What most people know about health insurance can be boiled down into two statements. It is necessary, and it is expensive. However, what many people don't really understand about health insurance companies is the ways in which they control medical bills. With a health insurance company, people get assistance with their medical bills. They do not have to pay as much out of pocket, thanks to arrangements that insurance companies make with health providers. Each health policy is different, so it is important that consumers examine health policies carefully before choosing one. However, they should be aware of the ways in which health insurance companies control medical bills and how they this relates to what they pay for coverage.

First, health insurance companies control bills through providing a network of professionals. Typically, individuals pay more when they obtain health insurance from companies that offer flexible plans, meaning the right to choose from many doctors and go to any doctor they wish. Less flexible plans are typically less expensive. Health insurance companies cut their costs by limiting the number of doctors that people can use. They have special relationships with the providers in their network, which allow them to save money on payouts. They control a person's medical bills by reducing the amount the consumer has to pay through benefit amounts.

Second, health insurance companies control medical bills through determining how a person pays. When a person does not have health insurance, he or she must generally pay a medical bill right before or right after receiving a service — in full. With health insurance, a person's medical bill may come in a few different ways. First, the insurance company might pay part of the bill and invoice the consumer for the rest, or the insurance company may pay the doctor's office only what it has promised, leaving the doctor's office to bill for the rest. Finally, the insurance company may designate the co-pay that the individual must pay at the time of service. How much and when an individual must pay depends on the type of insurance and the insurance company.

Finally, health insurance companies control medical bills by deciding which issues are covered and which are not. Some companies cover preventative care, while others do not. And some companies consider certain treatments necessary while others are considered experimental. Insurance companies determine what treatments individuals may receive at the discounted rate available through the insurance company.

Insurance companies have a number of policies that differ greatly from company to company. Consumers need to look at a company's health policy to determine how that company controls medical bills and patient costs.