health insurance

health insurance,

prepayment plan providing services or cash indemnities for medical care needed in times of illness or disability. It is effected by voluntary plans, either commercial or nonprofit, or by compulsory national insurance plans, usually connected with a social securitysocial security,
government program designed to provide for the basic economic security and welfare of individuals and their dependents. The programs classified under the term social security differ from one country to another, but all are the result of government legislation
..... Click the link for more information. program.

Health Insurance Worldwide

Compulsory accident and sickness insurance was initiated (1883–84) in Germany by Otto von Bismarck; it was adopted by Great Britain, France, Chile, the Soviet Union, and other nations after World War I. In Britain the National Health Insurance Act of 1946, which went into effect in 1948, provided the most comprehensive compulsory medical care plan introduced anywhere up to that time. Under the plan the individual obtained free medical attention from any doctor participating in the national health service. The cost was met by the national government and local taxation; a small charge for some services has been instituted since then. In 1958 the Canadian Hospital and Diagnoses Act provided full hospital service almost free of charge in public wards; more comprehensive coverage was added in 1967. The program is financed by the federal government but administered by the provinces. National health insurance has been widely adopted in Europe and parts of Asia. The United States is the only Western industrial nation without some form of comprehensive national health insurance.

Health Insurance in the United States

In the past, health insurance in the United States took the form of voluntary programs. Such programs date from about 1850, when health insurance was provided chiefly by cooperative mutual benefit and fraternal beneficiary associations. Limited coverage by commercial companies was also introduced during that period, and subsequently many plans were established by industries and labor unions.

Advocacy of government health insurance in the United States began in the early 1900s. Theodore Roosevelt made national health insurance one of the major planks of the Progressive party during the 1912 presidential campaign, and in 1915 a model bill for health insurance was presented, but defeated, in numerous state legislatures. After 1920 opposition to government-sponsored plans was led by the American Medical Association and was said to be motivated by the fear that government participation in medical care might lead to socialized medicinesocialized medicine,
publicly administered system of national health care. The term is used to describe programs that range from government operation of medical facilities to national health-insurance plans.
..... Click the link for more information. .

Over the years in the United States, many plans have been set up by societies of practicing physicians, but the largest enrollment has been in Blue Cross and Blue Shield plans. These were set up as community-sponsored, nonprofit service plans based on contracts with hospitals and with subscribers. Most general voluntary plans accept subscribers, in groups or as individuals. These plans extend coverage to dependents and exclude accidents and diseases covered by workers' compensationworkers' compensation,
payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work.
..... Click the link for more information. laws. Although valuable in cushioning the financial distress caused by illness or injury, voluntary health insurance not only limits benefits in order to avoid prohibitive rates but excludes many people, particularly the poor, who cannot afford it, and senior citizens, for whom the cost is often prohibitive. By the mid-1990s many of the Blue Cross companies, which had been suffering financially, were reorganizing, and by 2002 more than 20% of Blue Cross members were covered by plans that had converted to for-profit status.

During the middle of the 20th cent. it became apparent that legislation was necessary to provide medical care for the elderly. A voluntary federal-state grant-in-aid program providing medical care to the elderly was first implemented in 1961. Legislation proposed by President Kennedy to provide medical care for the aged through the social security mechanism was defeated in 1961, but in 1965, during President Lyndon B. Johnson's administration, Federal legislation in the form of MedicareMedicare,
national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services.
..... Click the link for more information. for the aged and MedicaidMedicaid,
national health insurance program in the United States for low-income persons and persons with disabilities. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services.
..... Click the link for more information. for the indigent was enacted. Since 1966, both public and private health insurance has played a key role in financing health-care costs in the United States.

Over 70% of all medical bills are now covered by government programs and insurance, and the number of people covered by some form of health insurance increased from about 12 million in 1940 to over 225 million in 1996. About 38 million Americans were enrolled in Medicare, and there were more than 36 million Medicaid recipients. In that same year, about 187 million people were covered by private health insurance. However, more than 44 million Americans were not covered by any health insurance, and those who are have seen significant cost increases. As premiums increased from $16.8 billion in 1970 to $310 billion in 1995, and national health-care costs rose from $75 billion in 1970 to just over $1 trillion in 1996, many businesses increased the amount of money employees contribute toward their health insurance. This situation has led to continuing political pressure for restructuring of the national health-care insurance system.

