Health insurance is a form of insurance coverage that covers the cost of medical and surgical costs of an insured person.
To identify a clinic, hospital, doctor, laboratory, healthcare practitioner, or pharmacy that treats a person, insurers use the word “provider.” The “insured” is the health insurance policy owner or the individual protected by the health insurance coverage.
Either the patient pays out-of-pocket expenses and earns compensation, depending on the form of health insurance policy, or the insurer makes payments directly to the company.
Health insurance is generally provided in workplace compensation packages in countries without universal healthcare coverage, such as the United States.
According to the Kaiser Family Foundation, the number of people with insurance in the U.S. dropped from 44 million in 2013 to less than 28 million in 2016. The researchers put this down to recent legislative changes.
A 2011 Commonwealth Fund study found that a gap in health insurance coverage was faced by one-fourth of all working-age U.S. residents. When they either became unemployed or changed jobs, many individuals in the study lost their health care.
Depending on what form of health insurance a person has, the level of treatment in emergency departments varies greatly.
Types
Two main types of health insurance exist:
Private health insurance: The Centers for Disease Control and Prevention (CDC) states that private health insurance is heavily dependent on the U.S. health care system. In the National Health Interview Study, researchers found that 65.4 percent of people under the age of 65 years in the U.S. had a form of private health insurance coverage.
Public or government health insurance: In this form of insurance, in return for a fee, the state subsidizes healthcare. Examples of universal health insurance in the United States include Medicare, Medicaid, the Veteran’s Health Administration, and the Indian Health Service.
Other types
Through the use of the way they handle their policies and communicate with healthcare providers, people often describe an insurer.
Managed care plans: The insurer would have arrangements with a network of healthcare providers to provide their policyholders with lower-cost medical care under this form of arrangement. There will be penalties and additional costs added to out-of-network hospitals and clinics, but they will provide some treatment.
The more costly the policy is, the more flexible it is likely to be for the hospital network.
Indemnity, or fee-for-service plans: A fee-for-service contract covers all healthcare providers with fair treatment, empowering the insured to select their chosen place of care. The insurer will usually fund an indemnity plan covering at least 80 percent of the costs, while the patient will pay the remaining costs as co-insurance.
Health maintenance organizations (HMOs): These are organizations which directly provide the insured with medical care. Usually, the policy would include a committed primary care doctor who will manage all appropriate care.
HMOs will usually only finance the care referred by this GP and will have negotiated fees to reduce costs for each medical service. Normally, this is the cheapest form of plan.
Preferred provider organizations (PPOs): A PPO is similar to an indemnity plan in that it requires any doctor they prefer to see the insured.
The PPO also has a network of approved providers with which they have negotiated costs.
For out-of-network providers, the insurer will pay less for care. However, without having to see a primary care provider, people on a PPO plan will self-refer to specialists.
Point-of-service (POS) plans: As a combination of an HMO and PPO, a POS plan works. The insured can choose between arranging all services through a primary care doctor, providing treatment within the provider network of the insurer, or using non-providers of the network. The type of plan will dictate the progress of treatment.
Why is the type of insurance plan important?
The type of plan decides how a person will handle getting the care they need and how much cash they will need to spend on the day.
During 2003, the U.S. A new alternative was adopted by Congress, the Health Saving Account (HSA). It is a mix of tax advantages for an HMO, PPO, indemnity plan, and savings account. A policyholder must, however, combine this form with a current insurance plan that has a premium for individuals of over $1,100 and families of $2,200.
HSAs would expand coverage, expanding current plans to accommodate a broader variety of therapies. When an HSA is paid for by an employer on behalf of their workers, the payments are tax-free. In the HSA, a person can build up funds when they are safe and save later in life for instances of bad health.
People with chronic illnesses, such as diabetes, will not be able to save a significant amount in their HSA, however, because they have to pay high medical expenses annually for maintaining their health care.
These policies often have a very high deductible, which means that while premiums can be smaller, individuals often end up covering the full cost of any medical treatment required.
As plan types evolve, there is more overlap. The distinctions between policy types are becoming increasingly blurred.
Managed care strategies are used by the majority of indemnity plans to manage costs and ensure that adequate resources are available to pay for necessary care. Similarly, many managed care plans have embraced certain features of fee-for-service plans.
Legislation
As part of the Affordable Care Act (ACA) 2010, providing a degree of insurance is actually legally required in the U.S. An person with no health insurance has to pay a fine.
The Individual Mandate in the ACA, however, has been withdrawn from the legislation, meaning that as of 2019, insurance will no longer be a legal obligation in the U.S.
If the policy also protects the children in the family, a person is permitted until the age of 26 years to be insured by their parents, even if they are:
- married
- living away from home
- not financially dependent on their parents
- eligible to be included on their employer’s cover
Insurance is controlled at the level of the state, which ensures that purchasing a policy in one state varies from doing so in another.
Although state laws may impact the price of a policy, the insurer is responsible for the important decisions regarding the coverage and reimbursements of an individual. People should be sure to address the effect of any evolving laws on their personal policies with their broker or customer services representative.
