The ‘How’ and ‘Why' of Health Insurance
While many countries around the world offer universal health care, the United States isn't one of them. In these countries, health care is free at the point of being needed and is paid for by the government and taxation. While these systems aren't perfect and can result in problems such as long waiting times and overstretched departments, it does mean that no one ever needs to worry about not being able to pay for treatment.
In the United States, to access health care, you must either be able to pay for it outright or have insurance that covers the cost. Most Americans pay monthly premiums so that if they get sick, their insurance company foots the bill. Because health care can be very costly, it has become a key point in discussions around wealth inequality.
Health care costs are the number one cause of bankruptcy in the United States. You can try and protect yourself from this catastrophic financial outcome by making sure you have adequate insurance to cover all health eventualities, but the system is complicated, and it's easy to make mistakes. Mistakes can be extremely costly.
Here's a short rundown of how it works.
Why You Need Insurance
Americans need health insurance to ensure they're covered if they become ill or are injured. The vast majority of Americans will need an insurance policy. The only citizens who don't are the very rich, the very poor, and people over the age of 65.
Very wealthy people won't need insurance because they can simply cover the cost of their medical care without any assistance. People who are very poor may qualify for Medicaid, which will help them with health care costs. Those over the age of 65, who have paid into Medicare, are covered. Everyone else will need some kind of insurance. Everyone gets sick, and everyone risks bankruptcy if they get sick without insurance.
We take out insurance for lots of things in life - our homes, our cars, and insurance that protects us when we travel. However, it's somewhat more essential than say, car insurance. If you don't have car insurance and your car breaks down, you can always hop on a bus or train for as long as you need to. It might be inconvenient, but it's usually doable. We can't provide our own medical treatment, nor can we simply get another body. It's this that makes health insurance an absolute must.
Some employers offer health care as a benefit to their employees. This was introduced after the Second World War when most people were uninsured, and policies covered only the most basic of care as a way to entice employees during a wage freeze. Because health insurance premiums are non-taxable, a dollar of health insurance is actually worth more than a dollar of money.
The Affordable Care Act requires all Americans (other than those who can self-pay and the over-65s) to have health insurance, and is intended to make it easier for those who can't afford it to get coverage. The idea is that reducing the number of people who can't pay their medical bills will make accessing health care more affordable for all of us, as unpaid bills can cause price rises.
Because there's such a range of health care providers out there, there's an endless amount of choice. Before you can make a properly educated decision, you'll need to understand the difference between the different elements of health insurance, and what you'd like to cover.
Every insurance company will charge a monthly premium. Even if you never make a single claim on your health insurance, you'll pay a premium every month for the life of your policy. This is the foundation of health insurance. However, it isn't the only cost.
Insurance policies also include what's called a 'deductible,' which is the amount of your medical bill you're required to pay before your insurance kicks in. The amount of your deductible depends on your policy. They can be just a few hundred dollars or several thousand. People with long-term or chronic conditions often choose policies with higher premiums and lower deductibles, as this makes their treatments more affordable. People who are healthy and have no reason to believe they will need medical treatment any time soon may opt for the opposite, as they are unlikely to need to pay a deductible and can enjoy lower monthly premiums in the meantime.
You'll also pay a co-payment for each and every visit to your doctor or hospital. These are small amounts, and you're required to pay these in their entirety until your deductible threshold is reached. You'll also pay a percentage of any surgeries or procedures you may need. This is known as co-insurance.
With so many different elements, it's not surprising that so many people find health insurance confusing and expensive. However, it's more than worth taking the time to find the right policy. Medical debt can be financially crippling. Having a health insurance plan that allows you to be seen for minor illnesses, and access to preventive care also reduces the risk that you'll develop serious complications.
Those people who can't afford any kind of medical insurance at all may qualify for Medicaid. If you need to do this, your local state government will be able to help you apply.
Once you've gotten to grips with different types of health care plans and what might work best for you, it's time to find a provider. Again, there are several options.
Many Americans receive health coverage via either their employer or their spouse's employer. People who work for smaller companies that aren't able to offer health coverage may still be able to get coverage through employment. Many professional organizations and unions offer coverage to members. If you're not able to take advantage of either of these options, you'll need to seek an individual policy.
Most workplace policies will be provided by a Health Maintenance Organization or HMO. These policies are generally a package of health care services - anything not included in the package isn't covered. Your treatment is provided by a primary care physician, and specialist doctors are only brought in if your physician deems it appropriate. This means that you'll only receive treatment that your PCP thinks is needed, and you'll not be covered if you decide to seek treatment elsewhere.
If you'd rather be able to see any doctor you like, whenever you like, you'll need a 'fee for service' plan. These policies don't require you to have a primary care physician, and you won't need their approval to seek treatment. However, these plans tend to have higher costs - both premiums and deductibles. This is to discourage people with these plans from accidentally driving up costs by seeking treatment when it isn't needed.
If neither of those sounds like the perfect fit for you, you may be able to take out a policy with a Preferred Provider Organization. These companies sit somewhere between an HMO and a fee for service plan. You have a PCP as with an HMO, but pay more for the flexibility to see another doctor without your PCP needing to refer you.
Insuring a Long-term Illness
It feels kind of icky to think about insuring a serious illness before you've been diagnosed with one, but it's actually easier to plan ahead than try and find insurance after knowing it (some providers consider a condition you've already been diagnosed with as a pre-existing condition and won't cover it). If you have a prevalent family history of cancer or other conditions or have been told by your doctor that you're at risk of developing some form of the disease, you'll need to think about insurance.
Cancer-specific insurance policies cover the shortfall that happens when medical expenses covered by your standard insurance policy are exceeded, and your provider will no longer pay. Cancer policies also cover other out-of-pocket expenses that can occur when you're ill for a long time, such as childcare expenses and loss of earnings.
If you've been diagnosed with cancer and need emotional support not offered by a medical provider, there are lots of organizations out there who may be able to help. Try Cancer Support VVSB for help and advice. You could also find a support group in the local area to contact people who have had similar experiences.
If you're at a low risk of developing cancer but have a family history of other conditions, you may want to consider taking out a critical illness policy. These differ from cancer-specific policies and are designed to cover other life-threatening illnesses such as organ failure or heart attacks. Depending on your insurance provider, you may be able to get a policy that covers both cancer and critical illness, so make sure you have all the information before you sign on the line.