How Do Public And Private Health Insurance Differ?

A guide between public and private healthcare insurance.

Public health insurance is a type of insurance which is subsidized or paid entirely by the government’s funds. In the U.S., Medicaid and Medicare are two very prominent public health insurance. On the other hand, private health insurance is a type of insurance which is paid for by the individuals who are being covered. It is often given by employers or organisations.

Private Insurance

Private Insurance can be paid by you or by your employer. Usually it is advisable to get the insurance offered by an employer since private insurance can get extremely expensive for individuals to pay for. Costs for private insurance can vary extremely between regions, companies, and plans. These plans may require you to reimburse some of the medical bill as co-payment. Some private insurance plans work with certain health care providers to control costs at a greater level. These plans are called managed care plans, which usually have the following types:

  • Health Maintenance Organizations (HMOs): These plans only pay for care within their core network, but cost less than PPOs.
  • Preferred Provider Organizations (PPOs): These plans cover a larger share of your medical costs if you take care from their network of providers, but if you go outside their network they will still pay for a part of your bill.

Medicare

Medicare is a federal public health insurance for senior citizens (people over the age of 65), people with certain disabilities, and people with end-stage kidney disease. The insurance is divided into four components: Parts A, B, C, and D. Part A covers hospital visits and home health care; Part B covers doctors’ visits; Part C is often run by private companies which cover Parts A and B and can include extras such as prescription drugs. Part D is run by private insurance companies and covers prescription drugs.

Medicaid

Medicaid is another public health insurance which is administered by states with state and federal funds. The insurance is aimed for low-income individuals and families. The exact eligibility guidelines and coverage are determined by each state.

There are certain special programs available for the groups of people who may not be eligible for Medicare or Medicaid, however nearly 58% of Americans rely on private health insurance from one source or the another. It is always advisable to check your local and state guidelines for health insurance to be properly aware of all the possibilities.

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