Why Does Health Insurance Exist

Health insurance probably isn’t something you get excited thinking about, but when a medical concern pops up, having health insurance is probably at the front of your mind. The truth is that health insurance is one of the most important types of insurance coverage you can carry in the United States.

Whether you have medical insurance coverage through your employer, you have a private policy or you opt to take advantage of a government-subsidized plan, having some type of protection against medical costs is crucial to protecting your health and your wallet.

The History of Health Insurance

Although the term “health insurance” is rather broad is its definition since any type of financial coverage of medical costs can be considered insurance, what Americans know today as health insurance didn’t really become a thing until the early 1900s. During the Great Depression, the economy of the United States took a huge hit and left many workers struggling to survive.

With this, many hospitals also saw their revenue drop, and the effect was that hospitals began to face the prospect of closing for good. This would have a cascading effect on overall community health in addition to causing further unemployment.

As a result, Blue Cross and Blue Shield began offering access to hospitals in Minnesota in exchange for a monthly fee. This was one of the first forms of modern health insurance and helped Americans in poverty while also assisting medical care facilities to stay afloat.

Over the years, health insurance has expanded to become a big business, and today, many employers offer access to health insurance coverage as a benefit of employment. Individuals can also purchase private insurance on their own, and family coverage is available to most Americans as well. Federal and state programs like Medicare and Medicaid also provide a type of health insurance coverage for individuals who quality due to age, income or disability.

The Reason Modern Health Insurance Exists

Although the original intent of medical insurance was to assist individuals struggling financially, modern insurance plans are in place to reduce healthcare costs for all. America is one of the most prosperous nations on the planet and is home to some of the finest, most advanced medical care. With these advancements come higher costs due to the work involved in research and development of new medicines, therapies, care practices, physician training and education, medical facilities and more.

Part of the trade-off of living with the ability to take advantage of this medical care is that costs are quite high for some people, especially when complex or ongoing care is required. Health insurance products are designed to alleviate some of these costs by reducing them through the payment of health insurance premiums and deductibles. Most health insurance plans cost a monthly or annual premium fee to carry the policy. Additionally, a deductible amount must be met prior to benefits being applied to care costs.

Health Insurance as Protection Against Catastrophe

While health insurance assists in paying for things like routine medical care, the real reason medical insurance exists is to provide protection in the event of a medical catastrophe. If you need to seek treatment for a major health concern like cancer, your medical bills could range into the hundreds of thousands of dollars or even more. Being hit with such a large amount of medical debt can cause most people to face extreme financial hardship and even lead to bankruptcy.

In these kinds of cases, insurance coverage becomes a vital asset in protecting your wealth and your future earning potential. After meeting your deductible, your insurance plan is likely to cover much of the costs related to the treatment of a serious medical condition, and this alone can give you peace of mind when you make your premium payment each month. Of course, all insurance plans and providers are different, so you will need to consult with your provider to learn the details of your coverage and its limitations.