Obama Care...the first shoe drops

The Affordable Care Act, a.k.a Obama Care has been a point of contention since its inception.  It was promoted as the answer to all of our healthcare woes, and we are quickly finding that not to be the case.  Regardless of where you stand, there are some undeniable truths. 

There are a few good things that have come from this legislation.  One of them is that there are no more lifetime limits in health care plans (you cannot exhaust your plan with high cost procedures).  Another benefit is that kids cannot be declined from their parents' plan (but the insurance company can charge more for "sick" kids).  The last major benefit that came along with the ACA is that all preventative care is covered %100 (wellness visits, shots, breast exams, colonoscopies, etc..)  The administration aportioned funds to each state to offer plans to people with pre existing conditions called the PCIP plan.  These plans provide quality coverage adn the premiums are based on age alone.  While these changes are good for the consumer on one hand, they are not free, and the additional funds must come from somewhere.

One way that the gov't decided to help pay for these benefits is with the 85/15 rule (this rule varies from state to state and by size of provider).  This rule states that health insurance providers must use 85% of premiums collected for medical claims, leaving 15% for administrative costs, commissions, and other non medical requirements.  As the new "guaranteed issue" products become available we will see taxes change, and overall costs rise. 

Now for the consequenses that I have seen thus far.  The first effect that is painfully evident is that the health insurance companies are tightening restrictions for new applicants in an attempt to build healthy books of business prior to the "guaranteed issue" products.  These underwriting guidelines have forced more people into the state plans (PCIP), which is why they were formed in the first place.  The latest word from the state of AZ is that they are suspending new applicants to the PCIP program due to budget concerns.  The big question is, "where do the sick people go now?"   The answer is to the emergency room...higher costs for the rest of us.   And this is just the beginning.


Opinions, thoughts and comments are always appreciated.

 

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