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- Health insurance companies must meet the requirements of the Affordable Care Act
- Insurance must provide essential health benefits and no cost prevention services
- The federal and state governments seek maximum value for their residents
- Health Insurance companies design health plans to make profits
Health insurance companies do not operate for the public good. Their duty is to the owners and shareholders to return a profit on their investments. Rare corporate owners dedicate effort to doing things that help the consumer and increase insurance coverage.
During the Congressional debates on the Affordable Care Act, many proponents of public operation of Obamacare came forward with this line of reasoning. The private for-profit insurance industry was not a good match for the goals of universal coverage, low prices, and high-quality benefits. They would inevitably put profits ahead of concerns for the public.
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Prior to the Affordable Care Act
Before the ACA, insurance companies were free to set prices and conditions for coverage. They often charged women more than men because women either had or could have children. They often refused to cover the sickest and vulnerable and took opportunities to cancel costly subscribers. They limited benefits by lifetime and annual caps on the use of particular services.
Before the Affordable Care Act, health insurance companies often refused to cover or to continue to cover children with terminal conditions. Using medical underwriting pre-existing conditions disqualified many applicants despite the fact the conditions were treatable such as hypertension and early stages of diabetes.
The Affordable Care Act Included Private Insurers
The votes needed for passage of the law in the House and Senate ultimately came down on the side of using a mix of private and publicly-operated payers. The insurance industry fought for a form of participation that its members could use.
The federal Marketplace and state exchanges could work with the private providers to ensure high quality and low prices. The law as passed with its many participants and compromises would certainly be a marked improvement over the pre-ACA conditions of high prices, poor coverage, and uncontrolled national healthcare costs.
The Individual Mandate
By requiring every eligible resident to get and keep coverage, the Affordable Care Act created a diverse pool of millions of new applicants for health insurance. These included uninsured persons and millions with inferior policies that the law would not accept as qualified health plans.
Medicaid expansion was part of the statutory design to get to the highest possible levels of coverage. Many private insurance companies provide insurance coverage for Medicaid subscribers.
Te Affordable Care Act changed the insurance industry by taking away the power of private companies to decide who gets insured. The law requires insurers to accept all applicants using a modified form of community rating. They must offer all applicants the same prices and benefits under common policies.
The law forbids the use of individual traits and limits the price discrimination to the following five areas:
- Tobacco usage
- Individual versus family plans
- By type of Obamacare policy, whether platinum, gold, silver, or bronze.
Waiver and Innovation
The Affordable Care Act was not designed to be the last word for US health insurance. It was a compromise built upon earlier compromises. The for-profit sector won concessions as did those favoring a single-payer and the public option.
In the end, the law provided a framework for more than one type of health insurance system. States can use their unique position as insurance authorities and their close connection with their populations to shape a program that helps competition and promotes low prices.
Private Insurance Trends
From the first year of operation, insurance companies have pressed for higher prices and lower benefits. They frequently asked for larger rate increases than states allowed. The below-listed items describe trends in Obamacare insurance shows the preference of insurers for protecting profits over extending benefits for consumers.
- Narrow networks that use fewer doctors and hospitals and specialists. Narrow networks create greater likelihood that subscribers will go outside of the network for some services they consider necessary. This adds to the costs of insurance, out-of-pocket costs, and customer dissatisfaction.
- No credit towards out-of-pocket limits for outside spending. The limits for expenses mean greater contributions from insurance as they will pay the entire costs of benefits once the consumer passes the out-of-pocket limit.
- Higher premiums and expenses with fewer benefits in all types of Obamacare insurance plans. The premium seems to cover nothing more than the contract for insurance as copays and coinsurance rise along with deductibles. The deductible limit at approximately $7,100 for individuals will be difficult for most consumers to reach.
Single Payer System
The principle of group insurance is that a large pool of applicants can demand lower prices than individuals or small groups. The single payer concept would convert all of the Obamacare subscribers into a single group to negotiate terms with insurers, equipment manufacturers, and pharmaceutical companies.
The single payer system appears in many foreign countries that offer universal coverage, and it is the underpinning for group coverage of major employers in the US.
Single Payer versus Public Option
The public option has a single payer but the public entity would compete with private companies. The idea is to drive down prices through competition among insurance providers including the public insurance entity. The public option resembles Original Medicare in which subscribers can choose medical providers that accept Medicare terms and conditions.
COOPs Were Consumer Friendly
The Affordable Care Act contained a provision for funding a group of public oriented healthcare organizations. These Consumer Operated and Oriented Plans were dedicated to riding high-quality services and driving down prices. They could have added badly needed competition in many markets to drive prices down and keep them lower than markets that lacked meaningful competition.
The Republican Senate ultimately defunded the risk corridor protection needed to start any major health insurance operation This defunding came after most had begun operations. The result was that most could not operate without risk protection.
There are contending visions for the future of healthcare. The Obama Administration’s vision for the Affordable Care Act was summarized in a presentation by President Obama in 2016. It was presented as an article in the Journal of the American Medical Association Network.
The presentation points to the many opportunities to expand and improve the Affordable Care Act. They include the public option and the single payer systems.
Are heath insurance companies rip-offs?
The private health insurance industry has different priorities than the Administration that created the Affordable Care Act. Their priorities differ from the vast majority of those that use the Obamacare system. The private insurance industry operates for profit. Starting in the early 1940’s, they built a tremendous volume of business by providing health insurance to employees and groups at large corporations.
In the individual and family market, they have used far more privilege and selectivity in coverage. Recent trends support that they have clearly acted to protect profits rather than promote higher quality coverage and benefits for the public.
Comparison shopping is the best defense against high prices for health insurance. Consumers can use comparison shopping to find the best value for their individual or family situation.
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