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Health
Insurance: Private/Public
Health Insurance is a type of insurance whereby the insurer pays the
medical costs of the insured if the insured becomes sick due to covered
causes, or due to accidents. The insurer may be a private organization
or a government agency.
Private
health insurance
Health insurance is one of the most controversial forms of insurance
because of the conflict between the need for the insurance company to
remain solvent versus the need of its customers to remain healthy, which
many view as a basic human right. This conflict exists in a liberal
healthcare system because of the unpredictability of how patients respond
to medical treatment. Suppose a large number of customers of a particular
insurance company were to contract a rare disease costing 100 million
dollars to fight for each patient. The insurance company would be faced
with the choice of either charging all its future customers astronomical
premiums (thus losing customers and going out of business), paying all
claims without complaint (thus going out of business) or fighting the
customers in an attempt to deny the costly treatment (thus outraging
patients and their families, and becoming a target for lawsuits and
legislation).
Publicly
funded medicine
Many countries have made the societal choice to avoid this important
conflict by nationalizing the health industry so that doctors, nurses,
and other medical workers become state employees, all funded by taxes;
or setting up a national health insurance plan that all citizens pay
into with tax payments, and which pays private doctors for health care.
These national health care systems also have their problems. Many countries
have citizen groups which protest bureaucracy and cost-cutting measures
that unduly delay medical treatment.
Medicare/Medicaid
In the United States, health insurance is made more complicated by Federal
Medicare/Medicaid programs, which have had the unintended consequence
of determining the price of medical procedures. Many suspect that these
prices are set independently of medical necessity or actual cost. A
physician who refuses to accept a Medicare/Medicaid payment will be
banned from accepting any such payments for a number of years, regardless
of the reason for rejecting the payment or the amount offered. In either
case, this means that private insurers have little incentive to pay
more than the government does.
Common complaints of private insurance:
Some common complaints about private health insurance companies include:
Insurance
companies do not normally announce their health insurance premiums more
than a year in advance. This means that, if you get sick, you may find
your premiums greatly increased. This defeats the purpose of having
insurance in the first place.
If insurance companies try to charge different people different amounts
based on your health, people will feel they are unfairly treated. Some
states require that insurance companies cover all who apply at the same
cost; this rule has the effect (called adverse selection) that healthy
people subsidize sick ones, and thus only really sick people buy insurance
and the premiums are very expensive.
When a claim is made, it is in the best interest of the insurance company
to use paperwork and bureaucracy to attempt to deny the claim. Some
percentage of people will give up, leading to lower costs for the insurance
company.
Health
insurance is only available at a reasonable cost through an employer-sponsored
group plan. This means that unemployed individuals and self-employed
individuals are at a disadvantage.
Employers
can write some or all of their employee health insurance premiums off
of their taxable income whereas individuals have to pay taxes on income
used to fund health insurance. This reduces the employee's bargaining
power in negotiating service with the insurance provider and also increases
their dependence on the employer. In the US, COBRA was passed in an
attempt to address the latter concern.
Experimental treatments are generally not covered. This practice is
especially criticized by those who have already tried, and not benefited
from, all "normal" medical treatments for their condition.
The
Health maintenance organization ("HMO") type of health insurance
plan has been criticized for excessive cost-cutting policies. The least
popular of these policies is having accountants or other administrators
essentially making medical decisions for customers by deciding which
types of medical treatment will be covered and which will not.
Since the health care recipient is not directly involved in payment
of health care services and products, they are less likely to scrutinize
or negotiate the costs of the health care received. To care providers,
insured care recipients are essentially customers with relatively limitless
financial resources who don't look at prices. The health care company
has few popular and many unpopular ways of controlling this market force.
Common
complaints of publicly funded medicine:
Price
no longer influences the allocation of resources, and health care worker's
pay is often not related to quality or speed of care. Thus very long
waits can be had before care is received.
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