A health insurance exchange is a set of state-regulated and standardized health care plans in the United States, from which individuals may purchase health insurance eligible for federal subsidies. All exchanges must be fully certified and operational by January 1, 2014 under federal law.^[1]

Acronym[link]

HIX (Health Insurance Exchange) is emerging as the de facto acronym across state and federal government stakeholders, and the private sector technology and service providers that are helping states build their exchanges. The acronym HIX differentiates this topic from Health Information Exchange, which has been designated HIE.^[2][3]

Scope[link]

Exchanges of this type were intended by the administration of President Barack Obama as a governmental or quasi-governmental entity to help insurers comply with consumer protections and to compete in cost-efficient ways, and to facilitate the expansion of insurance coverage to more people. Exchanges are not themselves insurers, so they do not bear risk themselves, but determine the insurance companies that are allowed to participate in them. Ideally, a well-designed exchange will promote insurance transparency and accountability, facilitate increased enrollment and the delivery of subsidies, and play roles in spreading risk to ensure that the costs associated with those with high medical needs are shared more broadly across large groups rather than spread across just a few beneficiaries. This is what has occurred in the state-run Health Connector exchange in Massachusetts. Some hope that insurance exchanges also will help to contain overall health costs.^[4]

Background[link]

The private health insurance industry fears that restricted eligibility and a market size that is too small could result in higher premiums, encourage "cherry-picking" of customers by insurers, and force a clearance of the exchange. That is what some believe happened in Texas and California in their failed exchanges.^[5]

One of these factors, "cherry-picking" of customers, will not be possible in the state-run exchanges mandated by the PPACA, because all insurance plans will be guaranteed issue in 2014. Furthermore, the law will bring millions of new enrollees into the marketplace by way of the "individual mandate" requirement for all citizens to purchase health insurance to help to reduce the issue of a small market size.^{[citation needed]}

History[link]

Although the House of Representatives had sought a single national exchange, when the Patient Protection and Affordable Care Act was passed, it split exchanges by state, in line with the bill that passed the U.S. Senate. ^[6] States may choose to join together to run multi-state exchanges, or they may opt out of running their own exchange, in which case the federal government will step in to create an exchange for use by their citizens.^{[citation needed]}

On the date of enactment of the Patient Protection and Affordable Care Act of 2010, only a few health insurance exchanges across the country were up and running. Among them were the Massachusetts Connector, the Utah Health Exchange, and HealthPass, a New York-based, non-profit exchange.^[7] Advocates claim that these exchanges make these "markets" more efficient, providing oversight and structure. Supporters argue that this is because current health insurance markets in the United States are not well-organized and have to deal with wide variations in coverages and requirements among different companies, employers, and policies.^[8]

There was a long struggle between Obama's advocates and free-market health care advocates over the question of a "public option", which would have created a federal public-benefit corporation subsidized to compete with the private companies in the exchange. Republicans and their allies eventually defeated this "public option" idea by arguing that the public nature of such a company would give an unfair edge over the private organizations in the exchange and would "unfairly out-compete" the private insurers. After a group of moderate Senate Democrats and Joseph Lieberman joined Republicans in their objections to the public option, the PPACA was passed without including a public option, ensuring that the insurance exchange would inevitably be composed purely of the private health insurers.^[9]

Private health insurance exchanges[link]

A private health insurance exchange is an exchange run by a private sector company or nonprofit. Health plans and carriers in a private exchange must meet certain criteria defined by the exchange management. Private exchanges combine technology and human advocacy, include online eligibility verification, and mechanisms for allowing employers who connect their employees or retirees with exchanges to offer subsidies. They are designed to help consumers find plans personalized to their specific health conditions, preferred doctor/hospital networks, and budget. These exchanges are sometimes called marketplaces or intermediaries, and work directly with insurance carriers, effectively acting as an extension of the carrier.

Examples of private sector exchanges include:

• Health Services Administrators, which operates in Massachusetts and Rhode Island
• eHealthInsurance.com, operated by eHealth, Inc. and carries products nationwide
• majormedicalhealth.com, which specializes in major medical plans
• Extend Health, Inc., which specializes in Medicare plans
• HealthPass, a nonprofit exchange covering the New York City metro area

Health Insurance Exchanges in the Patient Protection and Affordable Care Act (ACA)[link]

President Obama promoted the concept of a health insurance exchange as a key component of his health reform initiative. Obama stated that it should be "...a market where Americans can one-stop shop for a health care plan, compare benefits and prices, and choose the plan that's best for them, in the same way that Members of Congress and their families can. None of these plans should deny coverage on the basis of a preexisting condition, and all of these plans should include an affordable basic benefit package that includes prevention, and protection against catastrophic costs. I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest."^[10] However, the public health insurance option was ultimately dropped from the reform legislation; the insurance sold on the health insurance exchanges in the United States will, therefore, now be exclusively from the private insurers.

The Patient Protection and Affordable Care Act (ACA) sets up insurance exchanges in each state known as American Health Benefits (AHB) Exchanges. Implementation of the individual exchanges changes the practice of insuring individuals. The expansion of this market is the major focus of President Obama’s Patient Protection and Affordable Care Act^[11]. Studies have shown that increases in health care costs are driven by increases in per-case cost, not merely the overall prevalence of disease^[12], thus driving the need for greater access to health coverage.

[edit] Major requirements affecting insurers in the individual exchanges:^[13]

• Guaranteed issue: insurers will not be permitted to refuse to insure any individuals
• Limit to price variations: prices will vary based on four factors and not beyond a total factor of approximately 10
• Plans will be offered in four comparable tiers ranging from bronze to platinum with limited out of pocket expenses
• Strict regulations on rescission
• Lifetime and annual limits eliminated

Guaranteed Issue[link]

In the individual market, sometimes thought of as the “residual market” of insurance, insurers have generally used a process called underwriting to ensure that each individual paid for his or her actuarial value or to deny coverage altogether^[14]. The House Committee on Energy and Commerce found that, between 2007 and 2009, the four largest for-profit insurance companies refused insurance to 651,000 people for previous medical conditions, a number that has increased significantly each year ^[15](49% increase in that time period)^[16]. The same memorandum said that 212,800 claims had been refused payment due to pre-existing conditions and the insurance firms had business plans to limit money paid based on these pre-existing conditions. These persons who might not have received insurance under previous industry practices are guaranteed insurance coverage under the ACA. Hence, the insurance exchanges will shift a greater amount of financial risk to the insurers, but will help to share the cost of that risk among a larger pool of insured individuals.

