Obama Care part 2...The insurance side

In my last post, I discussed the affects that the Affordable Care Act will have on "us".  Now I would like to detail how it will affect the insurance industry, and how we view our insurance policies. 

First, lets examine how the insurance companies evaluate their business.  Make no mistake, they are a business, and they are in business to make money.  The way that they make money is to receive premiums from consumers.  The way that profit is made is when the amount of the premiums is more than the amount of claims paid out and administrative costs.  When the amount of claims is more than the amount of premiums received, a decision must be made.  Raise premiums, close up shop, or restrict participants by their health status.  Up until now, in order to keep premiums down, insurance companies have made underwriting guidelines more strict.  Enter Obamacare. 

With the new law in place, there are no restrictions on participants due to health status.  This leaves that insurance companies only one option.... raise premiums.  So for all of you that think/thought the Affordable Care Act would make health insurance more affordable, think again.  Consumers will still have the option of getting into an underwritten plan (highly recommended) if they can qualify. 

There are a few ways that the insurance companies will try to keep health insurance manageable for "us".  The first way is to offer higher deductables.  By the end of the year, deductable options will grow to at least $20,000.  They will also attempt to negotiate better rates with the doctors and hospitals.   Another way to keep premiums down is to offer defined benefit plans.  These plans will limit the amount that the insurance companies have to pay toward claims for the policy holder.  There is nothing wrong with these plans, they just increase exposure for the consumer (in trade for a lower premium).  It is possible that some things will not be covered, but time will tell how that shakes out.  Finally, smokers will pay a premium (50% or more than their non smoking counterparts). 

The big question is, who can afford these "huge" deductables?  The answer is supplemental insurance.  There are a handful of companies that offer cash benefit insurances that pay "you" when something unforeseen occurs.  Basically, you can receive lump sum cash if you get cancer, stroke, heart attack, coma, have an accident, or get hospitalized.  These policies will help people navigate through the high deductable waters, and protect themselves in case something bad does happen.

This new law is rife with confusion.  It will cause even more stress for the average consumer when it comes to their health care concerns.  There will be many choices regarding health insurance, and it would be wise to utilize a licensed professional when attempting to find the best solution for you and your family.

 

Opinions, thoughts and comments are always appreciated.

 

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Todd Uzzell
www.insphereis.com/tuzzell
todd.uzzell@gmail.com