Private Insurance vs. Government Insurance
- Private insurance providers have to turn away some customers to stay profitable. If government insurance expands to cover all Americans, everyone would be able to access medical attention. The government can also get private insurers to cover all Americans without creating its own health care program. For example, the federal government can require that all Americans buy insurance and regulate the insurance industry so everyone can afford insurance.
- As an insurance provider, the government does not have to bear the burden of costs that private insurers have to. Private insurance providers have to pay taxes and assessments to the government, while the government has no taxes to pay. Private insurers also have to collect the premiums themselves, adding to their expenses. The government already has the Internal Revenue Service to collect its insurance premiums. Private insurers also have to strive to remain profitable to survive, while the government faces no such risk. As such, government insurance may be cheaper than private insurance.
- Private insurers tend to make more efficient use of their resources compared with the government Medicare program, according to FoxBusiness.com. From 2000 to 2005, Medicare consistently spends more on administrative cost per patient compared with private insurance. The administrative cost of internally administered government insurance is even higher. In 2009, internally administered government insurance programs, such as Medicaid and VA, spent 26 percent of its total claims in administrative costs. In contrast, private insurance providers spent 12.7 percent on administration.
- Proponents of government insurance access for everyone want Americans to have more choice so the industry becomes more competitive. Because of the benefits that the government enjoys over private insurers, opponents of the plan believe that Americans will eventually choose government insurance over private insurance. This results in the government having to charge higher taxes or rationing services. As a result, people who need medical care have to wait longer to get treatment.
