In order to keep the costs of health insurance plans as low as possible, insurance companies must take cost containment seriously at the management level. Since limiting the healthcare being provided would make the plan unusable, they have to look at other methods which maintain a specific level of services without incurring undue costs.
Using healthcare networks is a primary method. This allows the insurance company to contract with health professionals to make set payments for standard practices. Most health insurance plans use such networks, and if a patient chooses to go outside of the network, the additional cost for the services they receive is then placed on the patient so that the insurance company is not burdened by additional, non-contracted pricing.
Another method of keeping costs down is to exclude coverage for preexisting conditions. This eliminates responsibility for certain conditions that have potentially long term costs, including asthma, diabetes and other medical problems with the potential to be lifelong disorders. It is not that such conditions are deemed unworthy of health insurance plans, the truth is simply that providing such coverage for previously existing conditions could drive the cost of insurance up for all group members, even to the extent of pricing the plan out of reach of many members.
Copays and coinsurance are two similar, but different methods of controlling the costs of healthcare. By placing some of the burden of the care received back on the patient, insurance companies are able to maintain the level of care for all members without paying the full cost of the procedures being performed.
Some procedures also have limits of payments available, preventing ongoing medical care from becoming, as with the case of preexisting conditions, an overbearing burden on the insured group as a whole. The insurance company will pay the cost of care up to a specified limit, at which time the patient would need to have supplemental coverage or take on increasing amount of the costs themselves.