Health insurance in the United States

From Wikipedia, the free encyclopedia

Main articles: Health insurance, Health care in the United States, and Insurance in the United States

Health care in the United States

Government Centers for Medicare and Medicaid Services Medicare Medicaid TRICARE Department of Veterans Affairs (VA) Indian Health Service State Children's Health Insurance Program (SCHIP) EMTALA Federal Employees Health Benefit Plan Private Health insurance in the United States Health Maintenance Organization (HMO) Managed Care Medical underwriting Preferred provider organization (PPO) Private consumer driven Flexible spending account (FSA) Health Reimbursement Account Health Savings Account Medical savings account High Deductible Health Plan (HDHP) Others Canadian and American health care systems compared Health care reform in the United States Single payer health care Uninsured in the United States Universal Health Care

This box: view • talk • edit

The term health insurance is commonly used in the United States to describe any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government.^[1] Synonyms for this usage include "health coverage," "health care coverage" and "health benefits."

In a more technical sense, the term is used to describe any form of insurance that provides protection against injury or illness. This usage includes private insurance and social insurance programs such as Medicare, but excludes social welfare programs such as Medicaid. In addition to medical expense insurance, it also includes insurance covering disability or long-term nursing or custodial care needs.

The US market-based health care system relies heavily on private and not-for-profit health insurance, which is the primary source of coverage for most Americans. According to the United States Census Bureau, approximately 84% of Americans have health insurance; some 60% obtain it through an employer, while about 9% purchase it directly.^[2] Various government agencies provide coverage to about 27% of Americans (there is some overlap in these figures).^[2]

In 2006, there were 47 million people in the US (16% of the population) who were without health insurance for at least part of that year.^[2] The percentage of the non-elderly population who are uninsured has been generally increasing since the year 2000.^[3] There is considerable debate in the US on the causes of and possible remedies for this level of uninsurance as well as the impact it has on the overall US health care system.

Contents 1 History 2 Public health care coverage 2.1 Medicare 2.1.1 Medicare Advantage 2.1.2 Medicare Part D (Prescription Drugs) 2.2 Medicaid 2.3 State Children's Health Insurance Program (SCHIP) 2.4 Military health benefits 2.5 Indian health service 2.6 State risk pools 3 Private health care coverage 3.1 Employer-sponsored 3.1.1 Small employer group coverage 3.1.2 Federal employees health benefit plan (FEHBP) 3.1.3 "Portability" of group coverage 3.2 Individually purchased 3.3 Types of medical insurance 3.3.1 Traditional indemnity or fee-for-service 3.3.2 Blue Cross & Blue Shield plans 3.3.3 Health Maintenance Organizations 3.3.4 Managed care 3.3.4.1 Network-based managed care 3.3.4.2 Other managed care techniques 3.3.5 Blurring lines 3.3.6 New types of medical plans 4 Other types of health insurance (non-medical) 4.1 Disability income insurance 4.2 Long-term care insurance 5 Supplemental coverage 5.1 Medicare Supplement Coverage (Medigap) 5.2 Hospital indemnity insurance 5.2.1 Scheduled health insurance plans 5.3 Dental insurance 5.4 Vision care insurance 5.5 Specified disease 5.6 Accidental Death and Dismemberment (AD&D) insurance 6 Status of the uninsured 7 See also 8 Notes and references 9 External links

[edit] History

See also: History of 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 US by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the US effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.^[4]

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.

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.^[4] The predecessors of today's health maintenance organizations (HMOs) originated in 1929, through the 1930s and on during World War II.^[5][6]

[edit] Public health care coverage

Public programs provide the primary source of coverage for most seniors 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.^[7]

[edit] Medicare

Main article: Medicare (United States)

In the United States, Medicare is a federal social insurance program that provides health insurance to elderly workers and their dependents, individuals who become totally and permanently disabled, and end stage renal disease (ESRD) patients. Some health care economists (Uwe Reinhardt of Princeton and Stuart Butler among others) assert that the third-party payment feature of this program has 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. 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.^[8]

[edit] Medicare Advantage

Medicare Advantage plans expand the health care options for Medicare beneficiaries. The option for Medicare Advantage plans is a result of 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.

