Health insurance in the United States is any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance, or a social welfare program funded by the government.
Synonyms for this usage include "health coverage", "health care
coverage", and "health benefits".
In a more technical sense, the term "health insurance "is used to
describe any form of insurance providing protection against the costs of
medical services. This usage includes private insurance and social
insurance programs such as Medicare,
which pools resources and spreads the financial risk associated with
major medical expenses across the entire population to protect everyone,
as well as social welfare programs like Medicaid and the Children's Health Insurance Program, which both provide assistance to people who cannot afford health coverage.
In addition to medical expense insurance, "health insurance" may also refer to insurance covering disability or long-term nursing or custodial care needs. Different health insurance provides different levels of financial protection and the scope of coverage can vary widely, with more than 40% of insured individuals reporting that their plans do not adequately meet their needs as of 2007.
The share of Americans without health insurance has been cut in half since 2013. Many of the reforms instituted by the Affordable Care Act of 2010 were designed to extend health care coverage to those without it; however, high cost growth continues unabated. National health expenditures are projected to grow 4.7% per person per year from 2016 to 2025. Public healthcare spending was 29% of federal mandated spending in 1990 and 35% of it in 2000. It is also projected to be roughly half in 2025.
In addition to medical expense insurance, "health insurance" may also refer to insurance covering disability or long-term nursing or custodial care needs. Different health insurance provides different levels of financial protection and the scope of coverage can vary widely, with more than 40% of insured individuals reporting that their plans do not adequately meet their needs as of 2007.
The share of Americans without health insurance has been cut in half since 2013. Many of the reforms instituted by the Affordable Care Act of 2010 were designed to extend health care coverage to those without it; however, high cost growth continues unabated. National health expenditures are projected to grow 4.7% per person per year from 2016 to 2025. Public healthcare spending was 29% of federal mandated spending in 1990 and 35% of it in 2000. It is also projected to be roughly half in 2025.
Enrollment and the uninsured
Gallup
issued a report in July 2014 stating that the uninsured rate for adults
18 and over declined from 18% in 2013 to 13.4% by in 2014, largely
because there were new coverage options and market reforms under the Affordable Care Act. Rand Corporation had similar findings.
Trends in private coverage
The
proportion of non-elderly individuals with employer-sponsored cover
fell from 66% in 2000 to 56% in 2010, then stabilized following the
passage of the Affordable Care Act. Employees who worked part-time (less
than 30 hours a week) were less likely to be offered coverage by their
employer than were employees who worked full-time (21% vs. 72%).
A major trend in employer sponsored cover has been increasing
premiums, deductibles, and co-payments for medical services, and
increasing the costs of using out-of-network health providers rather
than in-network providers.
Trends in public coverage
Public
insurance cover increased from 2000–2010 in part because of an aging
population and an economic downturn in the latter part of the decade.
Funding for Medicaid and CHIP expanded significantly under the 2010 health reform bill.
The proportion of individuals covered by Medicaid increased from 10.5%
in 2000 to 14.5% in 2010 and 20% in 2015. The proportion covered by
Medicare increased from 13.5% in 2000 to 15.9% in 2010, then decreased
to 14% in 2015.
Status of the uninsured
The
uninsured proportion was stable at 14–15% from 1990 to 2008, then rose
to a peak of 18% in Q3 2013 and rapidly fell to 11% in 2015. The proportion without insurance has stabilized at 9%.
A 2011 study found that there were 2.1 million hospital stays for
uninsured patients, accounting for 4.4% ($17.1 billion) of total
aggregate inpatient hospital costs in the United States. The costs of treating the uninsured must often be absorbed by providers as charity care, passed on to the insured via cost-shifting and higher health insurance premiums, or paid by taxpayers through higher taxes.
Death
Since people who lack health insurance are unable to obtain timely
medical care, they have a 40% higher risk of death in any given year
than those with health insurance, according to a study published in the American Journal of Public Health. The study estimated that in 2005 in the United States, there were 45,000 deaths associated with lack of health insurance. A 2008 systematic review found consistent evidence that health insurance increased utilization of services and improved health.
A study at Johns Hopkins Hospital
found that heart transplant complications occurred most often amongst
the uninsured, and that patients who had private health plans fared
better than those covered by Medicaid or Medicare.
Reform
The
Affordable Care Act of 2010 was designed primarily to extend health
coverage to those without it by expanding Medicaid, creating financial
incentives for employers to offer coverage, and requiring those without
employer or public coverage to purchase insurance in newly created health insurance exchanges.
This requirement for almost all individuals to maintain health
insurance is often referred to as the "individual mandate." The CBO has estimated that roughly 33 million who would have otherwise been uninsured will receive coverage because of the act by 2022.
Repeal of the Individual Mandate
The Tax Cuts and Jobs Act of 2017
effectively repealed the individual mandate, meaning that individuals
will no longer be penalized for failing to maintain health coverage
starting in 2019. The CBO projects that this change will result in four million more uninsured by 2019, 13 million more by 2027.
History
Accident insurance was first offered in the United States by the
Franklin Health Assurance Company of Massachusetts. This firm, founded
in 1850, offered insurance against injuries arising from railroad and
steamboat accidents. Sixty organizations were offering accident
insurance in the US by 1866, but the industry consolidated rapidly soon
thereafter. While there were earlier experiments, sickness coverage in
the US effectively dates from 1890. The first employer-sponsored group disability
policy was issued in 1911, but this plan's primary purpose was
replacing wages lost because the worker was unable to work, not medical
expenses.
Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets, under what is known as the fee-for-service
business model. During the middle to late 20th century, traditional
disability insurance evolved into modern health insurance programs.
Today, most comprehensive private health insurance programs cover the
cost of routine, preventive, and emergency health care procedures, and
also most prescription drugs, but this was not always the case. The rise
of private insurance was accompanied by the gradual expansion of public
insurance programs for those who could not acquire coverage through the
market.
Hospital and medical expense policies were introduced during the
first half of the 20th century. During the 1920s, individual hospitals
began offering services to individuals on a pre-paid basis, eventually
leading to the development of Blue Cross organizations in the 1930s. The first employer-sponsored hospitalization plan was created by teachers in Dallas, Texas in 1929. Because the plan only covered members' expenses at a single hospital, it is also the forerunner of today's health maintenance organizations (HMOs).
