Five Major Health Insurance Reforms Under Obamacare

Obamacare includes five major reforms that all health insurers must implement starting in 2014.

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In many ways, the United States has the worst health care delivery system in the developed world. We pay about twice as much for health care than other developed nations, yet our health outcomes are no better than theirs. This is primarily becaue we rely on private health insurance to pay for health care for most people -- other than retirees and the poor.

Obamacare has not changed our reliance on private health insurance—which is one reason health insurers backed its passage. However, it has attempted to reform the exisitng private health insurance sytem by eliminating some of its worst features. These include five major reforms that all health insurers must implement starting in 2014.

No Preexisting Condition Exclusions

Obamacare prohibits health insurers from denying anyone coverage based on their health status. This means you're able to purchase health insurance regardless of any current or past health conditions. One welcome side effect of this reform: much shorter and simpler health insurance applications.

Insurance Premium Rate Reform

Insurers may vary their premiums based on the following factors only:

  • your age (older people may be charged up to 300% more than the young)
  • tobacco use
  • where you live, and
  • the number of family members covered.

This has resulted in rate decreases for people with health conditions as well as decreases for older people in some states who previously were charged as much as five times more than young people. It has also resulted in rate increases for some younger people.

Minimal Comprehensive Coverage

All health insurers must offer comprehensive health insurance coverage that provides at least the following ten essential health benefits:

  • ambulatory (“walk in”) patient services
  • emergency services
  • hospitalization
  • maternity and newborn care
  • mental health and substance use disorder services (including behavioral health treatment)
  • prescription drugs
  • rehabilitative and habilitative services and devices
  • lab services
  • preventive and wellness services and chronic disease management, and
  • pediatric services (including oral and vision care).

No Rescission

Starting in 2014, your insurer can't cancel your insurance if you get sick.

No Dollar Caps

Before Obamacare, many health insurance policies had annual and lifetime dollar caps--that is, a maximum amount the insurance would cover. Once the cap was exceeded, the insurance ended. For example, a person with a $1 million lifetime cap would have to pay all health expenses over $1 million out of his or her own pocket. Given the astronomical cost of health care, these caps could be exceeded very quickly in the event of serious illness. However, under Obamacare, insurers may not impose lifetime or annual dollar limits on their coverage. This means that no matter how much your health care costs, your insurer must pay all of your expenses once you've paid your total annual out-of-pocket limit.

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