How health insurance works
Health insurance isn't like homeowners or car insurance, which usually cover major accidents, like damage from a fire or car crash, and not minor ones, like a leaky sink or an oil change. Health insurance, on the other hand, covers it all—routine checkups, preventive services like screening tests, and serious health problems like a heart attack or cancer.
Most developed countries provide health insurance to all their citizens and finance it through taxes. In the U.S., the government covers about a third of the population through Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and programs for veterans. About half of Americans are covered by private insurance, either through an employer or purchased individually. Some 50 million people are uninsured.
Regardless of how you get health insurance, here's what you need to know.
Getting insurance through your employer
If you're younger than 65 and working, you probably get insurance through work. About 157 million Americans do. But the kind of insurance you're offered can differ substantially, often depending on the size of your employer.
Most businesses with more than 50 workers offer health insurance. Coverage and premiums aren't based on medical history or age but can vary by family size. You're likely to be offered more than one option, though the number has declined in recent years. Large employers are also more likely to "self-insure," that is, take on the insurance risk themselves and contract with health insurers to administer the plans. Self-insured employers can choose to make the final decision in any dispute you might have over coverage. If you're unhappy with the result, you can't complain to a state insurance department because self-insured plans aren't subject to state law. But the health-reform law requires self-insured employers to permit workers to seek an outside review if a claim is denied.
About 75 percent of the companies with 10 to 24 workers offer insurance; more than 50 percent of those with three to nine workers provide it. But smaller employers are less likely to offer you a choice of plans, and their insurance coverage might be skimpier. And you might have to pay a larger share of the costs, especially at the smallest firms.
Buying insurance on your own
Some 14 million Americans under the age of 65 buy insurance on their own and many more try to. If you're one of them, you probably have to pay more than if you got insurance through work, and the choices you have will depend on your health status.
If you're healthy, and especially if you're young, insurers want you because you'll be paying premiums but probably not using much health care. But if you're old, sick, or both, and especially if you have a few chronic conditions, your choice is almost always more limited. Insurers might reject you or accept you at a price several times higher than what a healthy person would pay.
Getting insurance through the government
Some 47 million get insurance through Medicare, more than 50 million through Medicaid, and 6 to 7 million through CHIP.
Medicare covers people 65 and older, those younger than 65 with certain disabilities, and people with kidney failure who need dialysis. It's a federal program.
Medicaid covers low-income people and those with certain disabilities. Its enrollees include 6 million low-income seniors who need long-term support and 70 percent of all nursing-home residents. Medicaid is a federal-state program.
CHIP covers uninsured children in low- and moderate-income families who don't qualify for Medicaid. It's another federal-state program.
Shop by quality, not brand
Most people with health insurance get their coverage from one of the 30 largest insurance companies in the U.S. But size and a familiar brand name is no guarantee of quality, according to our analysis of insurance-plan rankings from the nonprofit National Committee for Quality Assurance.
The five largest insurers—Aetna, CIGNA, Humana, Kaiser Permanente, and UnitedHealthcare—together with the 60 mostly state-based Blue Cross Blue Shield plans account for 75 percent of the 390 ranked private plans but only 36 percent of the top 50. Some of the top-ranked insurers are smaller, community-based, and mostly non-for-profit. For details, see more on shopping by quality, not by brand.
