Got Morals?: An Analysis of Price Discrimination in Healthcare

Mariana Baquero- Honorbound

In order to maximize their profits, businesses turn to price discrimination to receive the most amount of money from those that are willing and/or able to pay more.  In Naked Economics, Charles Wheelan describes price discrimination as “the attempt to sell the same item to different people at different prices”. How does price discrimination work?  Typically, businesses will use technology and logic in order to gather information about their customers in order to efficiently maximize their profits. For instance, airlines indirectly make tickets more expensive for wealthy businessmen than for leisure travelers based on gathered information about the two customer pools. [1]

However, many times, price discrimination proves to be effective yet immoral by exploiting those that are less privileged. In 2014, Harvard University researchers found that AIDS patients suffer from price discrimination due to the Patient Protection and Affordable Care Act. While researching forty-eight different Obamacare plans in twelve states, Harvard University researchers discovered that all available drugs for AIDS are assigned to the top tier of the plans with the highest co-pay, meaning that AIDS patients would have to pay an additional 3,000 dollars to the amount originally covered by Obamacare. [2]With no other options, AIDS patients are forced to pay this immense amount of money in order to treat their symptoms. With more than 1.2 million people suffering with AIDS in the United States, one can only question, is price discrimination ethical in healthcare? [3]

Consumed by the desire to outperform competitors and make extensive profits, leading healthcare insurance companies like Aetna, Humana, and Cigna would argue that price discrimination is moral. In February of 2016, Aetna’s fourth-quarter profits exceeded Wall Street’s expectations; thus, as the company boosted its dealings with government healthcare programs like Obamacare, its total profits rose thirty-eight percent. [4]Who would want to terminate a business that produces millions of dollars even though it is doing so through unethical means?

The answer quite simply is not many people. Wealth disrupts moral judgement. Because health insurance companies profit from price discrimination in healthcare, they are more likely to support the idea of price discrimination. However, since the news of price discrimination against AIDS patients was introduced in the New England Journal of Medicine, Cigna, Aetna, and Humana have signed agreements to lower the cost of AIDS medications for patients in Florida. Therefore, it is quintessential to note the unfairness of price discrimination towards AIDS patients and others suffering with expensive treatments. Not only does price discrimination oppose the intended purpose of the Affordable Care Act, but it also ostracizes individuals living with AIDS by forcing them to seek overpriced treatment. While health insurers will attempt to maximize their profits through price discrimination, it is unethical due to the exploitation of the 1.2 million Americans suffering with AIDS. Left with no other alternatives, AIDS patients are forced to purchase these costly medications if they want to ameliorate their health problems. The immorality of price discrimination in healthcare comes not from the simple price of AIDS medication, but from the fact that many AIDS patients are not able and/or willing to pay for these costly medications.

[1] Charles Wheelan, Naked Economics: Undressing the Dismal Science (New York: W.W. Norton & Company, 2010)

[2] Robert Langreth, “AIDS Patients Face Price Discrimination in Some Obamacare Plans,” Bloomberg.com, published on January 28, 2015 and accessed on October 16, 2016, http://www.bloomberg.com/news/articles/2015-01-28/aids-patients-face-price-discrimination-in-some-obamacare-plans

[3] CDC. gov, accessed on October 16 2016, http://www.cdc.gov/hiv/statistics/overview/ataglance.html

[4] Kevin McCoy, “Aetna Earnings Jump on Growth in Medicare, Medicaid Plans, “ usatoday.com, published on February 1, 2016, and accessed on October 16, 2016, http://www.usatoday.com/story/money/2016/02/01/aetna-reports-higher-than-expected-profit/79629518/

Photograph – Stephanie, Manes. “Teaching Good Morals To Your Kids.”Modernmom.com. Accessed on October 17, 2016. 

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