Congress debated many bills for a national health insurance plan in the 1960s and 70s, and in 1973 it passed the Health Maintenance Organization (HMO) Act, which provided grants to employers who set up HMOs (see health maintenance organizationhealth maintenance organization
(HMO), type of prepaid medical service in which members pay a monthly or yearly fee for all health care, including hospitalization. The term "health maintenance organization" was coined by a health policy analyst, Dr.
..... Click the link for more information. ). Unlike insurers, HMOs provide care directly to patients; HMOs were viewed as low-cost alternatives to hospitals and private doctors. In 1997 approximately 651 HMOs provided care to 66.8 million people.

In the 1980s and 90s political leaders again advanced a variety of national health insurance proposals. One plan backed by leading Democrats was known as "pay or play" because it would have forced employers to provide health insurance or pay into a national fund that would cover uninsured workers. A second, advanced by President G. H. W. BushBush, George Herbert Walker,
1924–2018, 41st President of the United States (1989–93), b. Milton, Mass., B.A., Yale Univ., 1948. Career in Business and Government
..... Click the link for more information. in 1992, would have provided tax breaks, vouchers, and other incentives to employers to extend health insurance benefits. A third proposal, based on the Canadian model and nationalized health care, was opposed by most doctors and the insurance industry.

In 1993, President ClintonClinton, Bill
(William Jefferson Clinton), 1946–, 42d President of the United States (1993–2001), b. Hope, Ark. His father died before he was born, and he was originally named William Jefferson Blythe 4th, but after his mother remarried, he assumed the surname of his
..... Click the link for more information. , who had been elected on a promise of health-care reform, proposed a national health insurance program that would have ultimately provided coverage for most citizens, but opposition by insurance, medical, small-business, and other groups killed it. In 1999, Clinton and Congress battled over developing a "patient's bill of rights," to protect people from denial of service and other HMO limitations.

A federal overhaul of the U.S. health insurance system again became a national issue in 2009 after the election of President Barack ObamaObama, Barack
(Barack Hussein Obama 2d), , 1961–, 44th president of the United States (2009–17), b. Honolulu, grad. Columbia (B.A. 1983), Harvard Law School (J.D. 1991).
..... Click the link for more information. . The Democratic president and Democratic-controlled Congress attempted to craft a federal law that would expand U.S. health-insurance coverage, but despite securing broader support than President Clinton had they still faced difficulty in winning passage of the legislation, which was only achieved in Mar., 2010.

The resulting legislation largely left the current U.S. health insurance system unmodified, attempting to increase the number of Americans covered by health insurance to an estimated 95% by 2019 by expanding Medicaid, providing subsidies to low- and middle-income families, requiring many companies to provide insurance and most Americans to have it, creating insurance exchanges on which individuals could shop for health insurance, and increasing taxes on the wealthiest Americans. Participation in the expansion of Medicaid (effective 2014) is voluntary for the states, and only about half have elected to participate. Many individual states have developed their own health insurance alternatives by using managed-health-caremanaged health care,
system of health-care delivery that aims to control costs by assigning set fees for services, monitoring the need for procedures such as tests and surgical operations, and stressing preventive care.
..... Click the link for more information. systems that monitor the type of services offered and have set fees for each service, by expanding Medicaid to help serve formerly ineligible patients, and by establishing statewide or small-business health insurance alliances that pool people into a large group that has more buying power.

