Health insurance

Student’s name

Affiliation

Course

Date

Health insurance involves taking an insurance plan to cover any medical expenses that one might incur over one’s lifetime. One is required to pay premiums to cover the health insurance plan. The amount and the frequency of the premium to be paid are determined by the insurance company with the agreement of the person taking the insurance cover ( HYPERLINK “http://en.wikipedia.org/wiki/David_Frum” o “David Frum” Frum, 2000). The health insurance is kind of a social or private contract between the person to pay the premiums and the insurance company to be paid. The person could be an individual person taking a private policy plan, an employer taking cover for his employee. An individual can also pay premiums to the federal government to get a health insurance cover over one’s lifetime.

Insurance policies in America are the most expensive when compared to other common wealth countries. This is according to a survey done by the commonwealth fund in 2007. The U.S health system is not only the most expensive, but it also under performs and does not have universal health cover.

Describe how risk can be managed.

Most Americans with a health insurance have a managed care plan that determines how one can access and receive health care as well as the amount one has to pocket whenever he/she receives care. The Managed health care plans on average covers an extensive range of health services. They include: Child and adult immunizations, general checkups, newborn care, preventive care, treatment of illness, diagnosis and complete prenatal. Moreover, most managed care plans give several services such as the diagnosis and treatment of mental health conditions as well as any substance abuse predicaments. Managed care plans works hard to save money by giving preventive health care services by early treatments and diagnosis to avoid one from serious health problems. When one contracts with hospitals and doctors in the community managed health plans they tend to save money to help control the fees they charge. These cost savings may help to suppress the much one and his employer pay every month for health insurance premium. The group of contracted health care giver is identified as the health plan’s “network.” When one receives health care services from a contracted network provider it is cheaper than to those who receive care from providers that are not part of the network provider (Morone, 2010).

Managed Care Out-of-Pocket Costs

One has to pay at an annual deductable as well as a copayment every time he visits the doctor. The sum of copayments and deductable depends on the premium. For instance a plan that requires one to use a network provider has high deductable and the copayment will have low premiums and vice versa.

Managed Care and Prescription Medications

This includes the formulary that one’s health plan has to pay for the medication. One’s copayment depends on the medicine one gets for instance: can get a generic or any other brand named medication that is not preferred by the health plan. Moreover One’s health plan might have lower copayments for prescription medications that you obtain through having a mail order fairly than through a ordinary retail pharmacy. There are three types of managed care plans that use provider network and are offered all through the country by health insurance companies. They include:

Health Maintenance Organizations that provides a network primary care physician responsible for coordinating and managing ones health Incase one needs a diagnostic service he/she maybe given a referral.

Preferred Provider Organizations is a health plan that has contracts with a network of preferred providers for one to choose. Here no referrals are required. When one receives care from doctors in the preferred network then he is responsible for only the annual deductable and a copayment for one’s visit. When one gets care from a doctor outside the preferred network one will pay higher amount like coinsurance

Point-of-Service Plans are a combination of a health maintenance organization and a preferred provider organization. Normally, POS plans have got a network which plays a role like a HMO. Here one picks a primary care doctor that coordinates and manages his care within the network. POS plans permits one to use a provider that is not within the network. However, when one chooses to go out-of-network for his care, he pays more. The POS are most preferred since one may decide to stay in the network and allow the PCP to control his care.

Evaluate the risks of health insurance in society (Morone, 2010)..One among the drawbacks that insurance brings into the medical care system is the lack of profitability for hospitals. Many hospitals have been reporting that their profit margins are shrinking due to the intervention of many players that seek to have cheaper care. As competition among healthcare providers intensifying, more hospitals are closing mostly attributed to the managed healthcare insurance systems. Physicians are also feeling the effect of insurance in their profession. Over the years, physicians from the United States have always been the envy world over. This is changing due to the stagnation of their earnings and increasing premiums. Hence, more healthcare providers are seeking to retire earlier this is affecting the physician-patient relationship. Concerns on the spending on the healthcare system are also real. A large portion of the Gross Domestic Product (GDP) goes to financing healthcare. According to studies, the major worry is that with the inflation of cost in medical services provision, its spending will have a negative effect on all the other indicators of growth. That is, currently the healthcare depends on insurance for funding. Accordingly, it will depend on government taxes and the funding coming from employers. Increasing medical care cost will prompt the government to increase taxes influencing negatively on the economy. Employers on their part will decrease the number of employees due to the rising costs. Investors will abstain from investing in the country and the impact of this is an overall fall in the economy. To prevent such a scenario government will have to formulate better policies.

In the U.S there are both private and social health coverage policies. The social insurance policies include the Medicare, Medicaid and other government social programs that provide health care to poor people unable to meet the costs of private health insurance premiums. It is important to note at this point that about 57 – 59% of all Americans rely on private health insurance covers. This is among the reason why the U.S health system was considered as the most expensive among the common wealth nations. Due to the high cost of private health insurance cover, a significant part of the population goes without cover annually in America. It is estimated that about 46 million people did not have any health insurance cover in 2007. It is highly risky for one to lose one’s job as with the loss one also loses the source of money to pay health insurance premiums which in most cases are paid by the employer.

Risk management tools

In order no notice a risk, one has to think deep, write down the requirements, visit the insurer, read thoroughly, and compare products before buying the insurance. Today’s financial world and lifestyles make people prone to risks previously unknown to exist. Health insurance is among the leading risks a human can and should insure. Health insurance is more of a tool than an investment. The main reason to insure one’s health is to cover any medical expenses that one might incur over his lifetime. It helps the insured have a sense of peace-of-mind knowing that they are secure and safe from medical hardships incase of medical attention.

