A lot has changed in the american private healthcare market since the 1970s. In the early days of private health insurance, most people with private health cover had ‘indemnity insurance’, often called ‘fee-for-service’. Under this system, the patient pays the healthcare provider the full amount for every visit, and subsequently submits a claim to the private health insurer, who will reimburse the patient for a specified percentage of the medical expenses.
However, Americans have shifted away from the indemnity model towards managed care plans, which usually have higher premiums than indemnity plans and restrict which healthcare providers patients can visit, but heavily subsidize each visit. Health maintenance organization plans (where doctors are employed or contracted to provide services to the organization’s clients) and preferred provider organization plans (where a group of healthcare professionals give a certain insurer’s clients a discount on the fee rendered) are quickly becoming the health insurance plans of many Americans’ choice.
On a broader scale, employer-sponsored private health insurance enjoyed a rapid growth in popularity as a result of wage controls imposed during World War II. When the federal government prohibited employers from raising wages high enough to attract sufficient job applicants, fringe benefits such as sick leave and health insurance were used to recruit employees. Private health insurance has remained such a lucrative industry in the United States partly due to a lack of a universal health care plan. Universal health care plans, in place in every other developed nation, were denounced as socialist by the American Medical Association when President Truman attempted to introduce a system during his term in office, and the program was not implemented.
Today, private health insurance continues to be a highly-controversial issue. Some believe that the costs are too high, whilst others believe that universal health care should be introduced, ignoring the debate altogether. Recent developments in the private health care market include President Obama’s health care reform, designed to ensure that every non-exempt American has private health insurance before 2014, or suffer a financial penalty. Whichever direction the private health insurance market takes, it’s always a good idea to have some backup in case anything goes wrong.