Health insurance is a contract between an insurer and an insured person in which the insurer agrees to pay all or some of the costs of health care services, in exchange for a monthly premium. Health insurance may cover ambulatory patient services for outpatient care, chronic disease management and preventive services; hospitalization; surgical procedures; medications; and mental health, substance use disorder and other behavioral health services. In addition, health insurance policies generally include coverage for preventive and screening services at no additional cost to the policyholder (Box 3.2).
Having good health insurance is a necessity for most people. Health care expenses are rising at a rate higher than medical inflation, and without health insurance, individuals can face financial devastation if they get sick or injured. Health insurance not only covers the cost of medical emergencies and illnesses, but it also helps people stay out of debt.
The majority of the 42 million uninsured Americans in 1999 were adults aged 19 to 34 years. This group is less likely than older groups to be eligible for employment-based insurance because they have shorter tenures in jobs and are more likely to work as independent contractors. In addition, they are more likely to report that their employer does not offer workplace insurance or that they declined an offer of workplace coverage because of the cost. Young adults are also more likely to be in excellent or very good health and therefore can avoid the costly expense of high-deductible plans.
Purchasing health insurance is complex and can be confusing, but understanding your options and the basics of how health insurance works can help you make better decisions. When evaluating any plan, carefully consider short-term costs like the monthly premium and longer-term costs like the deductible and copays. Also, be sure to verify that the doctors and health care facilities you prefer are included in the network of any plan you are considering.