Free Risk Management Tips Essay Sample
The U.S.A government has been trying to liberalize the insurance sector as much as possible, in order to make it more affordable to many people. "In 1996, the Health Insurance Portability and Accountability Act (HIPAA), was passed" (Consumer Report Organization, 2002). It gave people the feeling that if they quit or lost their occupations, they could still have the chance to secure another policy. However, they soon realized that keeping coverage involved two crucial steps, and only few individuals who left their occupations could still manage to go through first one. This is because COBRA, the first step, cannot be afforded by many people who have lost their jobs, simply because they cannot manage to pay the high premiums charged for health insurance. It could therefore be a mistake to take the health cover policy because you only enjoy the HIPPA benefits after clearing all your COBRA benefits.
Step 1: COBRA
"The Consolidated Omnibus Budget Reconciliation Act (COBRA) passed in the mid-1980s" (Consumer Report Organization, 2002). It enables employees who have quit their jobs to remain on their employers' health insurance programs for a period of one and a half years provided they service their premiums themselves. They are also guaranteed similar benefits they would have enjoyed if they were to continue working. For instance, members of their families can still have their coverage. According to the provisions in the federal law, COBRA benefits are not offered to those individuals serving in companies with less than twenty employees.
Step 2: HIPAA
This health insurance scheme serves two roles. First, it gives an individual the chance to join other insurance schemes provided by the new employer without necessarily having to meet the waiting periods set by the policy. Secondly, "it gives people who are leaving an employer group policy the right to buy a guaranteed issue individual insurance policy-guaranteed because, if they follow the rules, they can't be turned down no matter how old or sick they are" (Consumer Report Organization, 2002). It also doesn't exclude the coverage offered for the pre-existing health status. The manner in which guaranteed-issue policies are offered varies from one State to another.
The current poor state of the global economy has had several implications and its effects have been felt on the cost of health services. Recent economic studies reveal that many companies are now forwarding the responsibility of providing health care to their employees. Many companies now want their employees to contribute more funds toward their health insurance coverage. Meanwhile, the number of companies offering health benefits to their retirees are has also shrinking. This high level of cost sharing has made employees to contemplate how they use health services. "The average per-patient medical costs are projected to rise, 9.5% in 2010 and 9% in 2011, according to a research from PwC's Health Research Institute" (Stuart, Health Cost: Sharing the Pain, 2010).
The increased cost of medical services is attributed to the reduction in government reimbursements to Medicare. The medical costs are also increased by the short term outcomes of some positive trends. For example, the consolidation of medical services has been increasing since 2008. Such programs, initially enables insurers and hospitals to have a better bargaining power, hence they can increase costs, but after some time it leads to more efficiency and it also lowers costs in Medicare. Last but more importantly, the rate of inflation is on the upward trend and the prices of all services and goods are currently sky rocketing globally. This also explains the rise in the cost of health cover (Stuart, This is the eror of smarter medicine, 2010).
The increasing cost of Medicare is likely to affect COBRA operations because many people will opt for other health care services which are more affordable and flexible. If the government does not take serious measures to mitigate the effects of economic decline, then access to medical coverage will remain a long term dream for many citizens. The Cobra policies should therefore be redesigned to meet the current economic trends.