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» Healthcare vs. Health Insurance

April 25, 2023

ACA, Employee Benefits, Health Insurance, Healthcare

Healthcare vs. Health Insurance

What is the difference?

Healthcare refers to the range of services and treatments provided by medical professionals to diagnose, treat, and prevent illness and injury. Healthcare services may include physician consultations, hospital care, surgeries, medical tests, and therapies, among others.

On the other hand, health insurance is a financial product that covers the cost of healthcare services. It is an agreement between an individual and an insurance company, where the insurer agrees to pay for some, or all of the costs of the individual’s healthcare services in exchange for regular payments or premiums. Health insurance can help individuals afford healthcare services that they may not be able to pay for out of pocket.

In summary, healthcare is the provision of medical services, while health insurance is a means of paying for those services. Healthcare is an essential service that is critical for maintaining and improving individual and population health, while health insurance provides a way for individuals to manage the financial burden of healthcare services.

Why is this important?

The issue is that the ACA only addresses the health insurance market in an uneducated manner. The ACA focuses on insurance premiums, not the cost driving up those premiums. This then causes a misalignment of incentives between the consumer, the healthcare system, and the health insurance industry (financial system).

How has this caused problems?

Well because the big 5 Insurance companies are publicly traded, they are focused on their profits and the fiduciary responsibility they have to their shareholders. The ACA then enacted the MLR (medical loss ratio); however, it only encouraged a percent of profits and not the actual dollar. So, the insurance companies will then increase the dollar amount to make a large profit. Since this law was enacted, the big 5 insurance companies have increased their stock price by 200%.

Also because of the misalignment of incentives, quality does not always cost.

How can we fix this?

  1. Create Transparency within the system.
    1. Transparency is important in the healthcare and health insurance industry for several reasons:
      1. Informed decision-making: When patients have access to transparent information about the cost and quality of healthcare services, they can make informed decisions about their health and treatment options. This can help them choose providers and services that align with their preferences and values.
      2. Cost containment: Lack of transparency in healthcare pricing can lead to inflated costs and billing errors, resulting in a financial burden for patients and the healthcare system. Transparency can help identify inefficiencies and unnecessary costs, leading to cost containment.
  • Trust and accountability: Transparency in healthcare and health insurance can help build trust between patients, providers, and insurers by fostering accountability and reducing the likelihood of unethical or fraudulent behavior.
  1. Quality improvement: Transparency in healthcare outcomes and quality measures can encourage providers and insurers to improve the quality of care and outcomes for patients.

Overall, transparency in healthcare and health insurance is crucial for promoting patient-centered care, improving quality, containing costs, and fostering trust and accountability in the healthcare system.

  1. Provide more regulations.


For more information, please set up a meeting with our team of specialists!

  • Eleanor Schroeder

Posted by in ACA, Employee Benefits, Health Insurance, Healthcare