Health care costs are on an increasing trend today. For instance, in 1972, the cost of healthcare in the United States was 7.2% of the gross domestic product (GDP) as compared to 19.7% in 2009 and 2010 (Brunner et al., 2012). The resources available for health care come from either private expenditure or public resources, and sometimes, both the public and private sectors provide for the health care costs. In many developing countries, private funding takes a bigger share of the total health care cost compared to developed countries whereby the public sector contributes a greater percentage of the health insurance costs because they have higher incomes (Brunner et al., 2012). However, this does not mean that private health insurance is restricted to only the developed countries or high-income countries because low-income and middle-income countries use private health insurance to supplement the public resources (Thomson & Mossialos, 2006). This paper examines the similarities and differences between public and private health insurance in developed countries including the United States and the United Kingdom among other countries.
Private health insurance entails instances whereby the insurance company caters for a defined set of health services and the client is supposed to pay premiums to the company, which is usually a non-governmental entity. The insurance company covers the clients by paying for their health care services. On the other hand, public health insurance involves the government whereby the citizens raise funds via income taxes or payrolls. This means that private health insurance is a voluntary service offered by profit-making firms while public health insurance is a mandatory and publicly controlled service. Usually, the role of private health insurance is to cater for primary financial protection for workers and their families. On the other hand, public health insurance targets the poor and other vulnerable groups by providing them with public health care funds. Health insurance arrangements in many countries of the world show that a thin line separates the two forms of health insurance. It is not always that private health insurance is voluntary while public health insurance is mandatory. For instance, Uruguay and Switzerland have compulsory private insurance covers besides their public health care insurance arrangements (Grosso & Van Ryzin, 2012; Thomson & Mossialos, 2006). On the other hand, Mexico has a public medical insurance scheme that is voluntary.
Clients benefiting from private health insurance covers pay premiums that are risk-rated while those in public insurance arrangements make contributions based on their incomes. However, this is no always the case as there are exceptions. In countries such as Chile, clients can make payments towards private health covers with mandated income-based contributions. Moreover, there are existing variations in terms of the management of insurance companies. For example, in Australia and Ireland, many public insurance systems get directions from private entities and in other cases, public members control the biggest share of the private insurance companies (Asenova et al., 2007).
Private health insurance falls into two categories. The first one is mandatory private health insurance (MPHI) whereby individuals are required by the law to pay for private health insurance coverage. A good example is the case of Switzerland and Uruguay. The second category is private voluntary health insurance (PVHI) whereby the individual has the power to choose from a variety of options depending on the services offered. Most countries have PVHI as compared to MPHI because private insurance is usually voluntary. Private voluntary health insurance (PVHI) is classifiable as primary, duplicate, or complementary insurance programs. The primary form of PVHI refers to cases whereby there is only one type of insurance available to the consumers, particularly when there is lack a public health insurance cover. The duplicate form of PVHI refers to cases whereby a person has both PVHI and public insurance covers because the duplicate form offers better services. However, the individual under duplicate PVHI still contributes toward the public health insurance, for example, in Brazil. Finally, complementary PVHI entails partial medical cover of a person’s medical bill and supplements the public cover. Complementary cover takes care of some or all charges not covered by the public health cover (Brunner et al., 2012; Kaboru, 2012).
Most developed countries depend on private health insurance to cater for the health care needs of a large percentage of their citizens as compared to a smaller population covered by public health insurance. It is therefore necessary for the government to come up with policies to regulate the private health care insurance companies and ensure that they offer quality services. In the UK where the National Health Service (NHS) offers comprehensive health, 15% of the population still relies on private health insurance because of the perceived issues of quality concerning the services offered by the NHS. Furthermore, moderations should occur to ensure that vulnerable groups have equitable access to private health insurance (Watson & Ovsieko, 2005). In some cases whereby there is poor regulation of private health care systems, inequalities may arise in that only the strong and healthy get the much-needed insurance coverage. Insurance laws in particular help to curb crimes and to protect the consumers while improving access to the services agreed between the consumers and private health insurers (Sekhri, Feachem, & Ni, 2011).
According to Sekhri and Savedoff (2005), seven countries including Brazil, Chile, South Africa, Uruguay, and the United States financed more than 20% of their healthcare through private health insurance in 2001. This shows that private health insurance is not restricted to a certain region, and it is not subject to the income of the country. In order for private health insurance to work smoothly, there is the need for a legal framework that governs the insurance companies to address insufficiencies in the market. The United States spent the highest amount in 2001 in health care than any other country in the world. Disparities among countries occur because of the cost incurred in providing health care to vulnerable groups such as children, the elderly people, and the poor. For example, Uruguay has a mandatory private health insurance scheme that caters for about 60% of the population and the public health insurance supports it by providing services to the elderly and the poor. It is also important to note that more people are switching towards private health insurance because of the perceived benefits that come with it as compared to public health insurance. As a result, there is the need for legal frameworks that govern the insurance companies to address insufficiencies in the market.
All the countries of the European Union (EU) continue to fund their health care via public health insurance, with public financing surpassing 75% of the total health expenditure. However, major disparities exist among the EU countries. For instance, France and Germany are the highest spenders among the EU countries with four times more per capita than the least spending countries such as Spain and Portugal. However, these disparities in expenditure do not represent the wealth of these countries. In majority of EU countries though, the total health expenditure experienced a rise as compared to GDP growth (Watson & Ovsieko, 2005). In most developed countries such as the United Kingdom and the United States, public health insurance covers the disabled, the elderly, and the poor people through public hospitals. This makes certain groups of people such as the elderly more vulnerable because the health care services they receive may not be of the best quality. The United States was the only developed country without universal health insurance cover by the year 2009. According to Abdullah et al. (2009), lack of insurance cover worsens the health conditions of the most vulnerable groups. In fact, Abdullah and his colleagues established that lack of health insurance in children increases the risk of mortality by 60%, which is very high and can pose serious repercussions for the economy of a given country.
Certain ethical and legal issues arise from health insurance coverage whether it is private or public health insurance. For example, failing to give the insurance company accurate information concerning one’s medical condition may lead to nullification of the contract. Additionally, giving information regarding genetic issues can lead to the exposure of other family members because utilization of the data against them can occur. Moreover, people can lose insurance covers because of data utilization in a manner that seeks to discriminate against an individual based on a medical condition or a hereditary disease (Mcleane & Mason, 2003).
Both private and public health insurance arrangements are essential for a healthy nation. To achieve better service provision, it is essential for governments in different countries to come up with clear policies to regulate the insurance market, especially the private health insurance arrangement. Moreover, governments should also ensure that vulnerable groups including the elderly people, the disabled, and the poor have equitable access to private health insurance just like those in formal employments. On the other hand, the quality of services offered by public health insurance arrangements should improve to match up with those offered through private health insurance. As a result, there is the need for governments to come up with comprehensive covers funded by the public sector.
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