The Evolution of Private Health Insurance and Its Effects on Costs and Access to Services - Essay Example

? Insurance Insurance Introduction Health insurance helps in easing the burden and mitigating the risk of incurring expenses in seeking medical care among individuals. Prior to 1930, individuals seeking any assistance from physicians had to depend on their own pockets in paying the expenses. However, in 1930, American healthcare changed into a third party payer, which could either be private or public. The healthcare system of the United States relies immensely on the private health insurance. This comprises the principal source of coverage for most individuals in the U.S. Research depicts that around 58% of the Americans rely on private health insurance (Singh, 2009). Low income families, children and most senior citizens have the coverage of the government, which is also known as public coverage. Private insurance coverage has been at the top of fulfilling the dreams of most Americans by providing essential health coverage, which is vital for survival. In the mid 1800s, employees were insured against lost wages, which resulted from work related injuries. Insurance was developed later to cover lost wages, which resulted from catastrophic illnesses. Health insurance began in 1930s, when insurance commenced paying part or entire cost of medical services provided. The emergence of private insurance for health services such as the Blue Cross insurance was an essential issue; it helped the Americans ease the burden of paying for their medical services. In writing this assignment, I will discuss the evolution of private health insurance and its effects on costs and access to services. Evolution of Private Health Insurance During the industrial revolution, health insurance was viewed as a protection plan for employees who got injured during work related tasks. These resources were viewed as industrial sickness funds, which catered for compensation of workers who obtained injuries or who had a disability of working resulting from their occupation. Private insurance were unheard of during colonial times. During this time, health risks were almost at every corner and capacity to finance healthcare was usually battered for services rendered (Taylor, 2004). Employers did not lay considerations on displaced employees due to injury since it did not matter; most injured employees were easily replaced due to vast unspecialized labor force. Most individuals were willing to take the position of an injured person due to the nature of early industries. This posed an immense danger of increased injuries emanating from the unsophisticated technology of the period. Just like the work force, the need for insurance and healthcare started to develop. As the need for healthcare increased from increased injuries, there was a need for the development of formal insurance plans. This led to the development of private insurance health coverage plans. In 1930, healthcare in the United States took a significant change, which commenced the intervention of a third party payer (Taylor, 2004). Blue Cross & Blue Shield health organization was initiated as the first private insurance company in 1930. The company was located at the Baylor University Medical Center. The company commenced selling medical insurance to the community around its environs and later spread out to the entire nation. Effects on Costs and Access to Services Evolution of the private health insurance led to various firms and large companies venturing into the business. This made access to health services more affordable to the high and middle income groups. These two groups could access medical care without spending a lot for the service. The private insurance companies ensured that those individuals who were healthy could access health services at a lower fee than those with sickness; however, the premiums paid by the individuals remained the same for both parties. This helped the insurance companies to redistribute the costs effectively. Although the middle and upper class individuals could access health services at a reasonably lower cost than before, the evolution of private insurance led to marginalization of the low income group. Individuals in the low income group could not access the private insurance services since affording the service was not possible. As private insurance healthcare developed, most public insurance healthcare could not provide better services than the private ones, which made the private healthcare insurance companies raise their cost of service. This led to most low income group individuals facing problems in accessing private health insurance. For instance, for the Hispanics (a minor group in the United States), most field workers are not compensated with health coverage. In addition, some lower middle class employees do not make adequate money, which can buy quality healthcare plans. Denial of coverage and the rising costs through the decades have made private health insurance difficult to afford and access. Attempts of lowering the costs by large entities have resulted in lowering the amount of coverage and cutting of risky persons from their plans. In 2006, approximately two thirds of the population had private health insurance out of which 88% received covering through employers (Young, 2008). The increase in doctor liability and lawsuits has also affected the cost of medical care. This has resulted in a domino effect, causing insurance to become remarkably expensive. Evolution of private health insurance has shifted health insurance from contracts, which charged fees for accessing health services. This has resulted to lowering of the initial cost of health insurance; in some cases, it reduces coverage and deductibles, which can make consumers avoid seeking compensation for small issues. In addition, most large companies have opted to take part in the insurance sector, which has led to the adding up of private health insurance costs. Instead of focusing on improving the services offered, the companies focus on the profit motive, which