Private health insurance definition

What is private health insurance?

Private health insurance refers to health insurance plans marketed by the private health insurance industry, as opposed to government-run insurance programs. Private health insurance currently dominates the U.S. health care landscape, covering more than half of the US population.

Coverage includes policies obtained through employer-sponsored insurance, with approximately 49 percent of Americans receiving insurance provided as a benefit of employment in 2018. Another 6 percent of Americans bought coverage outside of the workplace on the individual health insurance market, both on and off-exchange.

Approximately 20 percent of Americans had coverage under Medicaid in 2018, and 14 percent had coverage under Medicare. These are government-run programs, as opposed to private coverage. However, the state and federal governments contract with private insurers to offer Medicaid managed care plans and Medicare Advantage plans, all of which are run by private insurers (in many cases, the same private insurers that offer employer-sponsored and individual market plans to the rest of the population).

As of 2017, more than two-thirds of the country’s Medicaid enrollees were covered under private Medicaid managed care plans, and 34 percent of Medicare beneficiaries were enrolled in private Medicare Advantage plans in 2019. However, the funding for these plans still comes from the government (federal for Medicare Advantage, and a combination of state and federal funding for Medicaid managed care).

Read our overview of private health insurance.

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