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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 …


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