Private insurance refers to insurance offered by private organizations, such as independent insurance companies or health organizations. Health insurance is under constant influence by both market forces and political agenda, which may move private health insurance more toward a public model, where health expenses are administered and paid for through government programs. There are many different levels between fully private and fully public health insurance that the health care system can move between.
Employee Health Insurance
The large portion of private health insurance in the United States comes from employers that create health insurance plans at work. These employers make deals with health insurance companies and offer a specific type of insurance to all their employees, known as a group health plan. These plans have become customizable under private health insurance, allowing employees to choose between different types of plans or choose extra features, like health savings accounts, to modify their plans with. The insurance companies receive profit both from the employer and employee.
Individual Health Insurance
A growing number of individuals in the United States are foregoing group health plans and are instead choosing individual health insurance, which is offered directly by the insurance companies to the individual. People have more control over their deductibles and the premiums they want to spend, but these plans rarely cover dependents like employer-based insurance does. Workers change to individual health insurance when they do not work for an employer that offers insurance or when they do not want to pay for their work plans. In this case, insurance companies profit directly from the individuals.
Benefits and Disadvantages
Private health insurance is the subject of lively debate. Proponents claim that privatization leads to increased competition among healthcare organizations and insurance companies, leading to lower costs and better quality, along with the ability to customize plans. Opponents claim that private health insurance leaves those who need the most help with medical bills uncovered, since they cannot afford premiums, and supports ruthless cost-cutting among healthcare organizations.
Not all health insurance in the United States is private. The vast majority of health insurance moves back and forth between different levels of private and public, but some types of insurance remain primarily public. The government offers assistance programs for the elderly and for those with low income. Most states have insurance programs for employees and for those who have high-risk conditions like cancer and AIDS.
- KFF: How Private Insurance Works: A Primer
- Brainmass: Role That Private Insurance Plays in Healthcare
- WLU: The Role of a Public Health Insurance Plan in a Competitive Market
- U.S. Department of Labor. "Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Businesses and Families FAQs." Accessed Mar. 25, 2020.
- Healthcare.gov. "Health Coverage for Self-Employed." Accessed Mar. 25, 2020.
- U.S. Small Business Administration. "Plan to Offer Employee Benefits." Accessed Mar. 25, 2020.
- Healthcare.gov. "Small Business and the Affordable Care Act (ACA)." Accessed Mar. 25, 2020.
- Medicare.gov. "What's Medicare Supplement Insurance (Medigap)?" Accessed Mar. 25, 2020.
- HealthCare.gov. "No health insurance? See if you'll owe a fee."
- Kaiser Family Foundation. "2019 Employer Health Benefits Survey: Section 1: Cost of Health Insurance." Accessed Mar. 25, 2020.
- eHealth. "How Much Does Individual Health Insurance Cost?" Accessed Mar. 25, 2020.
- Healthcare.gov. "Enroll In or Change 2020 Plans — Only With a Special Enrollment Period." Accessed Mar. 25, 2020.
- U.S. Department of Health and Human Services. "Lifetime & Annual Limits." Accessed Mar. 25, 2020.
Tyler Lacoma has worked as a writer and editor for several years after graduating from George Fox University with a degree in business management and writing/literature. He works on business and technology topics for clients such as Obsessable, EBSCO, Drop.io, The TAC Group, Anaxos, Dynamic Page Solutions and others, specializing in ecology, marketing and modern trends.