Supporters of the seriously flawed Affordable Care Act often tout as one of the law's most important benefits provisions prohibiting health insurance companies from discriminating against patients with pre-existing medical conditions. Under these provisions, insurers may not charge exorbitant premiums or deny coverage to patients with chronic medical conditions -- such as cancer, diabetes or HIV infection -- that require expensive, long-term medical care.
But an analysis by researchers at the Harvard School of Public Health, published in the New England Journal of Medicine on Jan. 29, suggests that a significant number of health insurance companies are employing new schemes to discourage high-cost patients with chronic illnesses from enrolling in their plans1. One such scheme, labeled "adverse tiering" by the researchers, targets coverage for prescription drugs -- one of the largest health care expenditures for many patients with chronic diseases.
For many years, health insurers have used "tiered formularies" under which enrollees are encouraged -- through different levels of cost-sharing copays and deductibles -- to use generic drugs and certain lower-cost brand-name medicines instead of more costly alternatives; out-of-pocket expenses for the low-tier generics are small, whereas those for more costly high-tier brand-name drugs are large.
However, under adverse tiering, some insurance companies place all drugs, both generic and brand-name, used to treat a particular disease in the highest cost-sharing tier. For example, looking at a sample of 48 health plans offered in 12 states, the Harvard researchers found that adverse tiering was used in 25 percent of the plans for a class of expensive drugs that are key to treatment of HIV infection2. On average, the out-of-pocket expenses for these drugs under the adverse-tiering plans was three times higher than for plans not using adverse tiering ($4,900 versus $1,600 per drug, per year, respectively)3.
The intended effect of such outrageous adverse-tiering practices undoubtedly is to dissuade certain high-cost patients with pre-existing conditions from enrolling in the companies' health plans and thus to maximize profits.
In the short term, the Department of Justice and the Department of Health and Human Services must investigate companies engaged in these discriminatory practices and punish them harshly. However, the only way to prevent similar conduct in the long term is to replace our current private, profit-driven health insurance system with a national, single-payer, improved Medicare-for-all system.
1. Jacobs DB, Sommers BD. Using drugs to discriminate -- Adverse selection in the insurance marketplace. N Engl J Med. 2015;372(5):399-402.