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Health Insurance

What is health insurance?

Health insurance, also called medical insurance, refers to insurance that covers a portion of a policyholder's healthcare costs in exchange for a premium payment. Health insurance can help pay for a broad range of healthcare services, including:

  • Doctor visits
  • Surgical procedures
  • Hospital stays
  • Prescription drugs

There are two main types of health insurers: public and private. In the United States, public health insurance refers to plans purchased through a government program, such as Medicare, Medicaid, or the Children's Health Insurance Program. These federal insurance programs extend coverage to older, disabled, and low-income people. About one in three Americans have public health insurance coverage. 

Private health insurance refers to plans purchased without government assistance, including employer-sponsored insurance and individual insurance. More than half of Americans get their health insurance through an employer, with premiums partially covered by the employer. Those who don't have access to employer-sponsored insurance can buy insurance directly from private insurers. 

How much insurance covers depends on the details of the policy. In addition to monthly premium payments, most health insurance plans require policyholders to pay for some of their healthcare costs in several ways: 

  • deductible is an amount the insured must pay out of pocket before the insurer begins to meet expenses.
  • Copays are set fees the insured must pay for specific services, such as doctor visits and prescription drugs, even after meeting the deductible. 
  • Coinsurance is the percentage of healthcare costs that the insured must pay after they've met the deductible. 

Why is health insurance important to healthcare?

Health insurance helps to protect against financial hardship in the event of an unexpected illness or injury. Overall, health insurance can help to make medical care more affordable and accessible for people who otherwise might not be able to afford it. Without health insurance, many people cannot get the care they need. Therefore, it's an essential part of the healthcare system.