Understanding Health Insurance

By: Lee Ann Obringer & Melissa Jeffries

Preventive care is next to impossible for those without health insurance.
Preventive care is next to impossible for those without health insurance.

In 2006, almost 43 million Americans had no health insurance, which translates into nearly 15 percent of the American population. This might be attributed to the fact that health care costs can be very expensive, and the cost of even the most basic care is steadily rising. Today, the amount Americans spend on health care is four times as much as the government spends on national defense. So it's no surprise that along with increased health care cost comes increased health insurance premiums. Employers typically bear the brunt of the expense for health insurance, but individuals are paying more and more each year as well. In 2006, employer insurance premiums increased 7.7 percent, twice the rate of inflation.

But what exactly is it you're paying for? Where does your monthly premium go if you don't get sick or go to the doctor? What do you do if you're not working or you're self-employed? What's the difference between all of the various plans there are to choose from? The maze of information you have to wade through about claims, co-pays, co-insurance, deductibles and more is enough to make your head swim.


In this article, we'll break down the main types of plans and explain their differences. Keep in mind that there are always variations in individual plans, but we'll at least give you a head start when you're trying to select the right plan and coverage for you.