Health Insurance Providers

Types of Private Health Insurance Providers

There are primarily two different types of organizations that provide private health insurance in the US.

State-Licensed Health Insuring Organizations

The state-licensed health insuring organizations are not just organized but also regulated under state law even though the federal law puts additional standards and in certain cases supervenes upon the state authority. There are 3 types of state-licensed health insuring organizations.

Commercial Health Insurers: These insurers are sometimes also called indemnity insurers. These are generally organized as stock companies that are owned by stockholders or as mutual insurance companies owned by their policyholders.

Blue Cross and Blue Shield Plans: Earlier, a lot of these plans were organized as non-profit organizations under special state laws by state hospital and state medical associations. These laws differed from state to state. Sometimes they imposed social obligations or regulatory requirements on the plans.

Currently, some of the plans continue to operate under special state laws while others are organized as commercial health insurers. Check if your blue cross and blue shield has special requirements to accept applicants for health insurance in your state.

Health Maintenance Organizations (HMOs): Usually the HMOs are licensed under the special state laws that strictly assimilate heath insurance with provision of health care. These HMOs act as insurers who provide or arrange necessary health care for the enrollees directly.

Many agencies that oversee insurance and health care providers in different states in the US share the HMO regulation. Even if these entities are separately licensed by the state, many health insurance organizations operate together under a common corporate identity.


Self-Funded Employee Health Benefit Plans

These are health benefit arrangements under the federal law, which may be sponsored by employers, employee organizations or a combination of both. Under this plan, the sponsor or the insurer has the direct responsibility to pay for the plan’s participant or the beneficiary.

Sometimes contracts are made with bodies that specialize in administering benefit plans, called third party administrators. However, in other cases, the HMOs have a contract with the sponsors for administrative services.