With the present system of employer-based private health insurance, many members of the general public may not know much about how their insurance company functions. Company rates often determine the viability of local health insurance coverage plans, especially for small business owners who may not provide the revenue necessary to explore options outside their own region. With these restrictions in place, private health insurance companies often wield excessive influence (such as setting price points for insurance premiums with no local competition) over the coverage process.
Fortunately for consumers, recent healthcare reform legislation may help resolve these issues. The Affordable Care Act (also known as Obamacare or the ACA) of 2010 has fundamentally changed the way private health insurance companies operate. In part, the Affordable Care Act was designed to expand access to healthcare services by mandating that any small business with more than 50 full-time employees must provide health insurance benefits for their full-time staff. Employers who opt out of this obligation will be required to pay a substantial financial penalty per full-time employee left uninsured. Likewise, a related individual mandate requires that uninsured individuals purchase one of the public option packages available on healthcare.gov. Like their corporate counterparts, individuals who opt out will have to pay a financial penalty meant to aid hospitals in recouping their costs for providing healthcare services to the uninsured.
All told, these measures may go a long way toward introducing competition for regional private health insurance companies. Many introductory Affordable Care Act plans feature high deductibles (the amount that must be paid by the consumer prior to the full rate of compensation provided by the insurance company), but the plans themselves may prove a precursor to universal coverage in the United States. Medicare, a socialized system of health insurance available to all US citizens over the age of 65, already functions as a kind of universal coverage system, with many public health advocates now calling for the program to be extended to all US citizens.
Under universal coverage, revenue is provided by a massive pool of public tax revenue that is then divided up and paid to healthcare providers and insurance companies as compensation for their services. Understandably, private health insurance companies are anxious about such an arrangement, because it gives the government a significant amount of leverage when negotiating price points. Since the government has the final say on which insurance company / healthcare manufacturer receives a national contract, these companies are forced to compete against each other to come up with safe, effective, and affordable solutions. Over the coming years, the Affordable Care Act may be amended to afford the government such liberties.