Health insurance is supposed to provide us with security when we need it most. By paying a monthly premium to a health insurance company, you should be assured that the company will cover the great majority of the costs of your care if you end up getting sick.
Unfortunately, health insurance companies have too often not been keeping up their end of the bargain. Instead, many companies deny coverage if someone has a pre-existing condition, cancel coverage once you get sick, place annual or lifetime caps on your coverage that can leave you in the lurch if you end up with a serious illness, and spend less and less of the premiums they collect on providing actual benefits to their customers. In short, due to questionable industry practices, our health insurance system has too frequently not been serving the interests of the American people.
The health care reform legislation passed by the Democratic Congress and signed by President Obama goes a long way toward forcing the health insurance industry to keep up its end of the bargain. Four key provisions that do so are:
- Prohibiting Denial of Coverage for Pre-Existing Conditions: People who have an illness or are at increased risk of an illness need health insurance the most. Those folks, however, are also the people that health insurance companies want to cover the least. So, for years, health insurance companies have denied coverage to people with pre-existing conditions, which have ranged from cancer and epilepsy to acne, intent to adopt a child, being a firefighter, or even being a victim of domestic abuse. Such policies are not only fundamentally unfair to people who need coverage the most, but they limit people who have insurance through their employer from changing jobs or starting their own businesses out of fear of losing their insurance, and have led many states to create expensive high risk insurance pools that are burdensome for both the people who were denied coverage and the taxpayers who help fund the programs. President Obama’s health insurance reform legislation finally ends this abusive industry practice. Pre-existing condition denials for children end tomorrow, Sept. 23, 2010, while such denials end for adults by 2014.
- Prohibiting Retroactive Cancellation of Insurance: A second problematic industry practice ended by health insurance reform is known as rescissions – where your health insurance company happily accepts your premiums every month, but then finds an excuse to cancel your coverage as soon as you get sick. The vast majority of these cases involve minor unintentional errors or minor pre-existing conditions that the customer did not know about. Approximately 10,700 people find themselves in this position every year, but as of tomorrow, rescissions will be outlawed.
- Ending Annual and Lifetime Coverage Limits: Another problematic health insurance industry practice is to place limits on the amount of coverage they will provide in a year or in your lifetime. This can have a significant impact if you are stricken with a serious or chronic illness as you may have to find a way to pay expensive health care bills in the midst of undergoing intensive treatment. As many as 20,400 people exceed their lifetime coverage limits, and 3,500 people exceed their annual coverage limits every year. Thanks to President Obama and Congressional Democrats, however, such limits will soon be a thing of the past.
- Requiring Health Insurance Companies to Spend Your Premiums on Providing Benefits: Health insurance companies describe the amount of your premiums that they spend on providing health care to you as their “medical loss ratio.” In other words, if your insurer spends 70 cents on every dollar on health care, and the remaining 30 cents goes towards advertising, marketing, and profits, the medical loss ratio is 70%. While medical loss ratios for health insurance used to average 90%, it has slipped in recent years, with some companies in the individual market having ratios as low as 60%. The health insurance reform legislation halts this trend by requiring 80-85% of premiums to go toward providing health care, rather than marketing and profits.
When evaluating any sector in our society, a critical question to ask is whether the interests and needs of individuals and society as a whole are being served by that sector. While the health insurance industry provides a useful service to millions of Americans, the industry has also been engaging in practices that are fundamentally unfair and that have prevented the people who need coverage the most from getting it. Thankfully, President Obama’s health insurance reform legislation will finally change that and help restore the basic security that health insurance should provide.
Are you happy that health insurance companies are finally being required to hold up their end of the bargain and to provide the health care security that our premiums should pay for? If so, write a letter to your local newspaper editor voice your support for the health care reform legislation passed by President Obama and Congressional Democrats.