Affordable Care Act: Insurance

Insurance, including health insurance, works on the same principle. It is designed to protect people against unforeseen events in the future. It is designed to protect a person against the costs of those events, such as health care costs. People purchase insurance and all the premiums are pooled together to pay for others who use the insurance more than they do. For example a healthy person buys health insurance. The money they pay in premiums goes to cover their care when they need it, and to cover the care of the person that utilizes medical services more often.

This is the nature of all insurance and has been since the very first insurance policy was created. The Patient Protection and Affordable Care Act did nothing to change this simple principle.

What also hasn’t changed is that the more benefits that are offered the higher the premiums health insurance companies tend to charge to consumers. More benefits equals more potential for consumers to use those services, and some are more costly than others. That in turn increases the cost to the health insurance company. It is up to the health insurance company, and the provider to negotiate fees that they are willing to accept in order to lower premiums, or cut out benefits.

The health insurance commission in each state then approves or disapproves plans and rate increases submitted by the Health Insurance companies.

Health insurance companies could deny coverage for office visits and procedures before the Affordable Care Act, and they can do so after the law fully goes into effect.

Can a health care provider have a different rate for non-insurance, insurance, Medicaid, and Medicare patients? Yes. That also has not changed.

Related posts:

Affordable Care Act: The Exchanges (https://roseylinn.wordpress.com/2013/11/23/affordable-care-act-the-exchanges/)

Affordable Care Act (https://roseylinn.wordpress.com/2013/10/11/affordable-care-act/)

ObamaCare is not health care (https://roseylinn.wordpress.com/2013/09/09/obamacare-is-not-healthcare/)

Two videos that discuss health care in America (https://roseylinn.wordpress.com/2013/11/08/two-videos-that-discuss-health-care-in-america/)

Health Care is not the same as Health Insurance (https://roseylinn.wordpress.com/2012/09/06/health-care-is-not-the-same-as-health-insurance/)

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3 thoughts on “Affordable Care Act: Insurance

  1. Roseylinn, good post. Another key cost driver under the ACA is the elimination of underwritinig restrictions on people with pre-existing conditions. Effective 1/1/14 all potential policyholders will not be denied coverage because of a preexisting condition. If you pick up a claim summary for any large group of people, 15% of the people will drive 85% of the claims cost. But, it is not always the same 15%. There will be some chronically ill or disabled folks, but there will be many new large claimants. So, everyone should seek insurance if they can afford it, as they are one accident or allergic reaction away from being in the 15%. Informative post, BTG

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    1. Good point. It is incredibly easy to get labeled with a preexisting condition and to be a relatively healthy person.

      I recall in 2005 it was relatively easy to get individual health insurance. In 2010 when the health insurance carrier I had managed to get another huge premium increase while cutting benefits down to almost nothing from the states health insurance commissioner I shopped around. I was denied coverage in less than 5 minutes for having a preexisting condition for every reason I had seen a doctor in the last five years and the medications that went with them. Including: eye glasses, flu, bronchitis. I did the calculation and the health insurance carrier I had made money on my account and so would the new one. That one denial made me ineligible for anything other than the high risk pool at a premium rate higher than the monthly premium I had been paying. So I dropped health insurance altogether.

      To health insurance companies any and all things are a reason for them to justify a premium rate increase and keep their profits as high as possible. Even with the requirement of having to spend 80% of the money on actual health care. It is one reason they shrunk the in-network networks and are bracing for when all those who were not eligible or couldn’t afford health insurance before go to the doctors now. I read an article that one carrier left a large market for that reason, they wanted their competition to absorb all the costs from those going for care starting in Jan 14, and will be waiting until 2015 to evaluate re-entry into the individual health care market.

      I agree that under the old system everyone was one office visit away from getting labeled with a preexisting condition. The elimination of the preexisting condition denial clause is a huge step forward.

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