In 1935 the decision was made by the Roosevelt Administration not to include a large-scale health insurance program as part of the new Social Security program. The problem was not an attack by any organized opposition, such as the opposition from the American Medical Association
that derailed Truman's proposals in 1949. Instead, there was a lack of
active popular, congressional, or interest group support. Roosevelt's
strategy was to wait for a demand and a program to materialize, and then
if he thought it popular enough to throw his support behind it. His
Committee on Economic Security (CES) deliberately limited the health
segment of Social Security to the expansion of medical care and
facilities. It considered unemployment insurance to be the major
priority. Roosevelt assured the medical community that medicine would be
kept out of politics. Jaap Kooijman says he succeeded in "pacifying
the opponents without discouraging the reformers." The right moment
never came for him to reintroduce the topic.
The rise of employer-sponsored coverage
Employer-sponsored
health insurance plans dramatically expanded as a direct result of wage
controls imposed by the federal government during World War II. The labor market was tight
because of the increased demand for goods and decreased supply of
workers during the war. Federally imposed wage and price controls
prohibited manufacturers and other employers from raising wages enough
to attract workers. When the War Labor Board declared that fringe benefits,
such as sick leave and health insurance, did not count as wages for the
purpose of wage controls, employers responded with significantly
increased offers of fringe benefits, especially health care coverage, to
attract workers.
President Harry S. Truman
proposed a system of public health insurance in his November 19, 1945,
address. He envisioned a national system that would be open to all
Americans, but would remain optional. Participants would pay monthly
fees into the plan, which would cover the cost of any and all medical
expenses that arose in a time of need. The government would pay for the
cost of services rendered by any doctor who chose to join the program.
In addition, the insurance plan would give cash to the policy holder to
replace wages lost because of illness or injury. The proposal was quite
popular with the public, but it was fiercely opposed by the Chamber of Commerce, the American Hospital Association, and the AMA, which denounced it as "socialism".
Foreseeing a long and costly political battle, many labor unions
chose to campaign for employer-sponsored coverage, which they saw as a
less desirable but more achievable goal, and as coverage expanded the
national insurance system lost political momentum and ultimately failed
to pass. Using health care and other fringe benefits to attract the
best employees, private sector, white-collar employers nationwide
expanded the U.S. health care system. Public sector employers followed
suit in an effort to compete. Between 1940 and 1960, the total number
of people enrolled in health insurance plans grew seven-fold, from
20,662,000 to 142,334,000, and by 1958, 75% of Americans had some form of health coverage.
Kerr-Mills Act
Still,
private insurance remained unaffordable or simply unavailable to many,
including the poor, the unemployed, and the elderly. Before 1965, only
half of seniors had health care coverage, and they paid three times as
much as younger adults, while having lower incomes. Consequently, interest persisted in creating public health insurance for those left out of the private marketplace.
The 1960 Kerr-Mills Act provided matching funds to states
assisting patients with their medical bills. In the early 1960s,
Congress rejected a plan to subsidize private coverage for people with
Social Security as unworkable, and an amendment to the Social Security
Act creating a publicly run alternative was proposed. Finally, President
Lyndon B. Johnson signed the Medicare and Medicaid programs into law in 1965, creating publicly run insurance for the elderly and the poor. Medicare was later expanded to cover people with disabilities, end-stage renal disease, and ALS.
State risk pools
In
1976, some states began providing guaranteed-issuance risk pools, which
enable individuals who are medically uninsurable through private health
insurance to purchase a state-sponsored health insurance plan, usually
at higher cost, with high deductibles and possibly lifetime maximums.
Minnesota was the first to offer such a plan; 34 states (Alabama,
Alaska, Arkansas, California, Colorado, Connecticut, Florida, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Minnesota,
Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico,
North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South
Dakota, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin,
Wyoming) now offer them. Plans vary greatly from state to state, both in
their costs and benefits to consumers and in their methods of funding
and operations.
These risk pools allowed people with pre-existing conditions such
as cancer, diabetes, heart disease or other chronic illnesses to be
able to switch jobs or seek self-employment without fear of being
without health care benefits.
While details of the plans varied from state to state, the plans were
expensive, with premiums that can be double the average policy, and the
pools currently cover only 1 in 25 of the so-called "uninsurable"
population—about 182,000 people in the U.S. as of 2004, and about 200,000 in 2008.
Additionally, even plans which are not expensive can leave those
enrolled with little real health insurance beyond "catastrophic"
insurance; for example, one insurance plan through Minnesota's high-risk
pool, while costing only $215 per quarter, includes a $10,000
deductible with no preventative or other health care covered unless and
until the enrollee has spent $10,000 of their own money during the year
on health care.
Very sick people can accumulate large medical bills during mandatory
waiting periods before their medical expenses are covered, and there are
often lifetime expenditure caps (maximums), after which the risk pool
no longer pays for any medical expenses.
Efforts to pass a national pool were unsuccessful for many years,
but some federal tax money has been awarded to states to innovate and
improve their plans. With the Patient Protection and Affordable Care Act,
effective from 2014, it has been easier for people with pre-existing
conditions to afford regular insurance, since all insurers are fully
prohibited from discriminating against or charging higher rates for any
individuals based on pre-existing medical conditions. Therefore, most of the state-based pools shut down.
Some remain due to statutes which have not been updated, but the also
may cover people with gaps in coverage such as undocumented immigrants or Medicare-eligible individuals under the age of 65.
Pre-existing Condition Insurance Plan
The Pre-existing Condition Insurance Plan, or PCIP, is a transitional program created in the Patient Protection and Affordable Care Act
(PPACA). Those eligible for PCIP are citizens of the United States or
those legally residing in the U.S., who have been uninsured for the last
6 months and "have a pre-existing condition or have been denied health
coverage because of their health condition." However, if one has health
insurance or is enrolled in a state high risk pool, they are not
eligible for PCIP, even if that coverage does not cover their medical
condition. PCIP is run by the individual states or through the U.S.
Department of Health and Human Services, which has a contract with the
Government Employees Health Association, or GEHA,
to administer benefits. Both will be funded by the federal government
and provide three plan options. These options are the standard,
extended, and the Health Savings Account
option. PCIP only covers the individual enrollee and does not include
family members or dependents. In 2014, the Affordable Care Act provision
banning discrimination based on pre-existing conditions will be
implemented and PCIP enrollees will be transitioned into new state-based
health care exchanges.
Towards universal coverage
Persistent lack of insurance among many working Americans continued to
create pressure for a comprehensive national health insurance system. In
the early 1970s, there was fierce debate between two alternative models
for universal coverage. Senator Ted Kennedy proposed a universal single-payer system, while President Nixon
countered with his own proposal based on mandates and incentives for
employers to provide coverage while expanding publicly run coverage for
low-wage workers and the unemployed. Compromise was never reached, and
Nixon's resignation and a series of economic problems later in the
decade diverted Congress's attention away from health reform.
