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Health Insurance

 

Health insurance is one of the big topics being discussed by politicians around the country. At this point nearly 50 million Americans do not have health insurance. For some it is due to economic reasons. For others, it is a matter of not understanding how to purchase affordable health insurance and not understanding what they should purchase and how much they should pay for health insurance.

 

Health insurance has not always been so difficult to obtain. In the early 1940’s the government imposed wage freezes on companies so they could support the war. When that occurred, companies began offering health plans in order to attract more employees.

 

It was common up until the 1990s for an employer to provide health care for all of their workers, however the rising cost of health care due to an influx of lawsuits brought against doctors, hospitals, and insurance companies, caused rates to rise so alarmingly, that many companies could no longer afford to pay rates for their employees. There were two options for employees at this point:

 

  1. Pay a portion of their insurance, or

  2. Go without company provided insurance at all.

 

Eventually the out of pocket expense for employees forced many to opt out of their insurance plans so they could use that money for immediate needs.

 

In an effort to control the rapidly rising cost of health insurance, managed care organizations (MCOs) were established. It was the hope that MCOs would make it possible for businesses and individuals to afford health insurance once again. However, there was an unforeseen backlash:

 

  1. Widespread perception that managed care cares more about the money that they make than they do about the patients using their programs.

  2. Stories about denial of care become headlines and caused people to react and call their politicians to action, and the health care movement began.

  3. Kaiser Family Foundation conducted a poll in 2004 that showed that the majority of managed care participants believed:

 

    1. The amount of time patients were allowed to spend with doctors decreased

    2. It was difficult to see a specialist if needed

    3. It was still costing the health care participants too much money.

 

This backlash caused many states to pass laws mandating managed care standards and insurance companies began offering plans that are more comprehensive, larger, and have better networks to choose from. Now, there are many choices for businesses and for individuals when it comes to choosing health insurance. The more expensive plans offer more options. However, this does not mean they offer a better quality of care, instead it means that they make it easier to choose who the insured sees and for what reason.

 

Businesses have the option of choosing whatever insurance company they desire for their employees. Once an insurance company is determined, employers also decide what plans to offer their employees as well. There are many choices, and employers can choose to allow each employee to choose their own comprehensive plan, or they can offer a choice of one or two packages. It depends on what the employer can afford for their employees. There are some ways, however, for an employer to reduce their costs:

 

  1. Get everyone to sign up – most insurance companies offer a discount on premiums for more people. This discount is determined by the amount of employees that sign up for a plan. The group pool depends on the fact that the healthier individuals help to cover expenses for higher risk participants.

  2. Require employee physicals – insurance companies charge lower rates to healthy people. Employers have the option of requiring employee physicals and then charging un-healthy employees for the difference in their health plans due to their higher risk. This helps the business to keep their premiums down and saves healthy employees money.

  3. Share the cost – by offering employees a basic insurance plan with comprehensive options that they pay for, a business can save a great deal of money while still offering some health insurance.

  4. Compare policies – by comparing costs between multiple companies a business can ensure they are getting the best price available.

  5. Join a risk pooling group – As mentioned earlier, risk pooling means that when there is a large group of people under the same health insurance plan help to balance each other out. Even though there might be sick or elderly among this large group, the insurance company balances out the premiums among the whole group, many of which are young and healthy, which keeps the premiums low. There are more companies offering this kind of group coverage, which allows small business who do not benefit from group policies, to join very large groups of people who do.

 

The risk pool means that, for some members, individual plans will end up saving them more money than if they participate in a group plan. For them, and for other individuals who do not have the option of receiving health insurance from their employer, either because it is not offered or because they are self employed, there are a number of health insurance policies available. The choice of health insurance should be made based on need and affordability, and making a comparison between several companies is important for getting the best rates.

 

Types of Managed Care Organizations

 

 

    1. Members have a primary care physician (PCP) who is responsible for their overall care

    2. Referrals are required from the PCP in order to see a specialist.

    3. Pre-authorization is required for any non-emergency hospital care.

    4. Services rendered to an HMO recipient outside of the network is not covered unless it is an emergency.

    5. Members pay a co-pay for each service rendered. The co-pays differ for a physician visit vs. a hospital visit.

 

 

    1. Physicians are contracted by the HMO.

    2. There is an annual set dollar amount for members, once that amount is reached then the members pay for any additional costs out of pocket. This applies to individuals, not families, so those with a family plan would have a set amount for each person covered.

    3. There is usually a fee-for-service negotiated with the HMO that each patient pays out of pocket for the service. The cost for each service varies.

 

 

    1. PPO contracts physicians to provide services at a discounted rate, usually a percentage of the national or regional charge data.

    2. PPOs offer either co-pay options or a deductible option to their participants.

 

      1. The deductible represents the first dollar of coverage and is paid by the patient.

      2. After deductible is met, the coinsurance portion applies. (Coinsurance would be the portion paid by the insured, such as a plan that offers 80/20, then 80% is covered by the PPO while 20% is paid by the insured).

      3. Once the deductible is met, the insured then has no more out of pocket expense; the PPO pays 100% of any additional costs. Deductibles vary and can be negotiated depending on how much the insured wishes to pay for their premiums.

       

 

    1. A POS plan combines features from both PPOs and HMOs. POS provides a network of doctors for use; however, patients are allowed to go out of network at a reduced coverage cost. There is a combination of co-pays and deductibles used within the POS plan as well.

 

Individuals who wish to have more options and freedom when it comes to their choices, have the more expensive option of choosing insurance outside of a managed care organization. These options meant that the insured person can choose their own physician, caregivers, hospitals, specialists, etc.

 

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