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The Center for Consumer Information & Insurance Oversight

 

The Affordable Care Act: Increasing Transparency, Protecting Consumers

The Affordable Care Act includes new patient protections that give you greater control over the care you receive, as well as new resources to make the health care system more transparent and competitive. These developments will help ensure that you have the information to make smart decisions and assure you that you are receiving a better value for your health care dollars.

The Department of Health and Human Services (HHS) has already implemented many of the new provisions of the law designed to empower consumers with information that was unavailable prior to passage of the health care reform law.

Requiring Insurers to Use Plain Language in Describing Benefits and Coverage

Before the Affordable Care Act, the marketing materials provided by insurers could make it difficult for consumers like you to understand what the policies cover and how cost sharing works in order to choose the plan that will work best for your specific health care needs. New Affordable Care Act rules require health plans to provide a summary of benefits and coverage, and a list of definitions, designed to make it easier for you to compare your options, and understand exactly what you are buying. The new requirements will also make it easier for employers to compare health insurance options to provide for their employees. 

Specifically, under these rules, consumers will have access to two key documents that will be written in plain language, in a standard format, to help you understand and evaluate your choices:

  • A short, easy-to-understand Summary of Benefits and Coverage (or “SBC”). This will include a new, standardized plan comparison tool called “coverage examples,” similar to the Nutrition Facts label required for packaged foods. The coverage examples will illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby (normal delivery) or managing Type 2 diabetes (routine maintenance, well-controlled).
  • A uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-payment.”

More information on the Summary of Benefits and Coverage and the Uniform Glossary can be found here:  http://www.healthcare.gov/news/factsheets/2011/08/labels08172011a.html

Finding Insurance Options Near You

At HealthCare.gov, our insurance and coverage finder tool allows you to shop for private health insurance policies. While coverage can be expensive, this tool can help you find policies in your area that offer the lowest premiums, the lowest out-of-pocket costs, and other features that matter when finding the most affordable option. The tool also helps you find coverage if you have a pre-existing health condition or qualify for other public options.

HealthCare.gov has also expanded its information on plan benefits. Previously, the website gave consumers information on a variety of benefits, including primary care office visits, specialist visits, X-ray/lab work, hospitalization, emergency room visits, prescription coverage, mental health and substance abuse coverage, and maternity coverage.

With this new update, consumers will have access to a more comprehensive list of benefits each plan offers along with the level of coverage provided. The benefits will be listed as covered, not covered, covered with limitations, or available for an additional premium. The new benefits include such things as home health services, in- and out-patient rehabilitation services, skilled nursing facilities, hospice services, dental care, infertility treatments and weight loss programs.

In addition, HealthCare.gov provides extensive information about consumer rights, tips for how to navigate the market’s complexities, and details on how the Affordable Care Act provides new protections for all Americans.

Direct Help with Problems or Questions about Health Coverage

To ensure consumers know their rights, the Administration has launched www.HealthCare.gov and supported state efforts to inform and protect consumers. New Consumer Assistance Program grants funded by the law will help make sure that consumers receive their new rights and benefits under the Affordable Care Act by providing grant money to states to educate consumers about their health coverage options and new programs, empower consumers to avail themselves of new protections, ensure consumers have access to accurate information, and help consumers navigate the system to find the most affordable and secure coverage that meets their needs.

You can find contact information for your state’s Consumer Assistance Program, or other consumer resources in your state, here: http://www.healthcare.gov/using-insurance/managing/consumer-help/index.html

Shining a Light on Insurance Rate Hikes

Thanks to the Affordable Care Act, health insurers are being held accountable for health insurance rate increases. Insurance companies are now required to disclose to its customers’ rate increases of 10% or more and justify these increases – and HHS and the states have the authority to determine whether these increases are reasonable. For the first time, you can find all of this information about rate increases in their state in one location, at http://companyprofiles.HealthCare.gov/

While HHS does not have the authority to require companies to roll-back proposed increases, public pressure can be powerful, and some states. These states have the authority to reject unreasonable premium increases and many have. In fact, since the passage of health reform, the number of states with this authority has increased from 30 to 37.