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The numbers of uninsured Americans and the uninsured rate from 1987 to 2008.
Shortly after his inauguration, President Clinton
offered a new proposal for a universal health insurance system. Like
Nixon's plan, Clinton's relied on mandates, both for individuals and for
insurers, along with subsidies for people who could not afford
insurance. The bill would have also created "health-purchasing
alliances" to pool risk among multiple businesses and large groups of
individuals. The plan was staunchly opposed by the insurance industry
and employers' groups and received only mild support from liberal
groups, particularly unions, which preferred a single payer system.
Ultimately it failed after the Republican takeover of Congress in 1994.
Finally achieving universal health coverage remained a top
priority among Democrats, and passing a health reform bill was one of
the Obama Administration's top priorities. The Patient Protection and
Affordable Care Act was similar to the Nixon and Clinton plans,
mandating coverage, penalizing employers who failed to provide it, and
creating mechanisms for people to pool risk and buy insurance
collectively.
Earlier versions of the bill included a publicly run insurer that
could compete to cover those without employer sponsored coverage (the
so-called public option), but this was ultimately stripped to secure the
support of moderates. The bill passed the Senate in December 2009 with
all Democrats voting in favor and the House in March 2010 with the
support of most Democrats. Not a single Republican voted in favor of it
either time.
State and federal regulation
Historically, health insurance has been regulated by the states, consistent with the McCarran-Ferguson Act.
Details for what health insurance could be sold were up to the states,
with a variety of laws and regulations. Model acts and regulations
promulgated by the National Association of Insurance Commissioners
(NAIC) provide some degree of uniformity state to state. These models
do not have the force of law and have no effect unless they are adopted
by a state. They are, however, used as guides by most states, and some
states adopt them with little or no change.
However, with the Patient Protection and Affordable Care Act,
effective since 2014, federal laws have created some uniformity in
partnership with the existing state-based system. Insurers are
prohibited from discriminating against or charging higher rates for
individuals based on pre-existing medical conditions and must offer a standard set of coverage.
California
In 2007, 87% of Californians had some form of health insurance. Services in California range from private offerings: HMOs, PPOs to public programs: Medi-Cal, Medicare, and Healthy Families (SCHIP). Insurers can pay providers a capitation only in the case of HMOs.
California developed a solution to assist people across the state
and is one of the few states to have an office devoted to giving people
tips and resources to get the best care possible. California's Office
of the Patient Advocate was established July 2000 to publish a yearly
Health Care Quality Report Card
on the top HMOs, PPOs, and Medical Groups and to create and distribute
helpful tips and resources to give Californians the tools needed to get
the best care.
Additionally, California has a Help Center that assists
Californians when they have problems with their health insurance. The
Help Center is run by the Department of Managed Health Care, the government department that oversees and regulates HMOs and some PPOs.
Massachusetts
The state passed healthcare reform in 2006 in order to greater decrease the uninsured rate among its citizens. The federal Patient Protection and Affordable Care Act (colloquially known as "Obamacare") is largely based on Massachusetts' health reform. Due to that colloquialism, the Massachusetts reform has been nicknamed as "Romneycare" after then-Governor Mitt Romney.
As of 2017, Massachusetts has the highest rate of insured citizens in the United States at 97%.
Public health care coverage
Public
programs provide the primary source of coverage for most seniors and
also low-income children and families who meet certain eligibility
requirements. The primary public programs are Medicare, a federal social
insurance program for seniors (generally persons aged 65 and over) and
certain disabled individuals; Medicaid, funded jointly by the federal
government and states but administered at the state level, which covers
certain very low income children and their families; and CHIP,
also a federal-state partnership that serves certain children and
families who do not qualify for Medicaid but who cannot afford private
coverage. Other public programs include military health benefits
provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service. Some states have additional programs for low-income individuals. In 2011, approximately 60 percent of stays were billed to Medicare and Medicaid—up from 52 percent in 1997.
Medicare
In the United States, Medicare is a federal social insurance program
that provides health insurance to people over the age of 65, individuals
who become totally and permanently disabled, end stage renal disease (ESRD) patients, and people with ALS.
Recent research has found that the health trends of previously
uninsured adults, especially those with chronic health problems,
improves once they enter the Medicare program.
Traditional Medicare requires considerable cost-sharing, but ninety
percent of Medicare enrollees have some kind of supplemental
insurance—either employer-sponsored or retiree coverage, Medicaid, or a
private Medigap plan—that covers some or all of their cost-sharing.
With supplemental insurance, Medicare ensures that its enrollees have
predictable, affordable health care costs regardless of unforeseen
illness or injury.
As the population covered by Medicare grows, its costs are
projected to rise from slightly over 3 percent of GDP to over 6 percent,
contributing substantially to the federal budget deficit.
In 2011, Medicare was the primary payer for an estimated 15.3 million
inpatient stays, representing 47.2 percent ($182.7 billion) of total
aggregate inpatient hospital costs in the United States.
The Affordable Care Act took some steps to reduce Medicare spending,
and various other proposals are circulating to reduce it further.
Medicare Advantage
Medicare Advantage plans expand the health insurance options for people with Medicare. Medicare Advantage was created under the Balanced Budget Act of 1997,
with the intent to better control the rapid growth in Medicare
spending, as well as to provide Medicare beneficiaries more choices. But
on average, Medicare Advantage plans cost 12% more than traditional
Medicare. The ACA took steps to align payments to Medicare Advantage plans with the cost of traditional Medicare.
There is some evidence that Medicare Advantage plans select
patients with low risk of incurring major medical expenses to maximize
profits at the expense of traditional Medicare.
Medicare Part D
Medicare Part D provides a private insurance option to allow Medicare beneficiaries to purchase subsidized coverage for the costs of prescription drugs. It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and went into effect on January 1, 2006.
Medicaid
Medicaid was instituted for the very poor in 1965. Since enrollees must pass a means test, Medicaid is a social welfare or social protection
program rather than a social insurance program. Despite its
establishment, the percentage of US residents who lack any form of
health insurance has increased since 1994.
It has been reported that the number of physicians accepting Medicaid
has decreased in recent years because of lower reimbursement rates.
The Affordable Care Act dramatically expanded Medicaid. The
program will now cover everyone with incomes under 133% of the federal
poverty level who does not qualify for Medicare, provided this expansion
of coverage has been accepted by the state where the person resides.
