Health insurance has become increasingly important in the present times. A large number of insurance companies are offering their services to people, who want to have financial security against illnesses and medical treatments. It is therefore important to have a body, which oversees the functioning of all these companies in the interest of people who wish to have health insurance.
Not Governed By Any Federal Organization
Health insurance companies in the United States are not governed or regulated by any federal organization. Each state regulates the health insurance at its own level. These regulatory agencies are called by names such as Insurance Bureau or the Department of Insurance. An officer usually appointed by the Governor of the state heads this agency and may be commonly known as the Commissioner of Insurance.
The main function of the state regulatory agency is to ensure that all the existing and aspiring insurance holders are treated in a fair manner. For this purpose, the regulatory organization has its own set of laws. The health insurance provider is expected to abide by those laws and function within their limits. These organizations also take up complaints, if any, against these agencies and take appropriate action to ensure justice to the policyholders. The regulatory agency is also required to analyze and then approve the policy forms. Also, the agency will have a fixed upper limit for the charges that the insurance companies can charge from their clients.
The Department of Insurance must also ensure the financial soundness of the insurance company. This is to ensure that the claims made by the patrons can be honored. For this, all the insurance companies, operating within the state are required to show their financial standing to the state insurance department. The insurance companies are accordingly permitted to operate within the state. On the other hand, if an insurance company is not found to be financially reliable or seems to be carrying out activities against the rules of the agency, the state has the right to take immediate action against that company.
Functions
The state regulatory authority also performs the following functions:
• Makes it mandatory for insurance companies to cover specific types of health benefits.
• Necessitates health insurances to include or exclude a particular health care provider.
• Rates the insurance companies according to their performance.
• Controls the capacity of the insurance company to grant insurance to people.
• Ensures that the maximum number of citizens is benefited by health insurance.
• Controls the rising cost of health care.
It is also a debatable matter whether the government should have a larger role in governing and regulating these companies, so that greater numbers of people are benefited by health plans. The government can indeed make it mandatory for work organizations to provide health care facilities to their employees, failing which they will have to pay higher taxes. Alternatively, the government can control the cost of health care facilities, by paying a part of them, itself.
Thus, a regulatory agency, whether at state level or at federal government level, ensures that the insurance companies function smoothly and handle the claims made by the insurance holders in a fair manner.