Health Insurance Coverage

Background

Health insurance is key to accessing the healthcare system. Individuals who are insured are more likely to receive preventive, primary, and specialized care. The American system of health insurance coverage includes a patchwork of private sector and publicly funded programs. Approximately 160 million individuals have employer-sponsored health insurance and about 13 million individuals purchase health insurance directly through a health maintenance organization (HMO) or insurer. Although the majority of individuals have private, employer-based coverage, a growing segment of the population is uninsured. Since employer-sponsored insurance is voluntary by employer and employees, not all businesses offer coverage, individuals may not choose to purchase or be able to afford the health insurance offered by their employer, and some workers may not be eligible for coverage.

As the nation shifts from an industrial to a service-based economy and labor patterns change, health insurance coverage is diminishing. The nation's service industry tends not to offer health insurance coverage. Additionally, employers increasingly employ workers who do not qualify for coverage, such as part-time and contract employees. Because of this trend, fewer workers have employer-sponsored insurance. Many small employers are unable to offer their employees health insurance coverage because of the rising cost of healthcare. Employers that do offer health insurance to employees generally require them to pay a larger portion of the costs for their coverage. This increased cost-sharing burden has caused many employees to forgo employer-sponsored health insurance entirely.

Health insurance coverage in the United States differs greatly from that of other developed nations. For example, Canada, Germany, and the United Kingdom have national health programs that provide healthcare to all their citizens. However, rather than adopt a socialist model in which the government provides health insurance coverage for everyone, the United States has opted for a voluntary, market-based system in which individuals must seek out their own health insurance coverage, generally through an employer-sponsored plan.

In the United States, there are six types of voluntary health insurance: fraternal societies and mutual benefit associations; contract physicians; private physician plans; county medical-bureau plans; hospital service plans; and group insurance operated by private, commercial insurance companies.

Health insurance coverage grew out of the marine, fire, and life insurance policies sold by commercial insurers. The Civil War was a major impetus for the development of injury insurance, which eventually evolved into health coverage. Several major events—including the Stock Market Crash of 1929, the Great Depression, and World War II—also had an influence on establishing a health insurance coverage system in this country. The federal and state government support for health insurance was directly related to the economic conditions in the country.

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