Can Someone Explain To Me How Insurance Work

4318michaeljohnson4318 · Jul 16, 2014

So throughout my life I really never used insurance outside of dental. Ive been in pretty good health my whole life and have only went to the doctor in my teens for sports physicals and I've never been in my 20's (im 23) so I really dont have a firm understanding of the behind the scenes and why the insurance industry is needed. This is my understanding of insurance in relation to client to insurance, client to doctor, doctor to insurance.

Client A pays for insurance. Client A goes to Doctor in his insurance network for illness. Doctor A charges retail price of services to Client A's insurance. Client A's insurance pays Doctor A for services.

Obviously this is a really simple version of what happens, I am missing things like co-pays, deductibles and what not. My question is how does Client A's insurance have the money to pay the Doctor for his services? Does the insurance company get to pay Doctor A at a rate discounted than retail? If so why? How exactly do insurance companies make money off this?

I am trying to figure out why exactly the insurance industry is necessary and why the government couldn't subsidize medical costs with tax revenues.

stillin729 · Jul 16, 2014

Ask Obama since I am now paying for every bum who chooses to do nothing with their life

ObamaCare FTL

$tatus $ymbol · Jul 16, 2014

StillIn729 said:
Ask Obama since I am now paying for every bum who chooses to do nothing with their life

ObamaCare FTL

LOL

rillo561 · Jul 16, 2014

StillIn729 said:
Ask Obama since I am now paying for every bum who chooses to do nothing with their life

ObamaCare FTL

wr · Jul 16, 2014

Insurance works on the idea that everyone paying for it, will not need it.

Deleted member 107398 · Jul 16, 2014

Wr said:
Insurance works on the idea that everyone paying for it, will not need it.

This.

If they are collecting $50/month (example) from 20 people. That's $1000/month in the insurance companies pockets. Let's say 5 of those people go to the doctor that month...part of that $1000 is used to cover those 5 people. Of course it makes more sense on a larger scale.

Deleted member 107398 · Jul 16, 2014

ask one of those people selling MCA how it works.

Am I doing it right?

T Lo Sweater · Jul 16, 2014

Living life without insurance crew
Never been to the hospital crew
Insurance is for suckers crew
Saving loads of money crew

Not srs

But I'm curious too :nerd:

coldcity · Jul 16, 2014

in case **** basically

diewitsjames · Jul 16, 2014

insurance is...exactly what it sounds like...insurance. same with your car, home, appliances. it is there JUST IN CASE one day something happens and you need it replaced, or in this case, need a major surgery, or need specialty services. not everyone who buys insurance will need it, but some will DEFINITELY need it (elderly/sick population). we (as the young invincibles) are technically paying at this moment for them but ONE DAY we hope that when we are in need of services, it will be paid for by others who pay for insurance but don't necessarily need or use the services.

stillin729 · Jul 16, 2014

I really thought about going no insurance but it isn't worth it if something does happen

I had my own insurance for $85 a month for years then ObamaCare happened and it ballooned to $340 a month :smh:

rillo561 · Jul 16, 2014

StillIn729 said:
I really thought about going no insurance but it isn't worth it if something does happen

I had my own insurance for $85 a month for years then ObamaCare happened and it ballooned to $340 a month

Have you looked into "obamacare"? It may be much cheaper. These insurance companies are raising rates because they can. It has nothing to do with obamacare. I pay about the same and when my open enrollment comes in November, I'm moving to the ACA I'll be saving around $200 for the same coverage. Its stupid to have your insurance tied to your job anyway, it gives people freedom.

Seriously, check it out and don't feed into the propaganda. Even people who were against it, now like it.

BANLEU · Jul 16, 2014

I work in the insurance industry at the state and local level so I can answer your question about how insurance generally works, but I don't know enough about taxes and health care policy to explain why the U.S. can't completely subsidies health care.

Basically, insurance is a way to spread out risk across a large pool of people. Health insurance providers rely on a mix of young/healthy customers to help pay for the health insurance costs of older/sicker customers.

In other words, young/healthy customers are typically paying more in an insurance than the benefits they actually receive. Older/sicker customers, on the other hand, are being charged less than the benefits they actually receive. So why have insurance if you're young/healthy? The simple answer is because you never know when you're going to get sick or if you're going to need it.

In your example, Client A's insurance has enough money to pay for the clients services because they have enough healthy clients that are not making insurance claims that they have a surplus in funds. Also, the insurance company's can and do get discounted rates for health care services depending on the type of plan.

