Claire Dawson
In the US, the health system is a mix of public and private, for-profit and nonprofit insurers and healthcare providers. While most people in the US have health insurance, hospitals are not in charge of health insurance. Instead, individuals make regular payments, or 'premiums', to a health insurance company, which covers some or all of their medical costs. In some cases, employers may contribute to these payments. In recent years, some hospital systems have become insurers, launching their own health insurance plans. However, this is a challenging business venture that requires significant resources and expertise.
| Characteristics | Values |
|---|---|
| Hospitals becoming insurers | Many hospitals have become insurers, launching their own health insurance plans |
| Reasons for becoming insurers | To diversify their population base and funding stream, and to take advantage of population health management capabilities |
| Challenges of becoming insurers | Requires resources and managerial and administrative expertise |
| Insurers' rules | Insurers may only sign contracts with certain doctors and hospitals, requiring patients to stay in-network or risk losing coverage |
| Public insurance programs | Medicare, Medicaid, CHIP, and military health insurance programs |
| Private insurance | The dominant form of coverage, primarily provided by employers |
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What You'll Learn
Hospitals as insurers
In the United States, the health system is a mix of public and private, for-profit and non-profit insurers and health care providers. While federal taxes fund public insurance programs like Medicare, Medicaid, CHIP, and military health insurance programs, private insurance is the dominant form of coverage, primarily provided by employers.
In recent years, there has been a growing trend of hospitals becoming insurers themselves. This shift is in response to the Affordable Care Act and the move towards value-based payments rather than the traditional fee-for-service model. By launching their own insurance plans, hospitals aim to not only seek reimbursement from insurance companies but also receive and pay insurance claims directly. This strategy allows hospitals to diversify their funding streams and manage population health more effectively. However, establishing an insurance business is challenging and requires significant resources, managerial expertise, and a paradigm shift in the traditional healthcare delivery system.
One example of a hospital system that has successfully ventured into insurance is the University of Pittsburgh Medical Center (UPMC). UPMC launched its own health plan in the early 1990s and has since become the second-largest hospital-owned health insurance plan in the nation, serving 2.6 million members primarily in Pennsylvania. UPMC's success has inspired many other hospitals and health systems to consider following suit.
North Shore-LIJ, a system comprising 20 hospitals, introduced its CareConnect subsidiary insurance company in 2013. This endeavor involved obtaining a license to operate an insurance company from the state of New York. While North Shore-LIJ recognized the complexities of entering the insurance business, they viewed it as a strategic move to diversify their population base and funding streams.
Hospitals that become insurers face significant challenges and must carefully consider the operational, regulatory, and financial complexities involved. However, by integrating insurance and healthcare delivery, these organizations have the potential to improve care delivery and enhance their population health management capabilities.
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Medicare and Medicaid
Medicaid, on the other hand, is a joint federal and state program that assists specific low-income individuals, families, children, pregnant women, the elderly, and people with disabilities. It is largely tax-funded, with federal tax revenues contributing about two-thirds of the costs and state and local revenues making up the rest. The rules around eligibility for Medicaid vary from state to state, generally depending on income, resources, and residency.
In cases where individuals have both Medicare and full Medicaid coverage, they are considered "dually eligible." Medicare is the primary payer, covering prescription drugs, while Medicaid pays last and may cover additional drugs or services that Medicare does not.
The University of Pittsburgh Medical Center (UPMC) is an example of a hospital that launched its own health plan in the early 1990s and now serves as a model for other hospitals interested in entering the insurance business. UPMC is the second-largest hospital-owned health insurance plan in the nation, serving 2.6 million members, primarily in Pennsylvania.
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Choosing a health plan
Hospitals are not in charge of health insurance, but some hospitals have become insurers by launching their own health insurance plans. This strategy is in response to the Affordable Care Act and the shift to value-based payments. However, becoming an insurer is a complex process that requires significant resources and expertise.
When it comes to choosing a health plan, there are several factors to consider:
Coverage
The services covered by health plans can vary significantly. For example, some plans offer preventive services, while others do not. Similarly, certain plans may cover routine podiatric (foot) care, while others exclude it. It is important to review the benefits package and understand the specific services covered by each plan before making a decision.
Choice of Doctor
Some health plans offer partial reimbursement for non-participating providers, while others only pay for or allow the use of participating providers. It is essential to check if your preferred doctors, including primary care physicians, specialists, mental health providers, and dentists, are in-network for the plan you are considering.
Convenience of Access
Consider the location of physicians' offices and hospital affiliations. Choosing a plan with participating providers or centers that are conveniently located near your home or workplace can make accessing healthcare services more convenient.
Cost
Health plans can vary in terms of cost-sharing structures. Some plans may require copayments, deductibles, or coinsurance. Additionally, certain medications may be covered, while others may not. It is important to understand the potential out-of-pocket costs associated with each plan and choose one that aligns with your budget and healthcare needs.