has made access and affordability of private health insurance not feasible. The availability of hospital insurance removed a vital cost constraint from hospital charges and services. One of the positive consequences of the elimination of the constraint was that individuals could have access to health services in various hospitals without being overcharged for a service. Before the existence of hospital insurance, individuals seeking healthcare services were denied the opportunity of paying the fair price of seeking medical services. Some physicians extorted patients since the negotiation for payment terms was between the patient and the physician or health provider. With the emergence of hospital insurance, some charges such as consultancy fee were eliminated (Jacobs, 2008). This created an advantage to the citizens since they could use the money they paid for consultancy in paying for other bills. Another positive consequence, which resulted from the availability of hospital insurance, was offering health services through affordable means. Hospital insurance made patients seek medical services through a third party. The third party includes insurance companies and other organizations, which pay for health services sought by patients. This made it feasible for patients to obtain medical services without going deeper into their pockets. This was advantageous to the patients since they did not have to pay for their services directly. The hospital insurance helped citizens in mitigating health risks. Individuals could access medical services at any time they felt sick, which eliminated health problems among individuals and increased their productivity (Cameron, 2010). This aided in sustainability of the household incomes since the households remained productive due to access of health services. In addition, the availability of hospital insurance had positive consequence since people could choose the health plan, which they desire, and the one with which they were flexible. One of the negative consequences associated with the availability of hospital insurance was that the field attracted many service providers, which made access to health insurance extremely difficult to the low income earners. Most enormous firms chose to offer health insurance firms, which raised the cost of accessing health insurance since the large firms were driven by the profit motive. Those people, who cannot afford to pay their health insurance, are discriminated against since they obtain poor health services or lack the service, which expose them to health risks. Although the availability of hospital insurance has been advantageous to some persons, it has been a problem to others. This is because not every person who pays premiums to hospital insurance that benefits from it. Some individuals pay premiums on a monthly basis, but do not enjoy the benefits of their contribution (Cameron, 2010). For instance, there are individuals who pay their contributions through their employer, but neither of their family members or themselves has sought healthcare services in hospitals. Such resources just benefit the insurance companies; in this case, the insured pays contributions. In addition, some health insurance provisions have restricted citizens insured against health risks to seek compensation for minor injuries. This is a disadvantage to the patients since, although they pay premiums for their health, they cannot seek health compensation for minor injuries. According to Cameron (2010), steeply rising medical liability insurance costs have become a growing concern for medical schools since the schools have to pay insurance premiums for any health risks that can occur during the learning process. Because of the rising number of learners involved in practicing operations such as surgery, there tends to be various health risks involved in the learning, which implies that medical schools have to pay remarkable amounts to cater for health insurance in the school. The schools are facing a challenge in paying the insurance costs since they increase at a remarkably high rate. This has made some schools decline to offer medical training emanating from the vast insurance cots. Practicing physicians and training hospitals are other fields facing remarkably high insurance costs. Because of the high risk involved in training hospitals and practicing physicians, the cost of insurance has risen drastically and increases by a high percentage every year. This has posed a risk to the training hospitals and practicing physicians. As a result, teaching hospitals and practicing physicians are choosing to offer low risk aspects in their practice in order to mitigate the high costs. This is a disadvantage to the society since physicians under training would not acquire the necessary skills resulting from the closure of training centers due to high insurance costs. Conclusion The healthcare system of the United States relies immensely on the private health insurance. This comprises the principal source of coverage for most individuals in the United States. Research shows that around 58% of the Americans rely on private health insurance. Health insurance helps in easing the burden and mitigating the risk of incurring expenses in seeking medical care among individuals. Prior to 1930, individuals seeking any assistance from physicians had to depend on their own pockets in paying the expenses. Evolution of the private health insurance made various firms and large companies venture in the business. This made access to health services more affordable to the high and middle income groups, but the low income groups were left behind. References Cameron, E.A. (2010). Essentials of Health Care Finance. New York: Jones & Bartlett Publishing. Jacobs, D.P. (2008). The Affordability of Private Health Insurance. New York: McGraw-Hill. Singh, A.D. (2009). Delivering Healthcare in America. New York: Pearson Education, Limited. Taylor, P. (2004). Private Health Insurance. New York: DIANE Publishing. Young, M.K. (2010). Health Care USA. New York: Prentice Hall. Read More