Econoclasm Chapter Two, continued: " Insurance "

 Health insurance – again I’m using the term because everybody else does, not because I think it’s accurate – can work in many ways. One of the most important broad dimensions is how the benefit gets delivered. ·Indemnity plans are the most like fire insurance. They pay money when the beneficiary incurs medical expenses. (The money could be paid to the beneficiary, or directly to the provider. That doesn ’t much matter.)·Service benefit plans have negotiated arrangements with providers to pay them a certain amount for a given service, when it is provided.·Service delivery plans actually provide the service, in other words a provider organization is given the premium and then must provide whatever services a beneficiary happens to need. Health insurance, even in the indemnity form, is different from fire insurance. We can estimate in advance the cost to rebuild our houses and replace the contents, and buy insurance for that amount and no more. For obvious reasons, insurance companies won ’t let us insure our houses for far more than they are worth. But there’s no meaningful limit to the medical costs someone might confront. Once you’ve rebuilt your house, you’re done. But medical expenses may be ongoing for the rest of your life.Which creates another problem. You can ’t hold off on buying fire insurance until your house catches fire; it will only pay for costs incurred after the policy is in effect. But in principle, you could wait until y...
Source: Stayin' Alive - Category: American Health Source Type: blogs