The resulting programme is profession-based: all people working are required to pay a portion of their income to a not-for-profit health insurance fund, which mutualises the risk of illness, and which reimburses medical expenses at varying rates. Children and spouses of insured people are eligible for benefits, as well. Each fund is free to manage its own budget, and used to reimburse medical expenses at the rate it saw fit, however following a number of reforms in recent years, the majority of funds provide the same level of reimbursement and benefits.
Employer-sponsored health insurance is paid for by businesses on behalf of their employees as part of an employee benefit package. Most private (non-government) health coverage in the US is employment-based. Nearly all large employers in America offer group health insurance to their employees.[56] The typical large-employer PPO plan is typically more generous than either Medicare or the Federal Employees Health Benefits Program Standard Option.[57]
Private insurers offer a variety of supplemental coverages in both the group and individual markets. These are not designed to provide the primary source of medical or disability protection for an individual, but can assist with unexpected expenses and provide additional peace of mind for insureds. Supplemental coverages include Medicare supplement insurance, hospital indemnity insurance, dental insurance, vision insurance, accidental death and dismemberment insurance and specified disease insurance.[19]
The Affordable Care Act (ACA) allows qualifying individuals and families to receive financial assistance to help cover the cost of premiums. Known as the Health Insurance Premium Tax Credit, this subsidy helps people who need health insurance afford their coverage. Healthcare.gov provides a single location where you find out whether you are eligible for the premium tax credit and shop for and compare the different health insurance plans available to you in your state.
Public insurance cover increased from 2000–2010 in part because of an aging population and an economic downturn in the latter part of the decade. Funding for Medicaid and CHIP expanded significantly under the 2010 health reform bill.[9] The proportion of individuals covered by Medicaid increased from 10.5% in 2000 to 14.5% in 2010 and 20% in 2015. The proportion covered by Medicare increased from 13.5% in 2000 to 15.9% in 2010, then decreased to 14% in 2015.[3][10]
As of 2014, more than three-quarters of the country’s Medicaid enrollees were covered under private Medicaid managed care plans, and 31 percent of Medicare beneficiaries were enrolled in private Medicare Advantage plans in 2016. However, the funding for these plans still comes from the government (federal for Medicare Advantage, and a combination of state and federal funding for Medicaid managed care).
A 2011 study found that there were 2.1 million hospital stays for uninsured patients, accounting for 4.4% ($17.1 billion) of total aggregate inpatient hospital costs in the United States.[12] The costs of treating the uninsured must often be absorbed by providers as charity care, passed on to the insured via cost-shifting and higher health insurance premiums, or paid by taxpayers through higher taxes.[13]

Both before and after passage in the House, significant controversy surrounded the Stupak–Pitts Amendment, added to the bill to prohibit coverage of abortions – with limited exceptions – in the public option or in any of the health insurance exchange's private plans sold to customers receiving federal subsidies. In mid-November, it was reported that 40 House Democrats would not support a final bill containing the Amendment's provisions.[36] The Amendment was abandoned after a deal was struck between Representative Bart Stupak and his voting bloc would vote for the bill as written in exchange for the signing of Executive Order 13535.


Some, if not most, health care providers in the United States will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn't pay. The insurance company pays out of network providers according to "reasonable and customary" charges, which may be less than the provider's usual fee. The provider may also have a separate contract with the insurer to accept what amounts to a discounted rate or capitation to the provider's standard charges. It generally costs the patient less to use an in-network provider.
ageing, menopause and puberty; AIDS/HIV; allergies or allergic disorders; birth control, conception, sexual problems and sex changes; chronic conditions; complications from excluded or restricted conditions/ treatment; convalescence, rehabilitation and general nursing care ; cosmetic, reconstructive or weight loss treatment; deafness; dental/oral treatment (such as fillings, gum disease, jaw shrinkage, etc); dialysis; drugs and dressings for out-patient or take-home use† ; experimental drugs and treatment; eyesight; HRT and bone densitometry; learning difficulties, behavioural and developmental problems; overseas treatment and repatriation; physical aids and devices; pre-existing or special conditions; pregnancy and childbirth; screening and preventive treatment; sleep problems and disorders; speech disorders; temporary relief of symptoms.[40] († = except in exceptional circumstances)
Most provider markets (especially hospitals) are also highly concentrated—roughly 80%, according to criteria established by the FTC and Department of Justice[118]—so insurers usually have little choice about which providers to include in their networks, and consequently little leverage to control the prices they pay. Large insurers frequently negotiate most-favored nation clauses with providers, agreeing to raise rates significantly while guaranteeing that providers will charge other insurers higher rates.[119]

