Health insurance can be expensive compared to auto or homeowners insurance. In 2020, the average national cost for health insurance was $5,500 annually for an individual and $13,800 for a family per year. However, costs vary among plans. There is a wide selection of plans and programs for health insurance, such as opting for a Health Maintenance Organization or agreeing to only use the doctors approved by the insurance company. In addition, most companies offer health insurance to their employees, and by joining a group insurance plan of mostly healthy people, premiums are reduced. Further, companies that provide health insurance for their employees usually pay for a good portion of the premium.
As an historical note, the United States is the only developed country (other than China) that does not have a national insurance program. The expansion of private health insurance in the U.S. goes back to World War II. Six million men and women were sent to fight in Europe and the Pacific. Thus, the military-industrial complex on the home front had a shortage of workers just as it was producing war material at full speed. One consequence, of course, was the recruitment of women to staff the manufacturing lines. Another consequence was the competition for employees. Companies were not allowed to give raises during the war in order to avoid inflation; in order to compete for employees, companies started giving benefits, like health insurance. From after the war until today, pharmaceutical companies, hospitals, doctors, and insurance companies have lobbied against the U.S. having a national health insurance plan. They are afraid (and rightly so) that a government insurance program will use its buying power to control their fees.
The most common types of health insurance programs are fee for service and managed care plans. Both cover doctors’ visits, hospital outpatient services, medical procedures, and hospitalization. Fee for service (sometimes called Personal Choice) allows you to choose your own doctors and specialists. Your doctor submits a bill to the insurance company and is paid all or part of their fee. If the insurance company thinks the fee from your doctor is higher than the prevailing rate in that area, the insurance company will only pay the prevailing rate, and you must pay the rest, a drawback of the fee for service policy.
Managed care plans require the policyholder to go to a specific group of doctors and hospitals identified by the insurance company. They are called in network doctors and hospitals. The value of this program is that the doctors recommended will not charge you above the fees agreed with your insurer, and you will not be billed for any difference. Health maintenance organizations (HMO) are insurers that usually establish a set annual fee per patient with doctors. You must go first to the primary care doctor, which you choose from their list. Any referral for further treatment by a specialist must first be approved by your primary care physician. The HMO is paying the primary care physician to keep you well and is controlling any unnecessary trips to specialists. The premiums for fee for service are higher than the managed care policies, which are higher than the HMO policies. Your choice of plan affects your premium payment.
Being part of a health insurance group (such as your employer-sponsored health insurance program) significantly reduces the total premiums. Of course, your employer decides how much of the health insurance premiums they are willing to subsidize. If you are self-employed or between jobs without health insurance, there are often ad hoc groups in your area that sponsor group programs. For example, you can join the local Chamber of Commerce that sponsors a plan that is cheaper than buying as an individual.
Finally, federal law states that an insurance company cannot refuse you coverage due to a pre-existing condition, as part of the Affordable Care Act (ACA) legislation. If you lose your healthcare because you lose your job, you should at least buy a low premium policy in case of an unexpected hospitalization. Hospital stays are expensive, and you should at least protect yourself against those expenses. If you are out of work, you should be able to enroll in a very reasonably priced ACA policy. There are also government subsidies for those with low income. You would likely qualify for this if you are single, and your only source of income is unemployment compensation.