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Health Insurance

Definition

Health insurance is insurance that covers the whole or a part of the risk of a person incurring medical expenses, spreading the risk over a large number of persons. By estimating the overall risk of health care and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity. According to the Health Insurance Association of America, health insurance is defined as "coverage that provides for the payments of benefits as a result of sickness or injury. It includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment".

What is 'Health Insurance'

Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly. It is often included in employer benefit packages as a means of enticing quality employees. The cost of health insurance premiums is deductible to the payer, and benefits received are tax-free.

Explaining 'Health Insurance'

Managed care insurance plans require policy holders to receive care from a network of designated health care providers for the highest level of coverage. If patients seek care outside the network, they must pay a higher percentage of the cost. In some cases, the insurance company may even refuse payment outright for services obtained out of network. Many managed care plans require patients to choose a primary care physician who oversees the patient's care and makes recommendations about treatment. Insurance companies may also deny coverage for services that were obtained without preauthorization. In addition, insurers may refuse payment for name brand drugs if a generic version or comparable medication is available at a lower cost.

Affordable Care Act

In 2010, President Barack Obama signed the Patient Protection and Affordable Care Act into law. It prohibits insurance companies from denying coverage to patients with pre-existing conditions, and allows children to remain on their parents' insurance plan until they reach the age of 26. In participating states, the act also expanded Medicaid, a government program that provides medical care for individuals with very low incomes. In addition to these changes, the ACA established the federal Healthcare Marketplace. The marketplace helps individuals and businesses shop for quality insurance plans at affordable rates. Low-income individuals who sign up for insurance through the marketplace may qualify for subsidies to help bring down costs.


Further Reading


Can insurance increase financial risk?: The curious case of health insurance in China
www.sciencedirect.com [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …

Equity of health care financing in Iran: the effect of extending health insurance to the uninsuredEquity of health care financing in Iran: the effect of extending health insurance to the uninsured
www.tandfonline.com [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …

Actor management in the development of health financing reform: health insurance in South Africa, 1994–1999Actor management in the development of health financing reform: health insurance in South Africa, 1994–1999
academic.oup.com [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …

The role of community-based health insurance within the health care financing system: a framework for analysisThe role of community-based health insurance within the health care financing system: a framework for analysis
academic.oup.com [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …

Horizontal equity in utilisation of care and fairness of health financing: a comparison of micro‐health insurance and user fees in RwandaHorizontal equity in utilisation of care and fairness of health financing: a comparison of micro‐health insurance and user fees in Rwanda
onlinelibrary.wiley.com [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …

Guaranteed access to affordable coverage in individual health insurance marketsGuaranteed access to affordable coverage in individual health insurance markets
www.oxfordhandbooks.com [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …

National health insurance policy in Nepal: challenges for implementationNational health insurance policy in Nepal: challenges for implementation
www.tandfonline.com [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …

Why publicly-financed health insurance schemes are ineffective in providing financial risk protectionWhy publicly-financed health insurance schemes are ineffective in providing financial risk protection
www.jstor.org [PDF]
We analyze the effect of insurance on the probability of an individual incurring 'high'annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the …



Q&A About Health Insurance


What are some types of managed care plans?

Some managed care plans require policy holders to receive care from a network of designated healthcare providers for the highest level of coverage. If patients seek care outside the network, they must pay a higher percentage of the cost. In some cases, the insurer may even refuse payment outright for services obtained out of network. Many managed care plans require patients to choose a primary care physician who oversees their treatment and makes recommendations about treatment. Insurers may also deny coverage for services that were obtained without preauthorization. In addition, insurers may refuse payment for name brand drugs if comparable medications are available at lower costs.

What distinguishes health economics from other areas?

Factors that distinguish health economics from other areas include extensive government intervention, intractable uncertainty in several dimensions, asymmetric information, barriers to entry and the presence of a third-party agent.

Why did he write about healthcare?

He wrote about healthcare because it is different than most goods in that there are many factors that make it unique.

What is health economics?

Health economics is a branch of economics concerned with issues related to efficiency, effectiveness, value and behavior in the production and consumption of healthcare and healthcare.

How does health insurance work?

Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly.

What is health insurance?

Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured.

What did President Obama do in 21?

President Barack Obama signed The Patient Protection and Affordable Care Act into law in 21 . It prohibits insurers from denying coverage to patients with pre-existing conditions, and allows children to remain on their parents' plan until they reach age 26 . In participating states , it also expanded Medicaid , which provides medical care to individuals with very low incomes . In addition , The ACA established The Federal Healthcare Marketplace , which helps individuals and businesses shop for quality healthcare pl""

Who was Kenneth Arrow?

Kenneth Arrow was an economist who wrote about the theory behind health care. He drew conceptual distinctions between health and other goods.

Who typically buys health insurance?

Employers often buy health insurance as a means of enticing quality employees.

What is government involvement in healthcare ?

Government involvement in healthcare includes Medicare (a federal program) and Medicaid (a joint state-federal program), both administered by HHS; military hospitals; Indian Health Services; Veterans Administration hospitals; Children's Health Insurance Program (CHIP); Food St