Private health insurance may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. Most Americans with private health insurance receive it through an employer-sponsored program. According to the United States Census Bureau, some 60% of Americans are covered through an employer, while about 9% purchase health insurance directly.[53] Private insurance was billed for 12.2 million inpatient hospital stays in 2011, incurring approximately 29% ($112.5 billion) of the total aggregate inpatient hospital costs in the United States.[12]

The US has a joint federal and state system for regulating insurance, with the federal government ceding primary responsibility to the states under the McCarran-Ferguson Act. States regulate the content of health insurance policies and often require coverage of specific types of medical services or health care providers.[54][55] State mandates generally do not apply to the health plans offered by large employers, because of the preemption clause of the Employee Retirement Income Security Act.


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The resulting programme is profession-based: all people working are required to pay a portion of their income to a not-for-profit health insurance fund, which mutualises the risk of illness, and which reimburses medical expenses at varying rates. Children and spouses of insured people are eligible for benefits, as well. Each fund is free to manage its own budget, and used to reimburse medical expenses at the rate it saw fit, however following a number of reforms in recent years, the majority of funds provide the same level of reimbursement and benefits.
Most FSA participants are middle income Americans, earning approximately $55,000 annually.[110] Individuals and families with chronic illnesses typically receive the most benefit from FSAs; even when insured, they incur annual out-of-pocket expenses averaging $4,398 .[111] Approximately 44 percent of Americans have one or more chronic conditions .[112]

