Difference Between Public and Private Healthcare Services

• Government health insurance schemes are social welfare schemes which provide free or subsidised coverage to the economically weaker sections of the society.
• Private health insurance plans are offered by general insurance companies and are available to every individual
• Government healthcare schemes are less expensive, have specified eligibility criteria and offer limited coverage.
• Private healthcare schemes are dearer, offer a wider scope of coverage and can be taken by any individual meeting the age criterion.

Health insurance coverage has become an essential requirement in today's age when medical costs are increasing. A simple hospitalisation or medical treatment can incur substantial costs and cause financial stress. However, a health plan can cover these costs and relieve you financially.Understanding the importance of health insurance, the government has launched various schemes. These schemes provide cost-effective coverage to eligible Indian citizens. There are also private healthcare plans that aim to provide customised coverage. This blog provides an understanding of what these plans are and how they differ.

Public healthcare services include government-launched health insurance schemes. These schemes provide subsidised or free health coverage to the underprivileged sections of society. The schemes are offered by both Central and State Governments. Eligible families can get insured under the scheme and get quality medical treatments without financial burden.Private health insurance schemes include plans offered by general insurance companies. can buy the plan provided you match the age criterion. The family members can be covered on a floater basis, and you can customise the coverage to suit your needs.

Some of the salient features of government healthcare plans are as follows -

• National and State-specific health insurance schemes are available
• The schemes target vulnerable and economically backward sections of society
• The government pays the premium either fully or partially. If the government pays partial premiums, the scheme is called a subsidised health scheme
• All family members can be covered on a floater basis
• There is usually a maximum sum insured limit
• Cashless treatments are available at empanelled hospitals
• For some treatments, there are fixed package rates which make the treatments affordable
• You can enrol under eligible plans online or offline
• A health card is issued under most schemes, which allows you to take cashless treatments
• Hospitalisation, medical treatments, critical illnesses, OPD, maternity care, etc., are some of the coverage features

Also Read: Health Insurance: Advantages, Disadvantages, and Important Considerations

The salient features of privately offered health insurance schemes are as follows -

• There are no eligibility criteria for insured individuals except for the minimum and maximum entry age
• Different sum insured levels are available, and you can choose a suitable amount based on your coverage needs
• You can take a separate health plan for senior citizens
• A tax benefit is allowed under Section 80D on the premium paid for the policy
• There are different types of coverage features under the plans, which include both inbuilt and optional ones
• You can enjoy lifelong renewability under private health insurance plans

Both public and private healthcare services schemes offer health insurance coverage to individuals. However, these schemes are fundamentally different from one another. Here are the differences between private v/s public healthcare schemes -

Type of Plan

Public health insurance plans work like group plans. They provide similar coverage to a large number of people.Private health insurance plans, however, offer customisable coverage to every individual. You can choose your sum insured, coverage benefits, number of members covered, etc. The premium depends on the plan details chosen.

Age Limit

Public healthcare plans usually have no age limit for insured members. Any eligible individual can enrol under the policy.Privately offered health insurance plans have minimum and maximum entry-age criteria. Usually, children are covered under floater plans aged 90 days and above. For adults, the minimum entry age is 18 years. Plus, there can be a maximum age too beyond which the plan might not be available.

Income Criterion

Government-sponsored health insurance plans usually specify the maximum family income for eligible individuals. If the family income falls within the specified limit, the members can enrol under the scheme.
No such income criterion is applicable under private health insurance plans.

Sum Insured

There is a maximum cap on the sum insured offered under government health insurance plans. This cap limits the coverage available. Moreover, if the family members are also insured, the sum insured is shared among them on a floater basis.Private health insurance plans also have a maximum sum insured limit. However, this limit is far higher than government plans. For instance, if government plans offer a maximum sum insured of ₹5 lakhs, private plans can offer coverage going up to ₹1 crore.Furthermore, you can opt for individual sum insured levels under private health plans, a benefit not available under government schemes. Members Covered Government plans cover all family members. Usually, there's no limit to the number of members covered.Private health insurance plans also cover family members. However, the maximum number of members under a single plan is limited.

Premium Payable

Government health insurance plans are much cheaper compared to private ones. Either the government pays the full premium or bears a major portion of the cost. The insured beneficiaries can enjoy cost-effective coverage.Private health insurance plans have higher premiums. Moreover, you have to pay the premium from your pockets.

No Claim Bonus

Under private health insurance plans, you earn a no-claim bonus if you don't claim in a policy year. This is a type of reward wherein your sum insured might increase by a specified percentage. In some cases, a premium discount is also allowed on renewals.Government health plans do not offer any no-claim bonus. This is a major difference between public and private health insurance .

Coverage Features

Government plans offer coverage for hospitalisation, maternity, OPD, critical illnesses, surgeries, pre and post-hospitalisation, etc. However, the scope of coverage is limited compared to private plans.With private health insurance plans, you can enjoy added coverage for domiciliary treatments, organ transplants, daycare procedures and much more.

Targeted Beneficiaries

Government health insurance schemes are specifically targeted to the economically weaker sections of society. They intend to make healthcare accessible to those individuals who might not be able to afford it themselves. Such schemes are social welfare schemes and are not meant for middle or high-income families.Private health insurance schemes are open to all. Anyone who fulfils the age criterion and is capable of paying the premium can buy the health plan. Such plans are seen more as a tool of financial protection than as a social welfare scheme.

Premium Discounts

Private health insurance plans offer different types of premium discounts. Some of these include the following -

• Discount for including 2 or more members under individual health plans
• Online discount
• Discount for choosing a deductible
• Discount for healthy living
• Discount for choosing a 2 or 3-year policy period, etc.

Premium discounts are not available with government healthcare schemes.

Empanelled Hospitals

Under government-sponsored health insurance schemes, there's a list of empanelled hospitals at which insured members can get treatments.Private health schemes also have a cashless hospital network wherein you can get cashless treatments. However, they also allow treatments at non-networked hospitals.

Optional Coverage Benefits

Private health insurance plans offer a host of optional coverage features at additional premiums. You can choose one or more of these coverage benefits to make your policy more comprehensive.
Government health insurance schemes do not offer optional coverage features. Whatever is covered forms part of the overall scheme.

Pre-Existing Conditions

Government health plans usually do not have a waiting period for pre-existing illnesses. You can enjoy coverage for such conditions from the first day of the policy.Private health insurance plans have a specified waiting period for pre-existing conditions. This period ranges from 12 to 48 months. Coverage for complications suffered due to pre-existing conditions is not allowed during the waiting period. Also Read: Tips to Choose the Health Insurance Plan in India

While we discussed the major differences between public and private health insurance, here is an analysis of these differences in a table format:

Now that you know the difference between public and private healthcare services , the next question is - which one should you choose?
The answer lies in your eligibility. Public healthcare schemes are not open to all. They are meant for the vulnerable and rural sections of society. If you are not eligible for them, a private health insurance plan will be the only alternative.However, if you are eligible for the government-sponsored health insurance scheme, you can also add the private health plan. The private health plan would allow you to customise and enhance your coverage. Plus, you can earn tax benefits on the premiums paid.

It is important to understand the difference between public healthcare and private healthcare . Check your eligibility under both and make an informed choice.A health insurance plan is a requirement in today's age to combat the increasing medical costs. So, add suitable coverage to your portfolio for financial security. Ensure that your family members are also covered under the scheme so that you don't have to shoulder their medical expenses.Choose a suitable coverage option and protect your finances against the incidence of medical expenses. Plus, if you opt for private health insurance plans, you can also save on taxes. Also Read: Buying Private Health Insurance