On Wednesday, June 18, 2014, I had the pleasure of testifying at the House of Representatives’ Committee on Oversight and Government Reform’s Subcommittee on Economic Growth, Job Creation, and Regulatory Affairs. The subcommittee held a hearing it called “Poised to Profit: How ObamaCare Helps Insurance Companies Even If It Fails Patients.”
Much of my testimony was drawn from content in this blog. What struck me was the minority’s emphasis that these provisions, which protect insurers from losing money in ObamaCare, are designed to motivate insurers to offer coverage to sick people.
It is a well-worn talking point of ObamaCare’s supporters that insurers can no longer charge higher premiums or deny coverage to applicants who are expected to have higher health costs, or exclude coverage for pre-existing conditions. Obviously, no insurer will seek to cover these people just because the government wants it to. The market has to be structured to achieve that objective.
As the testimony makes clear, ObamaCare attempts to do this in a way that is unnecessarily over complicated, opaque, and rife for manipulation by insurers. And it does not succeed!
If it did succeed, we would see insurers explicitly competing for sick patients in the exchanges. They would offer plans targeted at people with diabetes, leukemia, or Crohn’s disease — the rarer and more expensive the better!
Impossible? Certainly not: That is what Medicare Special Needs Plans (SNPs) do. Medicare SNPS are a type of Medicare Advantage plan that specializes in covering cancer patients or HIV/AIDS patients or patients with dementia, among other ailments.
We do not see this in ObamaCare exchanges. Instead, we see insurers (unsuccessfully) trying to avoid covering sick people. They maintain narrow provider networks and charge high co-insurance rates for the most expensive specialty drugs, or even exclude necessary drugs for patients that used them before ObamaCare.
ObamaCare’s risk adjustment, reinsurance, and risk corridors will reduce insurers’ risks, but they are not improving the sickest patients’ access to care.