| The cost of health care in the United States | | | | lower insurance premiums and out-of-pocket |
| is expensive and is escalating. A majority of | | | | costs to the consumer is the formation of |
| Americans cannot afford the cost of | | | | preferred providers organization (PPO). A PPO |
| medicines, physicians' fees, or | | | | is a group of private practitioners who sell |
| hospitalization without some form of health | | | | their services at reduced rates to insurance |
| insurance. Health insurance is a contract | | | | companies. When a patient chooses a provider |
| between an insurance company and an | | | | that is in that company's PPO, the insurance |
| individual or group for the payment of | | | | company pays a higher percentage of the fee. |
| medical care costs. After the individual or | | | | When a non-PPO provider is used, a much lower |
| group pays a premium to an insurance company, | | | | portion of the fee is paid. |
| the insurance company pays for part or all of | | | | |
| the medical costs depending on the type of | | | | A major advantage of a fee-for-service plan |
| insurance and benefits provided. The type of | | | | is that the patient has options in selecting |
| insurance policy purchased greatly influences | | | | health-care providers. Several disadvantages |
| where you go for health care, who provides | | | | are that patients may not routinely receive |
| the health care, and what medical procedures | | | | comprehensive, preventive health care; |
| can be performed. The three basic health | | | | health-care costs to the patient may be high |
| insurance plans include a private, | | | | if unexpected illnesses or injuries occur; |
| fee-for-service plan; a prepaid group plan; | | | | and it may place heavy demands on time in |
| and a government-financed public plan. | | | | keeping track of medical records, invoices, |
| | | | and insurance reimbursement forms. |
| Private Fee-For-Service Insurance Plan | | | | |
| | | | Prepaid Group Insurance |
| Until recently, private, fee-for-service | | | | |
| insurance was the principal form of health | | | | In prepaid group insurance, health care is |
| insurance coverage. In this plan an | | | | provided by a group of physicians organized |
| individual pays a monthly premium, usually | | | | into a health maintenance organization (HMO). |
| through an employer, which ensures health | | | | HMOs are managed health-care plans that |
| care on a fee-far-service basis. On incurring | | | | provide a full range of medical services for |
| medical costs, the patient files a claim to | | | | a prepaid amount of money. For a fixed |
| have a portion of these costs paid by the | | | | monthly fee, usually paid through pay roll |
| insurance company. There is usually a | | | | deductions by an employer, and often a small |
| deductible, an amount paid by the patient | | | | deductible, enrollees receive care from |
| before being eligible for benefits from the | | | | physicians, specialists, allied health |
| insurance company. For example, if your | | | | professionals, and educators who are hired or |
| expenses are $1000, you may have to pay $200 | | | | contractually retained by the HMO. HMOs |
| before the insurance company will pay the | | | | provide an advantage in that they provide |
| other $800. Usually the lower the deductible, | | | | comprehensive care including preventive care |
| the higher the premiums will be. After the | | | | at a lower cost than private insurance over a |
| deductible is met the insurance provider pays | | | | long period of coverage. One drawback is that |
| a percentage of the remaining balance. | | | | patients are limited in their choice of |
| | | | providers to those who belong to an HMO. |
| Typically there are fixed indemnity benefits, | | | | |
| specified amounts that are paid for | | | | Government Insurance |
| particular procedures. If your policy pays | | | | |
| $500 for a tonsilectomy and the actual cost | | | | In a government insurance plan the government |
| was $1000, you owe the health care provider | | | | at the federal, state, or local level pays |
| $500. There are often exclusions, certain | | | | for the health-care costs of elgible |
| services that are not covered by the policy. | | | | participants. Two prominent examples of this |
| Common examples include elective surgery, | | | | plan are Medicare and Medicaid. Medicare is |
| dental care, vision care, and coverage for | | | | financed by social security taxes and is |
| preexisting illnesses and injuries. Some | | | | designed to provide health care for |
| insurance plans provide options for adding | | | | individuals 65 years of age and older, the |
| dental and vision care. Other common options | | | | blind, the severely disabled, and those |
| include life insurance, which pays a death | | | | requiring certain treatments such as kidney |
| benefit, and disability insurance, which pays | | | | dialysis. Medicaid is subsidized by federal |
| for income lost because of the inability to | | | | and state taxes. It provides limited health |
| work as a result of an illness or injury. The | | | | care, generally for individuals who are |
| more options added to the insurance plan, the | | | | eligible for benefits and assistance from two |
| more expensive the insurance will be. | | | | programs: Aid to Families with Dependent |
| | | | Children and Supplementary Security Income. |
| One strategy insurance companies are using to | | | | |