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Private insurance plans include all forms of health insurance that are not funded by the government.
Purpose
These plans are intended to protect their beneficiaries from the high costs that may be incurred for health care. Most private insurance plans in the United States are employment-based.
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Of the nearly 239 million Americans who are covered by private health insurance, approximately nine in 10 (213 million, or 89%) are enrolled in employmentbased plans.
Description
Private health insurance plans may be purchased on an individual or group basis. Most group plans are offered by large employers, although some are available through voluntary associations. Individual policies are usually more expensive than group policies. Furthermore, they may have additional coverage restrictions. There are several major categories of private health insurance in the United States.
Indemnity plans
Indemnity plans are private insurance plans that allow beneficiaries to choose any physician or hospital when they need medical care. Most indemnity plans have a deductible, or amount that the policyholder must pay before the plan will cover any costs. After the deductible has been satisfied, indemnity plans pay a co-insurance percentage, most often 7090% of the charges. The beneficiary pays the remainder of the bill.
A person enrolled in a PPO can choose to seek care from a non-network provider. This is called going out of network. Some people find this beneficial because it allows continuity of care from an existing provider. Enrollees may also propose their physician for membership in the PPO so that continuity of service may be provided.
most or all of the co-insurance amounts charged by Medicare. Some Medigap policies cover Medicare deductibles.
Increased longevity. The life expectancy of most Americans is approximately 76 years. When older people join an insured group, the entire group's health care risks and costs rise.
Increased use of health care. Between 1991 and 1996, the average annual number of physician office visits rose from 2.73.4 per person. The average number of visits has continued to rise, and was just under four per person per year in 2003.
The rising costs of health insurance over the past 30 years have caused many employers to curtail or drop health insurance as an employee benefit. The cost of health insurance premiums increased from $16.8 billion in 1970 to $310 billion in 1995. By 2002, it had almost doubled again, to approximately $500 billion. Many employers have increased the amount of money employees are expected to contribute toward their health care. Others, particularly smaller businesses, do not offer health insurance at all. A 1997 study found that only 34% of workers in smaller businesses were covered through their employers, whereas 82% of employees in the largest companies were covered. Experts feel that this trend will continue. Workers in large-employer health insurance plans generally have policies that cover more health services, have lower deductibles, and offer more opportunities to enroll in HMOs.
Uninsured persons
The U.S. Census Bureau reported in 1997 that 43.4 million people in the United States, or 16.1% of the population, had no health insurance coverage. Between 1998 and 1999, both the number and proportion of uninsured Americans declined slightly, to 42.6 million and 15.5% respectively. As of 2000, the Centers for Disease Control and Prevention estimated that 40.5 million people under age 65 were without health insurance. Some workers do not have health insurance because they cannot afford it. In the 1950s, employer-based health insurance served most American families reasonably well because many workers were employed by large firms and remained with them for life. The trend over the past two decades is employment by small firms that do not offer health insurance as a benefit, and a tendency to change employers every few years. Most uninsured workers are self-employed, work only part-time, or hold low-wage jobs that do not give them access to lower-cost employer-sponsored group plans. Workers in
these three categories do not qualify for coverage by government programs for lowincome people. The other major category of uninsured people includes those who cannot purchase private insurance at affordable rates because they are likely to need expensive medical services. Those who have a high risk of developing cancer or are HIV-positive may not be able to obtain coverage from any insurance company. As early as the 1980s, some insurance companies began introducing clauses that excluded or restricted benefits for persons with pre-existing conditions. These clauses denied private insurance to anyone already diagnosed with a serious medical condition. One of the goals of the Health Insurance Portability and Accountability Act (HIPPA) of 1996 was to help workers who could not change jobs because they had family members with serious health problems. In the past, they would have been denied health insurance by the preexisting condition clauses in the new employer's plan. HIPAA requires employer-sponsored insurance plans to accept transfers from other plans without imposing preexisting condition clauses. An individual private health insurance plan can be expensive and restrictive. It may, however, be the only choice for a consumer who is not employed; self-employed; or is a new hire at a company and must wait several months or more before the company's coverage takes effect.
Resources
BOOKS
Institute of Medicine. Health Insurance Is a Family Matter. Washington, DC: National Academy Press, 2002. Miller, I. American Health Care Blues: Blue Cross, HMOs, and Pragmatic Reform Since 1960. Somerset, NJ: Transaction Publishers, 2000. Nyman J.A. Theory of Demand for Health Insurance. Palo Alto, CA: Stanford University Press, 2002. Stevens, W.S. Health Insurance: Current Issues and Background. Hauppauge, NY: Nova Science Publishers, 2003.
PERIODICALS
Cohen, M.A. "Private long-term care insurance: a look ahead." Journal of Aging and Health 15, no.1 (2003): 74-98. Longest, Jr., B.B. "Medicare: How You See it Depends on Where You Stand." Healthcare Financial Management 57, no.3 (2003): 88-92. Newton, L.H. "The Turn to the Local: The Possibility of Returning Health Care to the Community." Business Ethics Quarterly 12, no.4 (2002): 505-26. Sturm, R. and R.L. Pacula. "Private Insurance: What Has Parity Brought?" Behavioral Healthcare Tomorrow 10, no.2 (2001): SR26-28.
Taylor, P., L. Blewett, M. Brasure, K.T. Call, E. Larson, J. Gale, A. Hagopian, L.G. Hart, D. Hartley, P. House, M.K. James, T. Ricketts. "Small Town Health Care Safety Nets: Report on a Pilot Study." Journal of Rural Health 19, no.2 (2003): 125-34.
ORGANIZATIONS
American Association of Retired Persons (AARP). 601 E. Street NW, Washington, DC 20049. (800) 4243410, http://www.aarp.org/ . American College of Healthcare Executives. One North Franklin, Suite 1700, Chicago, IL 60606-4425. (312) 424-2800, Fax: 312-424-0023. http://www.ache.org/ . American Medical Association. 515 N. State Street, Chicago, IL 60610. (312) 464-5000. http://www.amaassn.org . Health Insurance Association of America. 1201 F Street, NW, Suite 500, Washington, DC 20004-1204. (202) 824-1600. Fax: (202) 824-1722. http://www.hiaa.org/index_flash.cfm . United States Department of Health and Human Services. 200 Independence Avenue SW, Washington, DC 20201. http://www.hhs.gov .
OTHER
Agency for Healthcare Research and Quality. [cited May 12, 2003]. http://www.ahcpr.gov/consumer/insuranc.htm . Association of Health Insurance Advisors. [cited May 12, 2003]. http://www.ahia.net/ . Council for Affordable Health Insurance. [cited May 12, 2003]. http://cahionline.org/cahi_index.shtml . Georgetown University Health Policy Institute. [cited May 15, 2003]. http://www.healthinsuranceinfo.net/ .
Health Insurance Information, Counseling & Assistance Program of New York State. [cited May 12, 2003]. http://hiicap.state.ny.us/ .
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