[edit] Medicare Part D (Prescription Drugs)

Main article: 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.^[9]

[edit] Medicaid

Main article: Medicaid

Medicaid was instituted for the very poor in 1965. Despite its establishment, the percentage of US residents who lack any form of health insurance has increased since 1994.^[10] 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.^[11] Medicaid is a social welfare or social protection program rather than a social insurance program.

[edit] State Children's Health Insurance Program (SCHIP)

Main article: State Children's Health Insurance Program

The State Children’s Health Insurance Program (SCHIP) 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 SCHIP is under title XXI of the Social Security Act. SCHIP 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 (SCHIP Medicaid expansion programs), or combine these approaches (SCHIP combination programs). States receive enhanced federal funds for their SCHIP programs at a rate above the regular Medicaid match.

[edit] 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.

[edit] 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.^[12]

[edit] 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. Minnesota was the first to offer such a plan; 34 states 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. They serve a very small portion of the uninsurable market—about 182,000 people in the US as of 2004.^[13] In best cases, they 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.^[14] However, the plans are 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.^[15] Efforts to pass a national pool have as yet been unsuccessful, but some federal tax money has been awarded to states to innovate and improve their plans.

[edit] 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.^[2] Private health insurers have a significant economic impact in the US as employers—in 2004 they directly employed almost 470,000 people at an average salary of $61,409.^[16]

[edit] 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 health coverage in the US is employment based. According to the Centers for Medicare and Medicaid Services, nearly 100% of large firms offer health insurance to their employees.^[17] The employer typically makes a substantial contribution towards the cost of coverage.^[18] In 2007 the average employee contribution was 16% of the cost of single coverage and 28% of the cost of family coverage. These percentages have been stable since 1999.^[19] 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.

Costs for employer-paid health insurance are rising rapidly: since 2001, 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.^[20] Employer costs have risen significantly 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.^[21] The percentage of total compensation devoted to health benefits has been rising since the 1960s.^[22]

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, is falling. The percentage of workers actually covered 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. Public policy changes could also result in a reduction in employer support for employment-based health benefits.^[23]

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.^[24]

[edit] 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.^[25] 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.^[26]

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-insuring the benefits (see Self-funded health care) is not a practical option for most small employers.^[27] A RAND Corporation study published in April of 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.^[28]

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.^[29] Over time, the effect of initial underwriting "wears off" as the cost of a group regresses towards the mean—the average health status of the group eventually moves towards that of an average group.^[30] The process used to price small group coverage changes when a state enacts small group reform laws.^[31]

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.^[32]

[edit] 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.

[edit] "Portability" of group coverage

Two federal laws address the ability of individuals with employment-based health insurance coverage to maintain 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.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides for forms of both "group-to-group" and "group-to-individual" portability. When an individual moves from one employer's benefit plan to another's, the new plan must count coverage under the old plan against any waiting period for pre-existing conditions, as long as there is not a break in coverage of more than 63 days between the two plans. When certain qualified individuals lose group coverage altogether, they must be guaranteed access to some form of individual coverage. To qualify, they must have at least 18 months of prior continuous coverage. The details of access and the price of coverage are determined on a state-by-state basis.

[edit] Individually purchased

Policies of health insurance obtained by individuals not otherwise covered under policies or programs elsewhere classified. Generally major medical, short-term medical, and student policies. According to the US Census Bureau, about 9% of Americans are covered under health insurance purchased directly.^[2] The range of products available is similar to those provided through employers. On average the deductibles, co-payments and other beneficiary cost-sharing provisions actually purchased are higher, however.^[33]

Premiums vary significantly by age. In states that allow medical underwriting, premiums may also vary by health status.^[33] In the individual market the consumer pays the entire premium without benefit of an employer contribution.^[33][34] While self-employed individuals can also buy health insurance on a tax-preferenced basis, most consumers in the individual market do not receive any tax benefit.^[35] The average premiums paid by consumers in the individual market are lower than the average premiums paid for employer-sponsored coverage (this comparison is based on the entire premium for employer-sponsored coverage, including both the employee and employer contributions).^[33][35][36] Factors that may be contributing to this include: differences in age; less generous coverage in the individual market (higher beneficiary cost sharing); and a tendency for individual consumers to only buy benefits that they expect to need and use while group coverage may provide some benefits that most beneficiaries do not use.^[33][35] Average out-of-pocket spending is higher in the individual market. Individual policyholders are also more likely to report being in excellent health than are people covered by employer-sponsored health insurance, which may be a contributing factor.^[37] Premiums in the individual market rose less rapidly over the period 2002 through 2005 than did out-of-pocket premiums in the employer-sponsored market (17.8% versus 34.4%). The increase was larger for family policies than for single policies (25.3% for family policies; the increase for single policies was not statistically significant). Note that these comparisons did not adjust for changes in benefit levels.^[34]

