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Health insurance is insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government.

By estimating the overall risk of healthcare expenses, a routine finance structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.

History and evolution

The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlen from the Peter Chamberlen family. In the late 19th century, "accident insurance" began to be available, which operated much like modern disability insurance. This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.

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 U.S. by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the U.S. effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.

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 most prescription drugs, but this was not always the case.

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. The predecessors of today's Health Maintenance Organizations (HMOs) originated beginning in 1929, through the 1930s and on during World War II.

How it works

A health insurance policy is a contract between an insurance company and an individual or his sponsor (e.g. an employer). The contract can be renewable annually or monthly. The type and amount of health care costs that will be covered by the health insurance company are specified in advance, in the member contract or "Evidence of Coverage" booklet. The individual insurered person's obligations may take several forms:
  • Premium: The amount the policy-holder or his sponsor (e.g. an employer) pays to the health plan each month to purchase health coverage.
  • Deductible: The amount that the insured must pay out-of-pocket before the health insurer pays its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of their health care is covered by the health insurer. It may take several doctor's visits or prescription refills before the insured person reaches the deductible and the insurance company starts to pay for care.
  • Copayment: The amount that the insured person must pay out of pocket before the health insurer pays for a particular visit or service. For example, an insured person might pay a $45 copayment for a doctor's visit, or to obtain a prescription. A copayment must be paid each time a particular service is obtained.
  • Coinsurance: Instead of, or in addition to, paying a fixed amount up front (a copayment), the co-insurance is a percentage of the total cost that insured person may also pay. For example, the member might have to pay 20% of the cost of a surgery over and above a co-payment, while the insurance company pays the other 80%. If there is an upper limit on coinsurance, the policy-holder could end up owing very little, or a great deal, depending on the actual costs of the services they obtain.
  • Exclusions: Not all services are covered. The insured person is generally expected to pay the full cost of non-covered services out of their own pocket.
  • Coverage limits: Some health insurance policies only pay for health care up to a certain dollar amount. The insured person may be expected to pay any charges in excess of the health plan's maximum payment for a specific service. In addition, some insurance company schemes have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs.
  • Out-of-pocket maximums: Similar to coverage limits, except that in this case, the insured person's payment obligation ends when they reach the out-of-pocket maximum, and the health company pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
  • Capitation: An amount paid by an insurer to a health care provider, for which the provider agrees to treat all members of the insurer.
  • In-Network Provider: (U.S. term) A health care provider on a list of providers preselected by the insurer. The insurer will offer discounted coinsurance or copayments, or additional benefits, to a plan member to see an in-network provider. Generally, providers in network are providers who have a contract with the insurer to accept rates further discounted from the "usual and customary" charges the insurer pays to out-of-network providers.
  • Prior Authorization: A certification or authorization that an insurer provides prior to medical service occurring. Obtaining an authorization means that the insurer is obligated to pay for the service, assuming it matches what was authorized. Many smaller, routine services do not require authorization.
  • Explanation of Benefits: A document sent by an insurer to a patient explaining what was covered for a medical service, and how they arrived at the payment amount and patient responsibility amount.


Prescription drug plans are a form of insurance offered through some employer benefit plans in the U.S., where the patient pays a copayment and the prescription drug insurance part or all of the balance for drugs covered in the formulary of the plan.

Some, if not most, health care providers in the United States will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn't pay. The insurance company pays out of network providers according to "reasonable and customary" charges, which may be less than the provider's usual fee. The provider may also have a separate contract with the insurer to accept what amounts to a discounted rate or capitation to the provider's standard charges. It generally costs the patient less to use an in-network provider.

