Insurance Market Reforms

Insurance Market Reform

The Affordable Care Act (ACA) includes a number of provisions that reform the health insurance market. A list of these is can be found here.

1.   Annual Limits 

Starting in 2014, the law bans annual dollar limits. This means plans cannot limit annual coverage of essential health benefits (EHBs), such as hospital, physician and pharmacy benefits.

2.   Coverage for Young Adults

Under the law, if a plan covers children, a parent can cover children on their health insurance plan until the child turns 26 years old, whether or not the child is the parent’s tax code dependent, resides with the parents, is a full-time student, or is married or single.

3.   Grandfathered Plans

Grandfathered Health Plans protect the ability of individuals and businesses to keep their current plan, while providing important consumer protections that give Americans control over their own health care.

4.   Medical Loss Ratio

Medical loss ratio (MLR) is the proportion of premium revenues spent on medical care, clinical services and quality improvements. The law requires health insurance issuers to submit data on MLR and issue rebates to enrollees if this percentage does not meet the following minimum standards:

  • Insured plans in the small group and individual market must spend at least 80% of revenues on medical care, clinical services and quality improvements.
  • Insured plans in the large group market must spend at least 85% of revenues on these expenses.

5.   Patient’s Bill of Rights

The Patient’s Bills of Rights helps children (and eventually all Americans) with pre-existing conditions gain and keep their coverage, protects all Americans’ choice of doctors, ends lifetime limits on the care consumers may receive and includes other provisions.

6.   Preventive Benefits

Prevention regulations require non-grandfathered health plans to cover certain evidence-based preventive services and eliminate cost sharing requirements for these services (i.e., no deductible, co-pay or coinsurance).

7.   Review of Insurance Rates

Rate review is part of a series of reforms to improve insurer accountability and consumer transparency. Grants will be used to help states crack down on unreasonable health insurance premium hikes.

8.   Student Health Plans

Student Health Plans are health insurance plans that are offered to students. These plans are often purchased when family coverage is not available. Some of these plans are comprehensive but others offer limited benefits.

9.   Self-Funded Non-Federal Governmental Plans

Prior to enactment of the Affordable Care Act, sponsors of self-funded, nonfederal governmental plans were permitted to elect to exempt those plans, or “opt out of,” from certain provisions of the Public Health Service (PHS) Act. This election was authorized under section 2721(b)(2) of the PHS Act.

The Affordable Care Act made a number of changes, with the result that sponsors of self-funded, nonfederal governmental plans can no longer opt out of as many requirements of Title XXVII.