Research confirms that consumers in the individual health insurance market are sensitive to price.^[38] Estimates of the demand elasticity in this market vary, but generally fall in the range of -0.3 to -0.1. It appears that price sensitivity varies among population subgroups, and is generally higher for younger individuals and lower income individuals.^[39] One study found that among individuals who lack other sources of health coverage, the percentage purchasing individual insurance increases steadily with income. However, even among those with incomes four times the federal poverty level, only about a fourth buy individual coverage. The self-employed, who can tax-deduct their premiums, are more likely to purchase than other individuals. The researchers concluded that affordability appears to be a key barrier to coverage in this market, and that any premium subsidies would likely have to be substantial to be effective. The researchers note that other factors such as health status and the complexity of the market can also affect the purchase of individual health insurance, but conclude that they are unlikely to be the primary drivers of low coverage rates.^[40]

Many states allow medical underwriting of applicants for individually purchased health insurance by insurance companies. A number of proposals have been advanced to limit the effect of underwriting on consumers and improve access to coverage. Each has its own advantages and limitations.^[41] One study published in 2008 found that people of average health are least likely to become uninsured if they have large group health coverage, more likely to become uninsured if they have small group coverage, and most likely to become uninsured if they have individual health insurance. But, "for people in poor or fair health, the chances of losing coverage are much greater for people who had small-group insurance than for those who had individual insurance." The authors attribute these results to the combination in the individual market of high costs and guaranteed renewability of coverage. Individual coverage costs more if it is purchased after a person becomes unhealthy, but "provides better protection (compared to group insurance) against high premiums for already individually insured people who become high risk." Healthy individuals are more likely to drop individual coverage than less-expensive, subsidized employment-based coverage, but group coverage leaves them "more vulnerable to dropping or losing any and all coverage than does individual insurance" if they become seriously ill.^[42]

Individual health insurance is primarily regulated at the state level, consistent with the McCarran-Ferguson Act. 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. The primary NAIC models affecting the individual health insurance market are:

• The Uniform Individual Accident and Sickness Policy Provision Law (UPPL);
• The Accident and Sickness Insurance Minimum Standards Model Act;
• The Advertisements of Accident and Sickness Insurance Model Regulation; and
• The Unfair Trade Practices Act.

All of these models have been implemented in one form or another by most states.

Federal laws affecting individual health insurance include:

• The Health Insurance Portability and Accountability Act (HIPAA);
• The Newborns' and Mothers' Health Protection Act;
• The Women's Health and Cancer Rights Act;
• The Fair Credit Reporting Act; and
• Federal rules governing Medicare supplement policies.^[43]

[edit] Types of medical insurance

[edit] Traditional indemnity or fee-for-service

Commercial insurance companies began offering accident and sickness insurance (disability insurance) as early as the mid-1800s.^[44][4] Hospital and medical expense policies were introduced during the first half of the 20th century. The first group medical plan was purchased from The Equitable Life Assurance Society of the United States by the General Tire & Rubber Company in 1934.^[4]

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.^[4]

[edit] Blue Cross & Blue Shield plans

Main article: Blue Cross and Blue Shield Association

During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis. The first group pre-payment plan was created at the Baylor University Hospital in Dallas, Texas.^[45][4][46] This concept became popular among hospitals during the Depression, when they were facing declining revenues. The Baylor plan was a forerunner of later Blue Cross plans. Physician associations began offering pre-paid surgical/medical benefits in the late 1930s Blue Shield plans. Blue Cross and Blue Shield plans were non-profit organizations sponsored by local hospitals (Blue Cross) or physician groups (Blue Shield). As originally structured, Blue Cross and Blue Shield plans provided benefits in the form of services rendered by participating hospitals and physicians ("service benefits") rather than reimbursements or payments to the policyholder.^[4][47]

