My question

What kind of health insurance does the American public have and how do they benefit from it?

I was surprised to read articles about the American health care system; this seems to be fundamentally different from the Japanese system. So, I became interested in the American health insurance system and health care costs.

According to this article (written in Japanese), in the United States;

You must pay $400 a month for even cheap private health insurance. If you use this course, all out-of-pocket until your medical bills reach $4,000. A course without a cutoff point would require a payment of $1,300 per month. I don't know if this is covering the whole household or this price for one subscriber only.

In Japan, the cost of an insurance capable of covering reasonable medical care for the entire family should be roughly $600 per month, however, half of this is paid by the employer, so the actual cost is $300/month.

According to another article (that is written in Japanese),
The Medical insurance, which is mainly purchased by companies, can be classified into HMOs, PPOs and EPOs; here, HMO(Health Maintenance Organization, PPO(Preferred Provider Organization), and EPO(Exclusive Provider Organization). These seem to have the notion of "network". You cannot use insurance unless you use a doctor or medical institution that belongs to a "network". In Japanese insurance, the concept of a network does not exist; almost all rational medical care is in networks.

The Japanese health insurance subsidies for such products are roughly as follows.

As a general rule, 30% of the medical expenses are paid by oneself (70% is paid by health insurance). The amount a patient pays in a month depends on the patient's income but, typically capped around $1000.

I am not very good at English. I am sorry if I have used rude or unclear words. Corrections are welcome.

  • 2
    "You must pay $400 a month for even cheap private health insurance." That's just not true. I pay $190/month for health insurance. Premiums and deductibles are just too varied for there to be one answer. – RonJohn Nov 26 '20 at 21:51
  • @ RonJohn Thank you for your comment. I could see from the variance in the testimonies of many people that this is not a one-size-fits-all story. But what's the factor that determines the price and coverage of insurance? There are various factors such as state, income, age, medical history, years of insurance coverage, insurance companies, etc. – Blue Various Nov 26 '20 at 22:28
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    I’m voting to close this question because while very interesting, these many "comparative economics" questions have, literally, no connection in any way to "personal finance". Perhaps they should be moved to, say, the politics site which is about such discussions. This site is for answerable questions about - for example - "how to use my checkbooks". A trans-Pacific economic segment comparison is really totally unrelated to this site. – Fattie Nov 27 '20 at 13:15
  • @BlueVarious There are a huge number of factors that matter in setting health insurance prices and medical service prices in the US. If it were just one or two factors, the system would probably not be as bad as it is. A simple answer to your question is probably not going to be very accurate or helpful. – Upper_Case Nov 27 '20 at 20:35
  • @ UPPER_CASE If you say this is complicated and bizarre, that would be the answer. – Blue Various Nov 27 '20 at 20:42

It functions like any other kind of indemnity insurance, but in an expensive setting

Indemnity insurance is financial protection for an unforeseeable risk in the future-- like the risk that you will fall ill or be injured. This is the kind of insurance that people usually mean when they refer to health insurance. The US has other products people can buy such as discount cards, supplemental insurance, et cetera, but those are (in my experience) usually off-topic when discussing health insurance.

People benefit from this type of insurance because while it is usually impossible to determine a person's individual risk for unpredictable future events, we can estimate how often those events occur within groups (as long as those groups are large enough). So actuaries determine the rate of those events over time, such as a year, then determine what the average risk of those events are for a given group of people. Because the average risk is something that can be estimated with measurable precision, insurers can price insurance policies efficiently (can, not necessarily do). That means that individuals who buy insurance policies can live as though they are at the average risk of the group, rather than their (unknowable) individual risk.

This is how all indemnity insurance works, and it is the same in the US as it is in Japan, France, Germany, and pretty much everywhere else. It's not limited to health insurance either: auto insurance, homeowners insurance, and similar insurance products work the same way.

The major differences between the US system and others around the world are that access to health insurance in the US is uneven (not everyone has the same choices to choose from), is arbitrarily inefficient (most people access health insurance through their employers, for historical and tax efficiency reasons), has many hard-to-identify limitations (like limitations on which doctors your insurance will pay for), is hard to compare to other insurance offers (you don't get free market benefits when people can't precisely evaluate what is offered to them), is complicated and opaque (most people have no idea what the cost of their insurance is each month, or what their policy actually covers), has to deal with complicated billing practices, and most importantly that medical services in the US are expensive.

The expense is a huge problem. Not only is receiving a medical service relatively expensive by itself, but that expense tends to mean that providing insurance for that service will also be expensive.

Insurance still benefits US consumers by limiting their financial risk due to health problems. But that benefit is offset somewhat by high cost-sharing requirements (it's common in insurance policies available in the US today to have to cover the first $5,000 of many medical expenses per year, for example), and high premiums (many people struggle to afford health insurance each month, whether the reduction in risk is valuable to them or not). But the high costs of both insurance and receiving medical services cause health insurance to function mainly as catastrophic coverage. Catastrophic coverage protects against massive medical bills, but doesn't help with much else.

