Health Insurance Private Plans

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Health Insurance Private Plans – There are four categories of health insurance in the United States. The introductory video below, from Humana Healthcare, provides a quick overview of how health insurance works in the United States.

Workers’ compensation was one of the first widely adopted social insurance programs in the United States. In workers’ compensation, employers are required to make provisions that workers who are injured in or on-the-job accidents receive medical treatment and receive payments of up to two-thirds of their wages to replace lost income. Workers’ compensation laws were first adopted by most states between 1911–20, and programs are still administered by state governments today (

Health Insurance Private Plans

, U.S. Workers’ compensation served as a trial balloon for mandatory government-sponsored health insurance before moving to a private (voluntary) system of health insurance. Legislative efforts in 16 states between 1916–18 failed to compel employers to provide health insurance to their workers.

Private Health Insurance Plans

Modern health insurance actually began in the form of hospital insurance during the Great Depression when high hospitalization costs threatened the financial well-being of both individuals and hospitals. The American Hospital Association supports hospital insurance, and helps organize hospital plans in the Blue Cross network while the California Medical Association starts a Blue Shield plan to pay for outpatient services. The two organizations (Blue Cross and Blue Shield) later merged into the program we know today (from Shi & Singh, 2013).

Private health insurance (formerly known as voluntary health insurance) began to develop and expand in the United States in the 1920s. and later led to congressional debates and reforms to address the special needs of older adults, the underserved, and those living in poverty, which ultimately led to the creation of Medicare and Medicaid programs that would receive public funding.

Health insurance became employer-based during World War II when, due to wage freezes, health insurance was used to compensate for loss of salary increases. In addition, Congress made health insurance benefits non-taxable, and the Supreme Court ruled that benefits, including health insurance, are a valid component of union-management negotiations (She & Singh, 2013, p. 66.) Until now, about 60 percent. Americans get health insurance from their employers.

The video below from Humana provides an overview of the evolution of US healthcare beginning in the 1940s.

A Brief History Of Private Insurance In The United States

Before publicly funded health insurance became available, government provision of health services to the poor took place in specialized care facilities, including city hospitals and state psychiatric hospitals.

Both programs were created in 1965 as part of Lyndon Johnson’s Great Society initiative. Medicare and Medicaid are very different programs in terms of populations served, funding sources, financial services, and management. Medicare is a federal program designed to provide coverage to the elderly and permanently disabled. Medicaid is a program jointly funded by the federal and state governments, and funding varies greatly among states. There’s a saying that if you’ve seen a state’s Medicaid program, you’ve seen a state’s Medicaid program.

Through this historical event, the various forms of insurance coverage for health can be summarized by the graph below on the left. A pie chart shows the percentage of the US population covered by each type.

In contrast to Europe, national health in the United States failed to gain ground due to several factors.

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Healthcare language can be an alphabet soup of terminology. You can review a list of healthcare-related acronyms by returning to the course home page and selecting “Guide to Acronyms.” There are a set of terms that are important to be familiar with so you know how your plan works – your type of health plan. Knowing the mechanics of your plan will help you navigate the complexities of health plan benefits and avoid unexpected and costly expenses.

Various insurance plans are offered through the exchanges, through employers, through Medicare (through Medicare Advantage), and through Medicaid.

The Commonwealth of Massachusetts has helpful information on a variety of plans. The following information is adapted from their site.

The indemnity scheme reimburses services as they are rendered. Reimbursement goes to the provider or the insured. Indemnity schemes were popular until the early 1990s. Today they are rarely offered on the private market. Medicare Parts A and B are traditional plans (we refer to fee-for-service), and some are Medicaid plans.

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Use network providers – doctors, hospitals and other health care providers – that participate in the plan. The only exception is for emergency care. HMOs require a primary care physician (PCP) to manage your care. Seeing a specialist usually requires a referral from your PCP, who must also be in network.

Use network providers – doctors, hospitals and other health care providers – that participate in the plan. The only exception is for emergency care. Unlike HMOs, you don’t have to choose a primary care physician, or you don’t have to contact your PCP for a referral to a specialist.

PPO (Preferred Provider Organization): With a PPO, you get more comprehensive benefits by using network providers – doctors, hospitals and other healthcare providers – who participate in the plan. You have the option of using a non-network provider, but with lower benefit rates and higher out-of-pocket costs. Because PPOs typically have a wider network, they are typically more expensive—carrying higher premiums than HMOs and EPOs. With a PPO, you don’t have to choose a primary care physician.

POS (Point of Service Plan): Hybrid plan with features of HMO plus indemnity. In-network care coverage is similar to the HMO arrangement described earlier. The difference between PPO and POS is the way the provider is paid.

Powerful Infographic For Individual Health Insurance.

It is important to inform consumers about the terms of their insurance plan or the risk of unexpected expenses. Some plans (mainly HMOs) do not cover out-of-network visits except in extreme cases, and even then they require pre-authorization (for services that are medically necessary and not provided by one of the HMO’s providers). The rules are in medical emergencies, but even if the emergency department is out of network there may be more cost sharing.

The graphic below summarizes the different types of health care coverage in the United States. The next section will explain these different coverages in more detail.

Medicare helps pay for hospital and doctor visits, prescription drugs, and other acute and post-acute services. In 2012, spending on Medicare accounted for 15% of the federal budget. Medicare also plays a major role in the health care system, accounting for 21% of total national health care spending in 2012, 28% of spending on hospital care, and 24% of spending on physician services.

The Medicare program consists of four parts – Part A, Part B, Part C (also known as Medicare Advantage), and Part D. Together, these four parts provide coverage for basic medical services and prescription drugs. Medigap (Medicare Supplemental Insurance) policies can be purchased privately to help cover certain “gap” health care costs (such as co-payments, co-insurance and deductibles).

Individual & Family Health Insurance Plans & Coverage

Medicare benefit payments were estimated to total $556 billion in 2012; About two-thirds are for Part A (Hospital Insurance, or HI), and Part B (Supplementary Medical Insurance, or SMI) services. More than 20% for Part C, Medicare Advantage private health plans cover all Part A and B benefits, and more than 10% for Part D drug benefits.

Medicare spending per beneficiary is highly skewed, with the top 10% of beneficiaries in traditional Medicare accounting for 57% of total Medicare spending in 2009—more than five times the average for all beneficiaries in traditional Medicare, on a per capita basis. ($55,763 vs $9,702).

Coverage: Part A covers inpatient hospital care, some skilled nursing facilities, home health care, and hospice care. If you or your spouse have worked at least 40 quarters (10 years) and paid Medicare payroll taxes, you qualify for Part A coverage, and you don’t have to pay a monthly premium for it. It is called “Premium-free Part A”.

Funding: Part A is paid with a portion of Social Security taxes. Most people do not pay premiums because the individual or their spouse pays Medicare taxes while working in the US.

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Medigap (Medicare Supplemental Insurance) policies can be purchased privately to help cover some gaps in health care costs (such as copayments, copays, and deductibles).

Coverage: Part B, or the Supplemental Medical Insurance (SMI) program, helps pay for doctor services, outpatient hospital care, and certain home health visits that aren’t covered under Part A. It also covers laboratory and diagnostic tests, such as X-rays and blood work; durable medical equipment, such as wheelchairs and walkers; certain preventive services and screening tests, such as mammograms and prostate cancer screenings; Outpatient physical, speech and microbiological therapy; outpatient mental health care; and ambulance services.

Financing: Those who have opted for Part B option will have to pay a monthly premium. Most people who pay Part B premiums

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