Health plan vs. health insurance

Historically, HMOs tended to use the term "health plan", while commercial insurance companies used the term "health insurance". A health plan can also refer to a subscription-based medical care arrangement offered through HMOs, preferred provider organizations, or point of service plans. These plans are similar to pre-paid dental, pre-paid legal, and pre-paid vision plans. Pre-paid health plans typically pay for a fixed number of services (for instance, $300 in preventive care, a certain number of days of hospice care or care in a skilled nursing facility, a fixed number of home health visits, a fixed number of spinal manipulation charges, etc.) The services offered are usually at the discretion of a utilization review nurse who is often contracted through the managed care entity providing the subscription health plan. This determination may be made either prior to or after hospital admission (concurrent utilization review).

Comprehensive vs. scheduled

Comprehensive health insurance pays a percentage of the cost of hospital and physician charges after a deductible (usually applies to hospital charges) or a co-pay (usually applies to physician charges, but may apply to some hospital services) is met by the insured. These plans are generally expensive because of the high potential benefit payout — $1,000,000 to 5,000,000 is common — and because of the vast array of covered benefits.

Scheduled health insurance plans are not meant to replace a traditional comprehensive health insurance plans and 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. In recent years, these plans have taken the name mini-med plans or association plans. The term "association" is often used to describe them because they require membership in an association that must exist for some other purpose than to sell insurance. Examples include the National Association for the Self Employed and the Health Care Credit Union Association. These plans may provide benefits for hospitalization and surgical, but these benefits will be limited. Scheduled plans are not meant to be effective for catastrophic events. These plans cost much less than comprehensive health insurance. They generally pay limited benefits amounts directly to the service provider, and payments are based upon the plan's "schedule of benefits". Annual benefits maximums for a typical scheduled health insurance plan may range from $1,000 to $25,000.

Inherent problems with multiple insurance funds and optional insurance

Although the general principle of insurance is population solidarity, the economic behavior of insurance companies that are run for profit often seems to go against this very principle. This is exemplified in an Urban Institute paper which argues that the whole medical insurance industry in the United States is geared to managing two groups that it tries to keep from overlapping: the group of people who are healthy and will make only very small claims as policy holders (which it seeks to attract), and the group of people who will make above average claims (which the companies will do all they can to avoid paying out for — by exclusions, higher co-pay rates, etc). The authors say that these activities are antithetical to the whole concept of insurance (which is that the fortunate healthy should meet the health care costs of the unfortunately ill). The paper argues that American insurers are so focused on the process of managing these groups that they forget that their primary aim ought to be to buy cost-effective, efficiently delivered care on behalf of their clients . On the other hand, insurance companies might argue that they are trying to achieve fairness to policy holders given the fact that the split nature of the market means that risks are not evenly distributed between the various funds.

Adverse selection

Insurance companies use the term "adverse selection" to describe the tendency for only those who will benefit from insurance to buy it. Specifically when talking about health insurance, unhealthy people are more likely to purchase health insurance because they anticipate large medical bills. On the other side, people who consider themselves to be reasonably healthy may decide that medical insurance is an unnecessary expense; if they see the doctor once a year that's much better than making monthly insurance payments.

Because of adverse selection, insurance companies employ medical underwriting, using a patient's medical history to screen out those whose pre-existing medical conditions pose too great a risk for the risk pool. Before buying health insurance, a person typically fills out a comprehensive medical history form that asks whether the person smokes, how much the person weighs, whether the person has been treated for any of a long list of diseases and so on. In general, those who might represent large financial burdens are denied coverage or charged high premiums to compensate. One large U.S. industry survey found that roughly 13 percent of applicants for comprehensive, individually purchased health insurance who went through the medical underwriting in 2004 were denied coverage. Declination rates increased significantly with age, rising from 5 percent for individuals 18 and under to just under a third for individuals aged 60 to 64. Among those who were offered coverage, the study found that 76% received offers at standard premium rates, and 22% were offered higher rates. On the other side, applicants can get discounts if they do not smoke and are healthy.