Meanwhile, Medicaid benefits must be the same as the essential benefit
in the newly created state exchanges. The federal government will fully
fund the expansion of Medicaid initially, with some of the financial
responsibility gradually devolving back to the states by 2020.
In 2011, there were 7.6 million hospital stays billed to
Medicaid, representing 15.6% (approximately $60.2 billion) of total
aggregate inpatient hospital costs in the United States.
Children's Health Insurance Program (CHIP)
The Children's Health Insurance Program (CHIP) is a joint
state/federal program to provide health insurance to children in
families who earn too much money to qualify for Medicaid, yet cannot
afford to buy private insurance. The statutory authority for CHIP is
under title XXI of the Social Security Act. CHIP programs are run by the individual states according to requirements set by the federal Centers for Medicare and Medicaid Services,
and may be structured as independent programs separate from Medicaid
(separate child health programs), as expansions of their Medicaid
programs (CHIP Medicaid expansion programs), or combine these approaches
(CHIP combination programs). States receive enhanced federal funds for
their CHIP programs at a rate above the regular Medicaid match.
Military health benefits
Health benefits are provided to active duty service members, retired service members and their dependents by the Department of Defense Military Health System (MHS). The MHS consists of a direct care network of Military Treatment Facilities and a purchased care network known as TRICARE. Additionally, veterans may also be eligible for benefits through the Veterans Health Administration.
Indian health service
The Indian Health Service
(IHS) provides medical assistance to eligible American Indians at IHS
facilities, and helps pay the cost of some services provided by non-IHS
health care providers.
Private health care coverage
Private
health insurance may be purchased on a group basis (e.g., by a firm to
cover its employees) or purchased by individual consumers. Most
Americans with private health insurance receive it through an
employer-sponsored program. According to the United States Census Bureau, some 60% of Americans are covered through an employer, while about 9% purchase health insurance directly.
Private insurance was billed for 12.2 million inpatient hospital stays
in 2011, incurring approximately 29% ($112.5 billion) of the total
aggregate inpatient hospital costs in the United States.
The US has a joint federal and state system for regulating
insurance, with the federal government ceding primary responsibility to
the states under the McCarran-Ferguson Act.
States regulate the content of health insurance policies and often
require coverage of specific types of medical services or health care
providers. State mandates generally do not apply to the health plans offered by large employers, because of the preemption clause of the Employee Retirement Income Security Act.
Employer sponsored
Employer-sponsored health insurance is paid for by businesses on behalf of their employees as part of an employee benefit
package. Most private (non-government) health coverage in the US is
employment-based. Nearly all large employers in America offer group
health insurance to their employees. The typical large-employer PPO plan is typically more generous than either Medicare or the Federal Employees Health Benefits Program Standard Option.
The employer typically makes a substantial contribution towards
the cost of coverage. Typically, employers pay about 85% of the
insurance premium for their employees, and about 75% of the premium for
their employees' dependents. The employee pays the remaining fraction
of the premium, usually with pre-tax/tax-exempt earnings. These
percentages have been stable since 1999.
Health benefits provided by employers are also tax-favored: Employee
contributions can be made on a pre-tax basis if the employer offers the
benefits through a section 125 cafeteria plan.
Workers who receive employer-sponsored health insurance tend to
be paid less in cash wages than they would be without the benefit,
because of the cost of insurance premiums to the employer and the value
of the benefit to the worker. The value to workers is generally greater
than the wage reduction because of economies of scale, a reduction in adverse selection
pressures on the insurance pool (premiums are lower when all employees
participate rather than just the sickest), and reduced income taxes. Disadvantages to workers include disruptions related to changing jobs, the regressive tax
effect (high-income workers benefit far more from the tax exemption for
premiums than low-income workers), and increased spending on
healthcare.
Costs for employer-paid health insurance are rising rapidly:
between 2001 and 2007, premiums for family coverage have increased 78%,
while wages have risen 19% and inflation has risen 17%, according to a
2007 study by the Kaiser Family Foundation.
Employer costs have risen noticeably per hour worked, and vary
significantly. In particular, average employer costs for health
benefits vary by firm size and occupation. The cost per hour of health
benefits is generally higher for workers in higher-wage occupations, but
represent a smaller percentage of payroll. The percentage of total compensation devoted to health benefits has been rising since the 1960s.
Average premiums, including both the employer and employee portions,
were $4,704 for single coverage and $12,680 for family coverage in 2008.
However, in a 2007 analysis, the Employee Benefit Research Institute
concluded that the availability of employment-based health benefits for
active workers in the US is stable. The "take-up rate," or percentage
of eligible workers participating in employer-sponsored plans, has
fallen somewhat, but not sharply. EBRI interviewed employers for the
study, and found that others might follow if a major employer
discontinued health benefits. Effective by January 1, 2014, the Patient Protection and Affordable Care Act
will impose a $2000 per employee tax penalty on employers with over 50
employees who do not offer health insurance to their full-time workers.
(In 2008, over 95% of employers with at least 50 employees offered
health insurance.)
On the other hand, public policy changes could also result in a
reduction in employer support for employment-based health benefits.
Although much more likely to offer retiree health benefits than
small firms, the percentage of large firms offering these benefits fell
from 66% in 1988 to 34% in 2002.
Small employer group coverage
According
to a 2007 study, about 59% of employers at small firms (3–199 workers)
in the US provide employee health insurance. The percentage of small
firms offering coverage has been dropping steadily since 1999. The study
notes that cost remains the main reason cited by small firms who do not
offer health benefits.
Small firms that are new are less likely to offer coverage than ones
that have been in existence for a number of years. For example, using
2005 data for firms with fewer than 10 employees, 43% of those that had
been in existence at least 20 years offered coverage, but only 24% of
those that had been in existence less than 5 years did. The volatility
of offer rates from year to year also appears to be higher for newer
small businesses.
The types of coverage available to small employers are similar to
those offered by large firms, but small businesses do not have the same
options for financing their benefit plans. In particular, self-funded health care (whereby an employer provides health or disability benefits to employees with its own funds rather than contracting an insurance company) is not a practical option for most small employers. A RAND
Corporation study published in April 2008 found that the cost of health
care coverage places a greater burden on small firms, as a percentage
of payroll, than on larger firms. A study published by the American Enterprise Institute
in August 2008 examined the effect of state benefit mandates on
self-employed individuals, and found that "the larger the number of
mandates in a state, the lower the probability that a self-employed
person will be a significant employment generator." Beneficiary cost sharing is, on average, higher among small firms than large firms.
