The Need for Health Insurance

Most of us would agree that good health is an extremely valuable attribute. Those in poor
health generally have a lower quality of life as well as a reduced ability to work and earn
an income. Good health is frequently the result of biology (the genes you inherit), the life
style choices you make (exercise, diet, smoking), and appropriate medical care.
And even the healthiest among us need some medical care. Regular physician and dental
visits are a normal part of maintaining good health. Accidents, illness, and simply
growing older are other reasons medical care is necessary.

Paying For Medical Care

Medical care in the United States is, unquestionably, expensive. According to statistics
compiled by the federal government, over 20% of personal consumption expenditures are
directed to medical care.1 For those needing medical care, there are three basic choices:
· Don’t go: Not seeking medical care when it is needed can result in small, treatable
health problems becoming much bigger ones, with sometimes fatal consequences.
· Pay out-of-pocket: Paying for medical care from your own pocket can quickly exhaust
your assets. Huge medical bills are one reason cited as a cause of personal bankruptcy.
· Health insurance: Although the premiums can be expensive, for many individuals and
families, health insurance is the only practical way to provide needed medical care.

Sources of Health Insurance

There are three broad sources of health insurance in the United States today:
· Individually owned policies: The individual or family purchases a health policy
directly from an insurance company or health maintenance organization. Individual
health policies can be relatively expensive compared to group health insurance.
· Group health insurance: Group health insurance is typically provided through an
employer or another related group such as a professional association. The premiums for
group health policies tend to be less than those for individually owned policies.
· Government programs: For those age 65 and older, Medicare provides a base level of
health insurance. Medicaid provides health care for the impoverished. The federal
government has a number of programs to provide medical care to active duty and former
military service members. Some states have individual programs to provide health
insurance to low-income individuals and families.

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While health insurance may be expensive, trying to pay medical costs out of your own
pocket, or not seeking medical help when needed, can be much more expensive.
1 Source: Statistical Abstract of the United States:2007. Table No. 656 Personal Consumption expenditures in Current and Real (2000) Dollars, by Type: 1990 to 2004.
Page 1 Presented by: John Beyer