Private vs Public Health Insurance: Key Differences


68% of Americans receive medical assistance through private healthcare, but 63% also vote for the US government to provide public healthcare. 

The advantage of private health insurance over public health insurance is a hot topic among politicians and citizens alike, with some arguing how “wrong” the other is. But what is the difference between them? Is there anything better? 

Read on as we break down private and public health insurance and the key differences between them. 

Private health insurance 

Private health insurance is when people get health insurance from private companies. This type of insurance is provided to employees through their company, but individuals can also purchase it. 

Private healthcare has many advantages. For example, there are more provider choices, more doctors to choose from, and more flexible plans. 

However, it is very expensive and companies even take a pay cut to cover the cost of insurance. This leaves many people without medical support and unable to buy medicine due to the high cost. 

Different types of private health insurance 

Different types of private health insurance include fee-for-service, HMO, and PPO. 

Fee-for-service: is traditional private health insurance. You pay a monthly premium to your provider to cover most health care costs, but for some services, you'll have to pay a little out of pocket. 

Health maintenance organizations, or HMOs, are prepaid health plans. You also have to pay a monthly premium, but the difference is that you have to get health care at their facility. 

Preferred Provider Organizations, or PPOs, are focused on paying monthly premiums and small copays. Usage fees are paid during the doctor's visit. This limits the number of doctors and facilities you can use. 

Public health insurance 

Public health insurance is when the government offers insurance programs. This helps low-income individuals or families, the elderly and those eligible for special benefits get the medical care they need. 

Unlike the private sector, public healthcare is funded by government and taxes. The Affordable Care Act was enacted to help manage and pay for those in need of government assistance, but it accounts for a significant portion of government spending. 

Public health care providers 

Governments provide healthcare in three ways. It goes through Medicare, Medicaid, and CHIP.

Medicare is a federal insurance program for the elderly, that is, people 65 years of age and older as well as people with certain disabilities. Medicare health insurance professionals work to determine who needs it and what they need. 

Medicaid is a social insurance program funded by the federal and state governments but administered at the state level. Medicaid covers millions of very low-income families. 

The Children's Health Insurance Program, or CHIP, is for children and families who do not qualify for help but cannot afford private health insurance. It aims to fill gaps in healthcare. 

Private and public health insurance: which is better?

Private or public health insurance is not a conversation about what kind of coverage is best but about how we can make them work together. 

The main difference between private and public health insurance is that private healthcare is expensive and reserved for those who can afford it. Public health care is free and exclusive to those who need it. Was this article helpful? If so, check out our blog for more health, finance and tech news - and more!

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