Preferred Provider Organization's (PPO) are a type of managed care organization that includes doctors, hospitals, and other caregivers. PPO participants have agreed to participate within the insurance providers network. In exchange for a steady stream of clients and income, the participants in this network agree to pay a predetermined amount for medical services. For example, a doctor may charge $200 to clients without insurance, but agree to only charge $100 to insurance provider in the PPO network that they participate in.

stillin729 · Jul 16, 2014

rillo561 said:
Have you looked into "obamacare"? It may be much cheaper. These insurance companies are raising rates because they can. It has nothing to do with obamacare. I pay about the same and when my open enrollment comes in November, I'm moving to the ACA I'll be saving around $200 for the same coverage. Its stupid to have your insurance tied to your job anyway, it gives people freedom.

Seriously, check it out and don't feed into the propaganda. Even people who were against it, now like it.

I looked into and it's basically the same high rate so I jumped back on my work's plan which is still like $1200 more a year

I am a single male who never goes to the doctors getting hammered to pay for everyone else now

and I am not a Republican bashing Obama; I voted for him twice but Obamacare sucks

diewitsjames · Jul 16, 2014

Mr Anleu said:
I work in the insurance industry at the state and local level so I can answer your question about how insurance generally works, but I don't know enough about taxes and health care policy to explain why the U.S. can't completely subsidies health care.

Basically, insurance is a way to spread out risk across a large pool of people. Health insurance providers rely on a mix of young/healthy customers to help pay for the health insurance costs of older/sicker customers.

In other words, young/healthy customers are typically paying more in an insurance than the benefits they actually receive. Older/sicker customers, on the other hand, are being charged less than the benefits they actually receive. So why have insurance if you're young/healthy? The simple answer is because you never know when you're going to get sick or if you're going to need it.

In your example, Client A's insurance has enough money to pay for the clients services because they have enough healthy clients that are not making insurance claims that they have a surplus in funds. Also, the insurance company's can and do get discounted rates for health care services depending on the type of plan.

Preferred Provider Organization's (PPO) are a type of managed care organization that includes doctors, hospitals, and other caregivers. PPO participants have agreed to participate within the insurance providers network. In exchange for a steady stream of clients and income, the participants in this network agree to pay a predetermined amount for medical services. For example, a doctor may charge $200 to clients without insurance, but agree to only charge $100 to insurance provider in the PPO network that they participate in.

do you mind explaining the difference between PPO and HMO?

Fong$tarr · Jul 16, 2014

I work in insured to but no medical. Every insurance is different but in my line of business (recall insurance....think of when food spoils and is out at the grocery stores. We insured that those materials will be covered and will be destroyed, loss of business, media expense, etc) we do only write things that make sense. We don't want to write insurance that people will inevitably use and will gladly reject business that will have high cost losses. It all has to make sense from our business perspective and even the insureds that is purchasing the insurance. If they have a good record with no prior losses, then we'll cover them. If they have losses, we write a bigger premium and make sure the companies do certain things to prevent future losses. It's not always a fool proof plan but we try and prevent things from happening and if the the inevitable happens, then we'll step in and cover the losses.

Even car insurance is a different beast. You can literally get coverage for anyone but you will just have to pay a lot if the driver has a bad record and maybe the deductible is higher.

BANLEU · Jul 16, 2014

[/quote]
do you mind explaining the difference between PPO and HMO?
[/quote]

There are a few differences but the biggest is that HMO's require the client to pick a primary care physician (PCP) so all care goes through the clients PCP. If a client needs to see a specialist, for example, they would have to first go to their PCP who would then refer them to their preferred specialist.

For example, I tore my ACL a couple of years ago so I had to go to a orthopedic surgeon to get it repaired, but before I could go to the surgeon I had to go see my PCP to get a referral to the orthopedic surgeon that he collaborates or is a affiliated with.

If I had a PPO, however, I could have skipped my PCP and gone straight to see the surgeon. Some people prefer PPO's because you can save time and you don't have to pay copays to see two doctors for one diagnosis.

I should also add that both HMO's and PPO's have networks of participating doctors. The difference is that with PPO's you have the option of which doctor within the network you want to visit, whereas HMO's require you to go the PCP that you have been assigned to or chosen first. Also, PPO's give you more flexibility when seeing doctors that are out-of-network.

rillo561 · Jul 16, 2014

StillIn729 said:
I looked into and it's basically the same high rate so I jumped back on my work's plan which is still like $1200 more a year

I am a single male who never goes to the doctors getting hammered to pay for everyone else now

and I am not a Republican bashing Obama; I voted for him twice but Obamacare sucks

Strange, it's a lot cheaper than what I was paying and I go to the doctors once a year for a check up. Before ACA we were all paying for others too.

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Can Someone Explain To Me How Insurance Work

4318michaeljohnson4318

stillin729

$tatus $ymbol

rillo561

wr

Deleted member 107398

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Deleted member 107398

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T Lo Sweater

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coldcity

diewitsjames

stillin729

rillo561

BANLEU

stillin729

diewitsjames

Fong$tarr

BANLEU

rillo561

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