The ACA's prohibition on denying coverage for pre-existing conditions will begin in 2014. Until that time, the ACA provides funds for state-run high-risk pools for those with previously existing conditions^[17].

Limit to Price Variation[link]

Premiums in the individual private insurance exchanges could not exceed ~4.5x the cost of the lowest cost premium plan

Cost Factors Accounted for^[18]:

• Age: 3:1
• Location: 1.5:1

There are no cost factors for family size or smoking status.

Comparable Tiers of Plans[link]

Within the exchanges, insurance plans are to be offered in four tiers designated from lowest premium to highest premium: bronze, silver, gold, and platinum. The plans covered ranges from 60% to 90% of bills in increments of 10% for each plan. Proponents of the health reform believe that allowing comparable plans to compete for consumer business in one convenient location will drive prices down. Having a centralized location increases consumer knowledge of the market and allows for greater conformation to perfect competition. Each of these plans will also be limited in its out of pocket expenses at $5,950 for individuals and $11,900 for families^[19].

Regulations on Rescission[link]

The House Committee on Energy and Commerce found that between 2007 and 2009, the four largest insurers (Aetna, Humana, UnitedHealth Group, and WellPoint) refused to pay 212,800 claims because of pre-existing conditions^[20]. This practice will be outlawed in the new reform.

Lifetime and Annual Limits Eliminated[link]

The ACA eliminates lifetime and annual limits from plans in the individual Health Benefits Exchanges. This effectively eliminates the ceiling on financial risk for individuals in the individual exchanges^[21].

Additional Cost Management[link]

Beyond the lifetime and annual benefit limit elimination, individuals within income range between 133% and 400% of the federal poverty level (FPL) are able to receive federal subsidies in the form of tax credits to purchase this insurance ^[22].

Economics of Health Insurance Exchanges: The Individual Mandate[link]

The reason America’s Health Insurance Plans were willing to accept these constraints on pricing, capping, and enrollment is the individual mandate. The individual mandate requires that all individuals purchase health insurance. This requirement of the ACA allows insurers to spread the financial risk of newly insured people with pre-existing conditions among a larger pool of individuals.

Additionally, a study done by Pauly and Herring estimates that individuals with pre-existing conditions in the 99th percentile of financial risk represented 3.95X the average risk (mean)^[23]. Figures from the House Committee on Energy and Commerce would indicate that approximately 1 million high-risk individuals will pursue insurance in the Health Benefits Exchanges^[24]. Congress has estimated that 22 million people will be newly insured in the Health Benefits Exchanges^[25]. Thus the high-risk individuals do not number in high enough quantities to increase the net risk per person from previous practice. It is thus theoretically profitable to accept the individual mandate in exchange for the requirements presented in the ACA.

Insurer Concerns[link]

Despite economically profitable projections, there are possible problems inherent in the implementation of the exchanges. One of the primary concerns is that of adverse selection. This means that only sick individuals will enroll when they need care, and others will wait to enroll until they also need care^[26]. The result of this potential phenomenon would be an influx of high-risk individuals without the corresponding pool of healthy individuals over which to distribute risk. One possible solution is to create open enrollment periods in which all of the constraints of the ACA apply, but allow underwriting at other times. This places the imperative on consumers to buy into the exchanges before there are health concerns.

See also[link]

• Health care reform in the United States
• Health care compared - tabular comparisons of the US, Canada, and other countries not shown above.

References[link]

Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.^[1]

Background[link]

A health insurance policy is:

1) a contract between an insurance provider (e.g. an insurance company or a government) and an individual or his sponsor (e.g. an employer or a community organization). The contract can be renewable (e.g. annually, monthly) or lifelong in the case of private insurance, or be mandatory for all citizens in the case of national plans. The type and amount of health care costs that will be covered by the health insurance provider are specified in writing, in a member contract or "Evidence of Coverage" booklet for private insurance, or in a national health policy for public insurance.

2) Insurance coverage is provided by an employer-sponsored self-funded ERISA plan. The company generally advertises that they have one of the big insurance companies. However, in an ERISA case, that insurance company "doesn't engage in the act of insurance", they just administer it. Therefore ERISA plans are not subject to state laws. ERISA plans are governed by federal law under the jurisdiction of the US Department of Labor (USDOL). The specific benefits or coverage details are found in the Summary Plan Description (SPD). An appeal must go through the insurance company, then to the Employer's Plan Fiduciary. If still required, the Fiduciary’s decision can be brought to the USDOL to review for ERISA compliance, and then file a lawsuit in federal court.