Moral hazard

Moral hazard occurs when an insurer and a consumer enter into a contract under symmetric information, but one party takes action, not taken into account in the contract, which changes the value of the insurance. A common example of moral hazard is third-party payment—when the parties involved in making a decision are not responsible for bearing costs arising from the decision. An example is where doctors and insured patients agree to extra tests which may or may not be necessary. Doctors benefit by avoiding possible malpractice suits, and patients benefit by gaining increased certainty of their medical condition. The cost of these extra tests is borne by the insurance company, which may have had little say in the decision. Co-payments, deductibles, and less generous insurance for services with more elastic demand attempt to combat moral hazard, as they hold the consumer responsible.

Self-Funded Health Insurance

Other factors affecting insurance prices

A recent study by PriceWaterhouseCoopers examining the drivers of rising health care costs in the U.S. pointed to increased utilization created by increased consumer demand, new treatments, and more intensive diagnostic testing, as the most significant driver. People in developed countries are living longer. The population of those countries is aging, and a larger group of senior citizens requires more intensive medical care than a young healthier population. Advances in medicine and medical technology can also increase the cost of medical treatment. Lifestyle-related factors can increase utilization and therefore insurance prices, such as: increases in obesity caused by insufficient exercise and unhealthy food choices; excessive alcohol use, smoking, and use of street drugs. Other factors noted by the PWC study included the movement to broader-access plans, higher-priced technologies, and cost-shifting from Medicaid and the uninsured to private payers.

Comparison

The Commonwealth Fund, in its annual survey, "Mirror, Mirror on the Wall", compares the performance of the health care systems in Australia, New Zealand, the United Kingdom, Germany, Canada and the U.S. Its 2007 study found that, although the U.S. system is the most expensive, it consistently under-performs compared to the other countries. One difference between the U.S. and the other countries in the study is that the U.S. is the only country without universal health insurance coverage.

Australia

The public health system is called Medicare. It ensures free universal access to hospital treatment and subsidised out-of-hospital medical treatment. It is funded by a 1.5% tax levy on all taxpayers, an extra 1% levy on high income earners, as well as general revenue.

The private health system is funded by a number of private health insurance organisations. The largest of these is Medibank Private, which is government-owned, but operates as a government business enterprise under the same regulatory regime as all other registered private health funds. The Coalition Howard government had announced that Medibank would be privatised if it won the 2007 election, however they were defeated by the Australian Labor Party under Kevin Rudd which had already pledged that it would remain in government ownership.

Some private health insurers are 'for profit' enterprises, and some are non-profit organizations such as HCF Health Insurance and GMHBA Health Insurance. Some have membership restricted to particular groups, but the majority have open membership. Membership to most health funds is now also available through comparison websites like moneytime and iSelect. These comparison sites operate on a commission-basis by agreement with their participating health funds.

Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007.

The private health system in Australia operates on a "community rating" basis, whereby premiums do not vary solely because of a person's previous medical history, current state of health, or (generally speaking) their age (but see Lifetime Health Cover below). Balancing this are waiting periods, in particular for pre-existing conditions (usually referred to within the industry as PEA, which stands for "pre-existing ailment"). Funds are entitled to impose a waiting period of up to 12 months on benefits for any medical condition the signs and symptoms of which existed during the six months ending on the day the person first took out insurance. They are also entitled to impose a 12-month waiting period for benefits for treatment relating to an obstetric condition, and a 2-month waiting period for all other benefits when a person first takes out private insurance. Funds have the discretion to reduce or remove such waiting periods in individual cases. They are also free not to impose them to begin with, but this would place such a fund at risk of "adverse selection", attracting a disproportionate number of members from other funds, or from the pool of intending members who might otherwise have joined other funds. It would also attract people with existing medical conditions, who might not otherwise have taken out insurance at all because of the denial of benefits for 12 months due to the PEA Rule. The benefits paid out for these conditions would create pressure on premiums for all the fund's members, causing some to drop their membership, which would lead to further rises, and a vicious cycle would ensue.