When small group plans are medically underwritten, employees are
asked to provide health information about themselves and their covered
family members when they apply for coverage. When determining rates,
insurance companies use the medical information on these applications.
Sometimes they will request additional information from an applicant's
physician or ask the applicants for clarification.
States regulate small group premium rates, typically by placing
limits on the premium variation allowable between groups (rate bands).
Insurers price to recover their costs over their entire book of small
group business while abiding by state rating rules. Over time, the effect of initial underwriting "wears off" as the cost of a group regresses towards the mean.
Recent claim experience—whether better or worse than average—is a
strong predictor of future costs in the near term. But the average
health status of a particular small employer group tends to regress over
time towards that of an average group. The process used to price small group coverage changes when a state enacts small group reform laws.
Insurance brokers
play a significant role in helping small employers find health
insurance, particularly in more competitive markets. Average small group
commissions range from 2 percent to 8 percent of premiums. Brokers
provide services beyond insurance sales, such as assisting with employee
enrollment and helping to resolve benefits issues.
College-sponsored health insurance for students
Many
colleges, universities, graduate schools, professional schools and
trade schools offer a school-sponsored health insurance plan. Many
schools require that you enroll in the school-sponsored plan unless you
are able to show that you have comparable coverage from another source.
Effective group health plan years beginning after September 23,
2010, if an employer-sponsored health plan allows employees' children to
enroll in coverage, then the health plan must allow employees' adult
children to enroll as well as long as the adult child is not yet age 26.
Some group health insurance plans may also require that the adult child
not be eligible for other group health insurance coverage, but only
before 2014.
This extension of coverage will help cover one in three young adults, according to White House documents.
Federal employees health benefit plan (FEHBP)
In
addition to such public plans as Medicare and Medicaid, the federal
government also sponsors a health benefit plan for federal employees—the
Federal Employees Health Benefits Program
(FEHBP). FEHBP provides health benefits to full-time civilian
employees. Active-duty service members, retired service members and
their dependents are covered through the Department of Defense Military
Health System (MHS). FEHBP is managed by the federal Office of Personnel Management.
COBRA coverage
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) enables certain individuals with employer-sponsored coverage to extend their coverage if certain "qualifying events"
would otherwise cause them to lose it. Employers may require
COBRA-qualified individuals to pay the full cost of coverage, and
coverage cannot be extended indefinitely. COBRA only applies to firms
with 20 or more employees, although some states also have "mini-COBRA"
laws that apply to small employers.
Association Health Plan (AHP)
In
the late 1990s federal legislation had been proposed to "create
federally-recognized Association Health Plans which was then "referred
to in some bills as 'Small Business Health Plans.' The National Association of Insurance Commissioners
(NAIC), which is the "standard-setting and regulatory of chief
insurance regulators from all states, the District of Columbia and
territories, cautioned against implementing AHPs citing "plan failures
like we saw The Multiple Employer Welfare Arrangements (MEWAs) in the
1990s."
"[S]mall businesses in California such as dairy farmers, car dealers,
and accountants created AHPs "to buy health insurance on the premise
that a bigger pool of enrollees would get them a better deal." A November 2017 article in the Los Angeles Times
described how there were only 4 remaining AHPs in California. Many of
the AHPs filed for bankruptcy, "sometimes in the wake of fraud." State
legislators were forced to pass "sweeping changes in the 1990s" that
almost made AHPs extinct.
According to a 2000 Congressional Budget Office (CBO) report,
Congress passed legislation creating "two new vehicles Association
Health Plans (AHPs) and HealthMarts, to facilitate the sale of health
insurance coverage to employees of small firms" in response to concerns
about the "large and growing number of uninsured people in the United
States."
In 2003, according to the Heartland Institute's
Merrill Matthews, association group health insurance plans offered
affordable health insurance to "some 6 million Americans." Matthews
responded to the criticism that said that some associations work too
closely with their insurance providers. He said, "You would expect the
head of AARP to have a good working relationship with the CEO of
Prudential, which sells policies to AARP's seniors."
In March 2017, the U.S. House of Representatives passed The Small Business Health Fairness Act (H.R. 1101),
which established "requirements for creating a federally-certified AHP,
including for certification itself, sponsors and boards of trustees,
participation and coverage, nondiscrimination, contribution rates, and
voluntary termination."
AHPs would be "exempt from most state regulation and oversight, subject only to Employee Retirement Income Security Act (ERISA) and oversight by the U.S. Department of Labor, and most proposals would also allow for interstate plans."
Critics said that "Exemptions would lead to market instability
and higher premiums in the traditional small-group market. AHPs exempt
from state regulation and oversight would enable them to be more
selective about who they cover. They will be less likely to cover
higher-risk populations, which would cause an imbalance in the risk pool
for other small business health plans that are part of the state small
group risk pool. Adverse selection would likely abound and Association
Health Plans would be selling an unregulated product alongside small
group plans, which creates an unlevel playing field."
According to the Congressional Budget Office (CBO), "[p]remiums would
go up for those buying in the traditional small-group market." competing
against AHPs that offer less expensive and less comprehensive plans.
The National Association of Insurance Commissioners (NAIC), the National Governors' Association and "several insurance and consumer groups" opposed the AHP legislation. The NAIC issued a Consumer Alert regarding AHPs, as proposed in Developing the Next Generation of Small Businesses Act of 2017. H.R. 1774.
Their statement said that AHP's "[t]hreaten the stability of the small
group market" and provide "inadequate benefits and insufficient
protection to consumers."
Under AHPs, "[f]ewer consumers would have their rights protected, "AHPs
would also be exempt from state solvency requirements, putting
consumers at serious risk of incurring medical claims that cannot be
paid by their Association Health Plan."
In November 2017, President Trump directed "the Department of
Labor to investigate ways that would "allow more small businesses to
avoid many of the [Affordable Care Act's] costly requirements."
Under the ACA, small-employer and individual markets had "gained
important consumer protections under the ACA and state health laws —
including minimum benefit levels." In a December 28, 2017 interview with the New York Times,
Trump explained that, "We've created associations, millions of people
are joining associations. ...That were formerly in Obamacare or didn't
have insurance. Or didn't have health care. ...It could be as high as 50
percent of the people. So now you have associations, and people don't
even talk about the associations. That could be half the people are
going to be joining up...So now you have associations and the individual
mandate. I believe that because of the individual mandate and the
association".
Final rules were released by the Department of Labor on June 19, 2018.
