The Difference Between Private & Public Insurance

Insurance provides discounted or free health care services for an individual or family. Instead of having to pay for costly treatments or tests, insurance provides a more affordable option. This allows the individual to receive health care services he may not be able to afford alone. In addition, many countries provide citizens with public health insurance while some countries have private health insurance options available.

Availability

• A country with public health provides its citizens with health coverage at either a discounted rate or at no charge. The Canada Health Act, for example, provides citizens the availability of health services without regard to income or location in the country. The Canadian government prepays health services rather than having to pay for services individually to each provider. As of 2011, the United States does not have a public insurance plan for every citizen. The U.S. does provide public healthcare plans for the disabled, elderly and children who meet certain requirements.

Cost

• Some countries that provide public health care plans cover insured services 100 percent by government taxes. Other countries with public insurance have significantly discounted premiums that allow the country to provide insurance at an affordable rate for citizens. In countries such as the United States, a citizen must purchase insurance through an employer plan or purchase a private plan himself. A citizen will receive a charge, known as a premium, for this coverage and discounts.

Coverage

• Public health care provides recipients with coverage of services insured under the plan. In countries that provide this service, most require recipients to pay extra for services or amenities not included in the plan. For example, if the person wants something additional, such as a private room at a hospital, he must pay the excess out of his own pocket. The private health care company pays for specified services, usually hospital stays, surgeries and other medically related expenses. Besides paying monthly premiums for basic coverage or discounts to medical services, citizens must pay for tests or other services the private insurance does not cover.

Limitations

• If qualified for public health care, a citizen has very few limitations, depending on the coverage the country provides. For private health insurance, an applicant can receive denial of benefits due to current health conditions. He may also receive little to no coverage for preexisting conditions and pay more for doctors that are considered "out of network" for the insurance provider. For many private insurance companies, a person must also meet an out-of-pocket deductible each year before receiving coverage for certain services. This deductible may range from absolutely nothing to thousands of dollars per person.