Licking Wounds, Insurers Accelerate Moves To Limit Health-Law Enrollment

Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to discriminate against the sickest and could hold down future enrollment.

In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.

Last year, these "special enrollment" clients were much more expensive than expected because lax enforcement allowed many who didnâ€™t qualify to sign up, insurers said.

The insurance industry says it is not discriminating but adjusting to market realities including higher-than-expected medical claims and the failure of a government risk-adjustment program called "risk corridors" to cover much of that cost.

The risk corridor program was supposed to reimburse insurers with sicker-than-average members. In November, however, HHS said it had only enough money to pay 13 percent of what it owed under the program for 2014.

The result for gold plans is that "the risk adjustment system does not work at all," said Ana Gupte, a health insurance analyst at Leerink Partners. "So itâ€™s impossible to make money.

Let me give you a ‘real world’ example of how Kaiser claims people ‘game the system’. My son just switched jobs. He will not be eligible for health care at his new employer until April 1st. He could have taken COBRA at his old employer for two months (Feb, and March). If he did so, his out of pocket costs would have been in excess of $600 a month, plus his plan had a deductible and prescription drug co-pays involved.
My son looked into ‘Obamacare’ and found a Gold PLan plan for $369 a month, NO DEDUCTIBLE, and $40 co-pay for prescription drugs.
Since he is a type 1 diabetic and has another prescription for an expensive drug, he would have probably ended up paying over $1000 a month for everything under COBRA. Instead he will pay the $369 plus two $40 co-pays. He is saving over $500 a month, his health costs will actually be higher when he starts his new job (which has GREAT benefits btw) than he is paying now.

His is just one example of how rational people, make rational decisions when it comes to their finances. For the gov’t to think that anyone who is about 25 will take the Gold Plan unless they have pre-existing conditions is crazy. Logic dictates that the sickest, most expensive will pay slightly more for a Gold Plan which covers a huge portion of their expenses vs taking a bronze plan, is crazy. The healthy buy the cheapest up front plans (and will use them very little), the sickest or those with chronic medical conditions (ie type 1 diabetes) will buy the gold and this will cost the insurer way more than the premium.

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