Health Insurance For Your Protection!

Health Insurance For Your Protection!

Health insurance has long been a highly recognized insurance cover. Millions of people have put their trust in health insurance over the years. Individual health insurance has been a top choice of employers who want to obtain sufficient coverage for their employees. Medical costs these days are spiralling higher than ever before.

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, early health insurance was actually disability insurance, in the sense that it covered only the cost of emergency care for injuries that could lead to a disability. 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.[1] 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.

Private Health Insurance
A health insurance policy is a legal, binding contract between the insurance company and the customer. The largest difference between private sector health insurance and life insurance is that for life insurance, a person may purchase guaranteed renewable insurance for the whole of the insured's life at a constant premium rate, while health insurance is generally purchased year by year with generally no assurance of renewability and if renewable no guarantee that premium rates will not increase.

Inherent problems with private insurance
Any private insurance system will face two inherent challenges: adverse selection and Ex-post moral hazard.

Today’s individual health insurance needs are ever increasing.  The employer puts an amount of money in a fund and the employee spends from it until it is gone. After that the employee pays out of pocket for medical expenses, up to a certain amount. Any amount that is left over at the end of the year can be rolled over to the next year. This is just an example of the innovative new ways individual health insurance can be suited to your needs.

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 and it costs $250, that's much better than making monthly insurance payments of $400 (example figures).

The fundamental concept of insurance is that it balances costs across a large, random sample of individuals. For instance, an insurance company has a pool of 1000 randomly selected subscribers, each paying $100/month. One of them gets really sick while the others stay healthy, which means that the insurance company can use the money paid by the healthy people to treat the sick person. Adverse selection upsets this balance between healthy and sick subscribers. It will leave an insurance company with primarily sick subscribers and no way to balance out the cost of their medical expenses with a large number of healthy subscribers.

Because of adverse selection, insurance companies use a patient's medical history to screen out persons with pre-existing medical conditions. 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 or not the person has been treated for any of a long list of diseases and so on. In general, those who look like they will be large financial burdens are denied coverage or charged high premiums to compensate. On the other side, applicants can actually get discounts if they do not smoke and are healthy.

Starting in 1976, some states started providing "health insurance" "risk pools", which allow individuals who are medically-uninsurable through private health insurance to be able to purchase a state-sponsored health insurance plan, usually at higher cost. Minnesota was the first to offer such a plan, there are now 34 states which do. Plans vary greatly from state-to-state, both in the costs and benefits to consumers and to their methods of funding and operating. They serve a very small portion of the uninsurable market -- about 183,000 people nationwide -- but in best cases do allow 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. Efforts to pass a national pool have as yet been unsuccessful, but some federal tax dollars have been awarded to states to innovate and improve their plans.

 Moral Hazard
Moral hazard describes the state of mind and change in behaviour that results from one's knowledge that if something bad were to happen, the out-of-pocket cost would be mitigated by an insurance policy--in this case, one which provides reduced prices for medical care. In the same way that people treat water with little care when it is very inexpensive, people will also tend to overuse medical care when the out-of-pocket costs are small.

However, the reverse problem also occurs. People who have no health insurance, or who are severely under-insured, may wait too long, or not seek medical care at all for conditions that could be immediately life threatening out of fear of being financially ruined by enormous medical bills.

Other factors affecting insurance price
Because of advances in medicine and medical technology, medical treatment is more expensive, and people in developed countries are living longer. The population of those countries is aging, and a larger group of senior citizens requires more medical care than a young healthier population. (A similar rise in costs is evident in Social Security in the United States.) These factors cause an increase in the price of health insurance.

Some other factors that cause an increase in health insurance prices are health related: insufficient exercise; unhealthy food choices; a shortage of doctors in impoverished or rural areas; excessive alcohol use, smoking, street drugs, obesity, among some parts of the population; and the modern sedentary lifestyle of the middle classes.

In theory, people could lower health insurance prices by doing the opposite of the above; that is, by exercising, eating healthy food, avoiding addictive substances, etc. Healthier lifestyles protect the body from some, although not all, diseases, and with fewer diseases, the expenses borne by insurance companies would likely drop. A program for addressing increasing premiums, dubbed "consumer driven health care," encourages Americans to buy high-deductible, lower-premium insurance plans in exchange for tax benefits.

 Common complaints of private insurance
Some common complaints about private health insurance include:

1. Insurance companies do not announce their health insurance premiums more than a year in advance. This means that, if one becomes ill, he or she may find that their premiums have greatly increased (however, in many states these types of rate increases are prohibited).
2. If insurance companies try to charge different people different amounts based on their own personal health, people may feel they are unfairly treated.
3. When a claim is made, particularly for a sizable amount, insureds may feel as though the insurance company is using paperwork and bureaucracy to attempt to avoid payment of the claim or, at a minimum, greatly delay it.
4. Health insurance is often only widely available at a reasonable cost through an employer-sponsored group plan.

In the United States, there are tax advantages to Employer-provided health insurance, whereas individuals must pay tax on income used to fund their own health insurance.
Experimental treatments are generally not covered. This practice is especially criticized by those who have already tried, and not benefited from, all "standard" medical treatments for their condition.
The Health Maintenance Organization (HMO) type of health insurance plan has been criticized for excessive cost-cutting policies in its attempt to offer lower premiums to consumers.
As the health care recipient is not directly involved in payment of health care services and products, they are less likely to scrutinize or negotiate the costs of the health care received. The health care company has popular and unpopular ways of controlling this market force.

Some health care providers end up with different sets of rates for the same procedure. One for people with insurance and another for those without.
Unlike most publicly funded health insurance, many private insurance plans do not provide coverage of dental health care, or only offer such coverage with additional premiums.

Preventive care is a high priority with Health Insurance. Regular check-ups can determine health problems early on before they become life threatening. While this may be common sense, that’s not necessarily the case with all insurance companies. Your health is in good hands with reputable health insurance.