The compulsory insurance can be supplemented by private "complementary" insurance policies that allow for coverage of some of the treatment categories not covered by the basic insurance or to improve the standard of room and service in case of hospitalisation. This can include complementary medicine, routine dental treatment and private ward hospitalisation, which are not covered by the compulsory insurance.
^ Bump, Jesse B. (19 October 2010). "The long road to universal health coverage. A century of lessons for development strategy" (PDF). Seattle: PATH. Retrieved 10 March 2013. Carrin and James have identified 1988—105 years after Bismarck's first sickness fund laws—as the date Germany achieved universal health coverage through this series of extensions to minimum benefit packages and expansions of the enrolled population. Bärnighausen and Sauerborn have quantified this long-term progressive increase in the proportion of the German population covered by public and private insurance. Their graph is reproduced below as Figure 1: German Population Enrolled in Health Insurance (%) 1885–1995.
Persistent lack of insurance among many working Americans continued to create pressure for a comprehensive national health insurance system. In the early 1970s, there was fierce debate between two alternative models for universal coverage. Senator Ted Kennedy proposed a universal single-payer system, while President Nixon countered with his own proposal based on mandates and incentives for employers to provide coverage while expanding publicly run coverage for low-wage workers and the unemployed. Compromise was never reached, and Nixon's resignation and a series of economic problems later in the decade diverted Congress's attention away from health reform.
Persistent lack of insurance among many working Americans continued to create pressure for a comprehensive national health insurance system. In the early 1970s, there was fierce debate between two alternative models for universal coverage. Senator Ted Kennedy proposed a universal single-payer system, while President Nixon countered with his own proposal based on mandates and incentives for employers to provide coverage while expanding publicly run coverage for low-wage workers and the unemployed. Compromise was never reached, and Nixon's resignation and a series of economic problems later in the decade diverted Congress's attention away from health reform.
News Flash: The health insurance landscape has changed. Individuals who once could buy health insurance whenever they wanted are now forced to act like traditional company employees, and only enroll in a health insurance plan during an annual open enrollment period. However, life can throw curve balls, and leave an individual without health insurance outside…
Medicare Levy Surcharge: People whose taxable income is greater than a specified amount (in the 2011/12 financial year $80,000 for singles and $168,000 for couples[11]) and who do not have an adequate level of private hospital cover must pay a 1% surcharge on top of the standard 1.5% Medicare Levy. The rationale is that if the people in this income group are forced to pay more money one way or another, most would choose to purchase hospital insurance with it, with the possibility of a benefit in the event that they need private hospital treatment – rather than pay it in the form of extra tax as well as having to meet their own private hospital costs.
The Swiss healthcare system is a combination of public, subsidised private and totally private systems. Insurance premiums vary from insurance company to company, the excess level individually chosen (franchise), the place of residence of the insured person and the degree of supplementary benefit coverage chosen (complementary medicine, routine dental care, semi-private or private ward hospitalisation, etc.).
All U.S. citizens living in the United States are subject to the individual shared responsibility provision as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes. This category includes nonresident aliens who meet certain presence requirements and elect to be treated as resident aliens. For more information see Pub. 519. More: Shared Responsibility from the IRS (See Question 11)
Erica Block is an Editorial Fellow at HealthCare.com, where she gets to combine her interest in healthcare policy with her penchant for creating online content. When she isn't reading or writing, Erica can be found wandering around Brooklyn, playing softball, or listening to podcasts. She counts music, rescue dogs, and lumberjack sports among her greatest passions. Follow Erica on Twitter: @EricaDaleBlock
High-quality health care affects health and wellness. A health insurance policy is a contract between an insurance company and a policy holder intended to safeguard against high and unexpected health care costs. Although policy-holders pay a monthly premium, co-payments, co-insurance, and deductibles, it is expected that the total is far less than that required if paid fully out-of-pocket.
The average rates paid for health insurance plans are inversely related to the amount of coverage they provide, with Platinum plans being the most expensive and Bronze / Catastrophic plans being the cheapest. The following table shows the average rates a 21 year old would pay for individual health insurance based on plans in the different tiers. Older consumers would see their plans increase according to the age scale set by the federal guidelines.
Deductible: The amount that the insured must pay out-of-pocket before the health insurer pays its share. For example, policy-holders might have to pay a $500 deductible per year, before any of their health care is covered by the health insurer. It may take several doctor's visits or prescription refills before the insured person reaches the deductible and the insurance company starts to pay for care. Furthermore, most policies do not apply co-pays for doctor's visits or prescriptions against your deductible.
Workers who receive employer-sponsored health insurance tend to be paid less in cash wages than they would be without the benefit, because of the cost of insurance premiums to the employer and the value of the benefit to the worker. The value to workers is generally greater than the wage reduction because of economies of scale, a reduction in adverse selection pressures on the insurance pool (premiums are lower when all employees participate rather than just the sickest), and reduced income taxes.[20] Disadvantages to workers include disruptions related to changing jobs, the regressive tax effect (high-income workers benefit far more from the tax exemption for premiums than low-income workers), and increased spending on healthcare.[20]
HSAs are one form of tax-preferenced health care spending accounts. Others include Flexible Spending Accounts (FSAs), Archer Medical Savings Accounts (MSAs), which have been superseded by the new HSAs (although existing MSAs are grandfathered), and Health Reimbursement Accounts (HRAs). These accounts are most commonly used as part of an employee health benefit package.[108] While there are currently no government-imposed limits to FSAs, legislation currently being reconciled between the House of Representatives and Senate would impose a cap of $2,500. While both the House and Senate bills would adjust the cap to inflation, approximately 7 million Americans who use their FSAs to cover out-of-pocket health care expenses greater than $2,500 would be forced to pay higher taxes and health care costs.

Employers and employees may have some choice in the details of plans, including health savings accounts, deductible, and coinsurance. As of 2015, a trend has emerged for employers to offer high-deductible plans, called consumer-driven healthcare plans which place more costs on employees; some employers will offer multiple plans to their employees.[71]
Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets, under what is known as the fee-for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case. The rise of private insurance was accompanied by the gradual expansion of public insurance programs for those who could not acquire coverage through the market.
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