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Difference Between Private and Public Health Insurance in the United States

The U.S. is well known for its high medical costs. So much so that even international health insurance plans, which cover virtually every nation across the globe, often exclude America because of its high costs. While about 58 percent of the U.S. population has private health insurance to take care of their health needs, the debate over whether public or private insurance is more economically efficient seems endless, particularly since the institutional reform of the Affordable Care Act in 2010. Today, we at Health Insurance Plans Org present the below information on the differences between public and private hospitals in the U.S.

Public Health Insurance Plans

Public health insurance plans are plans offered by the government for low-income individuals or families, the elderly, and other persons that qualify for special subsidies. The primary public health programs in the United States are Medicare, Medicaid, and CHIP.

Medicare

Medicare is a federal social insurance program for seniors (mostly persons aged 65 and over), and certain disabled persons. With the aging population, the costs of Medicare are projected to rise, so the Affordable Care Act has taken steps to lower the burden on Medicare.

Medicaid

Medicaid, which covers millions of very low-income children and their families, is sponsored jointly by the federal government and states but is administered at the state level. The Affordable Care Act dramatically expanded Medicaid, so that every person with an income under 133% of the federal poverty level who doesn’t qualify for Medicare will be covered.

Children’s Health Insurance Program (CHIP)

CHIP is a federal-state partnership that serves certain children and families who are not eligible for medical assistance but can’t afford private coverage. CHIP aims to supplement the coverage gaps between Medicaid and private insurance.

The Advantages and Disadvantages of Public Health Insurance

Public health insurance is surely more affordable than its private counterpart. It often needs no co-pays or deductibles and has lower administrative costs than private health insurance.

Though, public health insurance is, at the same timeless flexible, as policyholders are often given a limited choice of medical service providers. This is because many medical establishments still refuse to accept government-sponsored health insurance plans. Also, even if therapy is deemed necessary, it may not be reimbursed by public health insurance.

Private Health Insurance

Private health insurance refers to private health insurance companies‘ plans and is often offered by an employer or other organization with which the policyholder is affiliated. It can be bought on a group basis or by individual customers. Currently, a majority of U.S. residents receive their health coverage through private health insurance plans.

Employer-Sponsored

Offered to employees as a benefit of employment, employer-sponsored health insurance is usually more generous than public healthcare insurance programs such as Medicare. Since 2015, Obamacare has mandated that all employers with over 50 full-time employees should offer affordable health coverage to employees to avoid a tax penalty. Nevertheless, workers who receive employer-sponsored insurance tend to be paid less in wages because of the employer’s insurance premiums.

Individual Health Insurance

Individual health insurance plans are plans bought for yourself or your family through no association with an employer or organization. The costs of these plans may differ significantly, depending on what kind of plan you select and what benefits you receive, but overall, individual health insurance plans tend to cost less as compared to group insurance plans.

The Advantages and Disadvantages of Private Health Insurance

Private health insurance plans are more flexible than group policies and give the policyholders more choices about which doctor or medical facility to visit. There are also more plan options on the market, so policyholders have many plans and a more extensive network of providers to select from.

Lastly, private health insurance plans are more costly than public health insurance. Furthermore, unlike public health insurance, private health insurance necessitates you to pay a monthly/yearly premium, which is not something every person can afford.

Resources and References:

• The Affordable Care Act
• Children’s Health Insurance Program