Lesson 4 - Introduction to Insurances / Payers

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What is healthcare Insurances / Programs?

An insurance or healthcare program is a system that helps people pay for medical care when they need it. Instead of paying the full cost of doctor visits, hospital stays, or prescriptions out of pocket, people pay a monthly fee called a premium to be part of the program. In return, the program helps cover most of their healthcare expenses. These programs can be run by private companies, non-profit organizations, or the government. Each one has different rules about what is covered, how much it costs, and who can join. Don't worry we will break it down in upcoming lessons.

Short Definition:

In short, a healthcare program or insurance helps protect people from high medical costs and makes it easier to get the care they need when they need it.

 

 

Health insurance in the United States can be grouped into two main categories which are as following:

1. Government Insurances
2. Private / Commercial Insurances

Government Insurances:

The Insurances that are worked under Federal, States or Local Government are called Government Insurances like Medicare and Medicaid… These Insurances are funded through taxes and have very low cost for individual’s pocket, whereas these insurances required certain criteria on which individual lays can be covered only. These insurances billing is more complex then private / commercial insurances…

Private / Commercial Insurances

The Insurances that are worked under the private or commercial scale level organizations for both profit and non-profit purposes are called private / commercial insurances like BCBS, Aetna and Cigna… These insurances are funded though premiums paid by individuals or employee and have little high to higher cost for individual / employee’s pocket according to the plan they enrolled. But these insurances do not require certain criteria for coverage. These insurances add additional steps for networks and pre-authorization in billing whereas Govt. insurances do not need this.
Private / Commercial Insurances are further divided into two main ownership Types as following:

1. Profit based organizations:
   For-profit insurance companies are private businesses that focus on making money. They collect premiums from customers and aim to spend as little as possible on medical claims to maximize profits for their shareholders.
2. Non-Profit based organizations:
   Non-profit insurance companies are also run by private health organizations, but their main goal is to serve their members, not to earn a profit. Any extra funds are reinvested into improving care, expanding services, or lowering costs for members.

For-profit insurance companies are private businesses that focus on making money. They collect premiums from customers and aim to spend as little as possible on medical claims to maximize profits for their shareholders.
Non-profit insurance companies are also run by private health organizations, but their main goal is to serve their members, not to earn a profit. Any extra funds are reinvested into improving care, expanding services, or lowering costs for members.

Ownership of Healthcare Insurances in US:

This means that only a small number of insurance companies operate as for-profit businesses. Most insurance operates through non-profit organizations, followed by the government.

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Does everyone in US have insurances for covering their healthcare expenses?

Not all people in the U.S. use health insurance to cover their medical expenses. Many choose to pay healthcare providers directly for the services they receive. These individuals are referred to as 'self-pay patients' because they cover the full cost of care out of pocket, without using insurance benefits.

Did you know about first insurance in US?

The first insurance company in the United States underwrote fire insurance and was formed in Charleston, South Carolina, in 1735. In 1752, Benjamin Franklin helped form a mutual insurance company called the Philadelphia Contribution ship, which is the nation's oldest insurance carrier still in operation.

How did modern health insurance develop in the United States, and what roles did Blue Cross and Blue Shield play in its early history?

Modern health insurance in the U.S. began in the 1920s with hospitals offering pre-paid services. A key example is Baylor University Hospital in Dallas, which in 1923 allowed local teachers to pay 50 cents a month (about $7 today) for up to 21 days of hospital care. This plan, launched to address unpaid medical bills, attracted 1,250 teachers in its first year and helped save the hospital from bankruptcy. It later evolved into Blue Cross, focused on hospital services, while in 1930s Blue Shield was introduced to cover physician services for workers in industries like lumber and mining. The rise of health insurance was largely driven by increasing hospital costs and the need to spread financial risk. Eventually, employer-sponsored health insurance became a major part of the U.S. system, with plans negotiated to help cover medical expenses.