Additional Benefits
Some health plans offer optional riders or additional benefits, such as prescription drug coverage. Review the benefits packages and compare the costs and inclusions to determine if they meet your specific needs.
Remember, it is important to compare multiple plans and review their benefits packages, provider directories, and cost structures before making an informed decision about which health plan best suits your individual needs and preferences.
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Out-of-network care
In the context of health insurance, the phrase "out-of-network care" typically refers to physicians, hospitals, or other healthcare providers who do not participate in a health plan's provider network. This means that these providers have not signed a contract agreeing to accept the insurer's negotiated prices. Out-of-network care can result in higher out-of-pocket costs for patients.
When a provider is in-network, there is a contractual agreement with the health plan regarding the rates for services. The provider agrees to accept negotiated rates for services from the insurance company. This means that patients will typically pay less for medical services received and are less likely to receive surprise bills.
On the other hand, out-of-network providers have not signed any agreement with the insurer. As a result, patients may have to pay higher out-of-pocket costs for services received from these providers. The federal cap on out-of-pocket costs only applies to in-network care, so out-of-pocket expenses for out-of-network care can be significantly higher. Additionally, out-of-network providers can balance bill patients for the remainder of the charges after the insurance company has paid its share.
It is important for individuals to understand the difference between in-network and out-of-network providers to help lower their healthcare expenses. Most health plans provide access to a network of doctors, facilities, and pharmacies that have agreed to accept discounted rates for covered services. By choosing an in-network provider, individuals can save money on their medical expenses.
In certain situations, such as emergencies or when a patient unknowingly receives care from an out-of-network provider at an in-network facility, the No Surprises Act protects patients from surprise balance bills. However, it is always advisable to verify insurance coverage and understand the potential costs before seeking medical care to avoid unexpected financial burdens.
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Public vs private insurance
When it comes to health insurance, individuals typically have the option of choosing between public and private insurance plans. Both types of insurance have their own advantages and limitations, and it's important to carefully consider various factors such as personal needs, financial capacity, and preferences when selecting a plan.
Public health insurance, often referred to as government-run insurance, is generally operated or subsidized by the government. The primary objective of public health insurance is to provide universal healthcare coverage to all citizens, regardless of their financial circumstances. It is funded primarily through state and federal taxes, making it more affordable or even free for eligible individuals. Public health insurance typically covers essential care services such as doctor visits, hospital stays, emergency and preventive care, and prescription medications. However, one of the limitations of public insurance is that there may be longer wait times for certain services and specialized care due to high demand or a limited number of available care providers. Modifications in governmental policies can also affect the extent of coverage and benefits provided to policyholders.
Private health insurance, on the other hand, is offered by private companies, allowing individuals to select plans that cater to their specific requirements and preferences. Private insurance typically provides access to a broader network of care providers, resulting in shorter wait times for visits, diagnostic tests, and elective procedures. It often includes comprehensive coverage, offering extensive medical services, elective treatments, and specialized care. This can be particularly beneficial for individuals with specific health conditions or those requiring personalized medical attention. Private insurance plans are usually paid for through monthly premiums, which can vary based on factors such as the level of coverage, age, and location. However, one of the main limitations of private insurance is the cost, as private plans tend to be more expensive compared to public options, making them less affordable for those with lower incomes. Private insurance companies prioritize profit, which can result in decisions driven by financial interests rather than solely the welfare of patients.
In some cases, individuals may opt for a combination of public and private insurance plans to ensure they have comprehensive coverage. Additionally, employers may offer private health insurance as a supplemental benefit to their employees, either as a standalone benefit or by sharing the cost of the premium with the employee.
Both public and private health insurance systems continue to evolve in response to changing healthcare needs, new treatments and technologies, and economic conditions affecting affordability. Understanding the differences between these insurance types is crucial for individuals, employers, and policymakers alike to make informed decisions regarding healthcare coverage.
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Frequently asked questions
Health insurance is a service that protects you from owing large sums of money to doctors or hospitals if you get sick or hurt. You make regular payments, or "premiums", to a health insurance company, and in exchange, the company agrees to pay some, or all, of your medical bills.
Hospitals are not in charge of health insurance, but some hospitals have become insurers by launching their own health insurance plans. This is a complicated process, and not all hospitals are capable of doing so.
North Shore-LIJ, which includes 20 hospitals in its system, introduced its own insurance company, CareConnect, in 2013. The University of Pittsburgh Medical Center (UPMC) also launched its own health plan in the early 1990s and is now the nation's second-largest hospital-owned health insurance plan.
In the United States, federal taxes fund public insurance programs such as Medicare, Medicaid, CHIP, and military health insurance programs. Private insurance is the dominant form of coverage, often provided by employers.
