Private health insurance in the United States is offered mainly by (1) insurance companies, (2) medical service plans, (3) managed care plans, and (4) self-insured employers.

1.Insurance Companies
Many companies that sell health insurance policies provide cash benefits, also called indemnity benefits, to the insured person. A cash benefit is a fixed dollar amount for each medical expense or day of hospitalization. If the cash benefits do not cover the entire cost of medical care, the policyholder must pay the balance.

2.Medical Service Plans
Medical service plans pay service benefits. A service benefit is a direct payment to the hospital or physician that provided the medical service. Payments are limited to reasonable and customary charges. Such a charge is the average cost of a particular medical service in the area in which the insured person lives.

In most cases, health insurance policies with service benefits offer fuller coverage but cost more than policies with cash benefits. Unlike insurance companies, medical service plans operate on a nonprofit basis. Blue Cross and Blue Shield plans are the largest medical service plans in the United States.

3.Managed Care Plans
Managed care plans have grown tremendously since the 1980's. They help limit the cost of health care by managing the provision and financing of care. The most widely used types of managed care plans are health maintenance organizations (HMO's) and preferred provider organizations (PPO's). In the United States, a large majority of workers in group plans sponsored by their employers are covered by managed care plans.

HMO's provide nearly complete health care services for a prepaid monthly or yearly fee. Such services range from hospitalization and surgery to medication and visits to a physician's office. HMO's are sponsored by various foundations, communities, medical groups, insurance companies, and medical service plans.

PPO's give employers discounts if they send their employees to health care providers that belong to the PPO. Employees tend to use the PPO's health care providers because they must pay more for their health care if they receive it from someone else. Like HMO's, PPO's provide nearly complete health care for a monthly or yearly fee. In both PPO's and HMO's, patients may be required to pay a small additional fee, called a copayment, for the medical services and medications they receive.

4.Self Insured Employers
Self-insured employers pay the health care costs of their employees instead of buying insurance. In this way, companies can design benefit plans to suit their circumstances, and they may profit by investing the money that would be spent on insurance. Many larger companies make such arrangements.