Health insurance often seems confusing and can be difficult to navigate for even the most knowledgeable consumer. It is one of the most talked about topics in political elections and has received considerable media attention because of the rules and restrictions placed on people who have insurance and the plight of the growing numbers of uninsured Americans.
The primary feature of health insurance is to pay for the cost of medical events that a person cannot afford. Insurance intends to pool for groups of people the financial risk of expensive, unforeseen medical events. Lately, however, the trend has been to use health insurance to pay for routine and ordinary health care as well as those catastrophic events. As a result, the cost of health insurance is rising for everyone.
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Insurance as a concept is easy to understand. It is simply a mechanism for pooling financial risk within a community so that no single person has to bear the burden of a substantial expense. When members of a community or a company insure against health risk, everyone puts money into a collection, and the cost of their health care is paid for, in part, from that pool. No individual person is responsible for overwhelming medical costs because they all share the burden of each other’s costs.
Insurance in practice is more difficult to navigate. To participate in insurance plans, a consumer must enroll in a plan either through his or her employer, through programs run by the federal or state governments, or individually with an insurance company. The enrollee pays a monthly payment called a premium, which goes to fund the risk pool. When insurance is accessed through work, the employer frequently pays all or part of this premium, and any remainder is paid by the employee using pretax wages. When insurance is accessed through public programs, little or no money is required of the consumer for the premium; however, funds are deposited by the government to fund a risk pool just the same.
Insurance companies offer different health insurance plans, each of which maximizes benefit or minimizes cost to the enrollee. Often, this means that plans that are the most financially appealing to the consumer because they cost less in premiums will have greater restrictions when the insurance is used and health care is sought. Health maintenance organizations (HMOs), preferred provider organizations (PPO), and point-of-service plans (POS) are plans that cost less in premium dollars than traditional, more expensive health insurance plans, but they also have more restrictions and guidelines that the consumer must follow in order for their care to be paid for by the insurance plan. The rules and guidelines of these types of insurance plans are often the basis of many complaints about health insurance today. It seems that in theory, health care is easily accessed and less costly with these types of health insurance plans; however, in practice, people find the rules and restrictions difficult to manage and to navigate.
Once enrolled, an insured person is able to go to any provider such as a doctor or hospital that accepts their particular insurance plan, and the provider will be paid for the care delivered by the insurance company. Providers are free to accept or to deny particular insurance plans, and consumers are usually provided with a list of participating providers by their insurance company. Also, depending on the rules of any particular insurance plan, an annual deductible and a co-pay or co-insurance may also be required of the enrollee. That means that the consumer is responsible for paying for a portion of the cost of the care out of his or her own pocket in addition to what the health insurance plan will pay for the care that is provided. It is important to understand that in most instances, insurance does not cover the entire portion of the cost of care, and consumers are increasingly being called on to make health care decisions based on greater responsibility toward the cost of their own care.
Access to health care providers looks about the same for anyone who has insurance, whether it is private, employer-sponsored insurance, or a public insurance program. However, if a provider is unwilling to accept your health insurance plan, then you must either find another provider who is willing, or pay for the care out of your own pocket.
People without health insurance have much greater difficulty gaining access to providers who are willing to treat them. Most providers will accept full cash payment from individuals without health insurance; however, the cost of health care today is much more expensive than most people can casually afford. Most people today are unaware of the full costs of an office visit, for example, and are often unable to pay unexpectedly for such visits out-of-pocket. As a result, uninsured people tend to go without medical care until such time as their illness or disease creates a major disturbance in their lives. Alternatively, they access health care through the emergency room of the local hospital. Either instance illustrates a critical issue in our health care system today. If someone waits too long to be treated because they lack health insurance, then their illness can be far more serious and more costly to treat when they finally do seek treatment. Also, when someone who is uninsured needs to access basic, routine health care through the emergency room, then the cost of their care is much greater, and the encounter is wasteful of health care resources. Either way, prompt, appropriate, and affordable health care is denied through a lack of health insurance.
Most Americans, about 60% of the population, get health insurance through their employer, whereas about 25% of the population gets health insurance through the federal government (Medicare) or the state government (Medicaid, State Children’s Health Insurance Program [SCHIP]). Also, at any given time during a year, there are between 20 and 40 million people, or up to 15% of the population, who are without health insurance, either because they are between jobs, their employer does not offer health insurance as a benefit, or they are unable to purchase health insurance on their own. Many of these uninsured Americans are working, wage earners; some will pay a substantial portion of their total income on medical costs out-of-pocket.
Women and children who are unable to access health insurance through an employer program, or for whom insurance is too costly to purchase, are often eligible for health insurance through state-run programs such as Medicaid and SCHIP. Medicaid is a state-run insurance program that provides health insurance to low-income families. Families must meet income guidelines proposed by their state to qualify for Medicaid insurance. Once enrolled in Medicaid, recipients are covered for a broad range of health care services from providers willing to accept Medicaid. The federal government outlines a list of required services that Medicaid will pay for from willing providers. These include, among others, inpatient and outpatient hospital services, physician services, prenatal care including nurse-midwife services, vaccinations for children, nursing facility services, family planning services, home health services, laboratory and x-ray services, pediatric and family nurse practitioner services, and early periodic screening, diagnostic, and treatment services for children younger than 21. Some states also elect to provide optional services, including prescription drugs and optometrist services, among others.
For little or no cost to families who make too much to qualify for Medicaid, but for whom health insurance is beyond their financial reach, SCHIP is a new program that enables states to insure children younger than 19 years for doctor visits, hospitalization, emergency room visits, and immunizations. Exact program components vary from state to state, and information about coverage can be obtained from any state’s Department of Health.
Nationwide, the SCHIP outreach and enrollment activities have increased the screening and evaluation of many uninsured families, and many states have reported that SCHIP has had a significant impact on their Medicaid programs. The result has been the identification and enrollment of children who may have been eligible for some time into either the Medicaid or SCHIP programs.
Even with these significant improvements in access to health insurance for our nation’s children, however, a significant number of children across many states continue to remain uninsured. During the 10-year period from 1988 to 1998, the proportion of children insured by Medicaid increased 4.2% (from 15.6% to 19.8%), and yet in the same time period, there was also an increase in the number of uninsured children (from 13.1% to 15.4%). It seems that the changes facing employer-sponsored health insurance in the quest to contain the costs of health insurance are substantially cutting the insurance benefits to many employed people. As a result, employed, previously well-insured Americans will become less well insured or even uninsured. Development of alternative insurance programs for the United States’ most vulnerable populations will continue to be an important issue at the state level. However, while states continue to test the viability and success of the Medicaid and SCHIP programs, it will not be without increasing cost, which the taxpayer will have to bear.
- Employer-Based Insurance, http://my.webmd.com
- Medicaid, http://www.cms.hhs.gov/publications/overview- medicare-medicaid/defasp
- SCHIP, http://www.cms.hhs.gov/schip/consumers_defasp