Understanding Health Insurance Plans And Single Payer Programs

Written By: Max Logan on August 3, 2010 No Comment

What health insurance is best for you? The answer to that question depends on your understanding of what health insurance is and what your particular needs are. First, it is not discounted health care. Generally speaking, insurance is a kind of risk management. Your premium is your monthly payment to the company to assume the risk of expense. In one sense, this is a sort of gambling. In this case, the health insurer is betting that you will not need care, and the premium you pay every month is your hedge to offset the consequences should you face large medical expenses. Your health insurance benefits are what you get when the company “loses” and has to pay out.

Now that we know that a health insurance policy is a way to manage risk, it is important to understand that there are a number different kinds of agreements, or policies, available depending on your needs. Generally, the subject of health insurance brings to mind questions about doctor and hospital care available for individuals and families through privately purchased policies, and/or employees through an employer group health insurance plan. When choosing a health insurance policy, you (or an employer) must decide what your tolerance for risk is and how much risk you want managed. To that end, there are many private companies selling insurance plans.

Some well-known health insurance company names that you might encounter when researching policies include, Assurant, Anthem, Blue Cross, Aetna, Cigna, Banker’s Life, Mutual of Omaha, United Health Care, Humana, Kaiser, and Tonik. This is really just the tip of the iceberg, and the point of listing these names is only to show you that there are many, many insurance companies all offering their own benefit packages and prices. When you choose a plan, you are choosing one health insurance company to be the payer on your health insurance costs. The way this works is that your doctor submits a bill (called a claim) to the insurance company for services provided, and the company reimburses the doctor an agreed upon rate. How much the insurer pays and how much you pay as your share of costs (deductibles and copayments) depends on the agreements set forth in the policy.

Whereas private insurance includes numerous different payers, a single payer health insurance program usually describes a system in which the government manages all health care costs. The government program is the single payer. In the purest form of this, there would be no interaction at all with the private sector. The closest example of single payer health insurance in the U.S. is probably Medicare, the Federal health insurance program for individuals age 65 and older. When Medicare first became law in 1965, the Federal government was the single managing entity and payer. In more recent years, the Federal government has allowed private insurance companies to manage Medicare benefits through private managed care plans in the form of Medicare HMOs (health maintenance organizations), PPOs (preferred provider organizations), and PFFS plans (private fee for service plans). The private Medicare plans are called Advantage Plans, and even though the government still supervises and authorizes the plan, it has allowed other payers to participate in the Medicare program.

Now, the issue of which health insurance is best for you is answered in part by what specific health care needs are in question. There are many different kinds of policies, and the choices can be overwhelming. For example, there is disability insurance, accident and dismemberment insurance, temporary health plans, continuation of coverage insurance, hospital only insurance, catastrophic coverage, disease specific, long term care, supplemental, and fee for service and managed care polices.

In order to figure out what health insurance will work best for you, it is important to list your costs, special needs, and any specific circumstances that need to be taken into account. For example, if you work in an environment where there is a high risk of injury, you may need a particular kind of insurance, such as a dismemberment policy. Another example would be industrial diving. Divers who risk decompression illness would need to be sure their insurance covers the expenses of a decompression chamber. For many of us, health insurance simply means coverage for basic doctor, outpatient, and inpatient care. However, making sure that you get the best low cost policy for you starts with an exact understanding of your health care needs.

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