History

• The first health insurance plan existed around the time of the Civil War. Businesses began providing health insurance during the 1930s and 1940s, a process accelerated by the wage freezes during World War II. According to Starr, employers used benefit packages to attract talented workers and create loyalty to their company. In 2010, Congress passed a national health care bill requiring every American to have health insurance by 2014, or pay a $695 annual fine.
  
  

Function

• The function of health insurance plans is that of spreading the risk of catastrophic illness and injury across a group. The average cost per person for health care in 2009 was over $8,000, according to a report by the Department of Health and Human Services. However, a serious illness can cost hundreds of thousands of dollars, or even more than a million dollars to treat. Most people could not afford this, but insurance allows the group to cover the minority with expenses of that scale.
  
  

Types

• Every health insurance plan is distinctive, but there are a few broad categories. These include Fee-for- Service, Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO) and health discount plans. Fee-for-Service pays health care providers a set fee for each service they provide a covered patient. HMOs require patients to receive referrals before they can see specialists. PPOs are networks of providers with whom the health care policy manager has negotiated rates and savings, and patients must see providers in the network. Finally, health discount plans do not pay out to the provider or patient, but instead negotiate discounts with providers on the patient's behalf so he pays less for services.
  
  

Misconceptions

• It is a common belief that having health insurance will automatically protect you from financial hardship if you become seriously ill or injured. However, there are many under insured people. According to the 2007 Commonwealth Fund Biennial Health Insurance Survey, 61 percent of Americans with medical debt had insurance when they received care. Insurance may have high co-pays or not cover all of your expenses. Additionally, you may suffer loss of income if your illness or injury prevents you from working.
  
  

Features

• Plans may cover different benefits, such as primary care physician visits, surgeries, hospital inpatient and outpatient, prescription drug coverage, eye care, and dental. Plans also have different out-of-pocket costs for patients. These include co-payments, a small amount paid before each doctor visit; a deductible, an amount the patient must pay each year before benefits kick in; and co-insurance, requiring the patient to pay a percentage of the costs for his treatment.