Final answer:
Health insurance in the U.S. is divided into private and public healthcare. Private healthcare is either employment-based or direct-purchase, while public healthcare is government-funded through programs like Medicare and Medicaid. Payment models include fee-for-service and HMOs, and adverse selection can impact insurance markets.
Step-by-step explanation:
The two main forms of health insurance in the U.S. are private healthcare and public healthcare. Private healthcare includes employment-based insurance, which is sponsored by an employer or union and may cover the employee and their family, and direct-purchase insurance, which individuals buy directly from private companies. Public healthcare is government-funded, with programs like Medicare for those over 65 or with certain disabilities, Medicaid for those with very low incomes, and other specialized programs.
In terms of payment models, a fee-for-service system means medical care providers are paid based on the services they provide, while Health Maintenance Organizations (HMOs) reimburse providers based on the patient count, requiring them to manage the allocation of healthcare services among patients. The concept of adverse selection addresses the issue of insurance buyers being more aware of their health risks than the insurance company, potentially leading to a distortion in the insurance market where low-risk individuals opt out while high-risk clients might consider it favorably priced.