Health insurance is intended to assist policyholders cover a portion of their healthcare and hospital bills, therefore offsetting the high costs of medical treatment. However, because each nation has its own public healthcare system, the extent of coverage differs.
Insurance Business explores how health insurance plans function in the four primary regions we cover: the United States, Canada, the United Kingdom, and Australia in this instalment of our client education series. We will also discuss the various policies accessible to people, as well as the benefits these plans give.
We recommend insurance agents and brokers to share this information with their clients in order to assist them understand this critical type of protection.
In 2010, the US enacted the Affordable Care Act (ACA), a comprehensive reform law aimed at reducing healthcare costs for families and ensuring that more Americans have access to health insurance. Under the ACA, patients who may be uninsured because of limited finances or pre-existing conditions can now secure affordable coverage through their state’s health insurance marketplace.
How does health insurance work in the US?
Through these health insurance marketplaces, Americans can choose from a range of coverages designed to meet different healthcare needs.
“Some types of plans restrict your provider choices or encourage you to get care from the plan’s network of doctors, hospitals, pharmacies, and other medical service providers,” according to the government’s health insurance exchange website HealthCare.gov. “Others pay a greater share of costs for providers outside the plan’s network.”
Here are some types of plans that people can access through these health insurance marketplaces:
Health Maintenance Organization (HMO)
This type of health insurance plan often limits coverage to care from doctors who work for or are contracted with the HMO. Policies generally do not cover out-of-network care except in an emergency. Plans may likewise require that a policyholder live or work in its service area to be eligible for coverage. HMOs typically provide integrated care and focus on prevention and wellness.
Exclusive Provider Organization (EPO)
This is a managed care plan where services are covered only if the doctors, specialists, or hospitals are in the plan’s network – except in cases of emergency. This means that if a policyholder opts for an out-of-network provider, they will have to cover the full cost of treatment themselves.
Point of Service (POS)
In this kind of plan, policyholders pay less if they access doctors, hospitals, and other healthcare providers belonging to the plan’s network. POS coverage also requires the insured to get a referral from their primary care doctor for them to see a specialist.
Preferred Provider Organization (PPO)
This health plan allows policyholders to pay less for healthcare if they choose to get treatment from providers in the plan’s network. However, they can also access doctors, hospitals, and providers outside of the network without a referral for an additional cost.
HealthCare.gov added that US health insurance plans are offered in four categories based on how the costs are split between the policyholder and the insurer. Also referred to as the “metal tiers,” these plans are:
- Bronze: 60% health insurer, 40% policyholder
- Silver: 70% health insurer, 30% policyholder
- Gold: 80% health insurer, 20% policyholder
- Platinum: 90% health insurer, 10% policyholder
What does health insurance in the US cover?
One of the changes the ACA has implemented is the standardization of insurance plan benefits in the country’s healthcare system. Before this, the benefits offered varied significantly depending on the insurance company and the type of policy. At present, US health insurance plans are required to cover these 10 “essential health benefits.”:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Laboratory services
- Mental health and substance use disorder services, including behavioral health treatment
- Pediatric services, including oral and vision care
- Pregnancy, maternity, and newborn care
- Prescription drugs
- Preventive and wellness services and chronic disease management
- Rehabilitative and habilitative services and devices
Birth control and breastfeeding coverage are also required benefits. Dental and eye care coverage for adults, meanwhile, are not considered essential benefits but are available as optional add-ons, along with medical management programs.
How much does health insurance cost in the US?
Health insurance premiums across the US cost an average of $456 monthly per person, according to the latest marketplace benchmark premiums from the Kaiser Family Foundation. This can be a steep price to pay for some American families.
For many employed individuals, this may not be a cause for concern as their employers cover about four-fifths of their health insurance costs. But those without access to company-sponsored coverage need to shop around for their own health plan and cover the full cost of premiums.
According to HealthCare.gov, health insurers can only account for five factors when determining premiums under the ACA. These are:
- Age: Premiums can be up to three times higher for older Americans than for their younger counterparts.
- Location: Differences in competition, state, local regulations, and cost of living also dictate health insurance rates.
- Tobacco use: Insurers can charge tobacco users up to 50% more than those who are not into smoking.
- Individual vs. family enrollment: Insurance providers can charge more for a plan that also covers a spouse and dependents.
- Plan category: The different metal tiers – Bronze, Silver, Gold, and Platinum – also impact premium prices.
States can limit how much these factors affect insurance rates but are prohibited from using medical history and gender in calculating premiums.
“Insurance companies can’t charge women and men different prices for the same plan,” HealthCare.gov explained. “They also can’t take your current health or medical history into account. All health plans must cover treatment for pre-existing conditions from the day coverage starts.”
Health insurance providers in the US offer basic policies to individuals and businesses – along with other services that can include Medicaid and Medicare policies, long-term care insurance, dental coverage, and vision benefits. The top 10 health insurance companies in the country control almost two-thirds of the market.
Canada: Among the world’s best healthcare systems
Canada’s healthcare system is regarded as one of the best in the world, providing all citizens and permanent residents free access to emergency care and regular doctor visits. However, there are still certain services that Medicare – the country’s universal health coverage – does not cover, which Canadians need to pay for.
How does Canada’s healthcare system work?