The individual insured person's obligations may take several forms:^[2]

• Premium: The amount the policy-holder or his sponsor (e.g. an employer) pays to the health plan to purchase health coverage.
• Deductible: The amount that the insured must pay out-of-pocket before the health insurer pays its share. For example, policy-holders might have to pay a $500 deductible per year, before any of their health care is covered by the health insurer. It may take several doctor's visits or prescription refills before the insured person reaches the deductible and the insurance company starts to pay for care however, most policies do not apply co-pays for doctor's visits or prescriptions against your deductible.
• Co-payment: The amount that the insured person must pay out of pocket before the health insurer pays for a particular visit or service. For example, an insured person might pay a $45 co-payment for a doctor's visit, or to obtain a prescription. A co-payment must be paid each time a particular service is obtained.
• Coinsurance: Instead of, or in addition to, paying a fixed amount up front (a co-payment), the co-insurance is a percentage of the total cost that insured person may also pay. For example, the member might have to pay 20% of the cost of a surgery over and above a co-payment, while the insurance company pays the other 80%. If there is an upper limit on coinsurance, the policy-holder could end up owing very little, or a great deal, depending on the actual costs of the services they obtain.
• Exclusions: Not all services are covered. The insured are generally expected to pay the full cost of non-covered services out of their own pockets.
• Coverage limits: Some health insurance policies only pay for health care up to a certain dollar amount. The insured person may be expected to pay any charges in excess of the health plan's maximum payment for a specific service. In addition, some insurance company schemes have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs.
• Out-of-pocket maximums: Similar to coverage limits, except that in this case, the insured person's payment obligation ends when they reach the out-of-pocket maximum, and health insurance pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
• Capitation: An amount paid by an insurer to a health care provider, for which the provider agrees to treat all members of the insurer.
• In-Network Provider: (U.S. term) A health care provider on a list of providers preselected by the insurer. The insurer will offer discounted coinsurance or co-payments, or additional benefits, to a plan member to see an in-network provider. Generally, providers in network are providers who have a contract with the insurer to accept rates further discounted from the "usual and customary" charges the insurer pays to out-of-network providers.
• Prior Authorization: A certification or authorization that an insurer provides prior to medical service occurring. Obtaining an authorization means that the insurer is obligated to pay for the service, assuming it matches what was authorized. Many smaller, routine services do not require authorization.^[3]
• Explanation of Benefits: A document that may be sent by an insurer to a patient explaining what was covered for a medical service, and how payment amount and patient responsibility amount were determined.^[3]

Prescription drug plans are a form of insurance offered through some health insurance plans. In the U.S., the patient usually pays a copayment and the prescription drug insurance part or all of the balance for drugs covered in the formulary of the plan. Such plans are routinely part of national health insurance programs. For example in the province of Quebec, Canada, prescription drug insurance is universally required as part of the public health insurance plan, but may be purchased and administered either through private or group plans, or through the public plan.^[4]

Some, if not most, health care providers in the United States will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn't pay. The insurance company pays out of network providers according to "reasonable and customary" charges, which may be less than the provider's usual fee. The provider may also have a separate contract with the insurer to accept what amounts to a discounted rate or capitation to the provider's standard charges. It generally costs the patient less to use an in-network provider.

Comparison[link]

The Commonwealth Fund, in its annual survey, "Mirror, Mirror on the Wall", compares the performance of the health care systems in Australia, New Zealand, the United Kingdom, Germany, Canada and the U.S. Its 2007 study found that, although the U.S. system is the most expensive, it consistently under-performs compared to the other countries.^[5] One difference between the U.S. and the other countries in the study is that the U.S. is the only country without universal health insurance coverage.

The Commonwealth Fund completed its thirteenth annual health policy survey in 2010.^[6] A study of the survey "found significant differences in access, cost burdens, and problems with health insurance that are associated with insurance design".^[6] Of the countries surveyed, the results indicated that people in the United States had more out-of-pocket expenses, more disputes with insurance companies than other countries, and more insurance payments denied; paperwork was also higher although Germany had similarly high levels of paperwork.^[6]

Australia[link]

The public health system is called Medicare. It ensures free universal access to hospital treatment and subsidised out-of-hospital medical treatment. It is funded by a 1.5% tax levy on all taxpayers, an extra 1% levy on high income earners, as well as general revenue.

The private health system is funded by a number of private health insurance organisations. The largest of these is Medibank Private, which is government-owned, but operates as a government business enterprise under the same regulatory regime as all other registered private health funds. The Coalition Howard government had announced that Medibank would be privatised if it won the 2007 election, however they were defeated by the Australian Labor Party under Kevin Rudd which had already pledged that it would remain in government ownership.

Some private health insurers are 'for profit' enterprises such as Australian Unity, and some are non-profit organizations such as HCF and the Health Insurance Fund of Australia (HIF). Some have membership restricted to particular groups, but the majority have open membership. Membership to most health funds is now also available through comparison websites like moneytime, iSelect or the decision assistance sites HelpMeChoose and the latest entry YouCompare. These comparison sites operate on a commission-basis by agreement with their participating health funds. The Private Health Insurance Ombudsman also operates a free website which allows consumers to search for and compare private health insurers' products, which includes information on price and level of cover. ^[7]

Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007. Complaints and reporting of the private health industry is carried out by an independent government agency, the Private Health Insurance Ombudsman.^[8] The ombudsman publishes an annual report that outlines the number and nature of complaints per health fund compared to their market share ^[9] [ The private health system in Australia operates on a "community rating" basis, whereby premiums do not vary solely because of a person's previous medical history, current state of health, or (generally speaking) their age (but see Lifetime Health Cover below). Balancing this are waiting periods, in particular for pre-existing conditions (usually referred to within the industry as PEA, which stands for "pre-existing ailment"). Funds are entitled to impose a waiting period of up to 12 months on benefits for any medical condition the signs and symptoms of which existed during the six months ending on the day the person first took out insurance. They are also entitled to impose a 12-month waiting period for benefits for treatment relating to an obstetric condition, and a 2-month waiting period for all other benefits when a person first takes out private insurance. Funds have the discretion to reduce or remove such waiting periods in individual cases. They are also free not to impose them to begin with, but this would place such a fund at risk of "adverse selection", attracting a disproportionate number of members from other funds, or from the pool of intending members who might otherwise have joined other funds. It would also attract people with existing medical conditions, who might not otherwise have taken out insurance at all because of the denial of benefits for 12 months due to the PEA Rule. The benefits paid out for these conditions would create pressure on premiums for all the fund's members, causing some to drop their membership, which would lead to further rises in premiums, and a vicious cycle of higher premiums-leaving members would ensue.