[edit] Health Maintenance Organizations

Main article: Health Maintenance Organization

The Ross-Loos Clinic, founded in Los Angeles in 1929, is generally considered to have been the first health maintenance organization (HMO).^[48] Henry J. Kaiser organized hospitals and clinics to provide pre-paid health benefits to his shipyard workers during World War II. This became the basis for Kaiser Permanente HMO. Most early HMOs were non-profit organizations. The development of HMOs was encouraged by the passage of the Health Maintenance Organization Act of 1973. 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").^[4][47]

[edit] Managed care

Main article: 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").^[49] 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.^[50]

Rise of managed care in the US

Year	Conventional plans	HMOs	PPOs	POS plans	HDHP/SOs
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%

[edit] 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.^[51]

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.

[edit] 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."

[edit] 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.^[52] However, some Blue Cross and Blue Shield plans continue to serve as insurers of last resort.^[53] Similarly, the benefits offered by Blues plans, commercial insurers, and HMOs are converging in many respects due to 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).^[4][54][47] 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.^[55]

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).

[edit] New types of medical plans

One approach to addressing increasing premiums, dubbed "consumer driven health care," 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). An HSA is an untaxed private bank account; withdrawals are only penalized if the money is spent on non-medical items or services. Consumers wishing to deposit pre-tax funds in an HSA must be enrolled in a high-deductible insurance plan with a number of restrictions on benefit design; in 2007, qualifying plans must have a minimum deductible of US$1,050. HSAs enable healthier individuals to pay less for insurance and bank money for their own future health care expenses.^[56] HSAs are one form of tax-preferenced health care spending account. Others include Archer Medical Savings Accounts (MSAs), which have been superseded by the new HSAs (although existing MSAs are grandfathered), Flexible Spending Arrangements (FSAs) and Health Reimbursement Accounts (HRAs). HSAs, FSAs and HRAs are most commonly used as part of an employee health benefit package.^[57]

Limited Medical Benefit Plans pay for routine care and do not pay for catastrophic care. As such, 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.

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.^[58]

[edit] 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.

[edit] Disability income insurance

Main article: Disability insurance

Disability income (DI) insurance pays benefits to individuals who lose their ability to work due to 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).^[59] 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). ^[60] Business owners can also purchase disability overhead insurance to cover the overhead expenses of their business while they are unable to work.^[61]

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).

[edit] Long-term care insurance

Main article: 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.^[62] 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.^[63]

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.^[64]

[edit] 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.^[4]

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.^[4]

[edit] Medicare Supplement Coverage (Medigap)

Main article: 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.

[edit] 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.^[4][47]

[edit] 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 then comprehensive health insurance. Annual benefit maximums for a typical scheduled health insurance plan may range from $1,000 to $25,000..^[65]

[edit] Dental insurance

Main article: Dental insurance

Dental insurance helps pay for the cost of necessary dental care. Many medical expense plans include coverage for dental expenses, and stand-alone dental insurance is also available. Discount dental programs are also available. These do not constitute insurance, but provide participants with access to discounted fees for dental work.

[edit] Vision care insurance

Main article: Vision 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.^[4]

[edit] Specified disease

Main article: Critical illness insurance

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.^[4]

[edit] Accidental Death and Dismemberment (AD&D) insurance

Main article: 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.^[4]

[edit] Status of the uninsured

Main article: Uninsured in the United States

In 2006, 47 million people in the US (15.8% of the population) were without health insurance for at least part of the year. The percentage of the non-elderly population who are uninsured has been generally increasing since the year 2000.^[3] Among the uninsured population, nearly 38 million were employment-age adults (ages 18 to 64), and more than 27 million worked at least part time. About 37% of the uninsured live in households with incomes over $50,000.^[2] According to the Census Bureau, 36.7 million of the uninsured are legal US citizens. Another 10.2 million are non-citizens, but the Census Bureau does not distinguish in its estimate between legal non-citizens and illegal immigrants.^[2] It has been estimated that nearly one fifth of the uninsured population is able to afford insurance, almost one quarter is eligible for public coverage, and the remaining 56% need financial assistance (8.9% of all Americans).^[66] An estimated 5 million of those without health insurance are considered "uninsurable" because of pre-existing conditions.^[15]