Health risk makes people take measures to avoid, accept, reduce, or transfer the risks. As people solve more risks and others disappear, more and more risks become clear and defined. Most findings registration tools can manage risk and findings. To analyze a risk, and come up with a risk management process, it is important to use appropriate tools. These tools include a likelihood scale, a consequences scale, a level of risk scale, a risk matrix, and a scale for evaluating risk (Sylvia, 1974).

A likelihood scale works by analyzing a health risk through an estimation of the likelihood of an event. The likelihood of a health risk is described in terms of rate e.g. the use of “almost certain” to mean “there is a chance that a condition will occur in the course of one year ” and “almost incredible” to mean a “condition that is likely to occur once in 100,000 years”. One can also apply a level of risk scale. This scale works perfectly as it arranges health risks in order of the level of risk starting with the highest risk lowering to the lowest health risk. The level of risk matrix tool is a amalgamation of the probability for a precise risk and the cost. An example of a low risk includes an event that is likely to occur but at the same time has minimal consequences. An example of a high risk includes an event that is highly likely to occur but on the other hand has moderately severe consequences.

Insurance company only pays for losses that took place at a known time, known place, and from an established cause. For example, a company will pay for death of an insured individual on a health insurance policy. When a company insures a person, it sets legal requirements and principles. Among the legal requirements is indemnity- the insurance company should compensate the insured person in case of losses, but only up to the interest of the insured. The point behind this aspect is to return maintain the financial position of the insured to the level it was before the loss.

Secondly, the benefit insurance- as stated in the insurance institute, the insurance company can recover nothing from the damage causer. The company should compensate the insured even if the insured party sues the damage causer. Third is the insurable interest- the insured party must suffer from his loss. The rules also state that the two parties are bound by honesty and fairness. Subrogation sets for the insurance company to seek action against the third party who is also the damage-maker but only after it has compensated the insured. There is also a value contract, which differs from an indemnity in that a value contact, pays a stated sum, with no regard to the actual amount of the loss. Insurable interest is also an important element in an insurance contract. This interest creates a relationship between the person applying for the insurance and the individual to be insured by the contract whereas the applicant is subject to loss upon destruction, illness, disability, damage, or death of the insured.

In these contracts, an insurable interest is present at the time of the contract in order for it to be valid. Once it is issued, there is no insurable interest requirement. Most health and life insurance contracts have a suicide e.g., 2 years clause to make sure the insured does not go for intentional claims.

There are various health insurance covers, both private and the ones provided by the government. Most health care institutions in the United States are owned by private entities. This makes access to health care in the United States very expensive. There are various programs though which have been put forth to aid local Americans have access to health care.

Medicare is among these social health insurance covers provided by the federal government. This program covers people who are 65 years and over, those who are under 65 but are physically disabled permanently and those with any other special deformity according to the federal government. Medicare is divided into four parts (Lemieux, Chovan & Heath, 2008). These parts include hospital insurance, medical insurance, a combination of the first two and prescription of drug coverage. The first part covers all inpatient care in a health institution and requires one to meet certain requirements. The second part covers the doctor’s services which are not covered in the first part. It is typically optional. Both parts require one to pay monthly premiums depending on one’s monthly income. In case one paid while working, then one is free of the premiums. The cover extends to the spouse of the one holding the insurance cover. The minimum premium that most people pay here is $115.40 (Lemieux, Chovan & Heath, 2008). The third part combines the first and the second cover and sometimes also the fourth to enable one pay for all the services including access to drugs and medicines easily. It is although managed by private insurance companies and can prove to be a challenge to many people. The last part can be accessed by everyone with Medicare cover. Medicare is run by the government. One is entitled to receive nearly any form of medic help. It although does not cover one for access of all prescription drugs. It requires one to take a separate policy for other type of drugs other than the drugs covered by the policy (Frum. 2000).

Medicaid is essentially not for the elderly but they too can fall into this category. This government funded social policy health insurance cover is for citizens living under the federal government poverty line. This insurance cover is funded by both the state and the federal governments. It covers citizens with very low income and disabled people (Bayer, 2008). Though it is optional for the federal governments to fund this health insurance cover, all the states have been involved since 1982.

The private health insurance cover though is the main source of health insurance to most Americans. About 60% of all Americans with health insurance covers access the same through an employment based insurance cover. Insurance companies providing health policies recorded substantial amounts of profits in the recent year (Sylvia, 1974). This has in some way prevented most Americans from accessing health insurance covers thus the deteriorating health conditions among the majority poor. This is way the current government is keen on reforming health insurance policies to help the American people have access to proper and cheap health services.

Medicare and Medicaid as well as other health insurance covers like the children’s health insurance program have had a very large social impact on the American population. These two programs are revolutionizing the once expensive service into an affordable and accessible service to all Americans. With the signing of health care legislation in 2010, millions of American citizens will now have access to health insurance cover at affordable prices. The insurers were also prohibited from refusing insurance covers to the American citizens based on their pre- existing conditions. This has seen the health conditions of most Americans improve significantly

References

Frum, D. (2000). How We Got Here: The ’70s. New York. New York: Basic Books.

Lemieux, J., Chovan, T., & Heath, K. (2008). Medigap coverage and spending.

A look at health affairs, 27, 16 – 25.

Sylvia, A. (1974). The role of private intermediaries in Medicare administration. Law, Blue

Cross: What Went Wrong? 35, 30-47.

Morone, J.A. (2010). Presidents and health reform: From Franklin D. Roosevelt to Barrack Obama. Health Affairs, 29(6), 1096-1100. Retrieved from the proQuest database.