What is the primary purpose of health insurance?

The primary purpose of health insurance is to provide financial protection against medical expenses. This means that when individuals face unexpected healthcare costs, such as hospital stays, surgeries, or ongoing treatment for chronic conditions, health insurance helps cover a significant portion of these expenses, reducing the financial burden on the insured.

Health insurance typically operates on a risk-sharing model where premiums are collected from many individuals and used to pay for the healthcare costs of those who need services. This approach ensures that individuals can access necessary medical care without the fear of exorbitant costs that could lead to financial ruin.

While reducing the cost of health services and offering wellness programs can be benefits of some health insurance plans, these are secondary to the fundamental goal of protecting individuals from high out-of-pocket expenses related to healthcare. Providing cash benefits for hospitalization might be part of specific insurance plans, but again, the overarching objective of health insurance is to alleviate the financial impact of medical treatments and ensure that individuals have access to the care they need.