by Trudy Despain
(last updated August 23, 2013)
It's no secret that American's are paying the highest percentage of their income to health insurance than ever before. The White House reported that "on average, middle class families with private health insurance spend $4,400 a year on health insurance premiums, deductibles, and co pays, or 9% of their household income." (Herzer and Sheshamani. "Why Middle Class Americans Need Health Reform." Middle Class Task Force. 2011.) And the problem is growing. "From 2001 to 2006, the percentage of privately insured middle class Americans facing a high financial burden from health care costs increase from 14 percent to 22 percent." (Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey, 2001-2006).
Health insurance originated as indemnity plans. With an indemnity plan, a patient can see any doctor in any hospital. After care is received, the doctor sends a bill to the insurance company who pays an agreed percentage, usually 80%, of the bill. The patient is then required to first pay their deductible, and then pay the remaining 20%. As health care costs have continued to rise, 20% of a healthcare bill becomes too much to pay for most Americans.
In order to keep the cost of healthcare down, health insurance companies have moved away from traditional indemnity plans and now offer managed care plans. There are basically two different kinds of managed care plans to choose from.
This article only touches the surface of options available in healthcare today. More options translate to greater savings to consumers if you are willing to do your homework and find the right coverage for you and your family.
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