What is Health Insurance?
Health insurance like other forms of insurance is a form of collectivism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses. Health Insurance 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.

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Health Insurance 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.

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. Public programs provide the primary source of coverage for most senior 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.

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.

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. In just three years, the Medicare and Medicaid programs will account for 50 percent of all national health spending. This has fueled an outcry for an overhaul of the health care system in the United States.

The House of Representatives passed a health care reform bill by a vote of 220-215 on November 7, 2009. Currently the fate of the bill rests on the Senate. The legislation once included changes that would give the government the power to negotiate policy premiums and to provide a public option, but in an effort to acquire the necessary votes to prevent a Republican filibuster the public option was eliminated from the bill. This would have given citizens the option to buy into public programs like Medicare for which current members pay only $96.40 monthly. Instead the bill now requires that all Americans purchase private health insurance or be subject to fines. The insurance industry represents a significant lobbying group in the United States. The major health interests have spent an average of $1.4 million per day to lobby Congress so far this year and are on track to spend more than half a billion dollars by the end 2009. This data may be indicative of why the current bill no longer offers a public option.

Source: wikipedia.org     The information on this web site is for informational purposes only and is not intended to diagnos or treat any illness or health condition. Always consult your physician about any health care issues you may have.