If you are considering investing in private health care then you should consider how it differs from state and federal healthcare. Private health care is not a money making business. Nurses and doctors do not receive financial incentives to perform a good job; instead are motivated only by personal goals of job satisfaction and patient care. Healthcare does not operate like a free-market. Patients often do not go to their physician for the latest brand name or best health care system.
Hospitals are run by public institutions such as state and county governments and are regulated by state law. Private practices are usually smaller, for-profit businesses that sell healthcare products and services through independent brokers and have a much more entrepreneurial bent to them. Often they begin by offering healthcare insurance and discount health cards to employees. They have the option to expand into other healthcare markets later.
There are two major differences between public healthcare and private health care, and those are the accountability and regulation aspects. Healthcare regulation is dictated by statutory rules set forth in the Affordable Care Act or something called Medicare. That is the current law and can change with changing political trends. Healthcare providers are regulated by state departments of insurance. Private insurance is not funded by Medicare or the Affordable Care Act.
Private health insurance is available to anyone with a taxable income. There is no eligibility criteria for coverage and there are no deductibles. Unlike Medicare, there are no medical underwriting rules or any cap on the total expenses for healthcare services.
The other major difference between public and private sector healthcare is that Medicare does not pay any of the costs associated with private health care providers. Medicare reimbursement is based on a sliding scale, with higher payments for senior citizens and children. Most private sector healthcare providers accept Medicare. However, not all do, as they either do not participate in Medicare or they charge much more than Medicare.
In the United States it is a lot more complicated because there are many public sector institutions that provide healthcare services. Hospitals, nursing homes, long term care facilities, etc. There are many different types of patients that are serviced by hospitals in this country. A person who is eligible for Medicare, but lives in a low-income neighborhood, will not necessarily be able to afford quality health care. The same is true of someone who is in a low-income apartment and needs nursing home care. Neither of these people will necessarily be able to afford a public sector hospital or nursing home, and neither will they be able to afford healthcare through private health care providers.
This is why Medicare only covers medical costs that are incurred by a non-senior citizen. Medicare helps low-income people avoid financial disaster when accidents occur or medical problems arise. A person in a low-income neighborhood may be eligible for Medicare supplements because they have a pre-existing medical condition, or they may qualify because of their low income. If they fall into one of these categories, they would have been unable to afford health care in the public sector. But Medicare actually does not cover medical expenses at hospitals, nursing homes, or doctor’s offices. They only offer coverage within the private sector.
Some people think that if Medicare truly offered free healthcare options that poor and middle class people wouldn’t have to worry about obtaining healthcare. This is simply not true. Private healthcare insurance companies do not need to take out large sums of government money in subsidies to cover the cost of healthcare provided to their customers. In fact, they can cut costs by providing lower cost healthcare services and by not providing expensive medical procedures or treatments to their clients who can’t afford them. If the US is to once again return to a healthy and free market for healthcare, it is imperative that we reduce the number of uninsured individuals and encourage more healthcare providers to participate in the free market for healthcare insurance.