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Health insurance is a type of Insurance whereby the insurer pays the medical costs of the insured if the insured becomes sick due to covered causes, or due to accidents. The insurer may be a private organization or a government agency. Market-based Health Care System s such as that in the United States rely primarily on private health insurance. HISTORY AND EVOLUTION The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlen from the added subdivision (b), which defines "health insurance" as "an individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits." Patients were expected to pay all other health care costs out of their own pockets, under what is known as the Fee-for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case A (for instance, a hospital stay might require the first $1000 of fees to be paid by the policy-holder plus $100 per night stayed in hospital). Usually there is a maximum out-of-pocket payment for any single year, and there can be a lifetime maximum, or the upper limit of what the insurance company will pay over the covered individual's lifetime. Prescription drug plans are a form of insurance offered through many employer benefit plans in the U.S., where the patient pays a copayment and the prescription drug insurance pays the rest. Some health care providers will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn't pay, as the insurance company pays according to "reasonable" or "customary" charges, which may be less than the provider's usual fee. The "reasonable" and "customary" charges can. Health insurance companies also often have a network of providers who agree to accept the reasonable and customary fee and waive the remainder. It will generally cost the patient less to use an in-network provider. Health Insurance companies are now offering Health Incentive accounts (HIA) {Link without Title} , to reward users for living health and making healthy choices, like stop smoking and/or losing weight, may get you funds added into your Health Incentive Account, which may lower your out of pocket costs. The health incentive accounts also carry over from year to year but once you leave the program you lose those benefits in the HIA. Inherent problems with private insurance Any private insurance system will face two inherent challenges: adverse selection and ex-post moral hazard. Adverse selection Insurance companies use the term " Adverse Selection " to describe the tendency for only those who will benefit from insurance to buy it. Specifically when talking about health insurance, unhealthy people are more likely to purchase health insurance because they anticipate large medical bills. On the other side, people who consider themselves to be reasonably healthy may decide that medical insurance is an unnecessary expense; if they see the doctor once a year and it costs $250, that's much better than making monthly insurance payments of $400 (example figures). The fundamental concept of insurance is that it balances costs across a large, random sample of individuals (see Risk Pool ). For instance, an insurance company has a pool of 1000 randomly selected subscribers, each paying $100 per month. One person becomes very ill while the others stay healthy, allowing the insurance company to use the money paid by the healthy people to pay for the treatment costs of the sick person. Adverse selection upsets this balance between healthy and sick subscribers by leaving an insurance company with primarily sick subscribers and no way to balance out the cost of their medical expenses with a large number of healthy subscribers. Because of adverse selection, insurance companies use a patient's medical history to screen out persons with pre-existing medical conditions. Before buying health insurance, a person typically fills out a comprehensive medical history form that asks whether the person smokes, how much the person weighs, whether the person has been treated for any of a long list of diseases and so on. In general, those who look like they will be large financial burdens are denied coverage or charged high premiums to compensate. On the other side, applicants can actually get discounts if they do not smoke and are healthy. Starting in 1976, some states started providing guaranteed-issuance risk pools, which allow individuals who are medically-uninsurable through private health insurance to be able to purchase a state-sponsored health insurance plan, usually at higher cost. Minnesota was the first to offer such a plan, and there are now 34 states which do. Plans vary greatly from state to state, both in their costs and benefits to consumers and to their methods of funding and operating. They serve a