Private vs Public Health Insurance
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Health care in the US is costly; you can barely afford it without health insurance. The most common types of coverage are private and public health. Both have different provisions, come with pros and cons, and are suitable for different people or conditions.
This article is set to provide you with all the essential information about both insurance policies. It will look into the difference between the two, what to look for when choosing either, and other types of health insurance policies.
Private Health Insurance
Private health insurance plans cover are provided by individual companies like an employer or private insurance company. There are two different types of private health insurance plans.
Employer-sponsored Health Insurance plans
These are health insurance schemes provided by employers to the employees as a benefit of employment. As of 2015, the Affordable Care Act, also known as Obamacare, states that employers with at least 50 full-time employees should provide insurance coverage to the workers to avoid a tax penalty.
Some of these plans will offer a portability option, which allows you to buy your employer-sponsored plan and take it with you when you leave the company.
Even though not required by law, businesses with less than 50 workers can insure their workers to qualify for Tax Credit for Small Employer Health Insurance Premiums.
The only concern that comes with this insurance plan is that workers tend to get lower wages to cover the cost of insurance. This insurance plan can also include retired and former employees for a while.
Individual Health Insurance Plans
Apart from employer-sponsored insurance, you can get private health insurance through individual health insurance plans. This is an insurance plan that you purchase for yourself or your family without any association with an organization or employer.
You need individual health insurance plans when you are 26 years of age or older. You can also apply for one if you are unemployed or employed part-time. Self-employed, any other employer, or retired workers, are also eligible for individual private insurance plans.
While most people tend to fear the cost of individual private insurance plans, they are affordable compared to employer-sponsored or group insurance policies. Some of the factors that determine the value include the kind of plan you choose and the benefits you receive.
Pros of Private Health Insurance
It allows you to choose your doctor depending on the type of insurance cover.
Quick medical attention as most private healthcare facilities are less busy compared to public hospitals.
It provides the best comfort. Unlike the public hospitals that are overcrowded and at times, underfunded, private facilities are well maintained and provide all the needed amenities.
Most private facilities provide private rooms that allow you the needed privacy.
Most private insurance plans allow you unrestricted visiting hours that will enable your family and friends to visit at your convenience.
Many plans will offer health insurance perks for taking personal preventative health measures to keep you healthy.
Cons of Private Health Insurance
Those with private insurance are highly likely to experience inequalities in treatments. Insurance companies and healthcare providers tend to care more about their needs rather than the patient. Those who pay more get preferential treatment.
The main concern in private insurance is the higher costs. You will pay more for individual health insurance plans and facilities as compared to publicly provided ones.
Most private health insurance plans are limited as they don’t cover all conditions. While you might have an exhaustive cover, at times, you have to forfeit some states to fit your budget.
Some private insurance policies cover only up to 80% of the expenses. This requires you to be prepared for out-of-pocket costs which can be costly.
Public Health Insurance
Public health insurance is a program run by state, federal, or local governments where the government covers some or all of the people's healthcare costs. Some of the public health insurance policies include:
Medicare
Medicare is a federal health insurance plan provided for people who are 65 years of age or older. It also applies to younger people with disabilities and people with End-stage renal disease. Medicare comes in different parts; Part A is the hospital insurance that covers some home health care, inpatient hospital stay, skilled nursing facility, and hospice care. Part B is medical insurance. It includes outpatient care, preventive services, medical supplies, and some doctor’s services. Part D is run by private insurance and involves prescription drug coverage. Private insurance also runs part C which includes parts A and B.
The parts of Medicare can be confusing, and at Policy Scout we have detailed guides to walk you through all of the questions you might have about Medicare coverage.
Medicaid
Medicaid is public health insurance jointly funded by the federal and state governments for low-income individuals and families. It covers children, pregnant women, people with disabilities, and elderly people. The states administer the program. They determine the coverage and cost to participants, if applicable.
The Affordable Care Act immensely expanded Medicaid, with the latest report showing coverage for 65.5 million people.
Other Special Groups
If you do not qualify for either Medicare or Medicaid, you can still be eligible for particular group insurance policies in some states. There are different provisions for special groups. These are;
Tricare – Tricare is a provision of the U.S Department of Defense that provides health insurance for service members, families, and some retirees.
Veteran Affairs – This is a health insurance coverage provided by the U.S Department of Veteran Affairs for military veterans and other qualifying military service members.
Children’s Health Insurance Program (CHIP) – CHIP is a health insurance program jointly funded by state and federal governments. It provides coverage to uninsured children and families who do not qualify for Medicaid. It covers children whose families earn too much money to be eligible for Medicaid yet cannot afford health insurance. The regulations on eligibility for CHIP vary in the different states. Also, some states cover pregnant women.
Pros of Public Health Insurance
A public health insurance policy is an affordable alternative to private health insurance. You don’t have to co-pay or remit any deductibles. They are also accruing lower administrative costs.
You can combine more than one insurance plan when using public policies that will come in handy for extra expenses.
Apart from the health expenses, you can still get help with other out-of-pocket costs if you have public health insurance.
Cons of Public Health Insurance
All public health insurance policies have strict eligibility requirements you must meet to qualify. The eligibility requirements range from income to disability, health conditions, and citizenship or immigration status. These requirements at times block worthy people who can’t afford insurance.
Some health facilities and medical service providers are not willing to serve patients covered by public health insurance. It involves a lot of paperwork and comes with a lower payout per treatment.
Factors to Consider when Choosing Either Public or Private Health Insurance Policies
Income: Your annual salary determines your eligibility for a public health insurance policy. For a private insurance policy, the income determines the amount of premium you can afford.
Age and state of health: For public insurance, each policy comes with age and health specifications. On the other hand, for private health insurance, most young and healthy individuals tend to pay lower premiums with higher deductibles.
The number of people insured: You should take a health insurance policy that will conveniently cover your family as a whole.
Any pre-existing medical conditions: Both private and public health insurance plans have different provisions in case of any pre-existing medical conditions.
Other Types of Health Insurance Policies
Other than who is responsible for financing the policy, you can also categorize health insurance depending on how the service administration is. Some types of health insurance policies are;
Managed Care Plans – This is an insurance plan that involves the insurer and the medical facility agreeing to provide lower-cost medical care to the insured. The insured incurs costs and penalties if they work with an out-of-network medical service provider. The amount to pay depends on the agreement. More expensive policies provide flexibility within the network of hospitals.
Fee-for-service or Indemnity plans – This is a plan where the insurer allows you to choose a healthcare provider of your choice. Whichever facility you want, the insurer pays 80% of the costs while you pay the remaining bits.
Preferred Provider Organizations (PPO) – PPO is almost similar to the indemnity plan, such that you get to visit a service provider of your preference. The only difference is that the insurer has a network of approved providers you can give, and they cover the entire cost. If you visit an out of the network facility, the insurer pays a little amount, while you pay for the rest.
Point-of-Service Plans (POS) – POS is flexible in a way that you can choose any medical care. You are free to use both the network and out of network facilities depending on the progress of your treatment.
Health Maintenance Organization (HMO) – HMO allows for direct medical care to the insured. It comes with a particular service provider who controls all the treatment procedures. The insurer will only take care of costs sanctioned by the primary service provider.
Conclusion
Now that you have all the critical information on the types of health insurance policies, feel free to apply for the ones you qualify for. You can also contact different insurance service providers for a range of plans that they provide.