How California health care reforms will impact the state insurance environment

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California Health Insurance

The Supreme Court’s decision to uphold President Obama’s law clears a path for the state to proceed.

Now that the top court in the country has deemed the Affordable Care Act to be constitutional, California health care reforms will be continuing onward, changing the way that many of the residents of the state obtain their insurance and, therefore, the medical care that they receive.

For the growing number of people without employer sponsored coverage, this will make a significant difference.

Though the changes will be gradual – particularly at first – they will still have a notable impact on millions of people. Individuals, for example, who are currently not covered because they work at a company that does not offer medical benefits, are self employed, or are unemployed, the California health care reforms will make a striking, rapid, and potentially highly beneficial difference to their ability to afford medical care.

The simplest way to look at the California health care reforms is to look at the business model of insurers.

Though the current strategy of the industry is to attempt to avoid risk, the new way of proceeding will put insurers in the position that they are forced to compete for their customers by offering them the best service.

What this means is that insurance companies are currently placing their focus on making sure that they are not providing coverage to the customers who are most likely to make claims, particularly expensive or ongoing ones. Said differently, they work to serve only the customers who are least likely to require their services. This is because insurers are only profitable if the premiums that they collect are greater than the payments that they make on claims for medical and other expenses.

However, the California health care reforms, in following with the overhaul of the system, will no longer allow insurance companies to discriminate against individuals with pre-existing health conditions. Though these people can currently be declined coverage, when the changes go into full effect in January 2014, they will no longer be permitted to do so.

In fact, they will also no longer be able to charge higher rates to people who have already been ill. The California health care reforms will ban this behavior outright, so that rates can be calculated based only on age, geography, and whether or not the individual is a tobacco user.

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