Health insurance, like other forms of insurance is a form of collectivism whereby people collectively pool their risks, in this case the risk of incurring medical expenses.
The group is usually publicly owned or organized on a non-profit basis for group members, although in some countries groups under health insurance may also be managed by companies. It is sometimes used more broadly to include insurance that covers long-term disability or nursing or custodial care needs.
It may be through a social government sponsored insurance program, or through private insurance companies. They can be purchased on a group basis (for example, by a company to cover its employees) or purchased by an individual. In each case, covered groups or individuals pay premiums or contributions to help protect themselves from unexpected health expenses.
When estimating the total risk of health expenses, a routine financing structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the health benefits set out in the insurance contract. The benefit is administered by a central organization, such as a public body, private company, or nonprofit entity.
