Funding universal, single payer health care
Insurance allows people to protect themselves from potentially life-ruining catastrophes that they would not be able to afford unless they pool the risk with other people.
How do Americans pay for health care now?
Private Health Insurance
“Private” means any health insurance plan that is not run by the federal or state government.
The vast majority of group health insurance plans are employer-sponsored benefit plans. It is possible, however, to purchase group coverage through an association or other organizations.
Group health insurance plans are purchased by companies and organizations, and then offered to its members or employees.
The Affordable Care Act (ACA) created a public marketplace where people can buy health insurance if they are not eligible for group insurance. Depending on life circumstances and income, this public marketplace provides insurance plans with tax credits that lower premiums to make the plans more accessible to many Americans.
You can also purchase private health insurance from companies not on the public marketplace.
Premiums, payments to the insurance company, are split between the organization and its members based on the plan.
All private health insurance plans are designed to split the cost between the participant and the insurer. These cost-sharing methods come in the form of deductibles, copays, and coinsurance.
Premium: A monthly payment you make to have health insurance. You pay the premium each month, even if you don’t use it, or else lose coverage. If you’re fortunate enough to have employer-provided insurance, the company typically picks up part of the premium.
Copay: A predetermined rate you pay for health care services at the time of care. For example, you may have a $25 copay every time you see your primary care physician, a $10 copay for each prescribed medication and a $250 copay for an emergency room visit.
Deductible: The deductible is how much you pay before your health insurance starts to cover a portion of your bills. For example, if you have a $3,000 deductible, you must pay $3,000 for your own care out-of-pocket before your insurer starts covering costs. The deductible resets yearly.
Coinsurance: Coinsurance is a percentage of a medical charge that you pay, with the rest paid by your health insurance plan, that typically applies after your deductible has been met. For example, if you have a 20% coinsurance, you pay 20% of each medical bill, and your health insurance will cover 80%.
Health insurance companies set the allowed cost for services based on UCR (Usual, Customary, and Reasonable) charges for the same or similar medical service. If the medical facility has a contract with the insurance company (“In-Network” facilities), they will accept the UCR payment. Co-insurance plus insurance company payment at UCR rates equals payment in full for the service.
“Out-of-Network” providers do not accept the Usual, Customary, and Reasonable contracted cost. This is the origin of “Surprise” or “Balance” billing.
Out-of-pocket maximum: The most you could have to pay in one year, out of pocket, for your health care before your insurance covers 100% of the bill.
Some medical plans have only co-pays; some plans have only co-insurance.
EXAMPLE of CO-PAYS vs CO-INSURANCE
You visit your primary care doctor for a sprained wrist. You make a co-payment of $25. The doctor requests X-rays. After the X-rays, the doctor provides you with a splint and sling. They prescribe a pain killer. You make a co-payment for the prescription.
For the same visit with co-insurance, you would be billed for the office visit, the X-ray, and the splint. You would pay the co-insurance amount for cost of the prescription.
Public Health Insurance
Public health insurance is provided or subsidized in some way by the federal government. Medicare, Veteran benefits, and insurance provided to federal employees are all examples of public health insurance.