Question

What is the definition of “indemnity” insurance? Why do you suppose it has largely been replaced by managed care? What are the three main types of managed care organizations? What are the pros and cons of each type?

Answer 1

Ans) Indemnity insurance is a contractual agreement in which one party guarantees compensation for actual or potential losses or damages sustained by another party. These special insurance policies indemnify or reimburse professionals against claims made as they conduct their business.

- Managed care became popular because it controls costs better than an indemnity plan does. Health insurance and delivery of healthcare are combined into a single system.

- HMOs, PPOs, and POS Plans. There are three basic types of managed care health insurance plans: (1) HMOs, (2) PPOs, and (3) POS plans. A health maintenance organization (HMO) is a type of managed healthcare system.

- The primary advantage of managed care is that it provides health care solutions for people whenever they want to speak with a medical provider. Immediate services can be rendered, allowing people to take their care into their own hands with a reasonable level of certainty. This access does come at a disadvantage.

Cons of Managed Care:
• Managed care can often extend the wait times for all patients.
• This option creates a general lack of privacy for patients.
• It turns people into commodities.
• Managed care forces the individual instead of the doctor to advocate for their health.