Health insurance in the US is provided (largely) by private companies. Those insurance companies may be owned, in whole or in part, by companies which own specific chains of hospitals and clinics, which may or may not have meaningful competitors in their area. There are public insurance plans available, but those are usually limited to specific groups (such as people older than 65, people with incomes below a certain amount). Sometimes those public insurance plans are managed by private companies. Sometimes people can get assistance paying for health insurance, and sometimes not. Insurance policies may or may not cover the same medical needs, and may or may not be subject to the same regulations.

Companies selling health insurance are regulated, mostly at the state level, which means that requirements for selling insurance can vary a lot from one state to another. Except for those insurance policies which are subject to federal regulations like the Affordable Care Act. Except when they have a waiver, meaning that they are regulated but don't have to deal with that particular regulation.

The health insurance system in the US is a complicated mess, and there is little information available to individual consumers to navigate it and even less leverage individuals have to get a good deal.

This only scratches the surface-- there are still lots of different kinds of insurance arrangements available (HSA, FSA, HMO, PPO, network tiers, and so many others), different needs people might have (and so different benefits from insurance in different situations), but the basic answer to the question is that people in the US get the same benefits as anyone from indemnity insurance: the ability to operate at the average level of group risk rather than their unknowable individual risk. But as health insurance is generally more expensive and less efficient in the US, those benefits are less valuable than many people from other countries would expect.

(I apologize if my descriptions are unclear, but my Japanese is awful. If anything needs clarification, please let me know). すみません、下手な日本語の話せる人です。

  • Thank you for your answer. I understood enough level of knowledge required for users of Japanese health insurance when I was in secondary school. That was about half a page of a secondary school textbook. There are only three or four things to remember. I have a Ph.D. in Natural Science. But I find it difficult to acquire a user-level knowledge of the US insurance system. How will American children learn about this? – Blue Various Nov 27 '20 at 22:00
  • @BlueVarious Currently, they don't. Most people in the US know very little about how their health care system functions and have very few casual opportunities to learn about it. It doesn't matter as much as you might think, because most people have few options for health insurance (whatever the employer offers, for example). In the US, people that know much about health insurance tend to be specialists who work in the insurance industry, negotiate with insurers, and similar. It is not a good situation. – Upper_Case Nov 27 '20 at 23:50
  • @ Upper_Case I have been diagnosed with back pain in Japan. It was about $60.00 including x-ray of my back and knee + 20 minutes of treatment with a low frequency treatment device + 30 minutes of massage + a week's worth of pain medication + compresses. (Price after insurance reimbursement. ) I should only have to pay 30% of the cost, so the original cost of medical care is about $200. X-rays showed findings of osteophytes in the spine and narrowing of the discs, but I did not need surgery or anything else. Thank goodness. – Blue Various Nov 28 '20 at 4:14
  • I have evaluated answers from the perspective of financial literacy education, I think your answer is the best answer. If we are going to design an education for the American children in the Secondary Education, do we need at least "types of insurance providers", "the concept of networks", "insurance reimbursement procedures", "premium premium lump sums", "covered medical care", "the amount of money the insurance will cover" and "conditions that can be a huge risk"? But some of the conditions are too complex for children to understand. – Blue Various Nov 28 '20 at 4:31
  • The people who design the insurance should be top level, and the people in charge of the actual procedure should have the expertise. But the users are ordinary citizens. My brain doesn't seem to be good enough to live in the US, even if my language handicap is covered. – Blue Various Nov 28 '20 at 4:34
  • it is pretty unsurprising that health care is incredibly different in different countries. anyone who's lived in more than 1 country knows this

  • you can literally see what US people see, say here: https://www.healthcare.gov/unemployed/coverage/ you can drill down and literally get prices etc. if that's what you are looking for. others may have better links

  • the summary you give of Japan costs "In Japan, .." really sounds "basically the same as the US, but the US is a bit more expensive"

On the Economics front, it is well-known that the US spends (wastes?) tremendously more than other countries per person. https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#item-start (scroll down to graph).

  • Thank you for your answer. But there seems to be too many different answers; some say the cost is similler to Japan, while others say the US system is terrible. This seems to be based on a specific difference in perception of facts rather than a difference of opinion.So I wait for many answer and comments. – Blue Various Nov 26 '20 at 18:47
  • The Japanese healthcare system is very different from the US system. Costs are much lower in Japan, but standard health insurance is also (generally) mandatory, insurers are non-profit (and not in a US-style formality way), with government-backed price schedules for medical services, and has greater availability of doctors and transit to reach those doctors. – Upper_Case Nov 27 '20 at 20:31
  • @Upper_Case The Trump administration appears to be trying to cap the price of drugs. – Blue Various Nov 27 '20 at 20:45
  • @BlueVarious It's a pretty weak proposal affecting a smaller number of drugs than you might think, to a lesser degree than you might think, under fewer circumstances than you might think, and the proposal has some serious obstacles anyways (it had collapsed, last I checked). As a lifelong US citizen who has worked in the health care industry for over a decade, I promise you: there is very little appetite for government price controls in health care in the US, especially (but definitely not just) from Republicans. – Upper_Case Nov 27 '20 at 20:50
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    @ Upper_Case How nice it would be to be able to enjoying the US's aggressive R&D environment and pay scale while using Japan's insurance system. – Blue Various Nov 27 '20 at 21:09

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