How will the health insurance reform help lower the cost of insurance?


How the health care reform bill will lower the cost of insurance is a highly debated topic and whether it will work or not remains to be seen.

This is how the proponents of the health insurance reform explain how it will lower the cost of insurance:

  • Cost savings. With the health care reform bill, medical services will be provided in a more efficient manner. Doctors will be better coordinated and armed with better information on the patient. The savings will in turn help to lower the cost of insurance.
  • Minimized administrative costs. The reform bill will also aim to prevent insurers from arbitrarily raising premiums. Insurance companies will have limits imposed on them with regards to non-medical expenses (such as executive compensation and administrative costs) tacked onto each policy. If an insurance company is caught violating this rule, the government may ask the company to pay rebates to its customers.
  • Removal of pricing based on one's health. With this bill, insurance companies are prohibited from setting prices based on pre-existing conditions.
  • Price monitoring. The reform will provide more funding for the states to monitor and review any price increases that are deemed unreasonable.
  • Tax breaks. Tax credits will be provided to those who buy in the individual market, and this will translate into considerable reductions on premiums. In fact, even when the premiums are lowered, consumers will be enjoying more benefits or better coverage.
  • Lowered out-of-pocket expenses. Those that are in the middle-income bracket will enjoy subsidies that are aimed towards decreasing out-of-pocket expenses (such as co-pays and deductibles). Those in the lower-income bracket (and who qualify) will enjoy a wider range of medical benefits through Medicare or Medicaid.

It is said that with these changes, insurance premiums may be decreased by as much as 14 to 20% for the individual market and up to 3% for the employee benefits market.

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