US Health Insurance 101
What is health insurance and why do we need it
Along with industry veterans, I've been working on a US Healthcare Wiki, which will be used as an onboarding guide for those entering the industry. I’m excited to release the first of many pages, focused on health insurance. I will release other pages in future weeks that will, in their entirety, give you a sense of the key players and incentives that have created our system.
If you’re interested in contributing, please reach out. I’ve linked the full page below and added an excerpt in the next section.
Why we have health insurance
Many people question the need for health insurance. Millions barely interact with the healthcare system and pay upwards of $10K a year, most of which is deducted from their paycheck. In this way, the system relies on healthy people contributing and covering the costs for those who need care - and ensures that when healthy people eventually need care, they won't be left without support.
At the highest level, it makes sense to have insurance protect against the “common hazards of life.” With and without a health insurance system, Americans have provided essential medical care to those unable to afford it, driven by our natural impulse to help those in need. The first hospitals were created because “there was no other option. Fellow creatures could not be allowed to die in the streets.” Today, the federal government reimburses hospitals for providing mandatory emergency healthcare services to certain uninsured, undocumented immigrants. In total, we spend over $40 billion a year on health care for the uninsured. Without broad coverage, individuals who forgo buying insurance while they are healthy might rely on “charity care” when they become sick, and the system will not be able to support itself. The book We’ve Got You Covered and many others argue for mandatory health insurance to solve this problem: “if we are inevitably going to respond when people face acute health problems without the resources to address them, it is better to formalize—and fund—those commitments up front.” In other words, by Edwin Chadwick:
“Once it becomes the recognized duty of the public to provide for the extreme needs of sickness irrespective of whether the individuals could and ought to have made provision themselves it seems an obvious corollary to compel them to insure (or otherwise provide) against those common hazards of life [otherwise] they would become a charge of the public.”