Canada has a publicly funded healthcare system that operates under the Canada Health Act (CHA). To be eligible to receive full federal cash contributions, each provincial and territorial health insurance plan needs to comply with the five pillars of the CHA, which stipulates the that policies must be:
- Universal
- Publicly administered
- Comprehensive coverage conditions
- Portable across provinces and territories
- Accessible (for instance, without user fees)
“Health care is funded and administered primarily by the country’s 13 provinces and territories,” according to the Commonwealth Fund, a private non-profit group that supports independent research on health care issues and provides grants aimed at improving the country’s health system. “Each has its own insurance plan, and each receives cash assistance from the federal government on a per-capita basis.”
The organization added that while benefits and delivery approaches vary, all Canadian citizens and permanent residents receive “medically necessary hospital and physician services free at the point of use.”
However, not everything is covered by Medicare. These include:
- Eye and dental care
- Outpatient prescription drugs
- Rehabilitation services
- Private hospital rooms, which Canadians need to pay for out of pocket
Canadians need to pay out of pocket for these, so it is not surprising that, although not required, nearly 70% of Canadians have taken out supplemental private health coverage, according to the latest figures from the Canadian Life and Health Insurance Association (CLHIA). Of these, 90% were purchased through group plans.
What does Canada’s universal healthcare system cover?
Canadian Medicare covers many of the healthcare basics, including:
- Doctor and hospital visits
- Diagnostics and examinations
- Eye examinations for Canadians aged under 18 or over 65
- Medically necessary dental surgeries
- Standard accommodations in the hospital (including care, food, and prescriptions)
- Surgeries and treatments
Each province and territory implement their own rules when it comes to health coverage, so the exclusions may vary. For the following items and services, private health insurance may be necessary for coverage, depending on where a person lives.
- Ambulance and EMT services
- Dental care
- Massage therapy
- Medical equipment (including wheelchairs, crutches, and leg braces)
- Outpatient prescription medications
- Physiotherapy
- Prescription eyeglasses
- Private hospital room stays
- Psychological services
How much does private health insurance cost in Canada?
The latest available figures from the Canadian Institute for Health Information (CIHI) estimated the cost of private health insurance at $756 per year, which is equivalent to $63 monthly. The institute’s data also showed that the average Canadian paid out $902 in out-of-pocket health expenses, or slightly over $75 each month.
These numbers, however, were taken before COVID-19 shook not just Canada’s healthcare system but also that of the world, so the values might actually be higher at present. In addition, the figures above are mere estimates and the best way to get an accurate amount is to contact the health insurance companies directly.
Canada is home to about 130 private health insurance providers, serving a total of 27 million Canadians. These companies offer some of the best supplemental health coverage.
United Kingdom: Residence-based system
The UK has a publicly funded healthcare system, called the National Health Service (NHS), which everyone living in the country can access for free.
The NHS operates a residence-based model rather than an insurance-based system. This means that anyone living and working in the UK, even those on a temporary work visa, is entitled to free healthcare through the NHS.
The NHS offers a wide selection of services, from primary care to specialised treatments. These include:
- Consultations with a general practitioner (GP) or nurse
- Contraception and sexual health services
- Maternity services
- Hospital treatment in accidents and emergencies (A&E)
- Treatment of minor injuries in clinics
- Treatment with a specialist or consultant if referred by a GP
But just like the public healthcare systems in other countries, the volume of people accessing the NHS has resulted in long waiting times. Because of this, UK citizens can opt to take out private health insurance, which enables them to access specialists more quickly and use better facilities.
How does private health insurance work in the UK?
Private health policies in the UK are designed to cover the cost of private treatment for acute conditions. This means most health plans provide coverage for short-term, curable medical issues, rather than chronic illnesses, which people tend to live with throughout their lifetimes.
There are several types of private health insurance that Brits can access. These include:
- Individual health insurance: Provides access to private medical care for those who are not insured by their employers.
- Family health insurance: Allows the policyholder and their loved ones to access private medical care.
- Health insurance for children: Provides private medical care for children 18-years old and younger, although the age requirement can be extended for those in full-time education.
- Company health insurance: Gives employees access to private medical care.
- Health insurance for over 50s: Allows people aged 50 and older to access private medical services.
What are the pros and cons of private health insurance in the UK?
Taking out private health insurance yields the following benefits:
- Faster access to health care at the point of need
- Control over where and when to get treatment and who conducts the treatment
- Access to a private room instead of being confined to a busy ward
- Option to receive specialist drugs and treatment unavailable on the NHS
However, there are also drawbacks and disadvantages of private health insurance:
- The high cost of coverage
- Some treatments and services are excluded
- Usually comes with an excess
- Most treatments covered can be accessed for free with the NHS
- Private hospitals often do not have an A&E department
How much does private health insurance cost in the UK?
An analysis conducted by London-based personal finance website NimbleFins has found that the average cost of private health insurance in the UK is around £85 a month or £1,200 annually.
Just like in other regions, premium prices are impacted by a range of factors. These include the policyholder’s:
- Age
- Residence
- Smoking status
- Previous health conditions
- Claims history
An analysis by the comparison website Finder pegged the cost of a hospital cover for a gold policy at about $228 a month. Monthly premiums for basic, bronze, and silver policies are estimated to be $99, $120, and $180, respectively. For extra cover, the average is $68 per single policy per month.
Every year, the Private Health Insurance Ombudsman (PHIO) releases a State of the Health Funds report to provide both consumers and industry experts with comparative information on the performance and service delivery of all health insurers across the country. The report also ranks the top private health insurance providers in Australia based on a set of key indicators.
source | Insurance Business Mag
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