Health care is a complex issue, and some terms can leave you scratching your head. This series helps you understand key concepts in a rapidly changing field.
People pay a monthly fee to an insurance company, called premiums, in exchange for help paying their medical bills when they get sick or injured. This is called health insurance.
What Is Health Insurance?
Health insurance is a way to help pay for medical care. It helps reduce the risk of very expensive illnesses and injuries by spreading the cost across a large group of people. Without it, one big illness or injury could bankrupt an individual or family. It’s also important for ensuring that routine, preventive care is available.
Most private health insurance is provided through employer benefits plans or the government’s Medicare and Medicaid programs. These programs are regulated by state and federal laws. Most states have also created their own rules to protect consumers and ensure that the health insurance industry is stable.
Many health plans offer different options to help you make the best choice for your needs and budget. These options are often called plan types and include HMOs (Health Maintenance Organizations), PPOs (Preferred Provider Organizations), POS (Point of Service) plans and EPOs (Exclusive Provider Organizations). You can also find high deductible health insurance plans with low monthly premiums that can help you save money if you don’t expect to need a lot of health care services during the year.
You should be aware that most health insurance plans have out of pocket costs that you must pay for health care services before the insurance company starts paying. These costs are called deductibles, coinsurance and/or copays. Health insurance plans typically try to minimize these out of pocket costs and make it easy for you to access care by allowing you to choose doctors and hospitals that are in network and offering guides, materials and call lines to help you navigate the health care system.
If you have a qualifying life event, like getting married, having a baby or changing jobs, you can take advantage of special enrollment periods to add or change your health insurance coverage. You can also shop for health plans during open enrollment to get the best deal on your health insurance.
What Is Medicare?
Medicare is health insurance that pays for most of a beneficiary’s health care expenses. It covers hospitalization, doctor visits, prescription drugs and a wide variety of medical supplies and equipment. It also offers preventive services, like screenings and immunizations, to keep you healthy. It is a major source of health insurance for people over 65 and disabled. Its introduction in 1965 was the single largest change to health insurance in the country’s history.
Medicare’s per capita spending is projected to increase about half as fast as private health care spending growth over the next 30 years, and it will pay for two-thirds of the increase in total health care spending, according to CBO’s most recent long-term projections. This is due to the aging of the population and higher health care costs.
It’s important to remember that Medicare is a public program and shouldn’t be privatized under the guise of reform, modernization and deficit reduction. We are contacted everyday at the Center for Medicare Advocacy by beneficiaries who have been mistreated or harmed by these private plans.
While Medicare Part A is financed by payroll taxes, Part B physician and other outpatient services and Part D prescription drug benefits are financed through general revenues and premiums paid by enrollees in separate accounts in the Supplementary Medical Insurance trust fund. This means that if health care prices and costs rise faster than expected, it can have the effect of hastening the depletion of the trust funds, and vice versa. This makes it even more important to maintain steady, sustainable rates of health care price and cost growth. This is the only way to ensure that Medicare will continue to provide a secure, reliable, and affordable set of benefits for people when they need it most.
What Is Medicaid?
Medicaid is a joint federal-state program that helps to pay for health care services for low-income individuals and families. Its eligibility rules vary by state, but it generally covers children, seniors and people with disabilities, as well as adults in families with income below the poverty line. The program has a strong track record of delivering health care in an effective and cost-efficient manner. It costs substantially less than private insurance to cover people with similar health status, largely due to lower payment rates and lower administrative costs.
It plays a unique role in the health care system, covering some of America’s most vulnerable populations. The population served by Medicaid is distinct from that covered by other private and public payers: These individuals and families typically live in communities with high rates of economic stress, often with limited access to stable employment or reliable transportation. They also tend to have higher medical needs and more complicated health histories, making it difficult to obtain quality, affordable health care.
In recent years, many Medicaid agencies have been working to change their traditional roles. They have moved away from simply paying bills and into roles as laboratories for change, using their control over reimbursement to promote innovation in the delivery of health care. These changes have been fueled by a need to contain costs and the need to improve outcomes.
At Providence, we believe that it is important to continue supporting Medicaid during this challenging time. That is why we have partnered with the United Hospital Fund to create a free consumer guide that provides practical advice for New Yorkers seeking to maintain their health care coverage during the pandemic. The guide can be downloaded here.
What Is the Affordable Care Act?
The Affordable Care Act (ACA) is a federal law that was passed in 2010 and became effective in 2014. It requires most people to have health insurance or pay a fine. It also prohibits insurers from denying coverage to people with preexisting conditions and sets minimum requirements for insurance policies. It also creates state- or multistate-based insurance exchanges where consumers can compare and purchase insurance plans.
The ACA was meant to help millions of Americans who struggled to afford private health insurance or were denied coverage for preexisting conditions. The ACA also ensures that all insurance plans cover a set of essential benefits. It also prevents insurance companies from imposing lifetime monetary caps on coverage and mandates that they spend 80 percent of premiums on medical costs and improvement efforts.
Those who have access to the health insurance marketplace can receive subsidies to lower their insurance premiums. These subsidies can be used to buy individual or family health insurance through the marketplaces or private health insurance. Those who don’t qualify for subsidies can get free or low cost health insurance through Medicaid, premium-free Medicare Part A, or through another government program.
The ACA is the first step in reforming our nation’s broken health system. The AMA will continue to advocate for a system that improves health outcomes, the organization and design of healthcare practice, and provides transparency for patients. This will include working to strengthen the ACA, including its consumer protections and the ability of doctors to provide the best care possible for their patients. Having health insurance is important because it allows you to get screenings and treatments that can help you avoid more costly and debilitating health problems later in life. This is why the AMA continues to promote and support the expansion of access to the health insurance marketplaces and other health care coverage options for all.
What Is the Canadian Health Care System?
While many Americans are fascinated with the Canadian health care system, it is important to note that it is not exactly what it is often portrayed. The Canadian model is much simpler than the American one in many ways, but it is not free of cost either.
The Canadian system is funded primarily by provincial and territorial governments with some transfer payments from the federal government. Provincial and territorial governments also offer supplementary coverage, such as prescription drugs outside hospitals, dental and vision care, rehabilitative services, and equipment (such as prosthetics).
Private insurance is available in Canada, and many people purchase it. However, the Canadian government prohibits private insurance companies from requiring co-payments for procedures covered by the public plan. The government also prohibits extra-billing. These rules leave most Canadians largely unaware of the true costs and scarcity of resources in their country’s health care system.
The federal government plays a role in the Canadian system through the Public Health Agency of Canada, which funds health promotion and disease prevention initiatives, infectious and chronic diseases control and response efforts, and research programs. It also operates the National Drug Program, which covers most drugs prescribed by physicians in Canada.
In the spring of 2007, all provinces and territories publicly committed to establishing Patient Wait Times Guarantees in one priority clinical area by 2010. These are promises made to patients that they can access health care within a certain timeframe, and they will be offered alternative care options if their wait is too long.
While the Canadian health care system faces challenges in some areas, it is generally considered to be performing well by international standards. In a 2012 survey, it ranked tied for fourth in the world for most of the measures used to compile “league tables” of health care systems worldwide, including timeliness and the ability to make same-day appointments with doctors.