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A man and child sit at the kitchen table with a pile of bills and a computer.

Who controls health insurance?

By Shelley Turk, Divisional Senior Vice President Illinois Health Care Delivery, Blue Cross and Blue Shield of Illinois

Health care can be expensive. But for the 297 million people with health insurance —  more than 90% of Americans as of 2020 – that care is far more affordable than it would be without coverage.

Health insurance combines health care costs across a large number of people and averages out the risk of claims. By spreading members’ insurance premiums across a large group, the average cost of medical care for everyone can be kept affordable. Those whose needs are in the millions of dollars are rare, so membership in a health care plan can keep their costs far lower and help them avoid financial hardship. In this way, a health care plan can protect you from unexpected and high medical costs when you’re ill, and ensure you have access to care when you need it.

The most effective way to keep health care costs lower for everyone is prevention. Annual checkups, vaccines and health screenings often are covered at no cost – even before you meet your deductible – to encourage people to take advantage of preventive care.

Health insurance can be complex because it must account for the full range of illnesses each person may encounter, and because health care is an essential industry that is regulated with safeguards to protect consumers like you.

Health insurance is controlled by laws

The industry is governed by laws and regulations to make sure it serves people responsibly and effectively. Insurers can’t do whatever they want. Federal and state governments control the ways public organizations and private companies offering health insurance serve the public.

There are two types of health insurance:

  • Federal and state taxpayer-funded programs including Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)
  • Privately funded plans from Blue Cross and Blue Shield of Illinois and other commercial insurers, HMOs and plans funded and designed by employers

State and federal oversight ensures health insurers operate fairly and responsibly. These laws cover a broad range of issues to protect consumers.

State laws set the rules for health care

States set standards that explain who state-licensed health insurers must accept as members. This ensures health insurance – and health care – is available and equitable. It also ensures that those with the greatest need for coverage have access to that coverage.

States set rules about how much insurers can charge in premiums, based on a person’s health status, number of claims they’ve filed and other factors. States also require health insurers to offer certain benefits – which may vary from state to state. Examples include fertility treatments, substance abuse treatments and breast reconstruction after mastectomy.

Federal laws make coverage consistent

The federal government also has laws that ensure certain protections are in place across the country. The first of these is Employee Retirement Income Security Act of 1974. ERISA, as it’s commonly known, protects workers from losing their benefits. It sets standards for benefits offered by employers and employee organizations such as unions. ERISA also prevents states from controlling self-funded employee benefit plans.

Another federal law is the Affordable Care Act, or ACA, whichprovides greater access to health care. It defines essential care that must be part of every Individual and Small Group health insurance plan, and helps to lower health care costs.

A recent new law is the Transparency in Coverage rule, whichhelps consumers better understand the cost of items and services before they are performed. It also helps people shop for health plans by price.

The Health Insurance Portability and Accountability Act, better known as the “patient privacy law” or HIPAA, is responsible for protecting private patient health information. It created a national Privacy Rule to safeguard protected health information. Today, sharing someone’s private and personal health information is restricted without that person’s consent or knowledge. It also helps people understand how their health information is shared and controls its use.

HIPAA laws also protect workers from lapses in coverage when they change or lose their jobs and prevents the denial of health benefits for pre-existing health conditions.

State-licensed private insurers, including BCBSIL, must accept certain people leaving group health coverage for the individual market regardless of their health status. There can’t be any exclusion period for pre-existing medical conditions. 

Other built-in protections

Along with many laws, health insurance companies must follow best-practice standards. They must be in good enough financial shape to operate and pay health care claims. They must make insurance available to people regardless of their health status or preexisting conditions.

Insurers must follow federal and state requirements when setting the price for monthly health insurance premiums paid by members. And they must provide defined health services that meet the needs of their members at a reasonable and set price and pay the benefits they promise to members and pay claims promptly.

Filing a concern or complaint

Complaints about health plans should be directed to the applicable state or federal agency that oversees your health plan. Each agency has slightly different procedures for filing consumer complaints. You can find information about how and where to file a complaint at the National Association of Insurance Commissioners, the U.S. Department of Labor or Centers for Medicare & Medicaid Services (CMS), depending on your plan and the nature of your complaint.

Visit our website for more information about health insurance options.  Click on the “Insurance Basics” tab.

A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association