Most investors consider Medical Loss Ratio as the most important factor to gauge an insurance company’s present and future profitability. On December 2, 2011, HHS released its final ruling on the Affordable Care Act’s Medical Loss Ratio policy. Beginning 2012, the revised policy guarantees tax-free rebates to consumers if the percentage of premium spent on medical care and quality improvement by their insurers, falls below 85% in larger group insurance sectors and below 80% in the small and individual insurance markets.

Visible impacts of ACA’s standardized Medical Loss Ratio ruling

Availability of precise data

Before the latest MLR ruling, it was difficult to obtain financial reports or enrollment data for individual, small groups and large group markets, even more so at the state level. Unavailability of data made comparison among health plans difficult which further made the insurance process seem impervious.  The Supplemental Health Care Exhibits documents issued by NAIC requires uniform reporting standards to be followed that will make it easier to:

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An issue brief released December 14th 2011 by the U.S. National Center for Health Statistics, establishes that the Affordable Care Act of 2010 has managed to secure health insurance for 2.5 million American youths.

In the U.S, young adults have traditionally been less likely to possess health insurance and before Obama’s healthcare overhaul, most were likely to be dropped from their parents’ dependent children coverage, as soon as they turned 19 years old.

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The establishment of the State Health Exchanges by 2014 may prove to be one of the more radical steps taken towards re-organizing the scattered and chaotic U.S healthcare industry. The state exchanges will serve as a central health care marketplace with the primary aim to empower small employers and individuals, to access, search, compare and purchase health insurance.

The purported efficacy of the state exchanges has inspired many health industry players like Walgreens with presence in many U.S states, to consider setting up their own private exchanges. Built on similar lines as state exchanges, these private health exchanges will serve as a one stop healthcare marketplace for their clients spread across different U.S states. Once set up, such reform in private exchanges will help these private healthcare giants market and sell all their available health insurance plans at a single location, thus facilitating easy comparison and selection from a multitude of available options.

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A successful government is one that learns from its’ past mistakes, infuses fresh ideas into the present and maintains a sharp eye on the market to prepare well for any probable future exigencies. The Obama administration faces an un-predictable future in the healthcare sector, as is evident from the study conducted by American Association of Medical Colleges. As per the AAMC research, US may be short by over 91,000 doctors in the next 10 years, with the worst spell expected to be around 2019-2020.

For the U.S Government, the need of the hour is to rake through the country’s healthcare industry and sift out compelling projects, ideas or successful community initiatives that can be instrumental in dealing with the imminent shortage of the number of practicing physicians over the next 10 years.

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The Affordable Care Act (ACA) has introduced new measures to further fortify the Medicare health care plan for senior citizens.  The revised Medicare health plan provides preventive medical care benefits, offers discounts on prescribed drugs, and improves the controversial ‘Donut-hole’ coverage gap.

How the new plan benefits you?

Since January 1, 2011, Medicare has seen the introduction of many preventive care policies and benefits that include yearly wellness visit, counseling sessions for tobacco discontinuation and various free medical screenings.

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In the previous blog posts, we looked at Private Exchanges and how they function. We’ve seen the functioning of Public Exchanges. We evaluated the pros and cons and we tried to put the two in perspective.

Finally, in this edition, we give you a low-down on the complicated lingo that is thrown around with the reforms and in the insurance industry in general.

Let’s dive right in.

The new Health Care Reform propose 4 levels of coverage – bronze, silver, gold and platinum. The coverage levels are based on the ‘actuarial value’, which is a measure of the level of protection that a policy offers and it indicates the percentage of health costs that would be covered by the health plan for an average population. Based on the actuarial value, the 4 levels and their coverage options have been defined as follows:

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In the first edition, we looked at how Private Exchanges are expected to operate and the benefits that they might provide to individuals and small businesses.

In this post, let’s look at State or Public Exchanges. These exchanges, according to the PPACA, will be State or Federally operated exchanges where public and private plans will offer a number of options to the citizens of that given state. Although similar in concept, State and Private Exchanges have some significant differences.

The functions of a Public Exchange can broadly be defined as follows.

•    Certify health plan offerings as Qualified Health Plans (QHP) based on certain pre-defined standards
•    Assist employers and individuals with purchasing and enrolling in QHPs

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Health exchanges are coming and employers are gearing up for it. With the likes of Walgreen entering the Health Exchange fray, there is absolutely no doubt that Health Exchanges are here to stay (Source: McKinsey Quarterly Report, June 2011).

But there is a lot of concern and curiosity around the concept of Health Exchanges that has emerged as a result of Obamacare. We, at hCentive have delved deep into the nuances of the PPACA and have tried to simplify the concepts that the new reforms introduce. This is the first in a series of blog entries in which we will attempt to unravel the different aspects of Health Exchanges.

To start off, there are 2 possible variations of an exchange – a. A private Exchange and b. A State or Federally operated Exchange.

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Health plans are on the verge of getting access to a large chunk of new customers. A lot of them, studies suggest, are young and healthy. Arguably, the most profitable customer profile for health plans. There are over 7.5 million young adults in the age group of 18-26 that are currently uninsured. When you expand that age group to 19-29, the numbers are close to 14.8 million. This is a goldmine for health plans.

Recent studies show that 25% of young adults between the ages of 18-26 don’t visit a doctor because they don’t have health insurance.

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For the longest time, Americans have complained of a broken healthcare system. After years of brushing it under the carpet, we finally saw the passing of the PPACA. The PPACA or more simply, the Affordable Care Act aims to make healthcare affordable and the buying of insurance an unbiased, transparent and competitive market.

With the January 1, 2014 deadline approaching fast, a new kind of consumer is available to the insurance companies – tech savvy, uninsured, and with disposable incomes. They don’t understand insurance and are not exactly keen on brokers, and paper applications.

Insurance companies are realizing that they need a simple and user-friendly web-based tool to attract and retain these potential clients. Merely competing on price might not be enough. Consumers will look for transparent and inclusive options and carriers will have no choice but to provide the consumer what he or she wants.

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