The health insurance world is quite complicated and it is not always easy to choose the type of insurance. And, choosing between public and private health insurance can be particularly difficult!
Although both types are fundamentally the same objectively, they are very different in terms of coverage, accessibility, cost and flexibility.
For making the right choice, you need to be aware of these differences across diverse areas including healthcare needs, financial situation and long-term plans. In this article, we will look at some of the most significant differences between both private and public health insurance so that you can make the right choice.
What is Private Health Insurance?
Offered by non-governmental bodies to cover medical expenses in exchange for a premium, private health insurance enables people to tailor their cover according to their healthcare requirements and budgets. Such plans are usually associated with a broader network of hospitals, lesser waiting periods for procedures as well as the ability to receive cashless treatment.
Depending on the insurer, policyholders have a variety of features to select from, including maternity cover, wellness benefits, top-ups and others. Digital-first insurers, like ACKO India, allow users to compare plans, purchase policies, and file claims online without any paperwork. Private health insurance is the best option when one wants flexibility and quick access to quality care.
What is Public Health Insurance?
As far as public health insurance is concerned, this includes government-sponsored health schemes that aim to provide basic healthcare coverage to citizens, usually with minimal or no premium costs. The schemes under this type. The schemes are typically funded through taxes and are designed to make healthcare accessible, particularly to economically weaker sections of society.
For instance, examples of public health insurance in India are the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), Employees’ State Insurance Scheme (ESIS) and various state-level health programs. These schemes generally cover hospitalisation for select illnesses in empanelled government and private hospitals. They are often a good foundation, but many individuals choose to supplement it with private health insurance so that they can get more comprehensive protection.
Key Differences Between Public and Private Health Insurance
While both public and private health insurance aim to reduce medical expenses, they differ significantly in terms of coverage, cost, and service delivery. Here is a side-by-side comparison:
What are Pros and Cons of Public Health Insurance?
As with any healthcare product, there are benefits and drawbacks to public health insurance. Knowing them can assist people in deciding whether it fits their medical requirements and financial status.
Pros:
- Affordable or Free: Premiums are either fully subsidised or much cheaper and affordable for low-income earners.
- Government-backed Schemes: Provides security and reliability in the form of central or state government schemes.
- Basic Hospitalisation Coverage: Covers basic medical treatment, surgeries and inpatient treatment.
- Covers Large Populations: It is meant to cover large populations, especially rural and semi-urban.
- No Need for Extensive Medical History Checks: Generally available without strict eligibility or underwriting requirements.
Cons:
- Limited Hospital Network: May be confined to government hospitals or a small number of empanelled private hospitals.
- Basic Coverage Only: Specialised treatment, premium diagnostics and elective surgery are not usually covered.
- Overburdened Infrastructure: Government hospitals can be overcrowded and this can delay treatment.
- Lack of Flexibility: Minimal options to customise the policy based on personal or family needs.
- Lower Claim Limits: Sum insured is usually low and this may not cover major medical emergencies.
What are Pros and Cons of Private Health Insurance?
For private health insurance, the flexibility and the broader coverage is more expensive. Proper evaluation of its advantages and disadvantages can assist people in taking decisions in accordance with their expectations and budget.
Pros:
- Wide Hospital Network: This comprises established private hospitals and provides access to quality care and treatment.
- Customisable Coverage: The policyholders have the option of selecting riders or add-ons like maternity, critical illness, and wellness benefits.
- Higher Sum Insured Options: These plans provide extensive financial security with options of up to several lakhs or even crores.
- Faster Claim Settlement: Claims can be settled quickly and without any hidden details, particularly with digital-first insurers such as ACKO
- Better Room and Service Options: Provides semi-private or private rooms, second opinions, and fast admissions.
Cons:
- Higher Premiums: Can be expensive, especially for the aged or those with pre-existing conditions.
- Waiting Periods: Most policies have a waiting period on certain treatments, such as pre-existing diseases and maternity.
- Exclusions and Clauses: Policy wording should be studied carefully to know what is and is not covered.
- Renewal Conditions: The policy should be renewed on a continuous basis to keep the policy in force; non-payment can lead to lapse.
- Requires Medical Underwriting: Medical tests may be required of some applicants or they may be rejected due to health status.
Conclusion
The decision to opt for either public or private health insurance is based on your healthcare requirements, financial ability and expectations in terms of quality of service. Public health insurance is basic and low-cost, which makes it suitable for individuals with low resources or low medical requirements. Conversely, private health insurance offers broader coverage, quicker services and customisation, which makes it more suitable for individuals or families who are looking for comprehensive coverage and convenience. A mix of the two can be the most balanced way of managing healthcare costs and risks.
