The individual Health insurance market for people who are not provided insurance through work, or who are too young to go onto Medicare, has undergone significant changes over the last decade, particularly after passage of the Affordable Care Act, otherwise known as “Obama Care”. Before ACA was signed into Law in 2010 most large national health insurers like Humana, Cigna, Blue Cross Blue Shield of Texas, Aetna, and United Healthcare, were writing individual policies.
At that time however, insurance carriers were not regulated at the federal level but at the state level with each state’s insurance commissioner making decisions as to what was and was not covered under these types of policies. Generally what was considered to be medically necessary was covered under these pre ACA plans aside from a list of exclusions including Maternity and Mental Health Coverage. Before ACA passage individual health insurance policies were medically underwritten and weren’t required to cover certain categories of coverage like the ACA nor were they required to cover preexisting medical conditions immediately upon issuance of the contract. Consequently, many individuals looking to purchase these plans could not obtain the coverage because of their health conditions or could not afford premiums because their income.
These individual health insurance plans in Texas and around the country were generally much more affordable to average purchasers of insurance at the time; however, it was difficult for some consumers with major preexisting conditions to obtain insurance from these insurers based on their health status. However, for the consumers who could qualify medically, large open access Preferred Provider Organizations known as PPO plans were the norm in the marketplace.
In fact, in Texas pre ACA there were few if any restricted HMO networks offered to individual policyholders under these plans. PPO plans have out of network benefits allowing policy holders to move in and out of network on a whim if necessary. They also had much more broad based networks of doctors and hospitals to choose from. This made finding a doctor to accept these insurance plans much easier than the modern ACA policies of today. It also allowed consumers freedom to choose their own provider much easier. Particularly in emergency situations, made finding a high quality provider to see much simpler.
Moreover, Pre ACA health plans generally were not subsidized by the Federal Government which made them unaffordable to many consumers. But, premiums were much more stable and less expensive to the average middle income American than its modern day counterpart. Policy premiums were rated according to a number of factors including age, gender, tobacco usage, area, and medical conditions. Insurers would often markup premiums for older, sicker people than younger healthier individuals who did not smoke or use tobacco.
Because insurers had the latitude to price products according to risk level and to deny coverage to the most risky individuals, insurers were better able to effectively manage their risk and maintain a stable pricing structure compared to the ACA policies of today. For some, this pricing structure made it difficult to afford insurance; however, for healthier lower risk individuals, it meant much lower health insurance premiums.
Along comes the passage of Obama Care in 2010 with the bulk of the reforms to the individual market taking effect in 2014. Beginning in 2014 and 2015, the individual market in Texas along with many other states, was rocked with instability. ACA regulations now required insurers like Cigna, Aetna, BCBS, and the like, to offer coverage without regard to ones preexisting medical conditions. No longer could insurers deny or rate insured policyholders based on their risk factors or demographics.
For the first time ever, consumers in this individual space were able to purchase a policy without having to answer a series of health questions on an application for insurance. Nor would these consumers be concerned with having to wait to have any preexisting medical conditions covered because the federal legislation would bar these insurance companies from any of these risk mitigation techniques they were able to practice before passage of Obama Care. These reforms made it much easier for the end consumer to obtain health insurance; however, the unfortunate by product of this legislation proved to drive up the cost of care to astronomical levels not seen beforehand.
As a result of the new legislation many insurers were forced to leave the individual marketplace and those left standing did away with PPO networks and replaced them with HMO networks. In fact, there are no ACA compliant individual PPO plan networks left in Texas as of the date of this publication. This drastic reduction in the number of insurers in the Texas marketplace has left consumers with fewer choices, higher premiums, and less access to critically necessary care. HMO networks, unlike PPO plans, require the insured to use primary care doctors and seek referrals for specialist services. What’s more, HMO plans don’t have coverage for out of network care. This places the end consumer in a dilemma, especially if there is a dreaded disease like cancer. Places like M.D. Anderson in Houston do not take any HMO networks, only PPO plans.
Not only has ACA transformed the regulatory environment for individual health insurance plans, but it has revolutionized the way end consumers pay for their insurance policies. ACA was designed to assist low to moderate income citizens afford their insurance premiums by way of a refundable tax credit applied to the cost of the policy. This tax credit is on a graduated scale based on one’s income, and increases as the level of one’s income decreases. Not only is this insurance premium subsidized, but the out of pocket costs associated with the deductible and co insurance can be subsidized for income levels at or below 250% of the national poverty level.
As a result of this subsidization of premiums and deductibles, millions of low income citizens have finally been able to afford and obtain insurance. However, for those middle to upper middle income Americans who make too much money to receive any type of government assistance, the increased premium costs resulting from ACA legislation have left millions of American saddled and burdened with ever increasing health insurance premiums. The healthier individuals are finding it very difficult to justify spending thousands of dollars per month for insurance coverage that has high deductibles and very poor access to providers.
ACA legislation has provided millions of Americans with critical insurance coverage but at a large cost to society in the way of higher premiums and lower quality of care. Now that the individual mandate has been rendered null and void effective 2019, it remains to be seen the future of this legislation or future impact it will have on our country. Hopefully our leadership can craft a plan designed to build on strengths of ACA while dismantling areas where the law falls short. We can only hope for a system that can take care of our most vulnerable citizens while providing individuals with freedom of choice regarding insurance policies they feel best for them and their loved ones.