The Difference Between Public and Private Healthcare in the United States

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The debate over healthcare financing in the United States has been a decades long conversation. The discussion mainly focuses on whether the healthcare system should be financed through public or private funding, or through a combination of the two. The United States primarily relies on private healthcare financing, with over 50% of healthcare costs paid for by private sources (Tikkanen). The United States is one of the few countries that relies on private healthcare, but it remains to be seen if this investment results in better healthcare.

Private Healthcare

Private healthcare financing is a healthcare system in which patients pay for medical services out-of-pocket or through private insurance. The private healthcare system prides itself on quick access to medical services and high quality care. The privatization of healthcare means that the population is segmented. When someone goes to the doctor, there is simply a smaller portion of the population who goes to the same doctor, resulting in lower wait times. Additionally, being funded privately and profiting off insurance, medical companies can invest in research for more advanced care. However, this financing model also has its drawbacks, such as high costs, limited accessibility, and potential equity issues. According to a study published in the Journal of Health Economics, private healthcare creates unequal access to care. Through private healthcare, the amount of coverage a person gets is simply as much as they can afford. Private healthcare costs are consistently rising, faster than the rate of inflation (Journal Of Health Economics). Despite the quality of care not improving, the yearly cost still rises. As a result, many Americans choose to go without health insurance, which further restricts access to healthcare services.

Public Healthcare

On the other hand, public healthcare is a system that is funded entirely by the government through taxes and other public revenue sources. In this model, healthcare services are typically free at the point of use, and all citizens have equal access to healthcare services regardless of their income or social status. While public healthcare financing can be an effective way to provide universal access to healthcare services, it can also result in long wait times, limited choice, and inefficiency.


One of the primary factors to consider when comparing private and public healthcare financing is cost. In the United States, healthcare costs continue to rise, and many Americans struggle to afford necessary medical care. The private healthcare system is known for being more expensive than the public system, with healthcare costs accounting for 18.3% of the country's GDP in 2021 (Centers for Medicare & Medicaid Services).

According to a study published in the Journal of Health Economics, the United States spends more on healthcare per capita than any other country in the world (Journal of Health Economics). The study found that the high cost of healthcare in the United States is primarily due to the high prices of prescription drugs, another issue that exists because of the privatization of the industry. Additionally, administrative costs, such as insurance billing and marketing, contribute to the overall cost of healthcare in the United States. In contrast, public healthcare financing tends to be more cost-effective than private financing. According to The Canadian Institute for Health Information, healthcare spending accounted for 12.7% of Canada's GDP in 2019, $8,019 per Canadian, which is significantly lower than the United States (National Health Expenditures).

Furthermore, the United States has the highest rate of medical bankruptcy among the countries surveyed, with more than half a million bankruptcies each year due to medical bills according to statistics reported by


Another important factor to consider when comparing the quality of care in private versus public healthcare financing is patient outcomes. While private healthcare systems often provide quicker access to medical services and a greater range of options for patients, this does not necessarily mean that the quality of care is superior.

In fact, past research has shown that public healthcare can lead to less hospitalizations. A 2019 study published in the Journal of General Internal Medicine found that patients in public healthcare systems had lower rates of preventable hospitalizations and better management of chronic conditions than patients in private healthcare systems (Jackson). The Journal cites that without the issue of money, patients felt more confident in visiting a clinic if they were feeling ill. Similarly, a 2018 study in the journal Health Affairs found that Medicare patients, who are covered by a public insurance program for Americans over 65, have better health outcomes and lower mortality rates than patients with private insurance (Weil). The reason behind this was because public healthcare ensures continuous coverage. Citizens who are on the fringe for paying for private healthcare may not have the ability to be fully covered every month, but under a public plan they would have coverage regardless of their economic status. This encourages them to see a doctor if they need to. If under a private plan, which can result in additional costs, they have to factor in costs alongside health. However, it is important to note that quality of care can vary significantly depending on the specific healthcare system and the resources available. In the United States, for example, there are some private healthcare systems that provide top-quality care and achieve excellent patient outcomes. Public healthcare systems can sometimes face challenges in providing care due to limited resources, funding cuts, and staffing shortages.


In the United States, healthcare financing is largely privatized due to a variety of historical, political, and economic factors. The U.S. has a long-standing tradition of valuing individualism and free market principles, which has led to a predominantly market-based approach to healthcare financing. Private health insurance companies and providers operate in a competitive market, where individuals and employers purchase insurance coverage based on their preferences and ability to pay. This has resulted in a complex system with multiple stakeholders, including insurance companies, hospitals, physicians, and pharmaceutical companies, each with their own financial interests and incentives. This separation serves as a catalyst for companies to enhance their care delivery and foster innovation through competition and the development of new technologies.

However, this privatized system also presents barriers to good healthcare for many Americans. High costs are one of the biggest challenges, as the U.S. has some of the highest healthcare costs in the world. The cost of medical services, medications, and insurance premiums can be prohibitively expensive, leading to financial strain and limiting access to care for those who cannot afford it. This creates disparities in healthcare access and outcomes, as individuals with lower incomes or inadequate insurance coverage may delay or forgo necessary medical care, resulting in poorer health outcomes. Additionally, the complexity of the U.S. healthcare system, with its multiple payers, varying coverage options, and administrative burden, can create inefficiencies and administrative costs that can impact the quality of care.

In conclusion, while private healthcare financing in the U.S. provides quick access to care and high-quality services for those who can afford it, it also creates barriers to good healthcare for many Americans, including high costs and lack of universal coverage. Addressing these challenges and finding a sustainable and equitable solution to healthcare financing is crucial for ensuring that all Americans have access to affordable, high-quality healthcare.


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The Difference Between Public and Private Healthcare in the United States
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