There are a number of other matters about which funds are not permitted to discriminate between members in terms of premiums, benefits, or membership – they include racial origin, religion, sex, sexual orientation, nature of employment, and leisure activities. Premiums for a fund's product that is sold in more than one state can vary from state to state, but not within the same state.

The Australian government has introduced a number of incentives to encourage adults to take out private hospital insurance. These include:

• Lifetime Health Cover: If a person has not taken out private hospital cover by the 1st July after their 31st birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum for each year they were without hospital cover. Thus, a person taking out private cover for the first time at age 40 will pay a 20 per cent loading. The loading is removed after 10 years of continuous hospital cover. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.

• Medicare Levy Surcharge: People whose taxable income is greater than a specified amount (currently $70,000 for singles and $140,000 for couples) and who do not have an adequate level of private hospital cover must pay a 1% surcharge on top of the standard 1.5% Medicare Levy. The rationale is that if the people in this income group are forced to pay more money one way or another, most would choose to purchase hospital insurance with it, with the possibility of a benefit in the event that they need private hospital treatment – rather than pay it in the form of extra tax as well as having to meet their own private hospital costs.
  • The Australian government announced in May 2008 that it proposes to increase the thresholds, to $100,000 for singles and $150,000 for families. These changes require legislative approval. A bill to change the law has been introduced but was not passed by the Senate.^[10] An amended version was passed on 16 October 2008. There have been criticisms that the changes will cause many people to drop their private health insurance, causing a further burden on the public hospital system, and a rise in premiums for those who stay with the private system. Other commentators believe the effect will be minimal.^[11]

• Private Health Insurance Rebate: The government subsidises the premiums for all private health insurance cover, including hospital and ancillary (extras), by 30%, 35% or 40%, depending on age. The Rudd Government announced in May 2009 that as of July 2010, the Rebate would become means-tested, and offered on a sliding scale. While this move (which would have required legislation) was defeated in the Senate at the time, in early 2011 the Gillard Government announced plans to reintroduce the legislation after the Opposition loses the balance of power in the Senate. The ALP and Greens (which currently combine in Australia to form a minority government) have long been against the rebate, referring to it as "middle-class welfare".^[12]

Canada[link]

Health care is mainly a constitutional, provincial government responsibility in Canada (the main exceptions being federal government responsibility for services provided to aboriginal peoples covered by treaties, the Royal Canadian Mounted Police, the armed forces, and members of parliament). Consequently each province administers its own health insurance program. The federal government influences health insurance by virtue of its fiscal powers – it transfers cash and tax points to the provinces to help cover the costs of the universal health insurance programs. Under the Canada Health Act, the federal government mandates and enforces the requirement that all people have free access to what are termed "medically necessary services," defined primarily as care delivered by physicians or in hospitals, and the nursing component of long term residential care. If provinces allow doctors or institutions to charge patients for medically necessary services, the federal government reduces its payments to the provinces by the amount of the prohibited charges. Collectively, the public provincial health insurance systems in Canada are frequently referred to as Medicare. This public insurance is tax-funded out of general government revenues, although British Columbia and Ontario levy a mandatory premium with flat rates for individuals and families to generate additional revenues – in essence a surtax. Private health insurance is allowed, but in six provincial governments only for services that the public health plans do not cover, for example, semi-private or private rooms in hospitals and prescription drug plans. Four provinces allow insurance for services also mandated by the Canada Health Act, but in practice there is no market for it. All Canadians are free to use private insurance for elective medical services such as laser vision correction surgery, cosmetic surgery, and other non-basic medical procedures. Some 65% of Canadians have some form of supplementary private health insurance; many of them receive it through their employers.^[13] Private-sector services not paid for by the government account for nearly 30 percent of total health care spending.^[14]

In 2005, the Supreme Court of Canada ruled, in Chaoulli v. Quebec, that the province's prohibition on private insurance for health care already insured by the provincial plan violated the Quebec Charter of Rights and Freedoms, and in particular the sections dealing with the right to life and security, if there were unacceptably long wait times for treatment, as was alleged in this case. The ruling has not changed the overall pattern of health insurance across Canada but has spurred on attempts to tackle the core issues of supply and demand and the impact of wait times.^[15]

China[link]

France[link]

The national system of health insurance was instituted in 1945, just after the end of the Second World War. It was a compromise between Gaullist and Communist representatives in the French parliament. The Conservative Gaullists were opposed to a state-run healthcare system, while the Communists were supportive of a complete nationalisation of health care along a British Beveridge model.

The resulting programme is profession-based: all people working are required to pay a portion of their income to a not-for-profit health insurance fund, which mutualises the risk of illness, and which reimburses medical expenses at varying rates. Children and spouses of insured people are eligible for benefits, as well. Each fund is free to manage its own budget, and used to reimburse medical expenses at the rate it saw fit, however following a number of reforms in recent years, the majority of funds provide the same level of reimbursment and benefits.

The government has two responsibilities in this system.

• The first government responsibility is the fixing of the rate at which medical expenses should be negotiated, and it does so in two ways: The Ministry of Health directly negotiates prices of medicine with the manufacturers, based on the average price of sale observed in neighboring countries. A board of doctors and experts decides if the medicine provides a valuable enough medical benefit to be reimbursed (note that most medicine is reimbursed, including homeopathy). In parallel, the government fixes the reimbursment rate for medical services: this means that a doctor is free to charge the fee that he wishes for a consultation or an examination, but the social security system will only reimburse it at a pre-set rate. These tariffs are set annually through negotiation with doctors' representative organisations.
• The second government responsibility is oversight of the health-insurance funds, to ensure that they are correctly managing the sums they receive, and to ensure oversight of the public hospital network.

