Hassle-Free Health Coverage: Traditional Indemnity Insurance Introduction
The rising cost of health care over the past 25 years- largely shouldered by business-has driven the problems in the healthcare system.
Until the early 1980s, most people received health coverage through a traditional indemnity or fee-for-service plan. Under this type of plan, your insurance company pays all or part of the bill for any doctor, hospital or other health care provider that you may choose.
With traditional insurance, also called indemnity insurance, you are free to visit the doctor of your choice. You can change to another doctor at any time for any reason. And you can use any hospital or licensed medical facility you choose.
Indemnity plans existed before the rise of HMOs, PPOs and other types of managed care plans. How
ever, indemnity plans-with their focus on flexibility-aren't very effective at controlling costs. In the early 1990s, indemnity plans lost their leading position in the U.S. health coverage market. Starting in 1993 or 1994 (depending on which survey you believe) more Americans got their health coverage through managed care plans.
Still, indemnity plans are the standard by which American health care plans are measured. They remain the main alternative to managed care systems; even though they're mostly the choice of larger corporations and wealthier individuals.
The conventional wisdom-within the medical profession and among consumers-is that people with traditional indemnity insurance get better treatment. And, most importantly, the traditional plans give policyholders the assurance that any decisions a health care provider makes are squarely in the patient's best interest.
But, we we will see in this chapter, these distinctions are not as clear-cut as some people like to think.
