This is the third in a series of blog posts celebrating the benefits that the Affordable Care Act (ACA) provides to people with disabilities. For the full list of prior and upcoming blog posts, see Friday’s news item.
The ACA Prohibits Individual Underwriting
In our first two blog posts in this series, we highlighted the ACA’s prohibition against denying coverage for pre-existing conditions and the guaranteed renewability of coverage. However, those are just the first two prongs of the protections that the ACA provides to ensure that everyone can get access to health insurance if they want it. The third and final of the “guaranteed issue” protections provided by the ACA is the prohibition for insurers to determine your premiums based on your health condition.
The first two protections are meaningless if the insurance companies were simply permitted to underwrite health insurance policies based on an individual’s health status. Prior to the ACA, insurance companies required individuals to go through lengthy enrollment processes which included filling out medical questionnaires on their own conditions and family health history. The insurance companies would then use this information along with the enrollee’s medical records to determine the enrollee’s risk and set the premiums based on all of those factors.
The ACA made sure that the guaranteed issue of the health insurance policy actually meant something by prohibiting individual underwriting. Insurance companies are now required to use “community rating” which looks at the potential health care costs for everyone enrolling in health insurance in one geographic region. This allows for risk to be spread over a larger group of people so that no one person is overburdened by the cost of their health care simply because they have a disability or other medical condition which requires a higher utilization of healthcare.
Requiring that insurance companies use community rating for all individual policies was a needed reform brought about by the ACA because what good is the right to buy health insurance if the insurance industry can simply price you out of the market?