By Eman Hamed
Edited by Kathleen Khorn
According to a UnitedHealthcare survey in 2017, only 9% of Americans “show an understanding” of four basic health insurance terms — health plan premium, health plan deductible, out-of-pocket maximum, and co-insurance. This proves that a majority of Americans struggle with low health literacy. As America battles the coronavirus pandemic, one of the worst global health crises in history, it is imperative Americans, especially the youth, are competent in the field of healthcare terminology and practices.
The best way to combat low health literacy rates, as the U.S. Department of Health and Human Services explains, is through education. The department identifies limited health literacy as a public health problem, and plans to release a “7 goal” plan to comprehensively address healthcare illiteracy. In these seven goals, there are initiatives to develop and disseminate health and safety information such as increasing informed decision-making and incorporating accurate standards based healthcare education in communities and schooling up to university levels. These resources have yet to come, so in the meantime, let’s examine the different facets of the United States healthcare system.
The Fabulous Four (Terms)
Remember the four aforementioned terms Americans barely know? Let’s increase the 9% of the population that understands them:
Definition: The amount you pay for your health insurance every month. The higher the premiums, usually the more quality and quantity healthcare you receive.
Example: An individual pays $440 per month to their health insurance company in return for coverage.
Definition: The amount you pay for covered health care services before your insurance plan starts to pay. After you pay your deductible, your insurance company pays the rest for your health needs and services.
Example: If a deductible is $2,100, you have to pay the first $2,100 worth of healthcare yourself
Out of pocket maximums:
Definition: These are limits set by the federal government on how much your health insurance plan can legally make you pay. This concept excludes monthly premiums.
Example: The out-of-pocket maximums in 2020 is $8,200 for individual plans and $16,400 for family plans. This means an individual cannot legally pay more than $8,200 for healthcare and a household cannot legally pay more than $16,400.
Definition: The percentage of costs of a covered health care service you pay after you've paid your deductible.
Example: Let's say the following amounts apply to your plan and you need a lot of treatment for a serious condition. The costs are $12,000: Deductible/ $3,000, Coinsurance/ 20%, and Out-of-pocket maximum/ $6,850. You'd pay all of the first $3,000 (your deductible). You'll pay 20% of the remaining $9,000, or $1,800. If the cost of the co-insurance exceeds your out of pocket maximum, in this case, $6,850, you would just pay $6,850 and insurance will cover the rest.
Public vs. Private Healthcare
Healthcare can be provided through public and private providers. Public healthcare is usually issued by the government through national healthcare systems. Private healthcare can be provided through “for profit” hospitals and self-employed practitioners, and “not for profit” non-government providers, including faith-based organizations.
Programs like Medicare and Medicaid are “public” - they are funded by taxpayer dollars and receive federal funding. Medicare is a federal program that provides health coverage if you are 65+ or under 65 and have a disability, irrespective of your income. Medicaid is a state and federal program that provides health coverage if you have a very low income, so it is like welfare. If you are eligible for both Medicare and Medicaid (dually eligible), you can have both. They will work together to provide you with health coverage and lower your costs.
Blue Cross and Blue Shield health insurance companies are prime examples of private insurance. The U.S. National Library of Medicine notes that 160 million individuals are insured through self funded employer-sponsored health insurance (private) and about 15 million individuals buy health insurance on their own. Employees can opt-in to their employer’s health benefits and choose to participate in their employer-sponsored plan. They pay a premium, a monthly payment, that varies based on factors impacting the healthcare needs of the employee group. In return, they receive an insurance card that gives them access to the doctors, hospitals and other health care providers who are part of the insurance plan.
As you can see, public and private healthcare systems are vastly different. However, they can intersect. Within Medicare, drug prices are set by private companies in the pharmaceutical industry, and these companies contract medical equipment and technology to the government for the public health endeavors that serve over twelve million people. More so, federal laws also regulate private health insurance to a certain degree such as the Employee Retirement Income Security Act of 1974 (ERISA) and Health Insurance Portability and Accountability Act (HIPAA). ERISA establishes national standards for employer and union-sponsored health plans and prohibits states from regulating self-funded employer and union-sponsored health plans. HIPAA mandates private insurers to accept people leaving group coverage into the individual market regardless of health status and without exclusion for pre-existing conditions. However, in most states, if eligible people are guaranteed access to coverage in the state's high-risk pool, private insurers are not required to sell coverage to them. HIPAA is a safety net for Americans who face lapses in coverage when they change or lose their jobs, which has been particularly helpful amid COVID-19, where millions of Americans have filed for unemployment and thus do not have their employer sponsored healthcare.
The New York Times estimates that more than twenty seven million American workers and their families lost their insurance this spring, a number higher than those in any full year of insurance losses. Four of every five people who have lost employer-provided health insurance during the coronavirus pandemic are eligible for free coverage through expanded Medicaid programs or government-subsidized private insurance, but experts say that insuring the recently unemployed is a difficult challenge. Many people cannot afford premiums for coverage through either the health care law or the program known as COBRA, for the Consolidated Omnibus Budget Reconciliation Act. Others might not know they are eligible for Medicaid.
Understanding these healthcare systems is important for personal health and wellbeing and necessary when times like these arise. Remember to stay informed, know what you qualify for, and what healthcare rights you are entitled to.