[josephfung]

That's not exactly accurate - he's blaming Obamacare for them having to provide new insurance products that have a net higher cost going forward - the incident of distressed babies happened before the ACA, which means they did have that choice, and chose to pay the costs.

Regarding what most insurance policies cover, there are actually several scenarios that would leave AOL on the hook. First, they could have a policy that has an Annual or Lifetime payment limit, which would leave the company (or individual) responsible for anything over. Alternatively, if the number of incidents was significantly higher than average for the carrier, AOL could see a significant premium increase due to the higher utilization of their plan. Or, they could actually be running a self-funded insurance program, which means they are managing the risk instead of relying on a separate insurance carrier.

Either way, there are several situations in which AOL's costs could be significantly impacted by the situation.