very small portion of the uninsurable market -- about 183,000 people in the USA -- but in best cases do allow people with pre-existing conditions such as cancer, diabetes, heart disease or other chronic illnesses to be able to switch jobs or seek self-employment without fear of being without health care benefits. Efforts to pass a national pool have as yet been unsuccessful, but some federal tax money has been awarded to states to innovate and improve their plans. Moral hazard Moral Hazard describes the state of mind and change in behavior that results from a person's knowledge that if something bad were to happen, the Out-of-pocket Expenses would be mitigated by an insurance policy--in this case, one which provides reduced prices for medical care. In most cases the carriers have a 2 year window to go back and see and pre Other factors affecting insurance price Because of advances in medicine and medical technology, medical treatment is more expensive, and people in developed countries are living longer. The population of those countries is aging, and a larger group of senior citizens requires more medical care than a young healthier population. (A similar rise in costs is evident in Social Security in the United States .) These factors cause an increase in the price of health insurance. Some other factors that cause an increase in health insurance prices are health related: insufficient Exercise ; Unhealthy Food Choices ; a shortage of doctors in impoverished or rural areas; excessive Alcohol use, Smoking , street Drugs , Obesity , among some parts of the population; and the modern sedentary lifestyle of the middle classes. In theory, people could lower health insurance prices by doing the opposite of the above; that is, by exercising, eating healthy food, avoiding addictive substances, etc. Healthier lifestyles protect the body from some, although not all, diseases, and with fewer diseases, the expenses borne by insurance companies would likely drop. A program for addressing increasing premiums, dubbed " Consumer Driven Health Care ," encourages Americans to buy high-deductible, lower-premium insurance plans in exchange for tax benefits and utilization of Health Incentive accounts . Common complaints of private insurance Some common complaints about private health insurance include: # Insurance companies do not announce their health insurance premiums more than a year in advance. This means that, if one becomes ill, he or she may find that their premiums have greatly increased (however, in many states these types of rate increases are prohibited). # If insurance companies try to charge different people different amounts based on their own personal health, people may feel they are unfairly treated. # When a claim is made, particularly for a sizable amount, insureds may feel as though the insurance company is using paperwork and bureaucracy to attempt to avoid payment of the claim or, at a minimum, greatly delay it. # Health insurance is often only widely available at a reasonable cost through an employer-sponsored group plan and online for individuals. # In the United States , there are tax advantages to Employer-provided health insurance, whereas individuals must pay tax on income used to fund their own health insurance, although a small number of pre-tax health plans exist. # Experimental treatments are generally not covered. This practice is especially criticized by those who have already tried, and not benefited from, all "standard" medical treatments for their condition. # The Health Maintenance Organization (HMO) type of health insurance plan has been criticized for excessive cost-cutting policies in its attempt to offer lower premiums to consumers. # As the health care recipient is not directly involved in payment of health care services and products, they are less likely to scrutinize or negotiate the costs of the health care received. The health care company has popular and unpopular ways of controlling this market force. # Some health care providers end up with different sets of rates for the same procedure. One for people with insurance and another for those without. # Unlike most publicly funded health insurance, many private insurance plans do not provide coverage of dental health care, or only offer such coverage with additional premiums and very low dollar-amount coverages. # Insurance Companies can influence the type or amount of treatment that the insured receives by setting limits on the number of visits, types of treatment, etc., it will cover. HEALTH INSURANCE IN THE UNITED STATES See Also: Health care in the United States According to the Latest United States Census Bureau figures, approximately 85% of Americans have health insurance. Approximately 60% obtain health insurance through their place of employment or as individuals, and various government agencies provide health insurance to over 29% of Americans. "Income, Poverty, and Health Insurance Coverage in the United States: 2005." U.S. Census Bureau. Issued August 2006. In 2005, there were 41.2 million people in the U.S. (14.2 percent of the population) who were without healthcare insurance for at least part of that year.