There are a number of other matters about which funds are not permitted to discriminate between members in terms of premiums, benefits or membership - these include racial origin, religion, sex, sexual orientation, nature of employment, and leisure activities. Premiums for a fund's product that is sold in more than one state can vary from state to state, but not within the same state.

The Australian government has introduced a number of incentives to encourage adults to take out private hospital insurance. These include:

  • Lifetime Health Cover: If a person has not taken out private hospital cover by the 1st July after their 31st birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum for each year they were without hospital cover. Thus, a person taking out private cover for the first time at age 40 will pay a 20 per cent loading. The loading is removed after 10 years of continuous hospital cover. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.


  • Medicare Levy Surcharge: People whose taxable income is greater than a specified amount (currently $70,000 for singles and $140,000 for couples) and who do not have an adequate level of private hospital cover must pay a 1% surcharge on top of the standard 1.5% Medicare Levy. The rationale is that if the people in this income group are forced to pay more money one way or another, most would choose to purchase hospital insurance with it, with the possibility of a benefit in the event that they need private hospital treatment - rather than pay it in the form of extra tax as well as having to meet their own private hospital costs.
    • The Australian government announced in May 2008 that it proposes to increase the thresholds, to $100,000 for singles and $150,000 for families. These changes require legislative approval. A bill to change the law has been introduced but was not passed by the Senate. An amended version was passed on 16 October 2008. There have been criticisms that the changes will cause many people to drop their private health insurance, causing a further burden on the public hospital system, and a rise in premiums for those who stay with the private system. Other commentators believe the effect will be minimal.


  • Private Health Insurance Rebate: The government subsidises the premiums for all private health insurance cover, including hospital and ancillary (extras), by 30%, 35% or 40%, depending on age. The Rudd Government announced in May 2009 that as of July 2010, the Rebate would become means-tested, and offered on a sliding scale.


Canada

Most health insurance in Canada is administered by each province, under the Canada Health Act, which requires all people to have free access to health care. Collectively, the public provincial health insurance systems in Canada are frequently referred to as Medicare. Private health insurance is allowed, but the provincial governments allow it only for services that the public health plans do not cover; for example, semi-private or private rooms in hospitals and prescription drug plans. Canadians are free to use private insurance for elective medical services such as laser vision correction surgery, cosmetic surgery, and other non-basic medical procedures. Some 65% of Canadians have some form of supplementary private health insurance; many of them receive it through their employers. Private-sector services not paid for by the government account for nearly 30 percent of total health care spending.

In 2005, the Supreme Court of Canada ruled, in Chaoulli v. Quebec, that the province's prohibition on private insurance for health care already insured by the provincial plan could constitute an infringement of the right to life and security if there were long wait times for treatment as happened in this case. Certain other provinces have legislation which financially discourages but does not forbid private health insurance in areas covered by the public plans. The ruling has not changed the overall pattern of health insurance across Canada but has spurred on attempts to tackle the core issues of supply and demand and the impact of wait times.

France

The French model of health insurance has been ranked by the World Health Organization as the best in the world, because it permits a high quality of care and nearly total patient freedom. The national system of health insurance was instituted in 1945, just after the end of the Second World War. It was a compromise between Gaullist and Communist representatives in the French parliament. The Conservative Gaullists were opposed to a state-run healthcare system, while the Communists were supportive of a complete nationalisation of health care along a British Beveridge model.

The resulting programme is profession-based: all people working are required to pay a portion of their income to a health insurance fund, which mutualises the risk of illness, and which reimburses medical expenses at varying rates. Children and spouses of insured people are eligible for benefits, as well. Each fund is free to manage its own budget, and used to reimburse medical expenses at the rate it saw fit, however following a number of reforms in recent years, the majority of funds provide the same level of reimbursment and benefits.