A report published by the Kaiser Family Foundation in April of 2008 found that economic downturns place a significant strain on state Medicaid and SCHIP programs. The authors estimated that a 1% increase in the unemployment rate would increase Medicaid and SCHIP enrollment by 1 million, and increase the number uninsured by 1.1 million. State spending on Medicaid and SCHIP would increase by $1.4 billion (total spending on these programs would increase by $3.4 billion). This increased spending would occur at the same time state government revenues were declining. During the last downturn, the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) included federal assistance to states, which helped states avoid tightening their Medicaid and SCHIP eligibility rules. The authors conclude that Congress should consider similar relief for the current economic downturn.^[67]

[edit] See also

• America’s Health Insurance Plans
• COBRA
• Economic capital
• Healthcare reform
• Health care reform in the United States
• Health economics
• Health Insurance Portability and Accountability Act
• Health maintenance organization
• Injury cover
• National health insurance
• Physicians for a National Health Program
• Public health
• Publicly-funded health care
• RAND Health Insurance Experiment
• Self-funded health care
• Sicko
• Social security
• Social welfare
• Uninsured in the United States
• Universal health care

[edit] Notes and references

[edit] External links

• Employee Benefit Research Institute (EBRI)
• National Association of State Comprehensive Health Insurance Plans (NASCHIP)
• National Association of Health Underwriters (NAHU)
• Kaiser Family Foundation
• Center for Studying Health System Change
• AHIP Center for Policy and Research
• U.S. Census Bureau - Health Insurance Statistics
• National Health Expenditure Data
• National Center for Health Statistics
• National Association of Insurance Commissioners
• Health Claim Appeals - A Guide to Resolving Health Insurance Disputes
• Centers for Medicare and Medicaid Services
• History of Health Insurance in the United States
• "Healthcare 2015 and U.S. health plans: How U.S. health plans can succeed in the changing healthcare environment," from the IBM Institute for Business Value
• Glossary of managed care terms
• Georgetown University Consumer Guides to Health Insurance

v • d • e  United States topics History Timeline Pre-Columbian · Colonial era (Thirteen Colonies) · Declaration of Independence · American Revolution · Westward expansion · Civil War · Reconstruction · World War I · Great Depression · World War II · Korean War · Cold War · Vietnam War · Civil Rights Movement · War on Terrorism By topic Demographic · Industrial · Military · Postal Government     Law Constitution Bill of Rights Separation of powers Enforcement Department of Justice (DoJ) Federal Bureau of Investigation (FBI) Legislature House Senate Executive Cabinet Federal agencies Policies Judiciary Supreme Court Appeals Intelligence Central Intelligence Agency (CIA) Defense Intelligence Agency (DIA) National Security Agency (NSA) Military Army Navy Coast Guard Air Force Marines Politics Political divisions · Political parties (Democrats · Republicans · Other) · Elections (Electoral College) · Ideologies · Scandals · Red states and blue states · Uncle Sam · Puerto Rico (Political status · Independence movement) Geography Territory · States · Cities · Counties · Regions (New England · Mid-Atlantic · Southern · Midwest · Great Plains · Northwest · Southwest) · Mountains (Appalachian · Rocky) · Rivers (Mississippi · Missouri · Colorado) · Islands · Extreme points · National Park System · Water supply and sanitation Economy United States dollar · Companies · Wall Street · Federal Reserve · Banking · Insurance · Standard of living (Personal / household income · Income inequality · Homeownership) · Communications · Transportation (Cars · Trucks · Highways · Airports · Railroads) · Tourism Society Demographics · Languages (American English · Spanish) · Religion · Social class (American Dream · Affluence · Middle class · Poverty · Educational attainment · Professional and working class conflict) · Media · Sports · Education · Holidays · Crime · Prisons · Health care · Health insurance Culture Music (Classical · Folk · Popular · Jazz) · TV / Film (Hollywood) · Radio · Literature (Folklore · Poetry · Transcendentalism · Harlem Renaissance · Beat Generation) · Visual arts (Abstract expressionism) · Cuisine · Dance · Architecture · Fashion · Flag Issues Abortion · Adolescent sexuality · Affirmative action · American exceptionalism · Anti-Americanism · Capital punishment · Drug policy / Prohibition · Energy policy · Environmentalism · Gun politics · Human rights · Immigration (United States–Mexico barrier) · Obesity · Pornography · Racial profiling · Racism · Same-sex marriage Portal