(ibid) For many people, however, this does not boil down to a simple question of affordability. Part of this population might include young and healthy individuals with low risk of serious illness who don't believe that health insurance would be cost-effective. In fact, approximately one-third of these 41.2 million live in households with an income over $50,000, with half of these having an income of over $75,000. Income, Poverty, and Health Insurance Coverage in the United States: 2005. U.S. Census Bureau. Additionally, one third of these 41.2 million are eligible for public health insurance programs but have not signed up for them.According to Dr. David Gratzer, senior fellow at the Manhattan Institute. Interviewed in the Sun, in the article Momentum Grows on Health Care . People living in the western and southern United States are more likely to be uninsured. Medicare In the United States, government-funded Medicare programs help to insure the elderly and end stage Renal Disease patients. Some health care economists (Uwe Reinhardt of Princeton and Stuart Butler among others) assert that (the third party payment feature) these programs have had the unintended consequence of distorting the price of medical procedures. As a result, the Health Care Financing Administration has set up a list of procedures and corresponding prices under the Resource-Based Relative Value Scale . Starting in 2006, Medicare Part D provides a program for the elderly to buy insurance for the purchase of prescription drugs. Medicare Advantage expand the health care options for Medicare beneficiaries. The option for Medicare Advantage plans is a result of the Balanced Budget Act Of 1997 , with the intent to better control the rapid growth in Medicare spending, as well as to provide Medicare beneficiaries more choices. Medicaid While Medicaid was instituted for the very poor, beginning in 1972, the number of individuals in the United States who lacked any form of health insurance for any period during the year increased each year, every year with the exceptions of the years 1999 and 2000. It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to relatively high administrative costs and low reimbursements. Cunningham P, May J. "Medicaid patients increasingly concentrated among physicians." ''Track Rep.'' 2006 Aug;(16):1-5. PMID 16918046. The shift to managed care in the U.S. Through the 1990s, Managed Care grew from about 25% of U.S. Employee s to the vast majority. According the Centers for Medicare and Medicaid Services, nearly 100% of large firms offer health insurance to their employees.http://www.cms.hhs.gov/TheChartSeries/downloads/private_ins_chap4_p.pdf Although much more likely to offer retiree health benefits than small firms, the percentage of large firms offering these benefits fell from 66% in 1988 to 34% in 2002.http://www.cms.hhs.gov/TheChartSeries/downloads/private_ins_chap4_p.pdf TYPES OF MEDICAL PLANS IN THE UNITED STATES On December 8, 2003, President Bush signed The Medicare Prescription Drug, Improvement and Modernization Act of 2003 into law, creating tax-deductible Health Savings Accounts. This gives consumers a new alternative to pay for health care expenses. The HSA is a private bank account which is un-taxed and only penalized if spent on non-medical items or services. Because it must be part of a high deductible insurance plan, the HSA insurance generally has a reasonably priced monthly premium and allows mostly healthy people to bank money for their own healthcare expenses rather than give it to the insurance company. COMMON MEDICAL INSURANCE TERMS NAVIGATING YOUR HEALTH BENEFITS FOR DUMMIES. CHARLES M CUTLER MD TRACEY A BAKER CFP (C)2006 ISBN-13:978-0-470-08354-3 R ADAMS, CSR AETNA INS. TAMPA FL
# Maintenance of benefits - If the other plan pays the same amount or greater than your plan, then your plan pays nothing. If the other plan pays less, your plan pays only the difference between what it would have paid and what the other did pay. # 100% allowable - The secondary plan pays the patient responsibility up to the full allowed amount by the plan. # Government Exclusion - In general these plans take the patient responsibility remaining from the primary plan and treat it as a brand new claim and pay it under the normal plan benefits.