The government has two responsibilities in this system.
  • The first government responsibility is the fixing of the rate at which medical expenses should be negotiated, and it does this in two ways: The Ministry of Health directly negotiates prices of medicine with the manufacturers, based on the average price of sale observed in neighboring countries. A board of doctors and experts decides if the medicine provides a valuable enough medical benefit to be reimbursed (note that most medicine is reimbursed, including homeopathy). In parallel, the government fixes the reimbursment rate for medical services: this means that a doctor is free to charge the fee that he wishes for a consultation or an examination, but the social security system will only reimburse it at a pre-set rate. These tariffs are set annually through negotiation with doctors' representative organisations.
  • The second government responsibility is oversight of the health-insurance funds, to ensure that they are correctly managing the sums they receive, and to ensure oversight of the public hospital network.


Today, this system is more-or-less intact. All citizens and legal foreign residents of France are covered by one of these mandatory programs, which continue to be funded by worker participation. However, since 1945, a number of major changes have been introduced. Firstly, the different health-care funds (there are five: General, Independent, Agricultural, Student, Public Servants) now all reimburse at the same rate. Secondly, since 2000, the government now provides health care to those who are not covered by a mandatory regime (those who have never worked and who are not students, meaning the very rich or the very poor). This regime, unlike the worker-financed ones, is financed via general taxation and reimburses at a higher rate than the profession-based system for those who cannot afford to make up the difference. Finally, to counter the rise in health-care costs, the government has installed two plans, (in 2004 and 2006), which require insured people to declare a referring doctor in order to be fully reimbursed for specalist visits, and which installed a mandatory co-pay of 1 € (about $1.45) for a doctor visit, 0,50 € (about 80 ¢) for each box of medicine prescribed, and a fee of 16-18 € (20-25 $) per day for hospital stays and for expensive procedures.

An important element of the French insurance system is solidarity: the more ill a person becomes, the less the person pays. This means that for people with serious or chronic illnesses, the insurance system reimburses them 100 % of expenses, and waives their co-pay charges.

Finally, for fees that the mandatory system does not cover, there is a large range of private complementary insurance plans available. The market for these programs is very competitive, and often subsidised by the employer, which means that premiums are usually modest. 85% of French people benefit from complementary private health insurance.

Netherlands

In 2006, a new system of health insurance came into force in the Netherlands. This new system avoids the two pitfalls of adverse selection and moral hazard associated with traditional forms of health insurance by using a combination of regulation and an insurance equalization pool. Moral hazard is avoided by mandating that insurance companies provide at least one policy which meets a government set minimum standard level of coverage, and all adult residents are obliged by law to purchase this coverage from an insurance company of their choice. All insurance companies receive funds from the equalization pool to help cover the cost of this government-mandated coverage. This pool is run by a regulator which collects salary-based contributions from employers, which make up about 50% of all health care funding, and funding from the government to cover people who cannot afford health care, which makes up an additional 5%.

The remaining 45% of health care funding comes from insurance premiums paid by the public, for which companies compete on price, though the variation between the various competing insurers is only about 5%. However, insurance companies are free to sell additional policies to provide coverage beyond the national minimum. These policies do not receive funding from the equalization pool, but cover additional treatments, such as dental procedures and physiotherapy, which are not paid for by the mandatory policy.

Funding from the equalization pool is distributed to insurance companies for each person they insure under the required policy. However, high-risk individuals get more from the pool, and low-income persons and children under 18 have their insurance paid for entirely. Because of this, insurance companies no longer find insuring high risk individuals an unappealing proposition, avoiding the potential problem of adverse selection.

Insurance companies are not allowed to have co-payments, caps, or deductibles, or to deny coverage to any person applying for a policy, or to charge anything other than their nationally set and published standard premiums. Therefore, every person buying insurance will pay the same price as everyone else buying the same policy, and every person will get at least the minimum level of coverage.