Donald TrumpTrump, Donald John,
1946–, 45th president of the United States (2017–), b. New York City. Prior to his election as president in 2016, he was a business executive and television personality rather than a political leader. After attending Fordham Univ.
..... Click the link for more information. , who criticized the 2010 health-care law during his presidential campaign and called for its replacement, in 2017 moved as president to limit it and, after failing to secure its replacement, acted further to limit or undermine it, including ending government funding to health insurance companies to subsidize plans under the act and ending tax penalties for not having insurance. In the 2018 elections, however, public support for expanded health insurance appeared to be strong. The repeal of the tax penalty led a federal judge in Dec., 2018, to declare the individual mandate to have insurance and thus the entire law unconstitutional, but that judgment was appealed.

Bibliography

See H. Eckstein, The English Health Service (1958); D. S. Hirshfield, The Lost Reform (1970); M. V. Pauly, Medical Care at Public Expense (1971); J. Blanpain, National Health Insurance (1978); O. Anderson, Health Services in the United States (1985); F. T. O'Grady, Individual Health Insurance (1988); D. Long, Principles of Life and Health Insurance (1988).

Health Insurance

Related to Health Insurance: Blue cross blue shield

Health Insurance

Health insurance originated in the Blue Cross system that was developed between hospitals and schoolteachers in Dallas in 1929. Blue Cross covered a pre-set amount of hospitalization costs for a flat monthly premium and set its rates according to a "community rating" system: Single people paid one flat rate, families another flat rate, and the economic risk of high hospitalization bills was spread throughout the whole employee group. The only requirement for participation by an employer was that all employees, whether sick or healthy, had to join, again spreading the risk over the whole group. Blue Shield was developed following the same plan to cover ambulatory (i.e., non-hospital) medical care.

The Blue Cross/Blue Shield plans were developed to complement the traditional method of paying for health care, often called fee-for-service. Under this method, a physician charges a patient directly for services rendered, and the patient is legally responsible for payment. The Blue Cross/Blue Shield plans are called indemnity plans, meaning they reimburse the patient for medical expenses incurred. Indemnity insurers are not responsible directly to physicians for payment, although physicians typically submit claims information to the insurers as a convenience for their patients. For insured patients in the fee-for-service system, two contracts are created: one between the doctor and the patient, and one between the patient and the insurance company.

Traditional property and casualty insurance companies did not offer health insurance because with traditional rate structures, the risks were great and the returns uncertain. After the Blue Cross/Blue Shield plans were developed, however, the traditional insurers noted the community rating practices and realized that they could enter the market and attract the healthier community members with lower rates than the community rates. By introducing health screening to identify the healthier individuals, and offering lower rates to younger individuals, these companies were able to lure lower-risk populations to their health plans. This left the Blue Cross/Blue Shield plans with the highest-risk and costliest population to insure. Eventually, the Blue Cross/Blue Shield plans also began using risk-segregation policies and charged higher-risk groups higher premiums.

During the 1960s, Congress enacted the Medicare program to cover health care costs of older patients and Medicaid to cover health care costs of indigent patients (Pub. L. No. 81-97). The federal government administers the Medicare Program and its components: Part A, which covers hospitalization, and Part B, which covers physician and outpatient services. The federal government helps the states fund the Medicaid Program, and the states administer it. Medicare, Part A, initially covered 100 percent of hospitalization costs, and Medicare, Part B, covered 80 percent of the usual, customary, and reasonable costs of physician and outpatient care.

Under both the fee-for-service system of health care delivery, where private indemnity insurers charge premiums and pay the bills, and the Medicare-Medicaid system, where taxes fund the programs and the government pays the bills, the relationship between the patient and the doctor remains distinct. Neither the doctor nor the patient is concerned about the cost of various medical procedures involved, and fees for services are paid without significant oversight by the payers. In fact, if more services are performed by a physician under a fee-for-service system, the result is greater total fees.

From 1960 to 1990, per capita medical costs in the United States rose 1,000 percent, which was four times the rate of inflation. As a consequence, a different way of paying for health care rose to prominence. "Managed care," which had been in existence as long as indemnity health insurance plans, became the health plan of choice among U.S. employers who sought to reduce the premiums paid for their employees' health insurance.

