Our health is our principal capital asset. There is nothing more important than it and therefore, no financial investment can come close to the importance of health insurance. Any type of medical setbacks, be it from an injury or illness, can be dreadfully expensive if you do not have the right healthcare plan to cover the related costs. Health coverage ensures that we don’t have to pay hospital visits, surgery, and any emergency medical costs out of pocket.
That said, another undeniable truth is that healthcare systems are complex. There are so many things to understand, including hospital systems, insurance, and legal matters. So it is only natural for most of us to want to avoid the subject altogether. But given the importance of health insurance, it is important to understand how it works and which healthcare plan is better for you. Not only will it impact your health, your family, and your finances, but it will save you from making costly mistakes down the road.
Read this post to learn the basics of healthcare system and understand a fair comparison between public and private health insurance!
What is a Healthcare System?
The fundamental idea behind a healthcare system is simple; to make basic healthcare accessible to everyone. Most people in any given country cannot pay for all medical expenses out of their own pockets. So, if a group of people pay a fixed amount every month, the risk is spread out over the whole group instead of just one person who might need expensive medical care. Thus, each person in the group gets a protection from high healthcare costs the burden of expenses is now shared by many.
In any case, health insurance doesn’t necessarily cover 100% of your medical costs. The healthcare system puts together insurance plans in a way that you have to share costs until you reach a limit, known as the out-of-pocket limit. After reaching that limit, your insurance plan covers 100% of your healthcare costs.
Public vs. Private Health Insurance
There are two means to cover your healthcare expenses, namely public and private providers. Public health insurance is generally provided by the government of a country through its national healthcare system. On the other hand, private health insurance is offered by insurance businesses, self-employed practitioners, and “not for profit” non-government providers, which includes faith-based organizations.
To keep things into perspective, according to the US Census Bureau most Americans have a private health insurance plan. The rest are covered by public or government programs like Medicare or employer insurance.
Below are a few common differences between public and private health insurance plans:
One key difference between public and private health insurance is that of eligibility. The qualifying criteria for public health insurance mainly consist of age and income level. If you do not qualify for public plans, you are left with the option of private health insurance. In any country or state, you can find a wide range of plans as well as insurance services to allow you to manage your medical coverage.
A healthcare program run by any local government generally have some or all of their healthcare costs covered by the government. Most public health insurance programs provide coverage for people aged 65 years or older and people with certain disabilities. Some programs also offer coverage for individuals and families with a low income.
On the other hand, private health insurance generally comprises of two major areas: hospital cover and general treatment cover. In some countries, you can also find ambulance coverage as the third type of private health insurance.
Another difference between the two types of plans is that of waiting period. With private health insurance, the waiting period for receiving a treatment is much shorter than with public health insurance plans.
Aside from waiting period, public systems also have priority patient order. This means that a patient’s treatment might be pushed back if another critical patient needs surgery. Whereas anyone with private insurance has the freedom to schedule a locked-in date. This means that the patient can decide when they want to get the treatment.
Under a public health insurance plan, a patient is usually placed in a room with two or more other patients with various conditions. In contrast to this, under private health insurance, you have the option of getting treatment in a private room, subject to availability.
A major difference between public and private insurance that makes public insurance so preferable over private is cost. Since the government is a big institution with a mighty budget, many people are likely to participate in a public option. This significantly lowers the pricing for healthcare needs. It also means that premiums would be lower than those that have to be paid to private health insurance providers.
A healthcare plan enables you to get the medical treatment you need without the worry of how to pay for it. But when it comes to choosing between private or public health insurance, there is a lot to consider.
A good place to start is to first look at your employer’s plan and the public health insurance plans. Next, narrow down the options by choosing those that include hospital visits, prescriptions, and the medical services you might need. Lastly, the plan that you choose must be best suitable for your personal and family healthcare needs.
Use a smart tool, like the Doctor Money app, to budget the expenses of each plan and then do the comparison. Download the app today and start planning for your first wealth – health!