What is the Future of Private Health Insurance?

As one of the most contentious national debates rages on, solutions are offered on all sides to two major problems in health care in the U.S. : the number of uninsured, and the high premiums for those who do have private health insurance. The future of private health insurance lies at risk.

Around a quarter of the American population has subsidized health insurance through Medicare, Medicaid, and the government, according to the Cato Institute. The remainder of the population either has no insurance or is covered by a private or state health plan. Figures vary on the number of uninsured and the source of those numbers.

The Kaiser Family Foundation estimates that, after accounting for Americans covered by Medicare and Medicaid, 18 percent of Americans under 65 have no public or private health insurance. In 2003, 63 percent of Americans received coverage from private insurers, usually through employers. What, then is the future of private health insurances?

At Status Quo, Private Insurance Won’t Change Much in the Future

Free market solutions to the health insurance offerings in the U.S. include simple flexible medical savings accounts for Americans; tax credit options for spending on non-covered medical expenses; increased market offerings of both comprehensive and high-risk coverage; and, to accomplish much of this, deregulation on the state and federal levels.

Supporters of the Canadian system ask for a more widespread public-run system that insures everyone, so, in other words, less private health insurance. While this approach tries to meet the needs of all Americans, it also raises the question of how Americans will receive high quality health care in a timely manner.

What Can Change in the Future for Private Health Insurance

Also, the definition of “private” health insurance is not clear-cut, simply because the federal tax system subsidizes private health insurance through deductions and tax advantages, according to Kaiser. However, more incentives and flexibility need to be in place before private health insurance plans can begin to serve more Americans.

One reason for the gap in coverage is that not all employers offer health insurance plans, and they are not required to do so. In addition, not all employees opt for employer health plans for reasons of expense. From this standpoint, it can be argued that over the next decade, the number of private non-group insurance plans will increase as self-employed individuals and small businesses look to add coverage.

This will happen in a strong economy, if the health insurance industry begins to increase its offerings in a free market scenario, or if the government begins to offer more incentives and flexible spending options. These options will need to be addressed in Congress and by insurance companies. That will brighten the future for private health insurance.

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