In a poll of 4,000 adult Americans, 77 percent admit that they don’t understand how the U.S. health care system works. One in four healthcare consumers has no idea how much he or she pays for health insurance according to a 2010 survey conducted by Deloitte Center for Health Solutions.

After a year and a half of intensive media attention surrounding healthcare reform initiatives, Americans are still ill informed when it comes to a healthcare system that costs more than $2.5 trillion a year. I’m a firm believer, when we know more, we can make better decisions for ourselves, our families, and our employees. Here are a few basics:

Why buy health insurance?
Financial security. Health insurance protects individuals and families from unpredictable and expensive health care costs. Hospital, physician office fees, lab and diagnostic testing costs and purchasing prescription medication can mean thousands of dollars in medical bills. With health insurance, a person dramatically reduces his or her direct costs for medical care by shifting the risk to a health insurance company. The health insurance company collects a monthly premium in exchange for the peace of mind and financial protection it offers.

What are the major types of health insurance?
1. Employer-sponsored
This is the most common type of health insurance. Employers contract with various health insurance companies then pay monthly premiums for each of their employees. Workers may be required to pay a portion of the premium costs along with out-of-pocket costs including deductibles, co-payments, and co-insurance.

2. Group
Small business owners, individuals who belong to professional or trade organizations purchase health insurance through their affiliation in the group. Often the costs of the premiums and out-of-pocket costs are less expensive than if the he or she purchased health insurance as an individual.

3. Individual
When a person is not covered by an employer-sponsored health insurance program or a group, he or she may contract directly with a health plan. In this instance, the insured pays all of the premium costs and out-of-pocket fees.

4. Government
Taxpayer finance government insurance programs I call the 3Ms: Medicare, Medicaid and Military healthcare programs. The government in turn often transfers the accountability of administering these programs through contracts with for-profit and non-profit healthcare organizations.

Moving forward as taxpayers and healthcare consumers, we need to seek to be informed consumers if we hope to turnaround health care costs now.