For some people, mention the words “health insurance” and the eyes begin to glaze over.
If you’re living in Texas, the state with the largest percentage of residents (25%) without health insurance coverage, it’s probably the same. For those living in Dallas, Houston or Austin, which traditionally have some of the highest numbers of residents without health insurance, the confusion may have at least something to do with the complexity of health insurance.
If that’s the case, perhaps a review of the basics will help.
With medical expenses rising and no relief in sight, it’s a near certainty that at least some people without health insurance coverage will find themselves needing it, the alternative being paying for the service when they can least afford it.
So what’s health insurance all about?
Health insurance plans are categorized into one of three types: so-called indemnity plans (otherwise known as reimbursement plans), preferred provider plans (PPOs), and managed care plans (HMOs).
The indemnity plan typically gives consumers the most choice: you pick your doctor, the bill gets sent into the insurance company and you’re reimbursed for all or part of the cost, depending on the amount the insurance company has worked out with doctors and those who sign up for the plan.
Health insurance providers may offer a PPO as a means of offering lower costs, done so by arranging with a specific group of health care providers. The consumer may get a broader range of coverage and the health insurance company is able to negotiate a better rate because it is bringing more business to the doctors and hospitals involved in the PPO.
With the HMO managed care plan type of health insurance, the health insurance company is even more involved in the process, in some cases directing the doctors to coordinate the care they provide, referring the patients they see to specialists that only work for the HMO network.
Again, lower costs is the objective.