Health insurance can be defined as an insurance which covers the costs of medical illness, surgeries or injuries. It dates from the late 19th century, when the first accident insurances became available.
The cost of the health insurance is determined by looking at the overall possibilities for the medical needs of a certain target group. The insurance is often paid monthly, and that money goes to the health insurance fund. If there is a need for some medical intervention, the health insurance covers the expenses from the mentioned fund and the user is not obligated to pay for the given intervention.
Medical costs can be covered in two different ways, depending on the policy:
- the injured party pays for the expenses, and the insurance fund reimburses it later;
- the amount is paid directly from the insurance.
Some countries consider health insurance to be the right of all people, along with the education, for example. In UK and Canada health insurance is free and all the citizens have the same right to have medical treatment when needed. When a country doesn’t have universal health care system, health insurance can be a part of the costs that employer pays for his employee. In the case of unemployment, the health insurance is covered by some kind of social protection system.
Another option that is available is private health insurance fund, which cost a little more but provides better treatment. They work at the same principle: the monthly (or periodically) fee is determined, and in the case of an injury, the money from the insurance fund is withdrawn to cover the costs. The benefit here is that many private practices can be covered with the insurance, and overall conditions are slightly better. But that varies from country to country.
Before the health insurance existed, the patients were obligated to pay for all the costs at once, after the treatment. That was economically unbearable, because the costs were often very big and there was no difference in the cost regarding on the financial income of the injured person. The health insurance concept offers constant inflow so the funds are always able pay for the insured person. On the other hand, there is no risk from having to pay huge amount of money at once because of the monthly fee that is predetermined.