HEALTH INSURANCE IN CANADA Most health insurance in Canada is administered by each province, under the national law that requires all people to have free access to basic health services. Collectively, the public provincial health insurance systems in Canada are called Medicare. Private health insurance in Canada cannot cover the same services provided by the universal Medicare services paid by the government. Private health insurance in Canada is allowed only for services the public health plans do not cover; for example, semi-private or private rooms in hospitals and prescription drug plans. Canadians also must use private insurance for medical services such as Lasik surgery, plastic surgery such as liposuction, and other non-basic medical procedures. Private health care cannot cover physician fees which are covered by Medicare. Private sector services not paid for by the government accounted for nearly 30 percent of total health care spending Institute for Health Information: National Health Expenditure Trends, 1975-2003 (2003) . In 2005, the Supreme Court of Quebec ruled, in Chaoulli V. Quebec , that the prohibition on insurance for health care already insured by the state constitutes an infringement of the right to life and security. It is yet to be seen if this ruling will change the overall delivery of health insurance across Canada. Insurance Waiting Lists and Comparisons to US Health Care Waiting lists in Canada are essentially different for each hospital system. There is no true system-wide average wait time, as wait times change on a daily basis as patients come in to receive services, and waiting lists are different for each hospital. A Canadian patient has the choice to visit a different hospital system if the primary care they received at the original hospital is found to be unacceptable. For example: If hospital A has a waiting list of five weeks for a surgery, the patient can go to hospital B that may have no waiting list at all. It is important to note that only elective surgeries, such as hip replacement, have waits associated with them. Emergency procedures are performed as soon as medically necessary, based on doctor opinion. This triage system is essentially the same as used in American hospitals where PPO, POS, and HMO managed-care plans may schedule elective surgeries several weeks or months out, but emergency procedures are carried out as soon as medically necessary based on doctor opinion. The American and Canadian systems are more similar than many people realize, and in effect only different in how the majority of insurance claims are paid. This triage system is the primary cause for concern in the Canadian system. Certain doctors and hospitals, in rare cases, have placed people on waiting lists for medically necessary/emergency procedures. The United States system has the same problem with cases where insurance companies deny a procedure and refuse services to patients. HMO and POS insurance systems in the United States are known for scheduling medically necessary procedures many months out, or possibly denying care. HMO insurance networks are noted for their extremely limited doctor and hospital choice combined with common denials of service for what the insurance organization deems unnecessary for the patient. PPO managed care, while much less restrictive and has the most doctor choice, is mostly known for denying claims for non-network doctors that don't accept the PPO's discounted rates after services have been rendered. This may cause patients with huge debts to file bankruptcy claims, even when considered fully covered under the insurance plan. Canadians generally believe their triage system with waiting lists is a better option than to have significant portions of the population denied coverage outright; however, most Canadians still feel their system needs reform, more funding, and better access. The primary problem in the Canadian system is not emergency care or major surgery, but rather a shortage of family physicians. Many Canadians have to go to walk-in medical clinics or emergency rooms to receive primary care due to this family physician shortage. Many Canadians view the doctor shortage as a downfall of having a better insurance delivery system. All Canadian citizens are covered by the universal insurance program and have free choice to choose a doctor; therefore, when enrollments at doctor offices are held usually primary family physicians roles fill up before many people get a chance to apply. Statistical studies show that if all Americans had immediate access to universal insurance and full doctor choice, the United States would face a severe shortage of primary care physicians even greater than Canada. Its a common belief in Canada that the lack of coverage for tens of millions of Americans does not mean there is a smaller shortage of doctors in the United States, but rather a severe class based society where lower classes are denied care in favor of shorter waiting lists for those in the higher brackets of the economic ladder of American society. This idea is mostly supported by the fact that the Canadian Health System does in fact have lower mortality rates on average, as shown on the links at the bottom of this article section. Both the Canadian and American health systems have an ongoing debate for each respective system in regards to medical access and quality of care. Each system has unique problems that need attention, mostly dealing with funding and insurance issues which create problems like doctor shortages and lack of care. Canada has a slightly lower mortality rate on average, particularly when involving HIV mortality. The US rate for HIV mortality is approximately 4x higher; however, there are not 4x more HIV cases per capita in the United States. Some people have noted categories like this as demonstrations where Universal Health Insurance may be a better option than having no Universal Insurance coverage. Sources: http://www.amsa.org/studytours/WaitingTimes_primer.pdf http://www40.statcan.ca/l01/cst01/health30a.htm http://209.217.72.34/HDAA/ReportFolders/ReportFolders.aspx?CS_referer=&CS_ChosenLang=en HEALTH INSURANCE IN AUSTRALIA The public health system ensures free universal access and is funded by a system similar to the US Medicaid called Medicare . The private health system is funded by a number of health insurance organisations the largest being Medibank which is government owned. The remainder of the private health insurers are 'for profit' enterprises with the notable exception of HCF Health Insurance which is a Non-profit Organization . REFERENCES SEE ALSO
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