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Competition In The Insurance Business

ACA has led to numerous changes in the healthcare industry, but its key agenda is to bring about a progressive reform in the healthcare sector. Lately, the Senate Finance Committee conducted a meeting to analyze the issues faced by health insurance CO-OPs formed under the Affordable Care Act. The sole witness of the meeting was the Acting Administrator of the CMS.

According to the reports, more than 12 health insurance CO-OPs (Consumer Operated and Oriented Plans) were set up after the act was implemented. Nevertheless, they are either closed now or not functioning fully. Some have stopped accepting new customers because of the problems.

In this scenario, ACA has got a major role to play. It can encourage increased competition among health insurance exchanges and health insurers. CMS thinks that more productivity among insurance providers can be brought about only through increased competition. This helps to improve the productivity as well.

During the meeting, the Senate Finance Committee expressed its willingness to use ACA to trigger increased competition among the insurers. It said that introducing new methods for insurance exchanges were possible through the provisions in the Affordable Care Act. The Consumer Operated and Oriented Plans exposed the scope and reliability of the insurance companies. At the moment, it is quite difficult for new players to enter the health insurance business. There are a lot of factors behind this such as immense startup costs, etc.

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Challenges In Health Insurance Sector

Meanwhile, it has been reported that ACA has authorized the use of Federal loans to the CO-OPS. It believes that the loans could be used effectively to meet huge start-up cost at the initial stages. The Senate Finance Committee says that the funding has been given out to the users in after being adjusted to make it maximum useful for their clients.

In addition to observing the challenges faced by the insurance companies and encouraging them to enter into the business that is marked by the strict competition, the CMS lead team also analyzed the newsworthy risk corridor program. CMS said that these programs were designed to improve the financial safety of the insurance companies.

CMS has also suggested plans to recover the loans. This year, it is expected to recover a sum of about $1.2 billion from the loans segment.