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What is the difference between government insurance company to private insurance company?
Wiki User
∙ 10y ago
The major difference between government insurance and private insurance is that the government programs are funded with taxes and serve national and state social purposes, while private are funded by premiums.
That said, "government insurance" is probably a misnomer. Most forms of financial support funded by taxes might be characterized as welfare-type programs. This is because taxes are levied upon the general public to pay benefits far in excess of that which the recipent has paid into the system. A good example is Medicare. While it limits the amount paid to medical providers, there is no limit on how much can be paid on behalf of a consumer participating in the program. The finds to pay those benefits come from taxes, and hence, the working public.
Another significant difference is that private insurance providers must be and remain financially sound. This is accomplished by acuarially determined rates (from which premiums are derived). Actuarial soundnessis not a hallmark of government programs.
Wiki User
∙ 10y ago
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