Today, this system is more-or-less intact. All citizens and legal foreign residents of France are covered by one of these mandatory programs, which continue to be funded by worker participation. However, since 1945, a number of major changes have been introduced. Firstly, the different health-care funds (there are five: General, Independent, Agricultural, Student, Public Servants) now all reimburse at the same rate. Secondly, since 2000, the government now provides health care to those who are not covered by a mandatory regime (those who have never worked and who are not students, meaning the very rich or the very poor). This regime, unlike the worker-financed ones, is financed via general taxation and reimburses at a higher rate than the profession-based system for those who cannot afford to make up the difference. Finally, to counter the rise in health-care costs, the government has installed two plans, (in 2004 and 2006), which require insured people to declare a referring doctor in order to be fully reimbursed for specialist visits, and which installed a mandatory co-pay of 1 € (about $1.45) for a doctor visit, 0,50 € (about 80¢) for each box of medicine prescribed, and a fee of 16–18 € ($20–25) per day for hospital stays and for expensive procedures.

An important element of the French insurance system is solidarity: the more ill a person becomes, the less the person pays. This means that for people with serious or chronic illnesses, the insurance system reimburses them 100% of expenses, and waives their co-pay charges.

Finally, for fees that the mandatory system does not cover, there is a large range of private complementary insurance plans available. The market for these programs is very competitive, and often subsidised by the employer, which means that premiums are usually modest. 85% of French people benefit from complementary private health insurance.^[16][17]

Germany[link]

Germany has Europe's oldest universal health care system, with origins dating back to Otto von Bismarck's Social legislation, which included the Health Insurance Bill of 1883, Accident Insurance Bill of 1884, and Old Age and Disability Insurance Bill of 1889. As mandatory health insurance, these bills originally applied only to low-income workers and certain government employees; their coverage, and that of subsequent legislation gradually expanded to cover virtually the entire population.^[18]

Currently 85% of the population is covered by a basic health insurance plan provided by statute, which provides a standard level of coverage. The remainder opt for private health insurance^{[citation needed]}, which frequently offers additional benefits. According to the World Health Organization, Germany's health care system was 77% government-funded and 23% privately funded as of 2004.^[19]

The government partially reimburses the costs for low-wage workers, whose premiums are capped at a predetermined value. Higher wage workers pay a premium based on their salary. They may also opt for private insurance, which is generally more expensive, but whose price may vary based on the individual's health status.^[20]

Reimbursement is on a fee-for-service basis, but the number of physicians allowed to accept Statutory Health Insurance in a given locale is regulated by the government and professional societies.

Co payments were introduced in the 1980s in an attempt to prevent over utilization. The average length of hospital stay in Germany has decreased in recent years from 14 days to 9 days, still considerably longer than average stays in the United States (5 to 6 days).^[21][22] Part of the difference is that the chief consideration for hospital reimbursement is the number of hospital days as opposed to procedures or diagnosis. Drug costs have increased substantially, rising nearly 60% from 1991 through 2005. Despite attempts to contain costs, overall health care expenditures rose to 10.7% of GDP in 2005, comparable to other western European nations, but substantially less than that spent in the U.S. (nearly 16% of GDP).^[23]

Insurance systems[link]

Germany has a universal multi-payer system with two main types of health insurance. Germans are offered three mandatory health benefits, which are co-financed by employer and employee: health insurance, accident insurance, and long-term care insurance.

Accident insurance (Unfallversicherung) is covered by the employer and basically covers all risks for commuting to work and at the workplace.

Long term care (Pflegeversicherung^[24]) is covered half and half by employer and employee and covers cases in which a person is not able to manage his or her daily routine (provision of food, cleaning of apartment, personal hygiene, etc.). It is about 2% of a yearly salaried income or pension, with employers matching the contribution of the employee.

There are two separate systems of health insurance: public health insurance (Gesetzliche Krankenversicherung) and private insurance (Private Krankenversicherung). Both systems struggle with the increasing cost of medical treatment and the changing demography. About 87.5% of the persons with health insurance are members of the public system, while 12.5% are covered by private insurance (as of 2006).^[25] There are many differences between the public health insurance and private insurance. If people change once in private insurance, there is no way back in public health insurance. In general the benefits and costs in the private insurance are better for young people without family. There are hard salary requirements to join the private insurance because it´s getting more expensive advanced in years.^[26]

Japan[link]

There are two major types of insurance programs available in Japan – Employees Health Insurance (健康保険 Kenkō-Hoken), and National Health Insurance ([国民健康保険 Kokumin-Kenkō-Hoken). National Health insurance is designed for people who are not eligible to be members of any employment-based health insurance program. Although private health insurance is also available, all Japanese citizens, permanent residents, and non-Japanese with a visa lasting one year or longer are required to be enrolled in either National Health Insurance or Employees Health Insurance.

Netherlands[link]

In 2006, a new system of health insurance came into force in the Netherlands. This new system avoids the two pitfalls of adverse selection and moral hazard associated with traditional forms of health insurance by using a combination of regulation and an insurance equalization pool. Moral hazard is avoided by mandating that insurance companies provide at least one policy which meets a government set minimum standard level of coverage, and all adult residents are obliged by law to purchase this coverage from an insurance company of their choice. All insurance companies receive funds from the equalization pool to help cover the cost of this government-mandated coverage. This pool is run by a regulator which collects salary-based contributions from employers, which make up about 50% of all health care funding, and funding from the government to cover people who cannot afford health care, which makes up an additional 5%.

The remaining 45% of health care funding comes from insurance premiums paid by the public, for which companies compete on price, though the variation between the various competing insurers is only about 5%. However, insurance companies are free to sell additional policies to provide coverage beyond the national minimum. These policies do not receive funding from the equalization pool, but cover additional treatments, such as dental procedures and physiotherapy, which are not paid for by the mandatory policy.

Funding from the equalization pool is distributed to insurance companies for each person they insure under the required policy. However, high-risk individuals get more from the pool, and low-income persons and children under 18 have their insurance paid for entirely. Because of this, insurance companies no longer find insuring high risk individuals an unappealing proposition, avoiding the potential problem of adverse selection.

Insurance companies are not allowed to have co-payments, caps, or deductibles, or to deny coverage to any person applying for a policy, or to charge anything other than their nationally set and published standard premiums. Therefore, every person buying insurance will pay the same price as everyone else buying the same policy, and every person will get at least the minimum level of coverage.