Managed Care essentially creates a triangular relationship among the physician, patient (or member), and payer. Managed care refers primarily to a prepaid health-services plan where physicians (or physician groups or other entities) are paid a flat per-member, per-month (PMPM) fee for basic health care services, regardless of whether the patient seeks those services. The risk that a patient is going to require significant treatment shifts from the insurance company to the physicians under this model.

Managed care is a highly regulated industry. It is regulated at the federal level by the Health Maintenance Organization Act of 1973 (Pub. L. No. 93-222) and by the states in which it operates. The health maintenance organization (HMO) is the primary provider of managed care, and it functions according to four basic models:

The staff-model HMO employs physicians and providers directly, and they provide services in facilities owned or controlled by the HMO. Physicians under this model are paid a salary (not fees for service) and share equipment and facilities with other physician-employees.
The group-model HMO contracts with an organized group of physicians who are not direct employees of the HMO, but who agree to provide basic health care services to the HMO's members in exchange for capitation (i.e., PMPM) payments. The capitation payments must be spread among the physicians under a pre-determined arrangement, and medical records and equipment must be shared.
The individual-practice-association (IPA) model HMO is based around an association of individual practitioners who organize to contract with an HMO, and as a result treat the HMO's patients on a discounted fee-for-service basis. Although there is no periodic limit on the amount of payments from the HMO, the physicians in an IPA must have an explicit agreement that determines the distribution of HMO receipts and sets forth the services to be performed.
The direct-service contract/network HMO model is the most basic model. Under this variation, an HMO contracts directly with individual providers to provide service to the HMO's patients, on either a capitated or discounted fee-for-service basis.

All four of these models share one very important feature of HMOs: The health care providers may not bill patients directly for services rendered, and they must seek any and all reimbursement from the HMO.

Another form of managed care is the preferred provider organization (PPO). A PPO does not take the place of the traditional fee-for-service provider (as does a staff–model HMO), and does not rely on capitated payments to providers. Instead, a PPO contracts with individual providers and groups to create a network of providers. Members of a PPO may choose any physician they wish for medical care, but if they choose a provider in the PPO network, their copayments—predetermined, fixed amounts paid per visit, regardless of treatment received—are significantly reduced, thus providing the incentive to stay in the network. No federal statutes govern PPOs, but many states regulate their operations. There are three basic PPO models:

In a gatekeeper plan, a patient must choose a primary-care provider from the PPO network. This provider tends to most of the patient's health care needs and must authorize any referrals to specialists or other providers. If the patient "self-refers" without authorization, the cost savings of the PPO will not apply.
The open-panel plan, on the other hand, allows a patient to see different primary-care physicians and to self-refer within the PPO network. The financial penalties for seeking medical care out of the PPO network are much greater in this less-structured model than in the gatekeeper model.
The exclusive-provider plan shifts onto the patient all of the costs of seeking medical care from a non-network provider, and in this respect it is very similar to an HMO plan.

Other forms of health care delivery that encompass features of managed care include point-of-service (POS) plans and physician-hospital organizations (PHOs). A POS plan is a combination of an HMO and an indemnity insurance plan, allowing full coverage within the network of providers and partial coverage outside of it. A patient must choose one primary-care physician and might pay a higher monthly rate to the POS if the physician is not in the HMO network. Another version of the POS plan creates "tiers" of providers, which are rated by cost-effectiveness and quality of patient outcomes. A patient may choose a provider from any tier and then will owe a monthly premium payment set to the level of that tier.

A PHO is very similar to an IPA in that it is an organization among various physicians (or physician groups) and a hospital, set up to contract as a unit with an HMO. Physician-hospital networks, within HMOs or through PHO contracts, further the managed-care mission of "vertical integration," which is the coordination of health care (and payment for that care) from primary care through specialists to acute care and hospitalization.

Managed care has affected Medicare as well as private health care. In 1983, Congress changed the payment system for Medicare, Part A, from a fee-for-service-paid-retroactively system to a prospective payment system, which fixes the amount that the federal government will pay based on a patient's initial diagnosis, not on the costs actually expended (Pub. L. No. 98-369). Medical diagnoses are grouped according to the medical resources that are usually consumed to treat them, and from that grouping is determined a fixed amount that Medicare will pay for each diagnosis. Although this system is applicable only to the acute-care hospital setting, it is clearly an example of shifting the risk of the cost of health care from the payer (in this case, Medicare) to the provider, which is an important element of managed care. In addition, many HMOs now offer Medicare managed-care plans, and many older citizens opt for these plans because of their paperless claims and preset co-payments for physician visits and pharmaceuticals.

