1. Health Insurance

2. State Standard
6) Differentiate among the methods of payment for healthcare in the United States. Include private and state or federal insurance, health savings accounts, , Veteran’s Health Administration, Military Health System/TRICARE, and long-term care.
7) Investigate current innovations in healthcare. Develop pro and con arguments based on information found in news media, professional journals, and trade magazines on how innovations have influenced the healthcare system. Support arguments with evidence presented in oral, visual, or written format.

3. Objectives Students will be able to…
Identify the different types of insurance in the United States.
Compare insurance types through completion of an insurance case study.

4. Health Insurance TABLE OF CONTENTS Lessons 1. Health Insurance Go
2. Managed Care Go
3. Government Programs Go
TABLE OF CONTENTS

5. Lesson 1– Health Insurance
The rising cost of health care is good for the economy, but the expenses are a burden for most individuals and families.
In the 1920’s, the United States developed a system of health insurance to help cover the cost of medical expenses.
Health Insurance
Health care is a profitable industry in the United States. In fact, health care expenses make up almost 15 percent of the United States’ gross national product. The rising cost of health care is good for the economy, but the expenses are a burden for most individuals and families.
In the 1920’s, the United States developed a system of health insurance to help cover the cost of medical expenses. Health coverage is offered by private health insurance agencies. Individuals make payments to the agencies. When medical services are needed, the agency covers part or all of the expenses. The amount of coverage varies according to the insurance policy.

6. Lesson 1– Health Insurance Terms
Premium – the amount paid to an insurance agency for a health insurance policy
Deductible - the amount that must be paid by the patient before the insurance agency will begin to make payments
Co-payment - an amount paid by the patient for a certain service
Out-of-pocket - a medical bill that must be paid by the patient
Health Insurance Terms
The following terms are important in the health insurance system:
Premium: The premium is the amount paid to an insurance agency for a health insurance policy. The premium is often paid on a monthly basis.
Deductible: The deductible is the amount that must be paid by the patient before the insurance agency will begin to make payments. Deductibles are paid on a yearly basis. The amount of the deductible is set by the type of policy that is purchased. Some policies may have a deductible of $500 or $1000 each year. Other policies may not require any deductible payment.
Co-payment: A co-payment is an amount paid by the patient for a certain service. For example, many insurance agencies require a $15 or $20 co-payment for every visit to the doctor.
Out-of-Pocket: An out-of-pocket expense is a medical bill that must be paid by the patient. Many health insurance policies have a limit to the amount of out-of-pocket expenses to be paid by the patient during a year.

7. Lesson 1– Individual and Group Insurance
Individual insurance is when a person purchases a policy and agrees to pay the entire premium for health coverage.
Group insurance is generally purchased through an employer. The premium is split between the employer and the person being insured.
Individual and Group Insurance
Health insurance policies may be purchased in two basic forms, individual and group. Individual insurance is when a person purchases a policy and agrees to pay the entire premium for health coverage.
Group insurance is generally purchased through an employer. The premium is split between the employer and the person being insured. Medical insurance is an important benefit of employment. Group insurance is almost always less expensive than individual insurance.

8. Lesson 1– Indemnity Insurance
In indemnity insurance, patients must pay for all health care expenses out of their own pockets. Afterward, the insurance agency will reimburse the patient for a percentage of the expenses.
Indemnity insurance does not work for everyone. Many people cannot afford to pay for their medical expenses out-of- pocket.
Indemnity Insurance
In the early years of health insurance, most policies were in the form of an indemnity policy. In indemnity insurance, patients must pay for all health care expenses out of their own pockets. Afterward, the insurance agency will reimburse the patient for the expenses. In some indemnity policies, the total expense will be reimbursed. However, most indemnity policies reimburse only a percentage of the total expense. A typical amount for reimbursement is 80%.
Indemnity insurance does not work for everyone. Some people cannot afford to pay for their medical expenses out-of-pocket and then wait for reimbursement. As a result, a new type of medical insurance became popular in the 1970’s. It is called managed care.

9. Lesson 1– Managed Care Two primary concepts of managed care:
To promote good health
To practice preventive medicine
Managed care plans offer medical services through a system of health care providers. The system of providers offers services at reduced rates.
Managed Care
Managed care is built on two primary concepts: to promote good health and to practice preventive medicine. The goal is to reduce the cost of medical expenses by maintaining a healthy lifestyle.
Managed care plans offer medical services through a system of health care providers. The system of providers offers services at reduced rates. People who are insured through a managed care plan must receive treatment from physicians within this system in order to get the reduced cost.

