Health Insurance Basics

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The health insurance system is complex and often changes; many factors affect health insurance in America. The state governments regulate health insurance, but they do not regulate supplemental non-insurance products like health discount plans. Today's health insurance buyers need to be aware of many issues when shopping for health insurance.

How Health Insurance Works

Private health insurance helps people make sure they will be provided access to health care. Insurance also gives health care companies assurance that their patients can afford the services and the bill will be paid in a reasonable amount of time.

Health insurance protects consumers from the potentially extreme cost of medical care. If you become extremely ill, the cost can be financially overwhelming. Health insurance helps make sure that doesn't happen to you. Health insurance makes health care more affordable, predictable, and manageable since the risk of expensive health care needs is pooled across a large group of people.

Many of us cannot afford the risk of not having health coverage. Health insurance is costly, but the expense from even a minor incident or illness can easily deplete your savings and can even leave you financially ruined. For instance, heart bypass surgery currently costs $60,000 to $80,000, plus medical needs before and after the procedure.

Who Provides Health Insurance?

Licensed Health Insurance Providers

Both publicly traded health insurance companies (owned by stockholders) and mutual health insurance companies (owned by the policyholders) are licensed health insurers. Blue Cross and Blue Shield companies are also state licensed insurers. These programs began as non-profit organizations under state hospital (Blue Cross) and state medical (Blue Shield) organizations. Blue Cross Blue Shield organizations are now (with few exceptions) normal commercial health insurance companies using the Blue Cross Blue Shield name.

Self-Funded Employee Health Plans

Employers and employee organizations sponsor self-funded health plans. Some companies administrate their own plans and others contract with an outside health insurance company or HMO to provide coverage. Self-funded employee health plans work a lot like state licensed insurers.

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