So everyone knows President Obama passed his health care reform bill, the Patient Protection and Affordable Care Act (PPACA), back in 2010. You also know that over the summer The Supreme Court voted to uphold the constitutionality of the PPACA, specifically the individual mandate. So why haven’t you seen a big change in your health insurance yet?
The bulk of the law is set to take effect starting January 1, 2014. That is when everyone will be able to obtain individual or family health insurance regardless of their medical history. Outside of the extensive expansion to Medicaid, abolishing medical underwriting, or an insurance company's ability to deny coverage due to preexisting conditions, is the most substantial change people will see in their health insurance.
Why is this important?
Believe it or not, I talk with more people who are “uninsurable” than “insurable”. It’s not as hard as you might think for someone to be denied coverage for health insurance. That’s not to say an insurance company is going to deny you because you had a cold last week. However there are a lot of, what we consider to be, common and minor health conditions that cost a substantial amount of money to treat. These common and minor conditions also put people at higher risk to develop more serious health conditions.
You will never see a TV commercial or hear a radio ad say it, but insurance companies are in the risk management business. Saying something like that can drive a sane person crazy, simply because the risk that is being managed is usually their personal property or well being. Two things people do not take lightly, and rightfully so.
Don’t go looking for that old straight jack yet. It’s important to keep in mind that the better an insurance company is at managing risk, the better off you will be if or when your personal property or well-being need protected.
That’s great, but I don’t have any pre-existing conditions
If you don’t have to worry about getting your own coverage, great. The only thing you need to worry about is how much your coverage is going to cost come 2014. When insurance companies start insuring everyone for everything, the cost associated with doing so will be dvtremendous. The new law has provided means (Tax credits and Subsidies) to attempt to offset those increases and make coverage more affordable. However, even if a slight miscalculation is made many people will be left unable to afford their new guaranteed coverage.
The cost to insure a 63 year old person who is taking seven prescription medications and sees their doctor once a month is going to be much greater than a 22 year-old, fresh out of college, with no medical problems. It’s very likely some or most of that cost differential will shift down the line to the younger, healthier demographic.
How does this affect my health insurance through work?
A simple two word answer, it doesn’t. Health insurance provided through an employer is already guaranteed regardless of medical history. This is able to happen because once you elect to participate in your company’s health insurance plan you are required to do so for the entire year. When an insurance company knows how many people they are covering, and for how long, it greatly improves their risk management abilities.
This is not the case currently with health insurance outside the workplace. If you are buying insurance on your own, you can come and go as you please. You can purchase a policy today and cancel tomorrow. This type of freedom minimizes an insurance company’s risk management abilities and puts them in an insecure financial position. It’s because of this freedom that they have to be more selective with the health conditions they cover.
Be Sure to Remember This
If you have been struggling to find health coverage, 2014 just might be the year you are finally able to get it. Let's just hope you can afford it.