Insurance is often misunderstood.  Allow me to try and explain it to you in simple terms! Yes, the healthcare system is a mess in the US and I won't argue against that, but insurance as it stands is misunderstood.  

Insurance as a whole industry is pretty scammy.  I will try and just tell you how it works in reality, not whether the industry is good or bad. 

Sources:

HMO vs PPO: https://www.humana.com/medicare/medicare-resources/hmo-vs-ppo