Individually purchased
Prior to the ACA, effective in 2014, the individual market was often subject to medical underwriting which made it difficult for individuals with pre-existing conditions to purchase insurance. The ACA prohibited medical underwriting in the individual market for health insurance marketplace plans.
Prior to the ACA as of 2007, about 9% of Americans were covered under health insurance purchased directly,
with average out-of-pocket spending is higher in the individual market,
with higher deductibles, co-payments and other cost-sharing provisions.
While self-employed individuals receive a tax deduction for their
health insurance and can buy health insurance with additional tax
benefits, most consumers in the individual market do not receive any tax
benefit.
Types of medical insurance
Traditional indemnity or fee-for-service
Early
hospital and medical plans offered by insurance companies paid either a
fixed amount for specific diseases or medical procedures (schedule
benefits) or a percentage of the provider's fee. The relationship
between the patient and the medical provider was not changed. The
patient received medical care and was responsible for paying the
provider. If the service was covered by the policy, the insurance
company was responsible for reimbursing or indemnifying
the patient based on the provisions of the insurance contract
("reimbursement benefits"). Health insurance plans that are not based
on a network of contracted providers, or that base payments on a
percentage of provider charges, are still described as indemnity or fee-for-service plans.
Blue Cross Blue Shield Association
The Blue Cross Blue Shield Association (BCBSA) is a federation of 38 separate health insurance organizations and companies in the United States. Combined, they directly or indirectly provide health insurance to over 100 million Americans.
BCBSA insurance companies are franchisees, independent of the
association (and traditionally each other), offering insurance plans
within defined regions under one or both of the association's brands.
Blue Cross Blue Shield insurers offer some form of health insurance
coverage in every U.S. state, and also act as administrators of Medicare
in many states or regions of the United States, and provide coverage to
state government employees as well as to federal government employees
under a nationwide option of the Federal Employees Health Benefit Plan.
Health Maintenance Organizations
A health maintenance organization (HMO) is a type of managed care organization
(MCO) that provides a form of health care coverage that is fulfilled
through hospitals, doctors, and other providers with which the HMO has a
contract. The Health Maintenance Organization Act of 1973 required employers with 25 or more employees to offer federally certified HMO options. Unlike traditional indemnity
insurance, an HMO covers only care rendered by those doctors and other
professionals who have agreed to treat patients in accordance with the
HMO's guidelines and restrictions in exchange for a steady stream of
customers. Benefits are provided through a network of providers.
Providers may be employees of the HMO ("staff model"), employees of a
provider group that has contracted with the HMO ("group model"), or
members of an independent practice association ("IPA model"). HMOs may also use a combination of these approaches ("network model").
Managed care
The term managed care is used to describe a variety of techniques
intended to reduce the cost of health benefits and improve the quality
of care. It is also used to describe organizations that use these
techniques ("managed care organization").
Many of these techniques were pioneered by HMOs, but they are now used
in a wide variety of private health insurance programs. Through the
1990s, managed care grew from about 25% US employees with
employer-sponsored coverage to the vast majority.
| 1998 | 14% | 27% | 35% | 24% | — |
| 1999 | 10% | 28% | 39% | 24% | — |
| 2000 | 8% | 29% | 42% | 21% | — |
| 2001 | 7% | 24% | 46% | 23% | — |
| 2002 | 4% | 27% | 52% | 18% | — |
| 2003 | 5% | 24% | 54% | 17% | — |
| 2004 | 5% | 25% | 55% | 15% | — |
| 2005 | 3% | 21% | 61% | 15% | — |
| 2006 | 3% | 20% | 60% | 13% | 4% |
| 2007 | 3% | 21% | 57% | 15% | 5% |
| 2008 | 2% | 20% | 58% | 12% | 8% |
| 2009 | 1% | 20% | 60% | 10% | 8% |
| 2010 | 1% | 19% | 58% | 8% | 13% |
| 2011 | 1% | 17% | 55% | 10% | 17% |
| 2012 | <1 span=""> | 16% | 56% | 9% | 19% |
| 2013 | <1 span=""> | 14% | 57% | 9% | 20% |
| 2014 | <1 span=""> | 13% | 55% | 23% | 27% |
| 2015 | 1% | 17% | 50% | 26% | 26% |
| 2016 | 2% | 23% | 35% | 32% | 28% |
Network-based managed care
Many managed care programs are based on a panel or network of contracted health care providers. Such programs typically include:
- A set of selected providers that furnish a comprehensive array of health care services to enrollees;
- Explicit standards for selecting providers;
- Formal utilization review and quality improvement programs;
- An emphasis on preventive care; and
- Financial incentives to encourage enrollees to use care efficiently.
Provider networks can be used to reduce costs by negotiating
favorable fees from providers, selecting cost effective providers, and
creating financial incentives for providers to practice more
efficiently. A survey issued in 2009 by America's Health Insurance Plans found that patients going to out-of-network providers are sometimes charged extremely high fees.
Network-based plans may be either closed or open. With a closed
network, enrollees' expenses are generally only covered when they go to
network providers. Only limited services are covered outside the
network—typically only emergency and out-of-area care. Most traditional
HMOs were closed network plans. Open network plans provide some coverage
when an enrollee uses non-network provider, generally at a lower
benefit level to encourage the use of network providers. Most preferred provider organization plans are open-network (those that are not are often described as exclusive provider organizations, or EPOs), as are point of service (POS) plans.
The terms "open panel" and "closed panel" are sometimes used to
describe which health care providers in a community have the opportunity
to participate in a plan. In a "closed panel" HMO, the network
providers are either HMO employees (staff model) or members of large
group practices with which the HMO has a contract. In an "open panel"
plan the HMO or PPO contracts with independent practitioners, opening
participation in the network to any provider in the community that meets
the plan's credential requirements and is willing to accept the terms
of the plan's contract.
Other managed care techniques
Other managed care techniques include such elements as disease management, case management, wellness incentives, patient education, utilization management and utilization review.
These techniques can be applied to both network-based benefit programs
and benefit programs that are not based on a provider network. The use
of managed care techniques without a provider network is sometimes
described as "managed indemnity."
Blurring lines
Over
time, the operations of many Blue Cross and Blue Shield operations have
become more similar to those of commercial health insurance companies. However, some Blue Cross and Blue Shield plans continue to serve as insurers of last resort.
Similarly, the benefits offered by Blues plans, commercial insurers,
and HMOs are converging in many respects because of market pressures.