Rwanda[link]

Rwanda is one of a handful of low income countries that has implemented community-based health insurance schemes in order to reduce the financial barriers that prevent poor people from seeking and receiving needed health services. This scheme has helped reach 90% of the country's population with health-care coverage.^[27][28]

United Kingdom[link]

The UK's National Health Service (NHS) is a publicly funded healthcare system that provides coverage to everyone normally resident in the UK. It is not strictly an insurance system because (a) there are no premiums collected, (b) costs are not charged at the patient level and (c) costs are not pre-paid from a pool. However, it does achieve the main aim of insurance which is to spread financial risk arising from ill-health. The costs of running the NHS (est. £104 billion in 2007-8)^[29] are met directly from general taxation. The NHS provides the majority of health care in the UK, including primary care, in-patient care, long-term health care, ophthalmology, and dentistry.

Private health care has continued parallel to the NHS, paid for largely by private insurance, but it is used by less than 8% of the population, and generally as a top-up to NHS services. There are many treatments that the private sector does not provide. For example, health insurance on pregnancy is generally not covered or covered with restricting clauses. Typical exclusions for Bupa schemes (and many other insurers) include:

ageing, menopause and puberty; AIDS/HIV; allergies or allergic disorders; birth control, conception, sexual problems and sex changes; chronic conditions; complications from excluded or restricted conditions/ treatment; convalescence, rehabilitation and general nursing care ; cosmetic, reconstructive or weight loss treatment; deafness; dental/oral treatment (such as fillings, gum disease, jaw shrinkage, etc); dialysis; drugs and dressings for out-patient or take-home use† ; experimental drugs and treatment; eyesight; HRT and bone densitometry; learning difficulties, behavioural and developmental problems; overseas treatment and repatriation; physical aids and devices; pre-existing or special conditions; pregnancy and childbirth; screening and preventive treatment; sleep problems and disorders; speech disorders; temporary relief of symptoms.^[30] († = except in exceptional circumstances)

There are a number of other companies in the United Kingdom which include, among others, AXA, Aviva, Bupa, Groupama Healthcare, WPA and PruHealth. Similar exclusions apply, depending on the policy which is purchased.

Recently (2009) the main representative body of British Medical physicians, the British Medical Association, adopted a policy statement expressing concerns about developments in the health insurance market in the UK. In its Annual Representative Meeting which had been agreed earlier by the Consultants Policy Group (i.e. Senior physicians) stating that the BMA was "extremely concerned that the policies of some private healthcare insurance companies are preventing or restricting patients exercising choice about (i) the consultants who treat them; (ii) the hospital at which they are treated; (iii) making top up payments to cover any gap between the funding provided by their insurance company and the cost of their chosen private treatment." It went in to "call on the BMA to publicise these concerns so that patients are fully informed when making choices about private healthcare insurance."^[31] The NHS offers patients a choice of hospitals and consultants and does not charge for its services.

The private sector has been used to increase NHS capacity despite a large proportion of the British public opposing such involvement.^[32] According to the World Health Organization, government funding covered 86% of overall health care expenditures in the UK as of 2004, with private expenditures covering the remaining 14%.^[19]

United States[link]

The United States health care system relies heavily on private health insurance, which is the primary source of coverage for most Americans. According to the CDC, approximately 58% of Americans have private health insurance.^[33] Public programs provide the primary source of coverage for most senior citizens and for low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors and certain disabled individuals, Medicaid, funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families, and SCHIP, also a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service. Some states have additional programs for low-income individuals.^[34]

In the late 1990s and early 2000s, health advocacy companies began to appear to help patients deal with the complexities of the healthcare system. The complexity of the healthcare system has resulted in a variety of problems for the American public. A study found that 62 percent of persons declaring bankruptcy in 2007 had unpaid medical expenses of $1000 or more, and in 92% of these cases the medical debts exceeded $5000. Nearly 80 percent who filed for bankruptcy had health insurance.^[35] The Medicare and Medicaid programs were estimated to soon account for 50 percent of all national health spending.^[36] These factors and many others fueled interest in an overhaul of the health care system in the United States. In 2010 President Obama signed into law the Patient Protection and Affordable Care Act. This Act included a main provision which the American medical insurance lobby group America's Health Insurance Plans had called for, namely, a mandate that every American must have medical insurance (or pay a fine) as a quid pro quo for "guaranteed issue", i.e. the dropping of unpopular features of America's health insurance system such as premium weightings, exclusions for pre-existing conditions, and the pre-screening of insurance applicants. The Patient Protection and Affordable Care Act is pending review for constitutionality by the United States Supreme Court. During March 26-28, the Supreme Court heard arguments regarding the validity of the Act. By the end of June 2012, a final Supreme Court ruling is expected.

History and evolution[link]

In the late 19th century, "accident insurance" began to be available, which operated much like modern disability insurance.^[37][38] This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.^[39]

Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in the U.S. by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the U.S. effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.^[40]

Before the development of medical expense insurance, patients were expected to pay health care costs out of their own pockets, under what is known as the fee-for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and most prescription drugs, but this is not always the case.

Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations.^[40] The predecessors of today's Health Maintenance Organizations (HMOs) originated beginning in 1929, through the 1930s and on during World War II.^[41][42]

Health plan vs. health insurance[link]

Historically, HMOs tended to use the term "health plan", while commercial insurance companies used the term "health insurance". A health plan can also refer to a subscription-based medical care arrangement offered through HMOs, preferred provider organizations, or point of service plans. These plans are similar to pre-paid dental, pre-paid legal, and pre-paid vision plans. Pre-paid health plans typically pay for a fixed number of services (for instance, $300 in preventive care, a certain number of days of hospice care or care in a skilled nursing facility, a fixed number of home health visits, a fixed number of spinal manipulation charges, etc.). The services offered are usually at the discretion of a utilization review nurse who is often contracted through the managed care entity providing the subscription health plan. This determination may be made either prior to or after hospital admission (concurrent utilization review).

