Purpose of Health Insurance

The main purpose of health insurance is to help people cover their health care costs. Health care costs include doctor visits, hospital stays, surgery, procedures, tests, home care, and other treatments and services.

*      Provide cost effective quality health services

*      Build up awareness on health issues

*      Decrease rate of maternal mortality and child mortality

*      Birth Control through motivation

*      Ensure quality of reproductive health services

*      Reduce malnutrition

*      Sustain the program through maintaining professionalism and providing service.

History and Evolution

The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlen from the Peter Chamberlen family. In the late 19th century, "accident insurance" began to be available, which operated much like modern disability insurance. This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability 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.

Health Insurance in Worldwide

Compulsory accident and sickness insurance was initiated (1883-84) in Germany by Otto von Bismarck; it was adopted by Great Britain, France, Chile, the Soviet Union, and other nations after World War I. In Britain the National Health Insurance Act of 1946, which went into effect in 1948, provided the most comprehensive compulsory medical care plan introduced anywhere up to that time. Under the plan the individual obtained free medical attention from any doctor participating in the National Health Service. The cost was met by the national government and local taxation; a small charge for some services has been instituted since then. In 1958 the Canadian Hospital and Diagnoses Act provided full hospital service almost free of charge in public wards; more comprehensive coverage was added in 1967. The program is financed by the federal government but administered by the provinces. National health insurance has been widely adopted in Europe and parts of Asia. The United States is the only Western industrial nation without some form of comprehensive national health insurance.

Different Types of Health Insurance

The types of health insurance are group health plans, individual plans, workers' compensation, and government health plans such as Medicare and Medicaid.

Health insurance can be further classified into fee for-service (traditional insurance) and managed care. Both group and individual insurance plans can be either fee-for-service or managed care plans.

The following are types of managed care plans:

*          Health Maintenance Organization (HMO)

*          Preferred Provider Organization (PPO)

01 Group Health Plans

A group health plan offers health care coverage for employers, student organizations, professional associations, religious organizations, and other groups. Many employers offer group health plans to employees and their dependents as a benefit of working with that particular employer (medical benefits). The employer may pay for part or all of the insurance cost (premium).

When an employee leaves a job he or she may be eligible for continued health insurance as a result of the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). This federal law protects employees and their families in certain situations by allowing them to keep his or her health insurance for a specified amount of time. The individual must, however, pay a premium to keep their insurance plan in effect. It is important to note that COBRA only applies under certain conditions, such as job loss, death, divorce, or other life events. The COBRA law usually applies to group health plans offered by companies with more than 20 employees. Some states have laws that require employers to offer continued health care coverage for people who do not qualify for COBRA. Each state's insurance board can provide additional information.

02 Individual Plans

These types of health care plans are sold directly to individuals.

Fee-For-Service
Fee-for-service is traditional health insurance in which the insurance company reimburses the doctor, hospital, or other health care provider for all or part of the fees charged. Fee-for-service plans may be offered to groups or individuals. This type of plan gives people the highest level of freedom to choose a doctor, hospital, or other health care provider. A person may be able to receive medical care anywhere in the United States and, often, in the world.

Under this type of insurance a premium is paid and there is usually a yearly deductible, which means benefits do not begin until this deductible is met. After the person has paid the deductible (an amount specified by the terms of the insurance policy) the insurance company pays a portion of covered medical services. For example, the deductible may be $250 so the patient pays the first $250 of yearly covered medical expenses. After that he or she may pay 20% of covered services while the insurance company pays 80%. The exact percentages and deductibles will vary with each policy. The person may have to fill out forms (claims) and send them to the insurance company to have their claims paid.

People who have cancer may be attracted to the freedom of choice that traditional fee-for-service plans offer. However, they will most likely have higher out-of-pocket costs than they would in a managed care plan.

Managed Care
Managed care plans are also sold to both groups and individuals. In these plans a person's health care is managed by the insurance company. Approvals are needed for some services, including visits to specialist doctors, medical tests, or surgical procedures. In order for people to receive the highest level of coverage they must obtain services from the doctors, hospitals, labs, imaging centers, and other providers affiliated with their managed care plan.