States are using rate review to bring real savings to consumers:

  • In July 2011, Oregon forced an insurer to lower its request for a rate hike by nearly 10%.  This put money back in the pockets of approximately 60,000 consumers. 
  • Last year, thanks to this new authority, North Carolina saved beneficiaries \ 4.5 million by reducing a rate increase request from the state’s largest insurance company.
  • Over the past year, at the direction of the State Insurance Commissioner, Arkansas has been negotiating with insurance companies requesting rate increases greater than 10% on their individual health insurance products. The Commissioner recently negotiated a lower rate affecting approximately 90,000 policyholders

To learn more about rate review, visit: http://www.healthcare.gov/news/factsheets/2011/05/ratereview05192011a.html

Ensuring Value for Every Dollar Spent on Premiums

The new law limits how much of your premium dollar your insurer can spend on things other than providing health care and improving its quality. If your insurance company spends less than 80% of premiums on health care benefits and quality, it must provide a rebate of the portion of premium dollars that exceeded this limit. This 80/20 rule is commonly known as the Medical Loss Ratio (MLR). 

Insurance companies now are required to reveal how much of your premium dollars they actually spend on your health care and how much they spend on administration, such as salaries, bonuses, and marketing. This is information that was not shared with consumers in the past. Under the new law, your insurance company will send you a letter every year to tell you if they missed the 80/20 mark and therefore owe you a rebate on your premium payments. We are considering whether your insurance company should send you a letter to tell you if their spending on medical care and quality exceeds this new threshold. 

For more information, read the press release about the new medical loss ratio consumer notifications or you can find the notices here: http://cciio.cms.gov/resources/other/index.html#mlr

If insurers’ practices in 2011 were like 2010, up to 9 million Americans could be eligible for rebates in 2012 that are worth up to $1.4 billion. Average rebates per person could total $164 in the individual market.  However, we are already seeing evidence that insurers are lowering their prices for consumers to meet the 80/20 rule. Either way, the 80/20 rule is bringing value to consumers for their health care dollars.

To learn more about the 80/20 rule, visit: http://www.healthcare.gov/law/features/costs/value-for-premium/index.html

Consumer Rights and Protections

The Affordable Care Act also implements other landmark consumer protections that end the worst insurance company abuses. Under the new law:

  • Insurers will be prohibited from denying coverage to children with pre-existing conditions. Additionally, children will no longer have specific benefits denied because of a pre-existing condition. Learn more about Children’s Pre-Existing Conditions.
  • Approximately 10,700 people whose coverage is dropped each year because they get sick and made an unintentional mistake on their application will not have their coverage rescinded. Learn more about Curbing Insurance Cancellations.
  • Before reform, cancer patients and individuals suffering from other serious and chronic diseases were too often forced to limit or go without treatment because of an insurer’s lifetime limit on their coverage. Insurance companies are now banned from placing lifetime limits on coverage. Up to 20,400 people who typically hit their lifetime limits along with nearly 102 million enrollees in plans with lifetime limits can live with the security of knowing that their coverage will be there when they need it most.
  • Restrictive annual limits will be banned until all annual limits are prohibited in 2014. Learn more about Lifetime and Annual Limits.  
  • New insurance plans cannot charge more in cost sharing for emergency services obtained outside of their network. Up to 88 million people will benefit from this new rule.
  • Up to 88 million people who enroll in new plans will be guaranteed their choice of any available primary care and pediatric doctor in their plan’s network of providers and women will have the right to see an OB/GYN without having to obtain a referral first. Learn more about Doctor Choice and ER Access.
  • Consumers in new insurance plans will have the right to appeal decisions made by their insurance company to an independent third party. Learn more about Appealing Health Plan Decisions.
  • Consumers will be given more public notice when a state wants to make certain changes to its Medicaid program through “demonstrations.” The new law will give residents greater input into a state’s plans before they apply to the federal government for approval to move forward.