Comprehensive vs. scheduled[link]

Comprehensive health insurance pays a percentage of the cost of hospital and physician charges after a deductible (usually applies to hospital charges) or a co-pay (usually applies to physician charges, but may apply to some hospital services) is met by the insured. These plans are generally expensive because of the high potential benefit payout — $1,000,000 to 5,000,000 is common — and because of the vast array of covered benefits.^[43]

Scheduled health insurance plans are not meant to replace a traditional comprehensive health insurance plans and are more of a basic policy providing access to day-to-day health care such as going to the doctor or getting a prescription drug. In recent years in the USA, these plans have taken the name mini-med plans or association plans. The term "association" is often used to describe them because they require membership in an association that must exist for some other purpose than to sell insurance. Examples include the Health Care Credit Union Association. These plans may provide benefits for hospitalization and surgical, but these benefits will be limited. Scheduled plans are not meant to be effective for catastrophic events. These plans cost much less than comprehensive health insurance. They generally pay limited benefits amounts directly to the service provider, and payments are based upon the plan's "schedule of benefits". Annual benefits maximums for a typical scheduled health insurance plan may range from $1,000 to $25,000.^[44]

Factors affecting insurance prices[link]

A recent study by PricewaterhouseCoopers examining the drivers of rising health care costs in the U.S. pointed to increased utilization created by increased consumer demand, new treatments, and more intensive diagnostic testing, as the most significant.^[45] However, Wendell Potter, a long-time PR representative for the health insurance industry, has noted that the group which sponsored this study, AHIP, is a front-group funded by various insurance companies.^[46] People in developed countries are living longer. The population of those countries is aging, and a larger group of senior citizens requires more intensive medical care than a young, healthier population. Advances in medicine and medical technology can also increase the cost of medical treatment. Lifestyle-related factors can increase utilization and therefore insurance prices, such as: increases in obesity caused by insufficient exercise and unhealthy food choices; excessive alcohol use, smoking, and use of street drugs. Other factors noted by the PWC study included the movement to broader-access plans, higher-priced technologies, and cost-shifting from Medicaid and the uninsured to private payers.^[45]

Other researchers note that doctors and other healthcare providers are rewarded for merely treating patients rather than curing them and that patients insured through employer group policies have incentives to go to the absolute best HCPs rather than the most cost-effective ones.^[47]

Military[link]

The price of health insurance for retired and active duty military personnel has gone up from $19 billion just a decade ago to $49 billion in the last year. Now, TRICARE, the government health insurance program, makes up nine percent of the total budget for the Pentagon.^[48]

California[link]

In 2007, 87% of Californians had some form of health insurance.^[49] Services in California range from private offerings: HMOs, PPOs to public programs: Medi-Cal, Medicare, and Healthy Families (SCHIP).

California developed a solution to assist people across the State and is one of the only States to have an Office devoted to giving people tips and resources to get the best care possible. California's Office of the Patient Advocate was established July 2000 to publish a yearly Health Care Quality Report Card^[50] on the Top HMOs, PPOs, and Medical Groups and to create and distribute helpful tips and resources to give Californians the tools needed to get the best care.^[51]

Additionally, California has a Help Center that assists Californians when they have problems with their health insurance. The Help Center is run by the Department of Managed Health Care, the government department that oversees and regulates HMOs and some PPOs.

Standards of hospitals and clinics used by insurance companies[link]

A key factor in patient safety is that the health care providers should be safe and fit for purpose.

In the USA, insurers will often only make use of health care providers that are independently surveyed by a recognized quality assurance program, such as being accredited by accreditation schemes such as the Joint Commission and the American Accreditation Healthcare Commission.^[52]

See also[link]

Notes and references[link]

Sean Parnell
10th Governor of Alaska
Incumbent
Assumed office July 26, 2009
Lieutenant	Craig Campbell Mead Treadwell
Preceded by	Sarah Palin
11th Lieutenant Governor of Alaska
In office December 4, 2006 – July 26, 2009
Governor	Sarah Palin
Preceded by	Loren Leman
Succeeded by	Craig Campbell
Member of the Alaska Senate from the I district
In office January 13, 1997 – January 13, 2001
Preceded by	Steve Rieger
Succeeded by	John Cowdery
Member of the Alaska House of Representatives from the 17th district
In office January 11, 1993 – January 12, 1997
Preceded by	Constituency established
Succeeded by	John Cowdery
Personal details
Born	(1962-11-19) November 19, 1962 (age 49) Hanford, California, U.S.
Political party	Republican
Spouse(s)	Sandra Scebold (1987–present)
Children	Grace Rachel
Residence	Governor's Mansion
Alma mater	Pacific Lutheran University University of Puget Sound
Profession	Lawyer
Religion	Non-denominational Christian[1]
Signature
Website	Official website

Sean R. Parnell (born November 19, 1962) is the tenth and current Governor of Alaska. He was elected to a full term as Governor in November 2010. A Republican, he was first sworn in on July 26, 2009 to succeed Sarah Palin after her resignation.^[2][3] He is the first unelected Alaska Governor to be elected in his own right.^[4]

Early life[link]

Sean Parnell was born in Hanford, California, to Kevin Patrick "Pat" (born September 16, 1937) and Thelma Carol (née Liebherr) Parnell.^[5] Pat Parnell was stationed at Fort Richardson, near Anchorage, Alaska, while in the U.S. Army in the late 1950s, and returned to Alaska with his family in 1973, establishing residence in Anchorage. Pat Parnell established a photocopy and office supply business alongside the busy Seward Highway in midtown Anchorage, while Thelma Parnell worked at Bartlett High School and East Anchorage High School, the latter being a short distance from their home. Sean Parnell attended East Anchorage High, graduating in 1980. He has a younger brother named Schöen.

