Individuals who are new to health insurance may wonder how health insurance companies can afford to cover the enormous expenses like surgery costs. Surgery costs, which are often thousands of dollars, are usually impossible for the typical American to pay out-of-pocket. However, health insurance companies can afford to cover the cost because of the health insurance structure, which uses risk analysis and other tools to ensure funds are available to pay for an individual's surgery costs.

The first step in the health insurance coverage process is a risk analysis. Health insurance companies gather all kinds of data about potential customers to determine what their health needs will likely be. Individuals who are likely to have higher needs, such as those with diseases or those who engage in unhealthy behavior like smoking have to pay higher premiums, or costs for their insurance policies. Health insurance companies do this because they know people who have higher risks of health problems are likely to cost them more. Because they do this risk analysis, they ensure they have the cash flow that is needed to cover even the highest medical costs, like surgery costs.

Health insurance companies also have relationships with health care providers that allow them to get better rates on procedures like surgery. In many health insurance plans, when consumers get their services within the health insurance company's network, the company will cover the costs. However, if insured people go outside the network for services, health insurance providers will not cover their costs or will cover only a portion of their costs. This is because health care outside of the network is more expensive to the insurance provider.

Knowing how health insurance works to cover surgery costs can help people with insurance policies understand how to use those policies to cover their surgery costs. Individuals who need surgery can encourage their health care providers to explain to the insurance companies why these procedures are necessary. This way, health insurance companies are more likely to cover them. Further, individuals should check with their health insurance companies to make sure the providers who will be doing the surgery are covered by the health insurance network. If they are not, individuals can do research to determine whether any in-network providers are able to conduct the same surgery. This way, individuals can save on the out-of-pocket cost that going to an out-of-network surgery provider will likely bring.

Health insurance companies can cover surgery costs because of their risk calculation tools and contracts with a network of health care providers. As consumers, insured people must understand these factors in order to make good decisions about where they will have their surgeries done.