In an industry update report published March 2013 by DELOITTE REVIEW.
The concept of insurance is fairly straightforward: Individuals or organizations purchase a service that mitigates their risk in the event of an unforeseen problem. It’s about financial security— hoping it may not be required to use the coverage purchased but hedging just in case.
In many insurance markets, premiums paid by policyholders are pooled so that the financial impact of a single event doesn’t wipe out a household or organization.
The majority pay, and over time, many receive a payout, but in a given year, a large majority do not. Health insurance is an exception where many policyholders use their insurance frequently. Thus, the math of insurance is about basics:
pooling of risk from a large number of policyholders to fund a smaller number of unforeseen losses.
Fast forward to the present, where the US health insurance industry plays a ubiquitous role in the nation’s economy and in many American households.
More than 160 million Americans are covered by employer-sponsored insurance plans.6 Another 17 million Americans purchase insurance for themselves in the private insurance market, and about 100 million are covered by government-sponsored insurance plans.7 Notably, in each of these categories, there are unique eligibility, enrolment, and premium requirements, and each is under intense regulatory scrutiny at the state and federal levels.
This an important report about the future of health insurers and their potential consumers, providers and partners.