There is an impression that comprehensive health reform, known as the Affordable Care Act, was written for the uninsured. Indeed, the law will extend insurance to 32 million Americans living without coverage. But just as important is the new security it gives to working families with insurance.
Some of these new protections quietly took effect in August of this year. In North Carolina, 216,649 individuals and families received $18.6 million in insurance rebates thanks to reform. The checks cut to consumers averaged $158 per person. Also in August the Affordable Care Act expanded the list of health care services insured women can receive with no cost sharing.
Let’s take a closer look at the rebates. Insurance companies are returning checks because of something called the 80/20 rule. This section of the health reform law requires that insurance companies not spend more than 20 percent of your premiums on administrative expenses. That means 80 cents of every premium dollar will now go to pay for health care services instead of salaries, marketing, and agent commissions. North Carolina is phasing in the 80/20 rule so that insurers can spend no less than 75 percent of premiums on medical care in 2011 ramping up to no less than 80 percent in 2012.
Many of the rebates will go to employees of large companies. Insurance companies will return $14.6 million of the total $18.6 million to employers. Employers will then pass these rebates on to employees based on how much employees contribute to their premiums. About $3 million in rebates will go directly to consumers who purchased individual insurance policies.
Most insurance companies in the state will pay some rebates to customers with the exception of Blue Cross and Blue Shield of North Carolina. The state’s largest insurer currently meets the spending benchmarks set by the Affordable Care Act.
In addition to direct rebates the 80/20 rule is a good deal for consumers because insurance companies will restrict growth in their administrative expenses. To avoid paying rebates insurers will spend more on medical care and less on overhead.
That will benefit all policyholders.
August also saw the beginning of new wellness benefits for women. It is already the case that new insurance plans and Medicare now cover a core set of benefits without cost sharing due to reform. Now the Obama administration has added eight new preventive services for women.
Here are the new additions: well-women visits, gestational diabetes screening, domestic violence screening and counseling, FDA-approved contraceptives, breastfeeding support and supplies, HPV testing for women over 30, sexually transmitted infection counseling, and HIV screening.
In this list, coverage for contraceptives has grabbed headlines. But in North Carolina this is hardly a cause for consternation. Our state has included the same requirement for many years without opposition or uproar. In fact, in crafting its birth control rule the federal government largely followed what a majority of states are doing now.
Lost in the political fight over contraceptives is the fact that insurance companies are now offering a package of new services that will reduce health care spending over time. If women take advantage of wellness visits and gestational diabetes screenings then doctors can catch problems early.
These two developments in the last month are small but important changes to our health system to strengthen coverage for those with insurance. In 2014 a host of new security measures will provide peace of mind to the insured, including caps on out-of-pocket expenses and a prohibition on denying coverage to someone based on previous medical history.
There is a long way to go before every North Carolinian has access to quality, affordable health care, but the protections added in August were two large leaps in the right direction.
Adam Linker is a policy analyst at the North Carolina Justice Center’s Health Access Coalition.