Final answer:
The Patient Protection and Affordable Care Act (PPACA or Obamacare) requires insurance companies to provide coverage regardless of pre-existing conditions, offer essential health benefits, comply with the employer mandate if they have more than 50 employees, spend most of the premiums on medical care (Medical Loss Ratio), and set limits on out-of-pocket costs. It initially also enforced an individual mandate to ensure a balanced risk pool.
Step-by-step explanation:
The Patient Protection and Affordable Care Act (PPACA) of 2010, often referred to as Obamacare, imposed several important requirements on insurance companies. One central aim was to expand healthcare access and make it more affordable. Here are some of the key stipulations that insurance companies must adhere to under the ACA:
- Insurance providers cannot deny coverage based on pre-existing conditions.
- They must offer a set of essential health benefits in their plans.
- The ‘employer mandate’ requires companies with more than 50 employees to provide health insurance.
- Insurers are obliged to spend a significant portion of premiums on medical care rather than administrative costs or profits, a rule known as the 'Medical Loss Ratio'.
- There must be yearly limits on out-of-pocket costs for patients.
Furthermore, to combat the issue of adverse selection and ensure a balanced risk pool, the ACA initially included an individual mandate, requiring everyone to have health insurance or face a penalty, though the associated penalty has been reduced to zero at the federal level as of 2019.
Through these requirements and other measures such as subsidies for low-income individuals, the ACA sought to reduce the number of uninsured or underinsured Americans and curb rising healthcare costs.