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Insurance Companies Change Strategies Due to Affordable Care Act (ACA), Business and Industry Trends Analysis

The Patient Protection and Affordable Care Act (ACA) completely changed the rules for health insurance underwriters as well as care providers.  Most of these insurance firms are of massive scale.  These are among the largest corporations in the U.S., and they have grown to such size by analyzing care providers, patient needs and treatment outcomes in an effort to provide effective coverage while attempting to control costs.  Their business requires enormous computer and data mining power, along with legions of claims administrators and utilization managers.  It is an extremely complex business, subject to very exacting regulation.  Prior to the ACA, such regulation was primarily at the state level, but it now includes extensive federal oversight.
The health reform act placed significant new requirements and restrictions on insurance underwriters, and they, in turn, have altered their relationships with the doctors, clinics and hospitals that serve the patients they insure.  For one thing, the act requires insurance firms to provide certain minimums of preventive care.  For example, insurers are no longer allowed to charge co-payments for preventive examinations such as mammograms.  Firms are required to spend at least 85% of collected premiums on health care for their clients, and no more than 15% on overhead and profit. 
Also, the act set up insurance “exchanges” that enable consumers to compare insurance plans and costs, and then purchase the plans that best suit their individual needs.  These exchanges are among the most disappointing outcomes of the act.  The ACA cannot force Americans to sign up for insurance.  It does, however, force insurers to accept new enrollees no matter how sick they may be, and to charge standard rates regardless of whether or not a person is ill.
Health insurers are no longer able to refuse a customer (or charge higher fees) due to pre-existing health conditions.  Nonetheless, they may charge higher prices to consumers who smoke or participate in certain other unhealthy activities.  Healthy people are far cheaper to insure than sick ones. 
A radical shift in the way doctors and hospitals are paid by insurers has begun.  Incentives are being paid, by insurers such as Medicare and Blue Cross Blue Shield, to providers that improve outcomes.  Improved care and lower costs are measured by closely following patients and coordinating care efforts for best results.


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