Paying for Health Care - Health

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