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Types of Insurance
People buy insurance to stay healthy or for financial protection following an accident or illness. The insured person may pay a monthly premium to the health insurance company. The health insurance company pays some or all of the person's healthcare costs.
There are two types of insurance in the U.S.
- Private Health Insurance
- Provided by health insurance companies to individuals, families, and businesses. Some people buy private insurance directly as an individual or family; others get insurance through their employers.
- Public Health Insurance
- Provided by the government. An example is Medicare, which provides coverage to people age 65 years and older, as well as people with disabilities. MC in California is another type of public health insurance that assists low-income individuals. Both Medicare and MC contract with private health insurance companies to provide these government programs.
Managed Care
In the United States, managed care plans make up the majority of both private and public health insurances. These plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Exclusive Provider Organizations (EPOs). Networks of doctors and hospitals contract with health insurance companies to provide quality and predictable cost. Health insurance company staff ensures that health services are medically necessary; some services and procedures require pre-approval from the health insurance company. Most health plans provide education to manage health and chronic illnesses.
Non-Managed Care
Non-managed care plans:
- Allow clients to direct their own care.
- Have no contracts with doctors or hospitals.
- Usually, require clients to pay the full cost of services up front before filing claims for reimbursement.
Health Maintenance Organization
An HMO is a health plan that connects a member with a primary care physician (PCP) or a team of physicians. The PCP/care team coordinates all of the member's care. Doctors, specialists, and hospitals in the HMO network provide all services. HMOs generally do not cover out-of-network costs except in emergencies. All plans require members to live in specific geographic service areas. All plans provide preventive care.
Preferred Provider Organization
A PPO is a health plan that creates a network of preferred or participating doctors and hospitals by contracting with doctors and hospitals. Members pay less when they use a network provider, although members may choose providers where they access services.
Exclusive Provider Organization
An EPO works like an HMO, members have access to the health plan's EPO network, which usually offers more limited doctor choices than a PPO. The health plan does not cover any services that members get from out-of-network doctors and hospitals, except in emergencies.
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