Health insurance

From New World Encyclopedia

Health insurance is a type of insurance that covers costs incurred for unexpected medical expenses. Health insurance is a relatively recent form of insurance; and it did not become important for most people until advances in modern medicine that made many procedures possible for repairing injuries and fighting disease. The pharmaceutical industry has also grown into one of the largest modern industries. Today medical expenses often exceed the cost of housing. A health insurer may be a corporation, a social institution, or a government agency. Health insurance can be market-based, socialized, or mixed, but in most countries it is some form of mixture.

There are many types of health insurance plans. Some are high-deductible plans that insure one against major expenses; these are the least expensive. Other are complete managed care programs that cover every visit to a physician and all medications. Health insurance plans can be for individuals, families, or groups. Socialized medicine is a form of national health insurance. Related types of health insurance usually purchased or provided separately are dental insurance, long term care insurance, and disability insurance.

People want to live long healthy lives, but the cost of insuring for the ever-increasing number and variety of medical treatments available is higher than what many people and societies can afford. This creates a moral and social challenge to find more ways that people obtain health insurance or reduce medical costs.

History and evolution

Forms of life and disability insurance date back to ancient times. In ancient Greece, benevolent societies were formed to care for individuals families when the income of the breadwinner was lost. Medieval guilds had similar plans. Many of the first group health insurance plans were an outgrowth of the guild idea. They were mutual insurance companies, like cooperatives, that were owned by the members. As shareholders, members would divide any profits from the company.

In the 19th century, early health insurance was actually disability insurance. Patients were expected to pay all other health care costs out of their own pockets. During the 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.

History of Health Insurance in the United States

The first insurance companies in the United States were mutual companies. The first policy giving health benefits was offered by Massachusetts Health Insurance of Boston in 1847.[1] The first individual plans in the United States began as a form of travel insurance to cover the cost if one was injured in an accident on a steamship or railroad. Insurance companies issued the first individual disability and illness policies around 1890. This payment model continued until the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.[2]

History of Health Insurance in Germany

State-mandated health insurance began in Germany in 1884, and initially covered workers in various labor unions. Coverage expanded to other parts of the work force, with family members of workers included after 1892. By 1928, practically all workers in Germany making less than 3,600 marks were forced to participate in the system.Cite error: Closing </ref> missing for <ref> tag. In 2005, 46.6 million (15.9%) Americans were without health insurance for at least part of the year.[3] However, approximately one-third of these without insurance live in housholds with an income over $50,000, with half of these having an income of over $75,000.[4] Also, one third are people who are eligible for public health insurance programs but have not signed up for them. People living in the western and southern United States are more likely to be uninsured.[3]

Medicare

In the United States, government-funded Medicare programs help to insure the elderly and end stage renal disease patients. Some health care economists (Ewe Reinhardt of Princeton and Stuart Butler among others) assert that (the third party payment feature) these programs have had the unintended consequence of distorting the price of medical procedures. As a result, the Health Care Financing Administration has set up a list of procedures and corresponding prices under the Resource-Based Relative Value Scale.

Starting in 2006, Medicare Part D provides a program for the elderly to buy insurance for the purchase of prescription drugs.

Medicare Advantage

Medicare Advantage expands the health care options for Medicare beneficiaries. Medicare Advantange was born from the Balanced Budget Act of 1997 in order to better control the rapid growth in Medicare spending, as well as to provide Medicare beneficiaries more choices.

Medicaid

While Medicaid was instituted for the very poor, beginning in 1972, the number of individuals in the United States who lacked any form of health insurance for any period during the year increased each year, every year with the exceptions of the years 1999 and 2000.[citation needed] It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to relatively high administrative costs and low reimbursements. [5]

The shift to managed care in the U.S.

Through the 1990s, managed care grew from about 25% of U.S. employees to the vast majority.

Rise of managed care in the U.S.
Year conventional plans HMOs PPOs POS plans
1988 73% 16% 11% NA
1993 46% 21% 26% 7%
1996 27% 31% 28% 14%
1998 14% 27% 35% 24%
1999 9% 28% 38% 25%
2000 8% 29% 41% 22%
2001 7% 23% 48% 22%

According the Centers for Medicare and Medicaid Services, nearly 100% of large firms offer health insurance to their employees.[6] 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.[7]

Health insurance in Canada

Until recently, private health insurance was illegal in all of Canada. All insurance was supplied by the government. Recently, the Supreme Court of Quebec ruled, in Chaoulli v. Quebec that private business must be allowed to offer health insurance and compete with the public program.

Notes

  1. [http://www.lieberson.com/en/medical%5Fhistory%5Fand%5Fethics/history/history_of_health_insurance.htm The History of Health Insurance in the United States], viewed January 26, 2007.
  2. See California Insurance Code Section 106 (defining disability insurance).[1] In 2001, the California Legislature added subdivision (b), which defines "health insurance" as "an individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits."
  3. 3.0 3.1 Cite error: Invalid <ref> tag; no text was provided for refs named Census
  4. Income, Poverty, and Health Insurance Coverage in the United States: 2005. U.S. Census Bureau
  5. Cunningham P, May J. "Medicaid patients increasingly concentrated among physicians." Track Rep. 2006 Aug;(16):1-5. PMID 16918046.
  6. http://www.cms.hhs.gov/TheChartSeries/downloads/private_ins_chap4_p.pdf
  7. http://www.cms.hhs.gov/TheChartSeries/downloads/private_ins_chap4_p.pdf

References
ISBN links support NWE through referral fees

  • Bodenheimer, Thomas S., and Kevin Grumbach, Understanding Health Policy, McGraw-Hill Medical, 2004. ISBN 0071423117
  • Boni, John A., et. al., The Health Insurance Primer, HIAA Insurance Education, 2000. ISBN 1879143496
  • Starr, Paul, The Social Transformation of American Medicine, Basic Books, 1984. ISBN 0465079350
  • Webster, Charles, National Health Service: A Political History, Oxford University Press, 2002. ISBN 019925110X

See also

  • COBRA
  • Government ownership
  • Health economics
  • Health maintenance organization
  • Healthcare reform
  • Health Insurance Portability and Accountability Act
  • Self-funded health care
  • List of insurance topics
  • Public health
  • RAND Health Insurance Experiment
  • Social security
  • Social welfare
  • AHIP

External links