Health insurance types, categorization methods, and managed care plans in the US

Heath Care

Health Care Plans

Health Care

Types of Health Insurance

Indemnity Insurance

This type of insurance is also known as a traditional or fee-for-service plan. The benefit of an indemnity plan is the flexibility; this plan allows members to choose any doctor or hospital. However, members must pay an annual deductible and then a percentage of each medical bill. Although these plans offer the greatest freedom to select any doctor, they are usually the most expensive option.

Typically, the member or the provider sends the bill to the insurance company. These plans usually have an annual deductible before the insurer starts paying. Once the deductible has been met most indemnity plans pay a percentage of what they consider the "Usual and Customary" charge for covered services. The insurer generally pays 80% of the Usual and Customary costs and the member is responsible the other 20%, known as coinsurance. If the provider charges more than the Usual and Customary rates, the member is responsible for paying both the coinsurance and the difference. These plans will pay for charges for medical tests and prescriptions as well as from doctors and hospitals. They may not cover for some preventive care such as checkups ("The Types of health insurance," 2011).

Managed Care

Preferred Provider Organization (PPO)

A PPO combine elements of indemnity and managed care plans. Each time a member needs care, they choose among doctors who belong to the PPO network or any non-network doctor. Members pay less when they use the network's preferred providers. However, members can see any doctor any time they wish, usually without getting pre-approval from the plan.

If a member chooses go to a doctor within the PPO network they will pay a copayment, coinsurance will be based on lower charges for PPO members. If a member chooses to go outside the network, they will have to meet the deductible and pay coinsurance based on higher charges. In addition, they may have to pay the difference between what the provider charges and what the plan will pay.

Health Maintenance Organization (HMO)

There are many varieties of HMOs. In a staff or group model HMO the doctors are employees of the health plan and members visit them at central medical offices or clinics. Other HMOs contract with physician groups or individual doctors who have private offices. These are called individual practice associations (IPAs) or networks. HMOs require that members pay a small, set copayment when using the plan's HMO doctors; however, generally there is no deductible.

HMOs give members a list of doctors from which to choose a primary care doctor, who coordinates their care and serves as a gatekeeper for specialty care. Generally members must contact the primary care doctor in order to be referred to a specialist. If they go to doctors who are not in the HMO, they are responsible to pay the full cost of the care, unless it is an emergency situation. Most HMOs are relatively inexpensive, offer preventive care services, and have special programs for disease management.

Point-of-Service (POS) Plan

Many HMOs offer an indemnity-type option known as a POS plan. POS plans or Open Access HMOs add an out-of-network benefit to HMOs. Like HMOs, members select a primary care physician who manages all their care and is responsible for referring patients to plan specialists. In a POS plan however, members have the option of going outside the HMO network, although their out-of pocket expenses for care received outside of the network will be more ("The Types of health insurance," 2011).

State-Sponsored Health Insurance

These programs cater to limited-income individuals and families. Eligibility requirements vary from state to state. This option is for low-income families, the unemployed, employees who don't benefit from a group plan and senior citizens. State-sponsored health insurance programs include Medicare and Medicaid and can be very inexpensive or free. Coverage cannot be denied based on pre-existing conditions.

Impact of Managed Care on State-Sponsored Programs

According to Rich and Erb (2005) over 90% of all persons with employer-based health insurance coverage in the United States are enrolled in a managed care plan. Only a decade earlier, fewer than three out of 10 people with health insurance coverage were enrolled in such plans. There has, however, been a strong backlash from consumers and providers against managed care. By 2001, all but four states had some type of comprehensive patients' bill of rights or patient protection act.