One example is the convergence of preferred provider organization (PPO) plans offered by Blues and commercial insurers and the point of service
plans offered by HMOs. Historically, commercial insurers, Blue Cross
and Blue Shield plans, and HMOs might be subject to different regulatory
oversight in a state (e.g., the Department of Insurance for insurance
companies, versus the Department of Health for HMOs). Today, it is
common for commercial insurance companies to have HMOs as subsidiaries,
and for HMOs to have insurers as subsidiaries (the state license for an
HMO is typically different from that for an insurance company).
At one time the distinctions between traditional indemnity insurance,
HMOs and PPOs were very clear; today, it can be difficult to distinguish
between the products offered by the various types of organization
operating in the market.
The blurring of distinctions between the different types of
health care coverage can be seen in the history of the industry's trade
associations. The two primary HMO trade associations were the Group
Health Association of America and the American Managed Care and Review
Association. After merging, they were known as American Association of
Health Plans (AAHP). The primary trade association for commercial health
insurers was the Health Insurance Association of America (HIAA). These
two have now merged, and are known as America's Health Insurance Plans (AHIP).
New types of medical plans
In recent years, various new types of medical plans have been introduced.
- High-deductible health plan (HDHP)
- Plans with much higher deductibles than traditional health plans—primarily providing coverage for catastrophic illness—have been introduced. Because of the high deductible, these provide little coverage for everyday expenses—and thus have potentially high out-of-pocket expenses—but do cover major expenses. Couple with these are various forms of savings plans.
- Tax-preferenced health care spending account
- Coupled with high-deductible plans are various tax-advantaged savings plans—funds (such as salary) can be placed in a savings plan, and then go to pay the out-of-pocket expenses. This approach to addressing increasing premiums is dubbed "consumer driven health care", and received a boost in 2003, when President George W. Bush signed into law the Medicare Prescription Drug, Improvement, and Modernization Act. The law created tax-deductible Health Savings Accounts (HSAs), untaxed private bank accounts for medical expenses, which can be established by those who already have health insurance. Withdrawals from HSAs are only penalized if the money is spent on non-medical items or services. Funds can be used to pay for qualified expenses, including doctor's fees, Medicare Parts A and B, and drugs, without being taxed.
- Consumers wishing to deposit pre-tax funds in an HSA must be enrolled in a high-deductible insurance plan (HDHP) with a number of restrictions on benefit design; in 2007, qualifying plans must have a minimum deductible of US$1,050. Currently, the minimum deductible has risen to $1.200 for individuals and $2,400 for families. HSAs enable healthier individuals to pay less for insurance and deposit money for their own future health care, dental and vision expenses.
- HSAs are one form of tax-preferenced health care spending accounts. Others include Flexible Spending Accounts (FSAs), Archer Medical Savings Accounts (MSAs), which have been superseded by the new HSAs (although existing MSAs are grandfathered), and Health Reimbursement Accounts (HRAs). These accounts are most commonly used as part of an employee health benefit package. While there are currently no government-imposed limits to FSAs, legislation currently being reconciled between the House of Representatives and Senate would impose a cap of $2,500. While both the House and Senate bills would adjust the cap to inflation, approximately 7 million Americans who use their FSAs to cover out-of-pocket health care expenses greater than $2,500 would be forced to pay higher taxes and health care costs.
- In July 2009, Save Flexible Spending Plans, a national grassroots advocacy organization, was formed to protect against the restricted use of FSAs in health care reform efforts, Save Flexible Spending Accounts is sponsored by the Employers Council on Flexible Compensation (ECFC), a non-profit organization "dedicated to the maintenance and expansion of the private employee benefits on a tax-advantaged basis". ECFC members include companies such as WageWorks Inc., a benefits provider based in San Mateo, California.
- Most FSA participants are middle income Americans, earning approximately $55,000 annually. Individuals and families with chronic illnesses typically receive the most benefit from FSAs; even when insured, they incur annual out-of-pocket expenses averaging $4,398. Approximately 44 percent of Americans have one or more chronic conditions.
- Limited benefit plan
- Opposite to high-deductible plans are plans which provide limited benefits—up to a low level—have also been introduced. These limited medical benefit plans pay for routine care and do not pay for catastrophic care, they do not provide equivalent financial security to a major medical plan. Annual benefit limits can be as low as $2,000. Lifetime maximums can be very low as well.
- Discount medical card
- One option that is becoming more popular is the discount medical card. These cards are not insurance policies, but provide access to discounts from participating health care providers. While some offer a degree of value, there are serious potential drawbacks for the consumer.
- Short term
- Short term health insurance plans have a short policy period (typically months) and are intended for people who only need insurance for a short time period before longer term insurance is obtained. Short term plans typically cost less than traditional plans and have shorter application processes, but do not cover pre-existing conditions.
- Health care sharing
- A Health care sharing ministry is an organization that facilitates sharing of health care costs between individual members who have common ethical or religious beliefs. Though a health care sharing ministry is not an insurance company, members are exempted from the individual responsibility requirements of the Patient Protection and Affordable Care Act.
Health care markets and pricing
The US health insurance market is highly concentrated, as leading
insurers have carried out over 400 mergers from the mid-1990s to the
mid-2000s (decade). In 2000, the two largest health insurers (Aetna and UnitedHealth Group) had total membership of 32 million. By 2006 the top two insurers, WellPoint
and UnitedHealth, had total membership of 67 million. The two companies
together had more than 36% of the national market for commercial health
insurance. The AMA
has said that it "has long been concerned about the impact of
consolidated markets on patient care." A 2007 AMA study found that in
299 of the 313 markets surveyed, one health plan accounted for at least
30% of the combined health maintenance organization (HMO)/preferred
provider organization (PPO) market. In 90% of markets, the largest
insurer controls at least 30% of the market, and the largest insurer
controls more than 50% of the market in 54% of metropolitan areas. The US Department of Justice has recognized this percentage of market control as conferring substantial monopsony power in the relations between insurer and physicians.
Most provider markets (especially hospitals) are also highly concentrated—roughly 80%, according to criteria established by the FTC and Department of Justice—so
insurers usually have little choice about which providers to include in
their networks, and consequently little leverage to control the prices
they pay. Large insurers frequently negotiate most-favored nation
clauses with providers, agreeing to raise rates significantly while
guaranteeing that providers will charge other insurers higher rates.
According to some experts, such as Uwe Reinhardt, Sherry Glied, Megan Laugensen, Michael Porter, and Elizabeth Teisberg,
this pricing system is highly inefficient and is a major cause of
rising health care costs. Health care costs in the United States vary
enormously between plans and geographical regions, even when input costs
are fairly similar, and rise very quickly. Health care costs have risen
faster than economic growth at least since the 1970s. Public health
insurance programs typically have more bargaining power as a result of
their greater size and typically pay less for medical services than
private plans, leading to slower cost growth, but the overall trend in
health care prices have led public programs' costs to grow at a rapid
pace as well.
