Health insurance policies are being canceled throughout the US
Controversy concerning the U.S. Affordable Care Act has reached new heights as several individual health insurance plans were canceled in late October and the beginning of November. Many individual policies throughout the U.S. have been canceled due to certain provisions of the Affordable Care Act. These provisions require insurance companies to provide coverage for 10 essential benefits, as outlined by the federal government. Policies that did not meet this standard were cancelled, but policyholders were also given an opportunity to purchase policies that comply with federal law.
Insurers may be pushing cancellations on their own
Despite the controversy this has created, designers of the Affordable Care Act suggest that health insurance companies were planning to move away from certain forms of individual coverage years ago. Ezekial Emmanuel, one of the minds behind the federal health care reform law, claims that private insurers had long disliked the way the market had been set up for them throughout the country. Emmanuel suggests that insurers envision a future where the individual market does not exist, which may be a difficult concept for many people to understand.
Insurance markets change over time, with some disappearing entirely
Insurance markets are typically finite. This means that some markets disappear as trends emerge in the global economy or the demand for certain types of coverage vanish. This is the case with flood insurance in the U.S., which is supplied by the federal government. Several decades ago, private insurers offered coverage for flood damage to properties. These insurers began growing wary of the financial risks associated with such coverage, however, which lead to the federal government taking over the market. Some insurers are showing interest in breaking into the flood market once again, largely due to the financial problems associated with the federal flood insurance program.
Insurers may want consumers to favor health insurance exchanges rather than the individual market
Emmanuel suggests that insurance companies are behind the cancelation of policies, not the federal government. Health insurance companies may want consumers to move into exchange programs, thereby evacuating the private market. Exchanges offer better prices for coverage while also giving insurance companies access to a wider range of consumers.