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Health Insurance Reform - Update

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As of Sept 23, the six month anniversary after President Obama’s administration passed the health care bill, some provisions have come into effect; others were implemented at the time it was signed. 

Specifically, in March, President Barack Obama signed a healthcare reform law, the Patient Protection and Affordable Care Act, which promises to substantially change the nation’s health insurance system. 

There are eight new health reforms that health insurers will have to follow. These reforms are a major work in progress. The law will provide health insurance to about 30 million Americans who currently lack it. Consumer protections will increase and more choices in services will be offered. Health insurers will be more closely regulated and held accountable for their rates. 

Some of the provisions from the Affordable Care Act will require health insurers to provide coverage for people with various medical conditions. Children under age 19 with a pre-existing medical condition can be covered. Discriminatory practices, such as the denial of care for pre-existing conditions, will now be banned. The lifetime limit or cap on health coverage has ended, so people with expensive medical conditions can also be covered. Another group of people, young adults, will also have increased access to health insurance. Young adults can stay on their parent’s health insurance plan until age 26, even if they don’t receive coverage on the job.

Under the law, consumers will have increased access to health services. Health insurers are required to provide free preventive services, including screenings, blood pressure, diabetes, and cholesterol tests, vaccinations, and many cancer screenings. Consumers can seek emergency room services from a facility outside their plan’s network, without having to pay higher copayments. Patients also have the right to ask the insurance company to reconsider any denial of coverage.

Health insurers are struggling with the cost of these reforms and the regulation of premiums. The “medical-loss ratio” provision of the law sets limits on how insurers allocate consumers’ premium dollars toward medical care versus administrative costs and profits. Insurers in individual and small group markets will have to spend 80 percent of premium dollars on medical care, while large group markets will be required to spend 85 percent. 

The National Association of Insurance Commissioners (NAIC) has spoken out against the high medical-loss ratio. This week, the NAIC met with President Obama to discuss implementation of the health care law. Health insurers are concerned that the medical-loss ratio would reduce competition in the individual insurance market. 

The NAIC has released a draft plan for the exclusion of most federal and state taxes in the overhead when calculating the medical-loss ratio, so that they can hit the 80 or 85 percent requirement.

Health insurance companies are now taking actions to mitigate costs. They are cutting administrative staff to lower overhead costs. Some companies have announced that they would stop selling new child-only policies in an effort to avoid the expense of covering children with serious medical conditions. Insurers are also investing in technology systems to improve quality of patient care while simultaneously minimizing costs.

By Lina Silimkhan and editing by Rachel Stockton

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