Final answer:
Major medical insurance is designed to provide coverage for medical and hospitalization costs, which usually includes a combination of deductibles, co-insurance, and co-payments. These insurance plans are part of a broader system that incorporates both government-funded and private coverage options; such complex structures are sometimes blamed for contributing to high overall healthcare costs.
Step-by-step explanation:
Understanding Major Medical Insurance Coverage
Major medical insurance focuses on covering medical and hospitalization expenses which include prescription drugs, medical supplies, and services from physicians and hospitals. People covered by such insurance often face various out-of-pocket costs, including a deductible, which is an initial amount paid before the insurer starts to cover medical bills. After meeting the deductible, insured individuals may also encounter co-insurance—a cost-sharing agreement where the policyholder and the insurance company split health care expenses at a certain rate—and co-payments, which are fixed amounts paid for specific services like doctor's visits or emergency room care.
In the United States, healthcare coverage can come from either public sources, like government-funded programs, or private insurers. An example of public coverage is Medicare, which has several parts including Part A for hospital coverage, funded by payroll deductions, and Part B for non-hospital medical expenses. Beneficiaries of these programs are still responsible for deductibles and copayments, and while the government subsidizes a significant portion of Medicare Part B, participants must pay monthly premiums.
The mechanism of how health insurance impacts overall healthcare costs is complex. Some researchers attribute high healthcare costs to the structure of health insurance, as the layers of deductibles, co-pays, and co-insurance add to the cost-sharing burden on individuals, while also creating a buffer that might lead to higher overall healthcare expenditure.