Public Health Insurance

Most developed countries have a version of public health insurance, including even the United States, where most people are covered by private insurance but those with very low incomes and the elderly are covered by public insurance programs such as Medicare and Medicaid.

In countries with more comprehensive public health insurance, there still may be options to purchase private insurance, to receive additional coverage, more amenities, or more treatment options, so it’s not just a matter of a country having public health insurance as the sole means of health insurance coverage.

Therefore, these systems usually exist side by side, the private and the public schemes, and in some areas, one may be required to have insurance, especially in countries where health care is provided by the government.

In the United States, recent legislation, the Affordable Care Act, also known as Obamacare, has also placed insurance requirements on people, against their will if necessary, and this issue is quite contentious. In this case, people would have to purchase certain privately provided coverages, but it is seen as one step closer to the universal health care that most developed countries have, and some want to see the government play a much bigger role in U.S. health care insurance.

The idea behind this and also behind publicly provided health insurance is similar though, to not have people not be insured against health care expenses. While we may expect major health care expenses to be the primary concern here, often it is the more nominal incidents that are even more worrisome, because they happen so much more frequently and are therefore more visible.

Public health care may be funded from general taxation or an insurance system may be set up by the government where people pay in, a certain percentage of their income for example. It is highly preferable to make the costs of health insurance more transparent and therefore having people pay into these schemes directly is preferable.

Public health insurance differs widely as far as what it will cover, and what payments if any patients have to bear. Some cover just basic medical costs but not major ones, some pay for medical visits and hospitalization but not prescriptions or vision care or dental care, and just about all do not pay for what is considered alternative health care.

Since these plans differ so much, if we do live in a country with some sort of public health care coverage, it is wise to consult the rules of the system to become informed of what and what it does not cover, although these things do tend to be pretty common knowledge among residents. Still though, there may be some lesser known aspects of the coverage that you may not want to discover after expenses that were assumed to be covered are actually not.

How Public Insurance Differs

Public health insurance is designed to be more inclusive than private coverage, where everyone is covered and everyone has to pay according to their means. While public insurance does not have to be administered as a social program, and we could have publicly run systems that competed with private insurers, we instead choose to use this as a means of having those of greater financial means subsidize the health care costs of those of lesser ability to pay.

Public Health InsuranceThis is accomplished by making participation in the plan mandatory, and while no one is forced to use the system, people are taxed or otherwise charged for it regardless. Among the issues that arise here is that people are forced to pay to receive a particular form of health care, certain services that fall within the scope of conventional medical treatments, and those who choose alternative medical practices for some or even all of their health care are left with buying something or too much of something than they would wish.

Those of higher incomes aren’t going to find this to be very efficient either, as their premiums so to speak are going to be a lot higher than they would be in a private system, while below average income folks benefit from having others pay a portion of what their costs would be normally.

These are political choices though, not so much economic ones, although we do need to realize that the prime directive with publicly funded health care insurance is redistribution, to have those with the means to pay more help pay for those who have less ability to pay. Depending on one’s political point of view, this may be seen as a benefit overall or something that may be seen as objectionable.

Even though social justice is the main driving factor here, this does not mean that we should not look to improve the efficiency of such a system to at least reduce the burden upon those who pay the majority of the costs of this insurance, or allow it to provide more benefits to people overall.

Public Health Insurance and Costs

We often think of public health care as being more efficient given that they have more power to set prices than private insurers do, even though private insurers still do this to some extent. In a public system though, the insurer, the government, usually functions as a monopoly, and can set things lower than the market would normally provide, and this can be of benefit in a lot of cases.

This is actually a clear benefit of a public system with health care at least, even though it may not be with other types of monopolies. The nature of health care spending does not have the normal reasonable limits attached to it like just about everything else does, and this has been a real problem lately with more and more expensive treatments being made available and people not considering costs as much as they would with anything else.

There is another side to this, as even though public health care does keep costs down, when the government is paying, with their deep pockets, it can be harder to draw the line like it is with private insurance companies just saying no to things.

While governments do stay within their budgets for the most part, with the public clamoring for more and more spending as they often do, this puts political pressure on governments and can result in expanding the system to levels which they cannot so easily manage.

With that said though, public insurance does tend to cost less than private insurance, and it’s not because of the insurance itself, it’s because of these limits that public insurers place upon reimbursements. This does come with a price though.

Qualitative Differences with Public Health Insurance

While spending on health care in countries with public health care does tend to be less, the quality of the health care declines as well. More expensive health care does not mean better health care though, and we only need to look at the United States, which spends the most on health care by capita but has one of the lowest life expectancy rates among developed countries.

Health care is of course about much more than life expectancy, but given that this is one of the primary goals of health care, to preserve life, this statistic is still pretty telling.

Beyond that though, public health care insurance limits one’s options and sometimes does not provide one with the ability to receive better care than the standard, although in some countries you can purchase the ability to do this.

In some countries though, this is disallowed and people are limited to the more stripped-down health care system that the government funds, often with very long wait times attached to it. Many people in a public setting may not even be able to retain a doctor due to shortages in personnel, especially when they move to other countries which may pay more, such as the United States.

When the government is administering the health care system though, we at least have some pretty effective limitations in place, which is a good thing for people who are concerned about exploding costs of health care, which is at least a lesser concern in a centrally managed system and their budgetary constraints.

Whether the standard of care that is available is up to par with people’s expectations or even to what is considered to be acceptable in general is another matter, and public health care systems may fall well short of the mark here due to underfunding.

Public health insurance often only covers certain things, and people are left to their own to pay for certain types of what we would normally consider to be health care expenses, like prescriptions, dental care, in home nursing, various procedures that may be seen as outside the scope of basic medical costs, including those delivered outside the covered region, vision care, home care, long term care, and a variety of other things that may not be covered.

To be fully covered, people then need to supplement their government provided public health insurance to fill any gaps that exist between what they need or wish to have and what their public health insurance provides. Often, these expenses are of a more incidental nature that generally should not be insured, especially since people have to pay the premiums for this coverage out of pocket and can probably expect that this supplemental insurance may end up costing them more than they ever get back.

People campaign for public health insurance to be more comprehensive and inclusive, although many of these people do not realize that there is only so much money to go around and governments already have serious debt problems that will have to be dealt with at some point, lest the payments to service this debt take up more and more of their tax dollars to the point where things end up collapsing due to the weight of this.

Public health insurance also does not cover anything that is outside of conventional medicine but may be quite helpful, and while with some of these services you may be able to purchase supplementary coverage for, once again this is not generally a good idea due to the lower costs alternative medicine generally, which would not normally require these events to be insured at a cost to the patients.

Public health insurance does have its good points, as it does allow for everyone to get a certain minimal standard of conventional medical care, and also serves to keep the cost of health care more reasonable. Public health care itself does tend to be of a lower quality though and sometimes low enough that many people consider it to be unacceptable, and others may object to having to subsidize the health care costs of others and in some cases object to being forced into this system where they would prefer their money to be spent elsewhere.

So, there are some real trade-offs here and while there are people in countries with limited public health insurance such as the United States who may pine away for a more encompassing public system, we do need to make sure that we are looking at both the pros and cons and especially understand that any health insurance costs real money even though you may pay for it more indirectly.

Robert

Editor, MarketReview.com

Robert really stands out in the way that he is able to clarify things through the application of simple economic principles which he also makes easy to understand.

Contact Robert: [email protected]

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