What is the primary purpose of health insurance?

The primary purpose of health insurance is to provide financial coverage for medical expenses incurred by the insured. This fundamental function of health insurance allows individuals and families to manage the potentially high costs of healthcare, which can include hospital stays, surgeries, routine doctor visits, and various treatments. By sharing these costs with the insurer, policyholders can access necessary medical care without facing overwhelming out-of-pocket expenses that could lead to financial hardship.

While cash benefits during hospital stays and subsidies for prescription medications may be components of some health insurance plans, they are not the overarching goal of health insurance as a whole. Similarly, while some plans may include certain guarantees for payments to healthcare providers, these aspects do not define the primary purpose of health insurance. Therefore, the essence of health insurance lies in its role as a protective financial mechanism against medical expenses.