The most recent development in the area of health insurance is the medical savings account (MSA), a pilot program that was created by the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191). The premise behind the MSA is to take the bulk of the financial risk, and premium payments, away from the managed-care and indemnity insurers; and to allow individuals to save money, tax free, in a savings account for use for medical expenses. Individuals or their employers purchase major-medical policies, medical insurance policies with no coverage for medical expenses until the amount paid by the patient exceeds a predetermined maximum amount, such as $2,500 per year. These policies have extremely high deductibles and correspondingly low monthly premiums. The participants take the money that they would have spent on higher premiums and deposit it in an MSA. This money accrues through monthly deposits and also earns interest, and it can be spent only to pay for medical care. The major-medical policy applies if a certain amount equal to the high deductible is expended or if the account is depleted. MSAs do not incorporate any of the cost-controlling aspects of managed-care organizations, and instead depend on competition among providers for patients (who are generally more cost-conscious about spending their own money) to encourage efficient health-care delivery and to discourage unnecessary expense.

Litigation has resulted from insurance companies seeking to place limits for certain conditions. The decision by the U.S. Court of Appeals for the Seventh Circuit in Doe and Smith v. Mutual of Omaha Insurance Co., 179 F.3d 557 (7th Cir. 1999), cert. denied, 120 S. Ct. 845 (2000), concerns AIDS caps insurance policies. At issue in the case was whether the Americans with Disabilities Act (ADA) covers the content of insurance policies. The plaintiffs, who sued under the pseudonyms john doe and Richard Smith, argued that Mutual of Omaha Company had discriminated against them by selling them insurance policies with lifetime caps on AIDS-related expenditures. John Doe's policy had a lifetime AIDS cap of $100,000, and Richard Smith's policy had a cap of $25,000. Other health insurance policies sold by the company had lifetime caps for other diseases of $1 million. The Seventh Circuit found that AIDS caps do not violate the ADA. The court found that Doe and Smith were not discriminated against, because the company did offer them an insurance policy. The ADA, the court determined, would only prohibit Mutual of Omaha from singling out disabled people and refusing to sell them insurance. The court ruled that the ADA did not prohibit the company from offering disabled parties insurance policies with different terms and conditions from other people. The court held the plaintiffs were not denied a policy because they had AIDS but rather were denied coverage for certain AIDS treatments.

In August 2000, a federal appeals court upheld the dismissal of a class-action RICO suit against Aetna-U.S. Healthcare Inc. after finding that the plaintiffs had failed to allege a valid RICO injury and that they therefore lacked standing to sue. In Maio v. Aetna Inc., 221 F.3d 472, 493 (3d Cir. 2000) the court found that the plaintiffs were unable to demonstrate that Aetna's policies gave less of a health care product than what Aetna had promised to deliver in terms of the level and quality of health care coverage under its HMO plan. The court found that without proof that systemic practices actually negatively affected the health care that Aetna provided to its HMO members through its participating providers, the case could not stand. The consumers who alleged that Aetna had lured them in with false promises of high-quality care, while secretly pressuring doctors to cut costs and to provide only minimal care, did not prevail in the suit.

Cross-references

Health Care Law; Physicians and Surgeons.

health insurance

health insurance

health′ insur`ance

health insurance

health insurance

health insurance,

Health Insurance Worldwide

Health Insurance in the United States

Bibliography

health insurance

health insurance

medical expense insurance

health insurance

health in·sur·ance

health in·sur·ance

Patient discussion about health insurance

Health Insurance

Health Insurance

Further readings

Cross-references

Health insurance

Health Insurance

Health insurance.

health insurance

Words related to health insurance

noun insurance against loss due to ill health

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