Positives & Negatives of Private Health Insurance

Private health insurance is health insurance issued by a private corporation. The only other form of comprehensive coverage is offered by the government, which is known as public health insurance. Private health insurance carries a number of advantages over government-sponsored care, but also a number of drawbacks.

Features

• Under private health insurance, a policyholder purchases an insurance policy from a private company. This policy may be purchased individually or as part of a group. Most private health insurance is issued through an employer who offers access to this coverage as a benefit of employment. Under government health insurance, the policy is issued by a government agency to individuals. In both type of plans, the policyholder is reimbursed for medical expenses.

Types

• Private insurance plans come in three main types: PPO, POS and HMO. Under a PPO plan, policyholders can visit any care provider they wish. However, policyholders will not receive as much compensation on claims from those providers who are not within the companies network. Under POS plans, a policyholder can use any care provider they like, but to receive full coverage the policyholder must be referred by a specified general practitioner first. Under HMO plans, policyholders can only visit doctors within the insurer's network.

Benefits

• Under private insurance, an individual generally has more choices as to the type of plan he receives. While some employers may offer a limited number of plans, an individual can choose to purchase an individual plan instead and, in some cases, may be eligible for coverage under a relative's plan. Also, many private health insurance plans offer a better standard of care than government-provided plans.

Drawbacks

• One of the main drawbacks to private health insurance is expense. Some individuals can receive comprehensive plans for relatively little money. People that an insurer deems at high risk of filing claims for medical expenses, such as people with preexisting conditions, may be charged thousands of dollars for annual premiums. Government plans generally provide equal levels of coverage to everyone at little or not cost.

Misconceptions

• Private health insurance and government health insurance are sometimes confused. Indeed, many forms of health-care coverage can be considered a mix of public and private insurance. For example, in some cases, the government may provide subsidies that allow people to purchase health insurance from a private company. The private company would generally have to conform to a number of government regulations regarding coverage, making the coverage a public-private hybrid.