What Is Health Insurance, Actually?

The Two Extremes Of Health CareIn recent years politicians and the press have tried to change the understanding of the American people as to what health insurance actually is.  They have implied that health insurance is the same thing as health care.  However, nothing could be further from the truth.

Health Care is the monitoring and treatment of accidents and illness in the human body with the intent of keeping that individual in as good a state of health as possible.

However, Health Insurance is nothing more than a financial tool designed to provide cash from people who enjoy relatively good health to those few who are unlucky enough to have an accident or illness.

Insurance companies have never provided health care and doctors have never provided health insurance.    They are two totally different things.

In addition to that misunderstanding, Americans have been taught to think that the only legitimate form of health insurance is Major Medical insurance.  In fact I have seen people state that any plan, other than Affordable Care Act plans, are not insurance.

The problem with that statement is that each state defines what is, and is not, insurance.  According to the McCarran-Fergusson Act, that is a state’s right as long as the federal government has not regulated it differently, and at this minute, congress has not passed, and the president has not signed any law that would prevent the states from defining “Health Insurance”.

For right now, comprehensive Major Medical insurance that pays doctors, hospitals and pharmacies, is a form of health insurance, but it is not the only form of health insurance.

Disability, Critical Illness and Accident Supplements are all types of health insurance.  Typically they pay the insured directly and it is up to the insured to pay that money as they see fit.  They can elect to pay it to doctors or hospitals if they want, but since the benefits are paid directly to them, they are allowed to use that money to pay their mortgage, utilities or any other bills they want.

The purpose of those type of health insurance policies is not to solve the Accounts Receivable problems for doctors or hospitals but to assure that an individual can maintain his/her standard of living while they recover.

Ideally, everyone would have a “Rainy Day” savings account that is sufficient to support them while they recover, but the truth is that many Americans do not have that luxury.  Health insurance creates money for when it is needed most.

Please do not get me wrong or misunderstand what I am trying to communicate.  If someone needs all of the benefits that come with “Obamacare” plans, and understand their limitations, there is nothing, at all, wrong with those type plans.  As long as they were purchased because they met an individual’s health insurance needs and not out of loyalty to a political candidate or party, I have no problems with them.

My entire point is that if an individual elects to use health insurance plans that provide fewer benefits than Affordable Care Plans at a much lower premium, they should not be scared by being told those plans are not insurance.

The final decision about what is and is not health insurance is made by the people in the individual state Department’s of Insurance.  It is not made by any DC politician or “talking head” looking for his/her “15 minutes of fame” on the TV or Facebook.

Sadly, the premiums that the insurance companies are forced to charge to provide all of the benefits found in “Obamacare” plans is very high. Often and individual is able to buy a complete health insurance portfolio, outside of the “Marketplace” for less money than they pay for a full “Obamacare” plan.