Other types of health insurance (non-medical)
While
the term "health insurance" is most commonly used by the public to
describe coverage for medical expenses, the insurance industry uses the
term more broadly to include other related forms of coverage, such as
disability income and long-term care insurance.
Disability income insurance
Disability income (DI) insurance pays benefits to individuals who
become unable to work because of injury or illness. DI insurance
replaces income lost while the policyholder is unable to work during a
period of disability (in contrast to medical expense insurance, which
pays for the cost of medical care).
For most working age adults, the risk of disability is greater than
the risk of premature death, and the resulting reduction in lifetime
earnings can be significant. Private disability insurance is sold on
both a group and an individual basis. Policies may be designed to cover
long-term disabilities (LTD coverage) or short-term disabilities (STD
coverage). Business owners can also purchase disability overhead insurance to cover the overhead expenses of their business while they are unable to work.
A basic level of disability income protection is provided through the Social Security Disability Insurance
(SSDI) program for qualified workers who are totally and permanently
disabled (the worker is incapable of engaging in any "substantial
gainful work" and the disability is expected to last at least 12 months
or result in death).
Long-term care insurance
Long-term care (LTC) insurance reimburses the policyholder for the
cost of long-term or custodial care services designed to minimize or
compensate for the loss of functioning due to age, disability or chronic
illness.
LTC has many surface similarities to long-term disability insurance.
There are at least two fundamental differences, however. LTC policies
cover the cost of certain types of chronic care, while
long-term-disability policies replace income lost while the policyholder
is unable to work. For LTC, the event triggering benefits is the need
for chronic care, while the triggering event for disability insurance is
the inability to work.
Private LTC insurance is growing in popularity in the US.
Premiums have remained relatively stable in recent years. However, the
coverage is quite expensive, especially when consumers wait until
retirement age to purchase it. The average age of new purchasers was 61
in 2005, and has been dropping.
Supplemental coverage
Private
insurers offer a variety of supplemental coverages in both the group
and individual markets. These are not designed to provide the primary
source of medical or disability protection for an individual, but can
assist with unexpected expenses and provide additional peace of mind for
insureds. Supplemental coverages include Medicare supplement
insurance, hospital indemnity insurance, dental insurance, vision
insurance, accidental death and dismemberment insurance and specified
disease insurance.
Supplemental coverages are intended to:
- Supplement a primary medical expense plan by paying for expenses that are excluded or subject to the primary plan's cost-sharing requirements (e.g., co-payments, deductibles, etc.);
- Cover related expenses such as dental or vision care;
- Assist with additional expenses that may be associated with a serious illness or injury.
Medicare Supplement Coverage (Medigap)
Medicare Supplement policies are designed to cover expenses not
covered (or only partially covered) by the "original Medicare" (Parts A
& B) fee-for-service benefits. They are only available to
individuals enrolled in Medicare Parts A & B. Medigap plans may be
purchased on a guaranteed issue basis (no health questions asked) during
a six-month open enrollment period when an individual first becomes
eligible for Medicare. The benefits offered by Medigap plans are standardized.
Hospital indemnity insurance
Hospital
indemnity insurance provides a fixed daily, weekly or monthly benefit
while the insured is confined in a hospital. The payment is not
dependent on actual hospital charges,
and is most commonly expressed as a flat dollar amount. Hospital
indemnity benefits are paid in addition to any other benefits that may
be available, and are typically used to pay out-of-pocket and
non-covered expenses associated with the primary medical plan, and to
help with additional expenses (e.g., child care) incurred while in the
hospital.
Scheduled health insurance plans
Scheduled
health insurance plans are an expanded form of Hospital Indemnity
plans. In recent years, these plans have taken the name mini-med plans
or association plans. These plans may provide benefits for
hospitalization, surgical, and physician services. However, they are not
meant to replace a traditional comprehensive health insurance plan.
Scheduled health insurance plans are more of a basic policy providing
access to day-to-day health care such as going to the doctor or getting a
prescription drug, but these benefits will be limited and are not meant
to be effective for catastrophic events. Payments are based upon the
plan's "schedule of benefits" and are usually paid directly to the
service provider. These plans cost much less than comprehensive health
insurance. Annual benefit maximums for a typical scheduled health
insurance plan may range from $1,000 to $25,000.
Dental insurance
Dental insurance helps pay for the cost of necessary dental care.
Few medical expense plans include coverage for dental expenses. About
97% of dental benefits in the United States is provided through separate
policies from carriers—both stand-alone and medical affiliates—that
specialize in this coverage. Typically, these dental plans offer
comprehensive preventive benefits. However, major dental expenses, such
as crowns and root canals, are just partially covered. Also, most
carriers offer a lower rate if you select a plan that utilizes their
Network providers. Discount dental programs are also available. These
do not constitute insurance, but provide participants with access to
discounted fees for dental work.
Vision care insurance
Vision care insurance provides coverage for routine eye care and is
typically written to complement other medical benefits. Vision benefits
are designed to encourage routine eye examinations and ensure that
appropriate treatment is provided.
Specified disease
Specified disease provides benefits for one or more specifically
identified conditions. Benefits can be used to fill gaps in a primary
medical plan, such as co-payments and deductibles, or to assist with
additional expenses such as transportation and child care costs.
Accidental death and dismemberment insurance
AD&D insurance is offered by group insurers and provides benefits
in the event of accidental death. It also provides benefits for
certain specified types of bodily injuries (e.g., loss of a limb or loss
of sight) when they are the direct result of an accident.
- Insurance companies have high administrative costs. Private health insurers are a significant portion of the U.S. economy directly employing (in 2004) almost 470,000 people at an average salary of $61,409.
- Health insurance companies are not actually providing traditional insurance, which involves the pooling of risk, because the vast majority of purchasers actually do face the harms that they are "insuring" against. Instead, as Edward Beiser and Jacob Appel have separately argued, health insurers are better thought of as low-risk money managers who pocket the interest on what are really long-term healthcare savings accounts.
- According to a study by a pro-health reform group published February 11, the nation's largest five health insurance companies posted a 56 percent gain in 2009 profits over 2008. The insurers (Wellpoint, UnitedHealth, Cigna, Aetna and Humana) cover the majority of Americans with health insurance.
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