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health insurance basicsHow Does Insurance Reduce Risk?Health insurance seems like a simple exchange. You pay an insurance company a premium and insurance pays your bills. You get rid of risk and the insurance company takes your risk. However, there is more to it that this. What does the insurance company do with your risk? Do they keep it? Do they also get rid of it somehow? When you understand what the insurance company does with your risk, then you can better evaluate your options and perhaps get a better deal on health insurance.
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How Does Insurance Affect Use of Services?When the price of something goes down, people tend to buy more of it. Is this true for health care?
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Community Rating vs Experience RatingA "Premium" is the price paid in advance for an insurance policy. With "Community Rating," everyone pays the same premium. An insurer using community rating to set insurance premiums ignores any differences in expected costs among insured groups or people. If an insurer uses community rating, but people know and use their expected costs to decide whether or not to buy insurance, then only the sickest people may wind up signing up for insurance.
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Frequently Asked Questions
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