United Kingdom

The UKmarker's National Health Service (NHS) is a publicly funded healthcare system that provides coverage to everyone normally resident in the UK. It is not strictly an insurance system because (a) there are no premiums collected, (b) costs are not charged at the patient level and (c) costs are not pre-paid from a pool. However, it does achieve the main aim of insurance which is to spread financial risk arising from ill-health. The costs of running the NHS (est. £104 billion in 2007-8) are met directly from general taxation. The NHS provides the majority of health care in the UK, including primary care, in-patient care, long-term health care, ophthalmology and dentistry.

Private health care has continued parallel to the NHS, paid for largely by private insurance, but it is used by less than 8% of the population, and generally as a top-up to NHS services.There are many treatments that the private sector does not provide. For example, health insurance on pregnancy is generally not covered or covered with restricting clauses. One of the major insurers, BUPA, excludes many forms of treatment and care that most people will need during their lifetime or specialist care most of which are freely available from the NHS. These include:

ageing, menopause and puberty; AIDS/HIV; allergies or allergic disorders; birth control, conception, sexual problems and sex changes; chronic conditions; complications from excluded or restricted conditions/ treatment; convalescence, rehabilitation and general nursing care ; cosmetic, reconstructive or weight loss treatment; deafness; dental/oral treatment (such as fillings, gum disease, jaw shrinkage, etc); dialysis; drugs and dressings for out-patient or take-home use† ; experimental drugs and treatment; eyesight; HRT and bone densitometry; learning difficulties, behavioural and developmental problems; overseas treatment and repatriation; physical aids and devices; pre-existing or special conditions; pregnancy and childbirth; screening and preventive treatment; sleep problems and disorders; speech disorders; temporary relief of symptoms.(† = except in exceptional circumstances)
BUPA's competitors include, among others, AXA, Aviva, Groupama Healthcare and Pru Health.

Recently the private sector has been used to increase NHS capacity despite a large proportion of the British public opposing such involvement. According to the World Health Organization, government funding covered 86% of overall health care expenditures in the UK as of 2004, with private expenditures covering the remaining 14%.

United States

The United States health care system relies heavily on private health insurance, which is the primary source of coverage for most Americans. According to the CDC, approximately 58% of Americans have private health insurance. Unfortunately these insurance companies utilize a pre-existing exemption clause in order to control costs and maximize profit. A recent study found that 62 percent of all bankruptcies filed in 2007 were linked to medical expenses. Of those who filed for bankruptcy, nearly 80 percent had health insurance. Together with the fact that in just three years, the Medicare and Medicaid programs will account for 50 percent of all national health spending., has fueled an outcry for an overhaul of the health care system in the United States. The House of Representatives passed a sweeping health care bill by a vote of 220-215 on November 7, 2009.
Currently the fate of the bill rests on the Senate. The legislation includes changes that would prevent private insurance companies from the using pre-existing condition clause, additionally it would give the government the power to negotiate policy premiums for those who opt to participate in the public option.


Public programs provide the primary source of coverage for most seniors citizens and for low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors 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 SCHIP, 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.

A few states have taken serious steps toward universal health care coverage, most notably Minnesotamarker, Massachusettsmarker and Connecticutmarker, with recent examples being the Massachusetts 2006 Health Reform Statute and Connecticut's SustiNet plan to provide quality, affordable health care to state residents.

In 2006, there were 47 million people in the United States (16% of the population) who were without health insurance for at least part of that year. About 37% of the uninsured live in households with an income over $50,000. Even those with insurance may not be adequately covered, as insurers often deny claims, leaving policy holders with limited short-term recourse. As bioethicist Jacob M. Appel has argued, "Having health insurance does not do you any good if that insurance doesn't cover your illness or injury."

