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Health Insurance

Contract between the individual and the insurance company is called health insurance plan and according to this legally binding document, the insurance company will receive premium payments from the individual in exchange for meeting certain medical expenses during the length of the contract. This contract can be renewed or not, but it usually lasts one year. Know that the premium may change if the contract is renewed.

Why is It so Expensive?

These are some of the basic information about the health insurance but there are some serious problems associated with this arrangement. When there is a fee that the insurance company has to meet, they bombard the individual with paperwork so that they avoid the payment or delay it. But they will gladly take the monthly premiums after you have signed the policy. This is one of the complaints and it is the most common one. Most of the people say that the health insurance costs too much money and a lot of people cannot afford it. How can this be possible? The first conclusion would be that the costs of modern medicine are high and thus, the insurance company has to impose expensive premiums so that the medical costs can be met. But this is a very simple answer. The basic function of the health insurance is to pay for the unexpected medical costs that we would all like to avoid, or we would not be able to pay. The principle of the insurance should not be associated with the payment of the normal expenditures but these very expensive and unexpected medical bills. So we pay for years and do not experience any of the possible serious health hazards which will produce a large bill. This can also be explained with the motor insurance.

We pay for this insurance for years and do not encounter any accident on the road. But if we do, the insurance company will pay for the costs that we are not able to pay, or that we can pay but it may ruin our financials. We have a majority of people who never encounter accident and pay the motor insurance every year so that a small number of people who does encounter an accident receive claim and the money from the insurance company. Why did we talk about the motor insurance? Well it is simple. When all people who drive pay for the motor insurance, the insurance company has large amounts of money at disposal and thus, it can meet the claims. But people do not do the same with the health insurance. Most people take out the policy when they need it and when they know they will experience health problems and hospital stay. So, we have many claims and the insurance company does not have pool of money to meet all the claims, like the motor insurance companies do. The reason why insurance companies avoid or delay paying is the just mentioned one. Also, people never try to save some money when insured and go to a less expensive medical facility, like they would do if they had to pay.

Sometimes they even overuse the medical care. Some have seen the answer to the problem in the managed care process and the HMO, or the Health Management Organization. But this provided two options for the individual and those are unwanted and disliked HMO and the too expensive traditional health insurance. But the PPO, or the Preferred Provider Organization, which has been introduced recently, may be the solution for the problem.

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