Health Insurance - Is Some Better Than None?

Some people are insured, but others are not. In this article, we will explore both reasons to have health insurance and the benefits each type of insurance offers. Let us know what you think about it!

Health Insurance - Is Some Better Than None?

This article will examine the benefits of having some form of health insurance in particular areas and circumstances. It is assumed that people with health insurance will be better off than those without such coverage as a result. This concept is also known as "risk pooling." People who cover an additional person or more in their plans generally spread their risk over more individuals making it less likely that one person's medical costs would bankrupt them or their family.

Risks

Despite the above reasoning, there are risks associated with any insurance, whether health or any other insurance. There is always some risk that a policyholder will need medical care that is not covered by the plan and/or face some emergency situation that is not specifically addressed in the plan. This can be especially true when you consider the potential for medical catastrophe such as injury in an accident, being diagnosed with a serious or chronic condition or illness not yet discovered (e.g., cancer), etc. In addition to these catastrophic events, a variety of less-severe issues can and do happen to insured people each year as well as people who are uninsured. These include accidents (i.e. the plan covers the medical bills, but not the lost wages or pain and suffering associated with them), occasional medical procedures such as a routine physical, dental check-ups, etc., chronic conditions such as hypertension or diabetes that most people know about and are typically managed appropriately by their primary care physicians. Although these conditions might not be life threatening or catastrophic, they can lead to substantially high costs for routine care if not controlled by the person's doctor. Again it is important to note that all of these issues can happen to insured people who carry health insurance as well as uninsured people.

Advantages of Insurance

Having health insurance in one way or another seems to be a universal American experience. Are the benefits of having some form of health insurance worth it, especially now that most people have to carry their own coverage? The answer appears to be a combination of yes and no. But first some definitions...

Health Insurance is an arrangement under which a company, corporation or government agency agrees to pay all or part of the cost for medical services that are provided to the policyholder.

Health Insurance can take a variety of forms and be offered by several different entities. It can be provided by commercial entities such as insurance companies themselves, for-profit corporations or the government. It can also be offered through non-profit organizations such as HMOs or Health Maintenance Organizations. (see below for definition) It may also be provided directly by the government through Medicare and Medicaid for people over 65, those in nursing homes and people with disabilities respectively. In addition, there is a variety of "Medigap" policies that are designed to help fill any gaps in the coverage of Medicare.

The following information is being presented to examine the advantages and disadvantages of each type of health insurance.

Commercial Health Insurance

The most common form of health insurance is offered by private, for-profit companies such as Blue Cross/Blue Shield and Kaiser/HMOs. These types of plans are usually the least expensive in terms of monthly premiums. However, they are generally accepted as being poor value in that they have single fee structures and typically do not offer the low cost benefits that many people desire. In addition, these plans often require employees to join groups by company classification or location to take advantage of the lower prices. For example, if your employer offers a commercial Blue Cross/Blue Shield plan for all employees at their plant in Fairfield, Ohio, you would have to be a specific class of employee (e.g., "blue collar") to take advantage of the lower premiums.

These types of plans can also be offered as plans through the government. In this case, you may purchase an individual policy or enroll in a policy as part of a group plan such as a Medicare or Medicaid plan that provides coverage for your entire family under one group contract (not every individual is covered by the same insurance company). As with any generalization, there are exceptions such as Blue Cross/Blue Shield's health plans for military retirees and their families. These plans are offered by the government directly to armed forces personnel and their dependents. These policies typically have lower premiums than commercial policies that cover the same benefits and they do not use company classifications. In many cases, health insurance provided by the government is free, but may only cover certain diseases such as cancer or heart disease.

Health Maintenance Organizations (HMOs)

HMOs are organizations that provide health care services to people who must be enrolled in them in order to be eligible for services. The main difference between commercial health plans and HMOs is the structure of coverage. Most HMOs have a tiered benefit structure that allows them to control costs by denying benefits for services that are not provided by the organization or other limitations on covered services. The goal is to decrease unnecessary spending while maintaining access to necessary medical care. In this type of plan, a person may get their primary care from any doctor they wish, but must go through an HMO doctor (i.e., one who has a contract with the organization) for any specialist service or any inpatient hospital care. However, many people have difficulty getting appointments with HMO doctors and may continue to see their primary physician as a result of failure to receive proper referrals or waiting periods before being able to see an HMO doctor. In addition, many HMOs have a variety of other cost controls that may be considered inconvenient or hurt the care people receive. For example they can only provide services at "in-network" hospitals, meaning you must go to a hospital certified by your HMO to get your hospital care paid for. Another cost control is a restriction on access to expensive or experimental drugs and treatments. In these cases, the HMO may deny coverage for some services as well as limit the number of medications it will cover.

The advantages of Health Maintenance Organizations are cost containment and preventive health care as well as coverage for limited health risks such as pregnancy and birth defects. However, many people with chronic conditions have difficulty obtaining coverage due to the requirements outlined above. In addition, quality of care has also been an issue since many HMO plans limit access and participation in research or charge a higher premium for such services.

Insurance Agents (Working on your behalf)

The third type of health insurance is something that most people never consider: working with an insurance agent or agency to broker your health insurance needs. The advantage of doing this is that you are dealing directly with the carrier and they will tailor a plan according to your needs (this can also be a disadvantage if you do not understand the plan).

Conclusion

Providing health insurance is a complex task in the U.S. There are many different types of plans from which to choose and they are very expensive relative to other parts of the world in terms of monthly premiums and yearly out-of-pocket expenses. The combination of high cost and limited benefits make them a poor value for most people. In addition, it can be difficult to obtain coverage for certain chronic conditions such as heart disease, cancer, stroke or diabetes if you are over the age of 50 or have had major illnesses in the past. For this reason, major medical insurance is more common than true health insurance these days.