US Health Insurance System

Information about the US healthcare system, getting health insurance for non-citizens and health insurance options Home/International Health Insurance/US Health Insurance.


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How Does the US Health System Work?

Healthcare in the United States is organized in a complex bureaucracy. While in the rest of the world healthcare facilities are owned mostly by governments or by private sector businesses, in the US a large share of hospitals and clinics are owned by private non-profit organizations.

Yet, the United States is the country that has the highest healthcare expenditures in the world. While these expenditures are covered in a large share by public payers as by Federal institutions, or State and local governments, they can also be covered by private insurance and individual payments.

At the same time, unlike most developed nations, the US health system does not provide health care to its entire population. As there is no single nationwide system of health insurance, the United States primarily relies on employers who voluntarily provide health insurance coverage to their employees and dependents.


In addition, the government has programs that tend to cover healthcare expenses for the fragile parts of the society as the elderly, disabled and the poor. These programs differ from one another, and all have a specific kind of people that are subject to.

Getting health insurance in the US is not an easy thing. Someone may think that once you have money everything is easy peasy, but in fact things are a bit more complicated. One must be very careful and look out to pick the right insurance.


Key question #1: What does the plan cover?

One of the things health care reform has done in the U.S. (under the Affordable Care Act) is to introduce more standardization to insurance plan benefits. Before such standardization, the benefits offered varied drastically from plan to plan. For example, some plans covered prescriptions, others did not. Now, plans in the U.S. are required to offer a number of "essential health benefits" which include.


Key question #2: Where can I receive care?

One way that health insurance plans control their costs is to influence access to providers. Providers include physicians, hospitals, laboratories, pharmacies, and other entities. Many insurance companies contract with a specified network of providers that has agreed to supply services to plan enrollees at more favorable pricing.


If a provider is not in a plan’s network, the insurance company may not pay for the service(s) provided or may pay a smaller portion than it would for in-network care. This means the enrollee who goes outside of the network for care may be required to pay a much higher share of the cost. This is an important concept to understand, especially if you are not originally from the local Stanford area.


If you have a plan through a parent, for example, and that plan’s network is in your hometown, you may not be able to get the care you need in the Stanford area, or you may incur much higher costs to get that care.

  1. Emergency services
  2. Hospitalization
  3. Laboratory tests
  4. Maternity and newborn care
  5. Mental health and substance-abuse treatment
  6. Outpatient care (doctors and other services you receive outside of a hospital)
  7. Pediatric services, including dental and vision care
  8. Prescription drugs
  9. Preventive services (e.g., some immunizations) and management of chronic diseases
  10. Rehabilitation services.

For our international population of students who might be considering coverage through a non U.S. based plan, asking the question, "what does the plan cover" is extremely important. 


Key question #3: How much will it cost?  

Understanding what insurance coverage costs is actually quite complicated. In our overview, we talked about paying a premium to enroll in a plan. This is an up front cost that is transparent to you (i.e., you know how much you pay).

Unfortunately, for most plans, this is not the only cost associated with the care you receive. There is also typically cost when you access care. Such cost is captured as deductibles, coinsurance, and/or copays (see definitions below) and represents the share you pay out of your own pocket when you receive care. As a general rule of thumb, the more you pay in premium up front, the less you will pay when you access care. The less you pay in premium, the more you will pay when you access care.


The question for our students is, pay (a larger share) now or pay (a larger share) later?

Either way, you will pay the cost for care you receive. We have taken the approach that it is better to pay a larger share in the upfront premium to minimize, as much as possible, costs that are incurred at the time of service. The reason for our thinking is that we don’t want any barrier to care, such as a high copay at the time of service, to discourage students from getting care. We want students to access medical care whenever it’s needed.