Health Insurance

Introduction to Health Insurance

• Cost Concerns

  • Healthcare costs exceed 17% of the gross national product.

  • Rising costs outpace other living expenses.

  • Health insurance is essential to avoid financial disaster from medical expenses.

  • Various health insurance plans are available.

Health Insurance Plans

• Provided by numerous agencies (e.g., Blue Cross/Blue Shield).

• Insurance company pays for covered expenses; coverage varies by plan.

Insurance Terminology

• Premium: Fee paid by individuals for insurance coverage.

• Deductible: Out-of-pocket amount before insurance pays.

• Coinsurance: Shared expenses; examples include:

  • 80/20: Insurance pays 80%, individual pays 20%.

  • 50/50: Shared equally between insurance and individual.

• Copayment: Fixed fee for specific services (e.g., $20 for physician visits).

Employment and Insurance

• Many individuals receive insurance through employment.

• Employers may cover full or partial costs.

• Individuals can also purchase private policies.

Types of Insurance

Health Maintenance Organizations (HMOs)

• Managed care plan with fixed monthly fees.

• Covers routine examinations and preventive care.

• Pros: Better access to healthcare, early detection, and treatment.

• Cons: Limited to affiliated providers.

Preferred Provider Organizations (PPOs)

• Managed care with contracts through specific agencies.

• Offers reduced rates for using affiliated providers.

• Requires deductibles and copayments; higher fees for nonaffiliated providers.

• n

Medicare

• Federal plan for:

  • Individuals over 65.

  • Those with disabilities for over two years.

  • Persons with end-stage renal disease.

• Coverage Types:

  • Type A: Hospital and extended care services.

  • Type B: Doctor services with an 80/20 coinsurance.

  • Type D: Pharmaceutical expenses.

Medigap Policies

• Supplemental insurance to cover costs not included in Medicare.

• Offered by private companies and subject to federal regulations.

Medicaid

• Jointly funded federal-state program for low-income individuals, children, and the disabled.

• Coverage varies by state.

• Includes hospital services, physician care, and long-term care.

• Children's Health Insurance Program (CHIP): Targets uninsured children in working families.

Workers’ Compensation

• Covers workers injured on the job, administered by the state.

• Employers fund treatments and lost wages.

U.S. Government Plans

• Provides healthcare for military personnel and their families.

• TRICARE covers active duty members and retirees.

• Veterans Administration offers services for veterans.

Managed Care

• Created to manage rising healthcare costs.

• Focus on efficient care and resource utilization.

• Preventive measures and routine checks are emphasized.

• Typically limits provider choices but aims to offer quality care at lower costs.

Compensation Types

Fee-for-Service

• Payment for each service rendered.

• Minimal incentive for cost-effectiveness.

Value-Based Compensation

• Payment based on performance and patient outcome metrics.

• Accounts for cost, quality, and satisfaction; faces implementation challenges.