When you start your search for an insurance plan, there are going to be certain regulations that are there for your protection and others that are there to protect the insurance company. If you know what these are, it can help you understand why some insurance companies have the rules and limitations that they set. Insurance companies are regulated on several levels. At the very top, the national government regulates insurance and applies certain rules to make sure that insurance companies as a whole are adhering to a general standard practice. At the next level, insurance companies are regulated by individual states. This allows each state to set its personal standards that all insurance companies operating within state borders must follow. The state oversees any kind of licensing for companies and agents as well as makes sure that insurance companies meet requirements for financial strength and business practices. If you know what kind of regulations your insurance company has to abide by, it may help you gain a deeper understanding of how your policies are written.
While insurance companies are most heavily controlled at the state level, the federal government also plays a large part in setting standards and establishing safe practice guidelines. The Department of Health and Human Services is the main body of the federal government that works with health care issues and business practices. Other agencies that fall under the control of the Dept. of Health and Human Services includes the Food and Drug Administration (FDA), the Centers for Disease Prevention, the Agency for Toxic Substances and Disease Registry, the Agency of Health Care Research and Quality, and the National Institutes of Health. Each branch of the government has a specific responsibility to health care issues. Each year, millions of federal dollars are provided to these organizations to conduct research in various health related fields to make sure that the American consumer is getting the best care possible.
When it comes to regulating health insurance companies, states do the majority of the work. Whether it’s setting the standard for becoming an insurance agent or making sure that the market is balanced properly by evaluating claims and setting premium prices, the state has a major part in your healthcare. No matter which state you live in, they all take certain things into consideration when they determine what kind of rates you pay for. This is only if you are seeking individual health insurance that excludes national health insurance programs like Medicare and Medicaid. These criteria includes things like: the number of people that are in your group plan, your age, whether you’ve filed claims in the past, your gender, where you live, and they type of industry you work in.
And with 50 states regulation health insurance, that means there are at minimum 50 different health care systems working in the U.S. right now. Some are very good while others are not attractive. Texas has repeatedly been named the worst health care state while Hawaii, with mandatory employer based health care coverage, has one of the best systems in the U.S. The quality of the care provided and the accessibility to it is what makes for a successful program but that means that state funds often weight heavily on both aspects. There are many other issues that states have to deal with like the cost burden of increased use of Medicare and Medicaid for unnecessary medical trips that could be solved at your local emergency clinic. States have to absorb this cost, which raises costs for other people as a whole.
There are many intricacies when it comes to national and state regulation of health insurance and with the passage of the Affordable Care Act in 2010, things will be changing for years to come as long as it stays in place. The best advice you can follow is to be sure to know you policy inside and out and if you ever have any questions, ask your insurance agent. They should be able to provide the answers you seek.