In any insurance contract, the insurer bets that it never has to pay out any claims, while the insured pays a premium every month just in case something happens. Health insurance is a contract between you and the insurance company that promises that the insurance company will pay a portion (or all) of your medical expenses if you get sick or hurt, have to go to a hospital, or see a doctor. The coverage that you pay for may vary greatly from policy to policy, company to company.
The policy spells out what the company will pay for, and how much of the bill you will have to pay. It may cover an office visit, and you have to pay a $20 co-payment, or it may not pay anything until you have paid a certain minimum amount, which is called a deductible.
Then there is co-insurance, the amount that you pay out of pocket once the insurance company pays all it has to pay. There may be a maximum that the company has agreed to pay.
What you pay for your insurance is determined by the terms of your policy, which are tailored to the risk you present to the company given certain factors such as (but not limted to) age, pre-existing conditions, etc. This data determines the probabilities used in the calculations made by the insurer.
Health Insurance is a Good Thing
Prior to 1920, the state of medical technology generally meant that very little could be done for many patients. Most patients were treated in their homes. It was common for surgery to be performed in private homes until the 1920s. There was no insurance to help pay medical bills; patients had to foot the expense themselves.
Healthcare Insurance Was a Novel Idea
Healthcare insurance was a novel idea. Then came workers compensation for employers to cover injuries sustained on the job. It evolved over time to pay bills that couldn’t otherwise be paid.
The expense of the medical payments was passed own to the premiums paid by the insured who paid but had fewer claims than premiums, resulting in a calculated profit for the insurers.
The insurers play the probabilities just as any smart gambler does. The odds are always in favor of the house, which is why casinos are so huge--they make big money.
Medicare and Medicaid Evolved
The aging of Americans became a serious issue in healthcare for the elderly as far back as 1912, during the presidency of Teddy Roosevelt, when his platform included health insurance. In 1945, Harry Truman proposed a national insurance fund open to all Americans, and president John Kennedy pushed for national healthcare after a study showed that nearly 60% of to pass bills providing coverage for citizens over 65 years old. Then, on July 30th, Lyndon B. Johnson signed the Social Security Amendments of 1965 into law.
What is Medicare?
“Passed in 1965, Medicare is a federal program with uniform standards that consists of two parts. Part A represents the compulsory hospital insurance program in which the elderly were automatically enrolled in upon reaching age 65. Part B provides supplemental medical insurance, or subsidized insurance for physicians’ services. Ironically, physicians stand to benefit tremendously from Medicare. Fearing that physicians would refuse to treat Medicare patients, legislators agreed to reimburse physicians according to their “usual, customary, and reasonable rate. In contrast to Medicare, Medicaid was enacted as a means-tested, federal-state program to provide medical resources for the indigent.” (source: eh.net)
Later, in 1972, Nixon made a major change by including individuals under the age of 65 with long term disabilities and people suffering from end-stage renal disease (ESRD).Americans with ESRD are eligible as early as three months after they begin dialysis treatments in the hospital — or they can qualify for immediate relief if they complete in-home dialysis training and begin treatment. For Americans with kidney failure, a devastating and extremely expensive disease, this has proven to be a literal lifeline. (source: medicareresouorces.org)
As a chiropractor, I’ve learned that working with insurance can be nearly impossible at times, that’s why the medical integration model that we teach at AMI is so important.
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