In 2004, U.S. health insurers directly employed almost 470,000 people at an average salary of $61,409. (As of the fourth quarter of 2007, the total U.S. labor force stood at 153.6 million, of whom 146.3 million were employed. Employment related to all forms of insurance totaled 2.3 million. Mean annual earnings for full-time civilian workers as of June 2006 were $41,231; median earnings were $33,634.) The insurance industry also represents a significant lobbying group in the United States. For 2008 insurance was the 8th among industries in political contributions to members of Congress, giving $28,654,121, of which 51% was given to Democrats and 49% to Republicans, with the top recipient of insurance industry contributions being Senator John McCain (R-AZ). The leading contributor from the insurance industry — as measured by total political contributions — was AFLAC, Inc., which contributed $907,150 in 2007.

The US health care system has been provided by private insurance & finance, which is creating exclusion from the system for many citizens. The poor portion of the population is being victimized the most intensively; as a result, government policies have passed to provide public health care for the people who are most in need ( children, seniors, and the poor individuals).

California Health Insurance

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).

At times, it is difficult to navigate the complex health insurance system. California developed a solution to assist people across the State and is one of the only 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. The number to call is 1.888.466.2219, they have staff on hand to help you through the process of filing a complaint, or just figuring out what to do next.

See also



Notes and references

  1. How Private Insurance Works: A Primer by Gary Claxton, Institution for Health Care Research and Policy, Georgetown University, on behalf of the Henry J. Kaiser Family Foundation.
  2. Howstuffworks: How Health Insurance Works.
  3. See California Insurance Code Section 106 (defining disability insurance). http://caselaw.lp.findlaw.com/cacodes/ins/100-124.5.html 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."
  4. Fundamentals of Health Insurance: Part A, Health Insurance Association of America, 1997, ISBN 1-879143-36-4.
  5. Thomas P. O'Hare, "Individual Medical Expense Insurance," The American College, 2000, p. 7, ISBN 1-57996-025-1.
  6. Managed Care: Integrating the Delivery and Financing of Health Care - Part A, Health Insurance Association of America, 1995, p. 9 ISBN 1-879143-26-1.
  7. Agency for Healthcare Research and Quality (AHRQ). "Questions and Answers About Health Insurance: A Consumer Guide." August 2007.
  8. http://www.healthharbor.com/HealthInsPriorAuth.html
  9. http://www.healthharbor.com/HealthInsReadingEOB.html
  10. "Comprehensive Health Insurance vs. Scheduled Health Insurance".
  11. "Mini Medical Plans On The Move".
  12. "The Bottom Line on Risk Classification in Individually Purchased Voluntary Medical Expense Insurance," American Academy of Actuaries, February 1999.
  13. Teresa Chovan, Hannah Yoo and Tom Wildsmith, "Individual Health Insurance: A Comprehensive Survey of Affordability, Access, and Benefits" America’s Health Insurance Plans, August 2005.
  14. Teresa Chovan, Hannah Yoo and Tom Wildsmith, Individual Health Insurance: A Comprehensive Survey of Affordability, Access, and Benefits, America’s Health Insurance Plans, Table 7, p. 11 (Note that the remainder, roughly 2%, received other types of offers, such as policies with condition waivers).
  15. Task Force on Genetic Testing in Health Insurance, "Risk Classification in Individually Purchased Voluntary Medical Expense Insurance," American Academy of Actuaries, February 1999.
  16. The Factors Fueling Rising Healthcare Costs 2006, PriceWaterhouseCoopers for America's Health Insurance Plans, 2006, accessed 2007-10-08.
  17. http://www.australianunity.com.au/au/hins/Misc/MedicareSurcharge.asp#
  18. http://parlinfoweb.aph.gov.au/piweb/Repository/Legis/Bills/Linked/27050802.pdf
  19. http://www.abc.net.au/news/stories/2008/08/12/2332647.htm
  20. "L'assurance maladie".
  21. John S. Ambler, "The French Welfare State: surving social and ideological change," New York University Press, 30 September 1993, ISBN 978-0814706268.
  22. http://www.carehealth.co.uk/pmiexpln.htm
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  • Navigating your health benefits for dummies. Charles M Cutler MD Tracey A Baker CFP (c)2006 ISBN 978-0-470-08354-3



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