There’s no question that the Affordable Care Act (ACA) is a complicated law. But there is at least one part of it that’s not complicated. And that’s the requirement that insurance companies stop discriminating against people with pre-existing conditions. It’s very simple. You. Can’t. Discriminate. Against. Sick. People.
Yet some insurance companies appear confused by this rule. Or they’re just unable to stop the old tactics of avoiding risk that made them so much money in the past. To wit, the admission of at least one insurer – CIGNA – that they have stopped paying commissions to brokers for enrolling people in gold level health plans.
What does this have to do with discriminating against sick people? There are two primary reasons why this new marketing tactic is problematic; one of which likely makes it impermissible under federal law (and the laws of many states). The first of course is that it discourages brokers from enrolling some people in the plan that’s best for them. If they steer customers towards higher deductible bronze or silver level plans, they get paid. If their client decides to enroll in a gold plan, they won’t get compensated for their time.
The second reason – and the one that makes it likely to be impermissible – is the one articulated by the CEO of CIGNA himself: “adverse selection.” Most health actuaries will tell you that gold plans, because they come with lower deductibles and out-of-pocket costs at the point of service, tend to attract older, sicker customers than bronze and silver plans. Before the ACA, these were the type of enrollees insurers could avoid by simply denying them a policy or charging them an exorbitant price. Now that those practices are prohibited, some insurers may be using marketing tactics – by way of broker commissions – to achieve the same result.
How is this impermissible? The Federal law is pretty clear: insurers “cannot employ marketing practices…that will have the effect of discouraging the enrollment of individuals with significant health needs in health insurance coverage…” It’s hard to see here how discouraging enrollment in gold level plans wouldn’t have the effect of discouraging the enrollment of people with health care needs.
At least one state, Colorado, has called this type of marketing practice – or any commission structure designed to discourage enrollment in certain types of plans – to be an unfair trade practice, and last week issued a bulletin (B-4.87) banning it. Let’s hope CCIIO – the federal agency responsible for insurance oversight – soon does the same.