An overview of the health insurance industry
The country’s health insurance industry is a complex mix of private, public, non-profit, and for-profit insurers. Private insurance is the most significant entity offering health coverage, mainly paid for voluntarily by employers. The governments provide health coverage to some specific sections of society.
Since healthcare in the country is expensive, it is highly recommended that the residents opt for the right insurance policies. This article covers an overview of health insurance in the country.
Types
There are two types of health coverage in the US.
Private – This covers the primary and most significant part of the industry. These are privately financed, of which employer or group insurance is the most common.
Public – This type of coverage is provided by the Federal and State governments. The main ones are Medicaid, Medicare, Veterans Health Administration, and Children’s Health Insurance Program.
Why is Health Insurance Important?
As mentioned above, healthcare is a very expensive affair in the country. For example, the cost of appendicitis surgery in the US costs $60,493 on average, or in the case of a severe illness, the expenditure can be $150,000 or more.
Health coverage helps pay for most of the health services a patient receives. These include the doctor’s fees, emergency room expenses, surgical and non-surgical procedures, hospital stays, etc.
Some Insurance Terms to Know
A deductible is an amount that the insured person needs to pay every year for health care before the insurer starts to pay its share of the expenses. For example, if your annual deductible is $1,000, it means that you need to pay the first $1,000 from your pocket. After this, the insurance company will take the expenses as per its share.
Out-of-pocket expense is the amount of a health expense that you need to pay. The other part needs to be paid by the insurance company if you have health coverage.
Covered benefits are the health services included in the insurance plan, for which you pay a monthly premium.
Covered means that the insurance company will pay a part of the health service costs. However, it cannot be guaranteed that the insurer will cover the entire amount.
A premium is an amount that you need to pay to the insurance company every month as part of the health coverage enjoyed by you.
Copayment or Copay denotes a fixed amount that the insured person pays whenever a healthcare service is received. Once the Copay amount is paid, the insurance company takes care of the rest of the amount.
Coinsurance is a percentage of the health service cost that the insured person pays, and the insurance company handles the rest.
History of the Evolvement of the Industry
It was in the 1920s when the first employer-backed health coverage plans were introduced in the country. When World War II ended, this gained momentum as the government declared it exempted from tax. As per records, in 2018, almost 55% of the American population was covered by an employer-sponsored plan.
Medicare and Medicaid were the first public-sponsored insurance programs that came into being through the Social Security Act in 1965.
A Brief About Public Health Insurance in the country
Medicare covers people aged 65 and above, except those with end-stage renal issues and those with long-term disabilities under the age of 65 who are eligible. Hospital and medical insurance are covered on a fee-for-service program.
Medicaid is a program that is meant for the low-income segment. It also covers disabled individuals and blind people. Later, pregnant women, children up to the age of 18 years, and infants from lower-income families were also offered coverage. All individuals need to enroll and re-enroll in the program annually.
Children’s Health Insurance Program or CHIP is a program offering coverage to children from the lower-income segment of society. Such families are usually unable to afford private insurance and are over and above the financial limit for the Medicaid program.
The Affordable Care Act 2010
The Act is heralded as an iconic addition to the insurance landscape in the US. Some of the points outlined are:
Made it mandatory for the citizens to get covered by health coverage plans. Initially, there was a penalty for not doing so; later, it was withdrawn.
Extension of coverage for children under their parents’ private plans till they attain 26 years.
This was in brief about the health coverage industry in the country. Since there are multiple stakeholders and the domain is pretty complex, this is just the tip of the iceberg.