10. Lesson 1– Managed Care versus Indemnity
Payment for medical services
Choosing a health care provider
Managed Care versus Indemnity Insurance
There are two major differences between managed care and indemnity insurance. The first difference is payment for medical services. In indemnity plans, patients have a greater financial responsibility. They must pay for services out-of-pocket and then wait for reimbursement from the insurance company. In most managed care plans, the insurance company will pay the health care provider directly for the medical services. However, in both types of insurance, the patient may be required to pay the yearly deductible.
The second major difference between managed care and indemnity insurance is choosing a health care provider. Most managed care plans require patients to choose from a specific list, or network, of health care providers. If a patient receives treatment from an out-of-network provider, the insurance company may not cover the medical expenses. In indemnity plans, there are no networks. Patients may receive treatment from any health care provider.

11. Lesson 1– Reimbursement
Health insurance agencies do not always reimburse the full amount charged for services.
Physicians will either “absorb” the loss, or they will charge the patient for the amount that was not paid by the insurance agency.
Reimbursement
Health insurance agencies do not always reimburse the full amount charged for services. Physicians may charge any amount for the services they provide. However, insurance agencies may have a set limit for the amount that they will reimburse. For example, a doctor may choose to charge $200 for a routine check up. However, an insurance agency may have a set limit of $150 for a routine check up. The remaining $50 may be covered in one of two ways:
The doctor will “absorb” the loss. This means that the doctor will drop the $50 charge and accept $150 from the insurance company as full payment for the check up.
The doctor will charge the patient for the remaining $50. In this way, the doctor will receive the full $200 payment for the check up.
It is important for patients to be proactive with their health care. They must ask questions and research reimbursement amounts. Otherwise, patients may be required to pay a portion of the bill.

12. Lesson 2– Managed Care Health Maintenance Organizations
Preferred Provider Organizations
Point of Service
Managed Care
Managed care offers reduced rates for medical services through a network of health care providers. There are several types of managed care providers. The three basic types are:
Health Maintenance Organizations
Preferred Provider Organizations
Point of Service

13. Lesson 2– Health Maintenance Organizations
Clients must pay a premium, deductible, and co-payments.
Clients must visit in- network doctors and select a primary care physician.
HMOs urge clients to practice healthy living and to receive preventive treatments.
Health Maintenance Organizations
Health Maintenance Organizations, or HMOs, are a common type of managed care. In an HMO, the person being insured pays a monthly fee, or premium. After the person has paid the deductible or co-payment, medical services are provided by a network of physicians. If the person receives medical services from a physician that is not in the network, the HMO will not cover the expenses.
Many HMOs also require the insured person to select one primary care physician, or PCP. The person must visit the selected physician for all check-ups and procedures. If it is necessary for the person to see a specialist, the primary care physician must give approval first. However, if the person is in an emergency situation, pre-approval is not required.
It is much cheaper to prevent an illness than to treat an illness. Therefore, HMOs urge their clients to practice healthy lifestyles. They also encourage their clients to visit the doctor regularly for check-ups. One benefit of HMOs is that the cost of routine doctor exams and preventive care is included.

14. Lesson 2– Preferred Provider Organization
Clients must pay a premium, deductible, and co-payments.
Clients do not have to choose a primary care physician.
Clients may visit non- network physicians, but coverage is greater with in-network physicians.
PPOs often have other fees and co-payments.
Preferred Provider Organization
A Preferred Provider Organization, or PPO, is another type of managed care. The insured persons must pay a monthly premium to purchase the plan. Unlike HMOs, PPOs do not require that insured persons receive treatment from a specific network of physicians. An insured person may choose a non-network physician. However, coverage will be greater if an in-network physician is chosen. For example, services at an in-network physician may be covered at 100% after the deductible and co-payment. But services from a non-network physician may only be covered at 80% after the deductible and co-payment. This means that a person receiving care from a non-network physician must pay the remaining 20% of expenses out-of-pocket. Additionally, PPOs often have other fees, such as a co-payment for hospital stays.
Another way that PPOs differ from HMOs is that PPOs do not require insured persons to select a primary care physician. Because there is no primary care physician, pre-approval for specialists is not required.

15. Lesson 2– Point of Service
Clients must pay a premium.
Clients must chose a primary care physician.
For in-network physicians, there is usually no deductible and co-payments are low.
Specialists may be non- network physicians, but coverage may be limited.
Point of Service
Point of Service, or POS, plans are often considered a type of HMO. However, because of their increasing popularity in recent years, POS plans have developed into their own division of medical coverage.
Insured persons must pay a monthly premium to purchase a POS plan. In addition, POS plans require insured persons to select a primary care physician. The physician must pre-approve visits to specialists. But specialists may be non-network physicians. Like a PPO, coverage may be limited for a non-network physician. Also, most POS plans require that a co-payment and a deductible are paid for non-network services. However for in-network services, there is no deductible and co-payments are low.

