Group Health InsuranceGiven the high cost of medical care these days, most people cannot afford individual health insurance policies. Group health insurance is now the norm in the industry. Group Health Insurance Group health insurance has been one of the most common forms of insurance over the past few decades. It is defined as a type of insurance where the policy that provides the health insurance is provided by an employer or private association for a select group of eligible people. All of the people who hold policies are members of the group and they share the medical expenses between them. Some of these groups became very large. Such Insurance Associations as Blue Cross became the best known sources of health insurance for most employed people and their families. Get California Health Insurance Plan Quotes To understand group health insurance, it is helpful to simplify it down to manageable numbers. Assume that a company employs one hundred people, and that company forms a “group” for the purposes of providing health insurance. Each of the one hundred people would be paying a certain amount of money into the group each week or month. This was known as a premium. The administrators of the group collected the money and in many cases would make short term investments with it to increase the total amount. When one of the group became ill and needed to have medical treatment, the payment would come from this collected money. The person who was ill did not have to pay for it at all. What made group health insurance feasible was the fact that people tended to be healthy more often than they were ill. When the group was large, there was always an excess amount of money paid into the association through premiums to pay all the medical expenses of the few people who became ill or were injured. If the administrators of the group were skilled and careful, the collected premiums could be increased by wise investment insuring that there were enough funds available to handle even hospitalization. Get California Health Insurance Plan Quotes Unfortunately, this system came under pressure from several factors and the basic structure had to be altered. First was the rising cost of health care. Even in the small group example, one major hospitalization among one of those one hundred people could cost more than the sum total of the premiums. A long term illness could run into hundreds of thousands of dollars in costs. It became necessary to put limitations on the coverage. It also became necessary to raise the premiums. As premiums became higher, people who felt they were not likely to need medical treatment would opt out of the group and take the gamble that they would not become sick or injured. This lowered the number of healthy people paying premiums into the group making less funds available for the payment of the expenses of the unhealthy members. There was a time when a group health insurance policy would cover virtually 100% of all medical expenses, but this soon became impossible. A system of deductibles was put into the group policies that required people to pay a certain amount of their medical bills out of pocket and the insurance would cover the remainder. Co-payments were another way of reducing the liability of the group. The insured group member might be required to pay a portion of the cost for routine procedures like doctor visits or medication. In recent years, other forms of health insurance have evolved out of the basic group health insurance model. The new forms are all geared at holding down the costs of medical care in anyway possible in order to hold down the premiums of the insured. << Back to Health Insurance Information
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