Medicaid vs. Private Insurance: Which is Better?

Quick question: Which would you rather have for your child, Medicaid or private insurance?

Where does your intuition take you?

My hypothesis is that most of you would choose private insurance, less for what it means medically but rather what it represents socioeconomically. People with private insurance tend to have jobs, tend to be more financially stable, and - according to sources - are quite happy with the coverage they receive.

But have you explored the details?

It’s a generalization, but some people apparently prefer publicly-financed healthcare to private coverage. If you don’t believe me, look here.

When dealing with patients, or even when considering your own health coverage situation, I consider it very important to understand the basic differences between programs. In my last blog, I discussed the definition of “uninsured.” Today, I want to take another step.

What would be one word you might use to describe the difference between private health insurance and publicly-financed healthcare?

For me, the answer is “access.”

With private health insurance, besides carrying the effective prestige that you have a job and are somewhat financially stable, you are generally going to be afforded greater access to physicians and providers. This is a direct result of provider reimbursement being significantly higher with Blue Cross than with Medicaid. The argument is really that simple.

If you dig much deeper, you’ll see that publicly-financed enrollees are federally required to have broader benefits than most private programs will offer (more on the Early Periodic Screening, Diagnosis, and Treatment program for children, perhaps, in a later blog). They are entitled, by law, to well-child care and to all the necessary therapeutic treatments that are prescribed. You’ll also notice that they don’t pay very much for coverage, as opposed to the co-payments and co-insurance that privately covered families burden. Seems like a pretty good deal, huh?

The divide comes when a publicly-covered individual, with Medicaid for example, is trying to get appointments for the federally-mandated services. All seems well that there is a law in place to protect the five-times-a-week physical therapy prescription for a child with cerebral palsy post-acute illness, but there is no law requiring physical therapists to accept Medicaid. If a state chooses to pay very little - or nothing - for physical therapy services, then the five-times-a-week prescription that is written is essentially meaningless.

Same goes to subspecialty surgical services, hospital services, and pediatric services.

This is the origin of many lawsuits taking place at the state level, filed on behalf of constituents (such as this one in Michigan), is that the state does not designate reimbursement high enough to encourage providers to see Medicaid patients. Sort of a loophole in the “entitlement” process, the plaintiffs often claim.

Medicaid is conspicuously a state-managed program, and thus the differences in access can vary greatly across state lines. States in dire financial straits often look to Medicaid as a money-saver, and one area they often look to cut is payments to providers, be it physicians or hospitals.

Providers often argue back vigorously, and invariably it winds up being the most vulnerable who are the collateral damage of the discussions.

So, the question of which coverage you’d prefer is not necessarily straightforward, especially if you’re coming from a “richer” state that pays providers fairly well. In that case, your coverage may be far more broad and inclusive, and your expenses significantly less.

Hopefully, this helps a bit in defining the complexity of the problems were facing, without attempting to push your opinion one way or another.

Find out more about Bryan R. Fine and our other Practice Notes bloggers.