People with cancer who are considering a managed care plan should check with the plan regarding coverage for services outside of the plan's list of participating providers. For example, if a person wants to travel to a cancer center for treatment, he or she should find out what coverage will be available. In these plans coverage is usually much less if a person receives treatment from doctors and hospitals not affiliated with the plan.

Health Maintenance Organization (HMO)
An HMO is a type of managed care called a prepaid plan. This type of coverage was designed initially to help keep people healthy by covering the cost of preventive care, such as medical checkups. The patient selects a primary care doctor, such as a family physician, from an HMO list. This doctor coordinates the patient's care and determines if referrals to specialist doctors are needed. People pay a premium, usually every month, and receive their health care services (doctor visits, hospital care, lab work, emergency services, etc.) when they pay a small fee called a copayment. The HMO has arrangements with caregivers and hospitals and the copayment only applies to those caregivers and facilities affiliated with the HMO. This type of coverage offers less freedom than fee-for-service, but out-of-pocket health care costs are generally lower and more predictable. A person's out-of-pocket costs will be much higher if he or she receives care outside of the HMO unless prior approval from the HMO is received.

Preferred Provider Organization (PPO)
A PPO combines the benefits of fee-for-service with the features of an HMO. If patients use health care providers (doctors, hospitals, etc.) who are part of the PPO network, they will receive coverage for most of their bills after a deductible and, perhaps a copayment, is met. Some PPOs require people to choose a primary care physician who will coordinate care and arrange referrals to specialists when needed. Other PPOs allow patients to choose specialists on their own. A PPO may offer lower levels of coverage for care given by doctors and other professionals not affiliated with the PPO. In these cases the patient may have to fill out claim forms to receive coverage.

03 Government Health Plans

Medicare and Medicaid are two health plans offered by the U.S. government. They are available to individuals who meet certain age, income, or disability criteria. TRICARE Standard, formerly called CHAMPUS, is the health plan for U.S. military personnel.

Medicare
Medicare, created in 1965 under Title 18 of the Social Security Act, is available to people who meet certain age and disability criteria. Eligible people include:

*          those who are age 65 years and older

*          some younger individuals who have disabilities

*          those who have end-stage renal disease (permanent kidney failure)

Medicare has two parts: Part A and Part B. Part A is hospital insurance and helps cover the costs of inpatient hospital stays, skilled nursing centers, home health services, and hospice care. Part B helps cover medical services such as doctors' bills, ambulances, outpatient therapy, and a host of other services, supplies, and equipment that Part A does not cover.

Medicaid
Medicaid, created in 1965 under Title 19 of the Social Security Act, is designed for people receiving federal government aid such as Aid to Families with Dependent Children. This program covers hospitalization, doctors' visits, lab tests, and x rays. Some other services may be

04 Workers Compensation

Workers' compensation covers health care costs for an injury or illness related to a person's job. Medical conditions that are unrelated to work are not covered under this plan. In some cases an evaluation is done to determine whether or not the medical condition is truly related to a person's employment.

Comparison between Employer-Sponsored and Private Health Insurance

Employer-Sponsored: Group policy paid in whole or in part (typically 73-84%) by employer

Individually Purchased: Individual policy, more costly, benefits usually more limited

Special Concerns

There are a variety of special concerns that people with cancer have regarding health insurance.

1.         Waiting Period

2.         Coverage Renewal

3.         Experimental/Investigational Treatments

4.         Complementary Therapies

5.         Cancer Screening Coverage

Health Care Regulations

The Health Insurance Portability and Accountability Act (HIPAA), passed by much first world country, offer people rights and protections regarding their health care plans. Because of HIPAA, there are limits on preexisting condition exclusions, people cannot be discriminated because of health factors, there are special enrollment requirements for people who lose other group plans or have new dependents, small employers are guaranteed group health plan availability, and all group plans have guaranteed renewal if the employer wishes to renew. In summary these rights and protections include:

*       Portability. This is the ability for a person to get new health insurance if a change is desired or needed.

*       Availability. This refers to whether or not health insurance must be offered to a person and his or her dependents.

*       Renewability. This refers to whether or not a person is able to renew his or her health plan.