Health Insurance
SOCIAL ISSUES IN THE UNITED STATES
REASONS FOR HEALTH INSURANCE
TYPES OF PLANS IN THE UNITED STATES
Indemnity Plans
Until the 1970s the vast majority of people in the United States with health insurance were covered under indemnity plans, more commonly known as fee-for-service plans. Under this type of plan, the patient may visit any health care provider, such as a doctor or hospital. The patient or the medical provider then sends the bill to the insurance company, which typically pays a certain percentage of the fee after the patient meets the policy’s annual deductible. For example, a fee-for-service plan might pay 80 percent of a medical bill. The patient would pay the remaining 20 percent of the bill—an amount often called coinsurance—of the bill. Most indemnity plans contain provisions to increase coverage to 100 percent (rather than 80 percent) in years when medical bills become unusually large.
Owners of fee-for-service insurance plans generally prefer this type of insurance because it allows the greatest flexibility in choosing health care providers. For example, a participant in a fee-for-service plan typically is free to seek health care from specialists or to enter a hospital without first obtaining approval from the insurance company. Members of managed care plans often have less flexibility in their choice of doctor or hospital.
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