Parnell attended Pacific Lutheran University, earning his B.B.A. in 1984, and University of Puget Sound School of Law (now Seattle University School of Law) earning his law degree in 1987. He is admitted to the bar in both Alaska and Washington D.C.

Alaska legislature[link]

In 1992, Parnell was elected to the Alaska House of Representatives, where he served two terms and was a member of the finance committee. In 1996, he ran for and was elected to a seat in the Alaska Senate. In the Senate, he was a member of the Energy Council and served on and then co-chaired the Senate finance committee.^[6]

Lobbying career[link]

Parnell left the Alaska Senate to become director of government relations in Alaska for the oil company ConocoPhillips.^[7]

In 2005, he joined the lobbying firm of Patton Boggs, where he advised clients on state and federal regulations in developing major oil and gas projects. Patton Boggs represented ExxonMobil in the Exxon Valdez oil spill litigation.^[8] In April 2005, Washingtonian and the Dallas Morning News reported that Patton Boggs was the first in revenue among lobbyists.^[9]

Parnell left Patton Boggs less than two years later on December 3, 2006^[10] to advise Governor Sarah Palin on issues related to commercializing Alaska North Slope gas.^[11][12]

Lieutenant governor[link]

In 2005, Parnell ran in the Republican primary to become lieutenant governor. In the general election, he ran as Palin's running mate. In Alaska, the lieutenant governor runs separately from the governor in the primaries, but after the primaries, the nominees for governor and lieutenant governor run together as a slate. Palin and Parnell were elected.

2008 congressional campaign[link]

On March 14, 2008, Parnell began his campaign to take on embattled 18-term Congress member Don Young in the August 26 Republican primary.^[13] His father was the Democratic nominee running against Young in 1980. The result was a landslide; Young captured 73 percent of the vote, his largest reelection vote percentage until 2002.

Parnell was endorsed by Sarah Palin,^[14] National Review magazine,^[15] and the anti-earmark Club for Growth.^[16]

On July 31, 2008, Parnell told Roll Call that he would not drop out in his race against Young to run against Senator Ted Stevens, who had been indicted.^[17]

Parnell lost the primary for the U.S. House seat. The margin between Young, the incumbent, and Parnell was narrow, and the winner was not immediately clear. The result released on September 18 showed Young winning by 304 votes. Parnell said the odds of overturning Young's victory were too small to warrant a recount.^[18]

Governor of Alaska[link]

Ascent to office[link]

On July 26, 2009, halfway through her term as governor, Sarah Palin resigned. Parnell replaced her becoming Alaska's 10th governor in accordance with the Alaska Constitution.^[2] Craig Campbell, commissioner of Alaska's Department of Military and Veterans Affairs, succeeded Parnell as lieutenant governor after Joe Schmidt, commissioner of corrections and Palin's designated replacement for Parnell, refused the position. Parnell and Campbell were sworn in to their new positions on July 26^{[dubious – discuss]} by Alaska Supreme Court Associate Justice Daniel E. Winfree.

2010 campaign[link]

Parnell ran for a full term as governor in 2010. In the primary, he faced off against Bill Walker, a former Cabinet member^{[dubious – discuss]} and aide to former governor Walter J. Hickel, and Ralph Samuels, a retiring member of the Alaska House of Representatives. Though Walker seemed to gain a lot of traction towards the end based on the issue of building a long-awaited natural gas pipeline, Samuels and Walker split the anti-Parnell vote^{[citation needed]} and Parnell won the nomination. He faced off against former House Majority Leader and 2008 Congressional nominee, Ethan Berkowitz.^[19] and was elected with Mead Treadwell who had won the August primary for Lieutenant Governor. Though Berkowitz, and former 2006 Congressional nominee, Diane Benson, seemed to have the strongest ticket seen by Democrats in a while^{[citation needed]} that included endorsements from Walker; Parnell-Treadwell eventually defeated Berkowitz-Benson by over ten points.^[20]

References[link]

External links[link]

Wikimedia Commons has media related to: Sean Parnell

	Alaska portal
	Biography portal
	Politics portal

• Office of Governor Sean Parnell official Alaska government site
• Parnell for Governor official campaign site
• Biography at the National Governors Association
• Biography, interest group ratings, public statements, vetoes and campaign finances at Project Vote Smart
• Biography at WhoRunsGov.com at The Washington Post
• Issue positions and quotes at On the Issues
• Campaign contributions at FollowTheMoney.org
• Appearances on C-SPAN programs
• Collected news and commentary at The New York Times

v t e Republican Party nominees for Governor of Alaska Butrovich (1958) Stepovich (1962) Hickel (1966) Miller (1970) Hammond (1974, 1978) Fink (1982) Sturgulewski (1986, 1990) Campbell (1994) Lindauer (1998) Murkowski (2002) Palin (2006) Parnell (2010)

v t e Governors of Alaska District (1884–1912) Kinkead Swineford Knapp Sheakley Brady Hoggatt Clark Territorial (1912–1959) Clark Strong Riggs Bone Parks Troy Gruening Heintzleman Hendrickson (acting) Stepovich Hendrickson (acting) State (since 1959) Egan Hickel Miller Egan Hammond Sheffield Cowper Hickel Knowles Murkowski Palin Parnell

v t e Lieutenant Governors of Alaska Wade K. Miller Ward Boucher Thomas T. Miller McAlpine Coghill Ulmer Leman Parnell Campbell Treadwell

v t e Current statewide political officials of Alaska U.S. Senators Lisa Murkowski (R) Mark Begich (D) U.S. Representative Don Young (R), Representative At-Large State government Sean Parnell (R), Governor Mead Treadwell (R), Lieutenant Governor State Senate Gary Stevens, President Kevin Meyer, Majority Leader John Coghill, Minority Leader State House Mike Chenault, Speaker Alan Austerman, Majority Leader Beth Kerttula, Minority Leader Supreme Court Walter L. Carpeneti, Chief Justice Dana Fabe Craig F. Stowers Daniel E. Winfree (one vacancy) AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY