Insurance

What is health insurance

Health insurance system in the USA is very developed and mainly of a private character. Decentralization, high level of insurance companies’ infrastructure and absence of government regulation are its distinguishing features. System of health insurance in the USA is based on mutual connections between central insurance fund and a network of independent local insurance companies. Funds are accumulated in a central budget that is deprived of administrative functions and after are shared between insurance companies according to legally approved forms of payment.

For the majority of the US population health insurance is a personal matter. Private health insurance covers more than 80% of the population. Among 1,500 private insurance companies in the USA there are two large companies operating only in health insurance business. They are Blue Cross and Blue Shield. They specialize in a voluntary health insurance and nothing else.

Health insurance sponsored by employer is the main way for an American citizen to obtain health insurance. Oftentimes employers provide health insurance as a part of a social package. But there are companies that do not provide health insurance for their employees, so they have to look for alternative ways.

Individual private insurance usually covers self-employed or retired people. Additionally, it covers some citizens who are not able to get insurance from their employer. Benefits vary considerably and depend upon the type of insurance. Individuals pay premiums from their own money.

Along with the private health insurance system there are two publicly funded government programs. The first one is Medicare and it aims at helping people over 65. Medicaid is the second one and was founded to serve the unemployed, the poor and some categories of disabled people.

Medicare is financed from federal income tax, payroll tax and the individual contributions of the insured person. Medicare Part A covers hospital services, Medicare Part B covers family doctor services and Medicare Part D offers prescriptions for narcotic drugs.

According to the statistics, only 48% of American citizens with a low income are registered and receive assistance under the Medicaid initiative. Medicare is considered to be more successful since it covers all citizens over 65. However, patients have to pay for the first day of hospitalization, visits of doctors in a clinic and almost all long-term care in a nursing home from their own pocket.

Medicaid is funded jointly by the federal and state governments through taxes. In general, the federal government pays 57% of the Medicaid costs. Medicaid offers an extended range of services. In spite of this, many insured citizens experience difficulties in finding providers since many of insurers don’t want to serve them because of low reimbursement rates.

Except of the aforementioned programs there are two other initiatives within a health insurance business.

The State Children’s Health Insurance Program (S-CHIP) was founded in 1997 to cover children whose parents earn too much to qualify for Medicaid, but too little to purchase private health insurance. S-CHIP and Medicaid have similar administrative and financial schemes.

Veterans Administration provides insurance for military veterans. Health services are provided in public hospitals and financed from the taxpayers’ money. Generally health care services are very affordable for veterans.

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