16. Lesson 3– Socio-Economics
Socio-economics is the study of how economics is affected by society, culture, and politics.
Socio-economics has revealed the need for medical assistance for the elderly, disabled, and poor.
Socio-Economics
Socio-economics is the study of how economics is affected by society, culture, and politics. Socio-economics shows that there is a link between poverty and poor health. Those who cannot afford doctor visits, medicine, vaccinations, and other medical treatments are more likely to become sick than those who can afford these services.
Many people purchase health insurance through their employer. The employer and the employee split the premium payment. This system makes the expense of health insurance more manageable. However, people who are not employed do not have these medical benefits. Likewise, not all employers offer health coverage for their employees. Individual insurance policies can be expensive, and many people cannot afford to purchase them.
Socio-economics has revealed the need for medical assistance for the elderly, disabled, and poor.

17. Lesson 3– Government Programs
In the 20th century, the United States government began to realize the need for public medical assistance.
In 1965, President Lyndon B. Johnson instituted two medical assistance programs to help those without health insurance.
Medicaid
Medicare
Government Programs
In the 20th century, the United States government began to realize the need for public medical assistance. In 1965, President Lyndon B. Johnson instituted two medical assistance programs to help those without health insurance. These programs are called Medicaid and Medicare.

18. Lesson 3– Medicaid Need-based program
Designed by the federal government, but administered by state governments
Provides medical assistance to individuals and families who are determined by the state to be “needy.” Each state must determine its own definition of “needy.”
Medicaid
Medicaid is a need-based program that was designed by the federal government. However, it is administered by state governments. Medicaid is a voluntary program, which states may or may not choose to participate in.
Medicaid provides medical assistance to individuals and families who are “needy.” Each state must determine its own definition of “needy.” Typically, needy individuals include:
Low-income families with young children
Pregnant women in low-income families
Families with adopted or foster children
Blind or disabled adults
Adults with certain chronic or debilitating diseases
Adults who receive social security benefits

19. Lesson 3– Medicaid Service
Services typically include:
Hospital services
Prenatal care
Child vaccines
Pediatric services
Physician services
Diagnostic testing and X-rays
Rehabilitation and physical therapy
Prescription drugs
Home health care
Medicaid Services
In addition to deciding who qualifies for Medicaid, states must also define the type, amount, duration, and scope of the services. Services vary from state to state, but they typically include:
Inpatient and outpatient hospital services
Prenatal care
Child vaccines
Pediatric services
Physician services
Diagnostic testing and X-rays
Rehabilitation and physical therapy
Prescription drug coverage
Home health care

20. Lesson 3– Medicaid Limits
Medicaid is not guaranteed to every low-income individual.
If a low-income individual does not have children or is not disabled, this person may be unable to receive any medical insurance.
Medicaid Limits
It is important to know that Medicaid is not guaranteed to every low-income individual. In fact, studies show that 40% to 60% of the poor do not qualify for Medicaid. If a low-income individual does not have children or is not disabled, this person may be unable to receive any medical insurance.

21. Lesson 3– Medicare Entitlement program for any citizen age 65 or older
Administered by the federal government
After an individual pays a deductible, Medicare will cover 80% of all medical expenses.
Medicare
Medicare is a program that is administered by the federal government. Unlike Medicaid, which is a needs-based program, Medicare is an entitlement program. This means everyone age 65 or older is entitled to Medicare insurance. Medicare is also available to some people under the age of 65 with certain disabilities.
Medicare will not cover all of an individual’s health care expenses. The insured persons are required to pay a yearly deductible. After the deductible, Medicare will cover 80% of all expenses. This means that insured persons must pay the remaining 20%. Many people cannot afford to pay the 20% charge. An additional form of insurance called Medigap may be purchased to help cover the remaining expenses.

22. Lesson 3– Medicare Services
Part A: Hospital Care
Hospitalization
Skilled nursing facilities
Home health care
Hospice care
Long-term care facilities
Part B: Outpatient Services
Medical expenses, including therapy, medical equipment, and testing
Preventive Care
Medicare Services
Medicare is divided into Part A and Part B. The following services are provided by these parts:
Part A: Hospital Care
Hospitalization
Skilled nursing facilities
Home health care
Hospice care
Long-term care facilities
Part B: Outpatient Services
Medical expenses, including physician services, physical therapy, occupational therapy, speech therapy, medical equipment, and diagnostic testing
Preventive care

23. Activity
Complete the 2 Sisters Insurance Case Study on the class website.
Once Finished write 2 paragraphs explaining the difference between the 2 sisters insurances. Who had the better insurance? Explain why having insurance coverage is so important. Figure out what each sister would have had to pay out of pocket if they had not had insurance.