StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Compare/Contrast of Public and Private Insurers - Research Paper Example

Cite this document
Summary
Private and public insurers share many similarities. Both use actuarial techniques to determine risks and expenditures. Both calibrate this data to their inputs: Private insurers to insurance payments, public insurers to taxpayer money, charity inputs, etc…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.5% of users find it useful
Compare/Contrast of Public and Private Insurers
Read Text Preview

Extract of sample "Compare/Contrast of Public and Private Insurers"

Private and public insurers share many similarities. Both use actuarial techniques to determine risks and expenditures. Both calibrate this data totheir inputs: Private insurers to insurance payments, public insurers to taxpayer money, charity inputs, etc. Both serve stakeholders and serve to insure against and manage risk. But they do have clear distinctions. Public insurers are accountable to taxpayers, legislators and public stakeholders. They are not designed to generate return on investment: Rather, they are designed only to keep their balance sheets even.

They have standards for insurance availability varying from citizenship to certain standards of geographic location or income. Their revenue is disproportionately provided by people who don't use the service or benefit less from it. The public insurer is managed by the government and behaves under its regulations. Public insurers are government-managed, either a direct government agency or a government-backed corporation. Private insurers, meanwhile, are beholden to shareholders or, in the case of charity, contributors and the board of directors.

If they are profit-seeking, they make it so that they make profit based on their management of actuarial risk. If they are not profit seeking, they are more like public insurance. They frequently negotiate with NGOs, governments and businesses to provide insurance. Private insurers are usually corporate or NGO. They operate under government regulations but have substantial internal autonomy. Of course, there are many other models for public or private insurance. There can be heavily subsidized private insurance options, for example.

And employers subsidize insurance for their workers. There are also government markets. The new health care bill, for example, has a government-provided market that lets people shop for public and private options. “ Beginning in 2014 (that’s right, this is four years away), these people would be able to shop for coverage in new “health exchanges,” a sort of online bazaar in which insurers would hawk different kinds of plans” (Grier, 2010). Pennsylvania until recently had a subsidized insurance program, AdultBasic, which covered roughly 40,000 people and had more than 400,000 people on its waiting list (Sapatkin, 2011).

The money was brought in from tobacco taxes and donations from Blue Cross (Sapatkin, 2011). Insurers can insure many different assets, and both public and private insurers can do this. Financial assets like banks, protected in America by the FDIC, and credit default swaps, once insured by AIG before they had to be bailed out, are one type. Property insurance like car and home insurance, or disaster insurance like fire or flood, are other types. The interaction between them is complex. Brown and Finkelstein find, “[T]he even very incomplete public insurance can substantially crowd out private insurance demand.

We examine the interaction of the public Medicaid program with the private market for long-term care insurance and estimate that Medicaid could explain the lack of private insurance purchases for about two-thirds of the wealth distribution even if there were no other factors limiting the size of the market. We also estimate that, for most individuals, Medicaid provides a very incomplete mechanism for smoothing consumption. Medicaid’s large crowd out effect stems from the very large implicit tax (on the order of 60 to 75 percent for a median wealth individual) that Medicaid imposes on the benefits paid from private insurance policies” (2006).

The requirements of each are different for law. The legal requirements for a private insurer to provide their services are covered under corporate or fraud law, while public insurers have a fiduciary responsibility to the taxpayer. Public and private insurance both serve a role in protecting the people. They are both key in reducing and managing risk in the modern market. The debacle of AIG and of Savings and Loan show how costly failures of each can be. Works Cited Brown, J. and Finkelstein, A. (2006). The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market.

Retrieved 2/21/2011 from http://econ-www.mit.edu/files/1429 Grier, P. (2010-3-20). Health care reform bill 101: Who gets subsidized insurance? Christian Science Monitor. Sapatkin, D. (2011-1-12). Pennsylvania subsidized health insurance for low-income people to end. Philadelphia Inquirer.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Compare/Contrast of Public and Private Insurers Research Paper”, n.d.)
Retrieved from https://studentshare.org/other/1408845-compare-contrast-of-public-and-private-insurers
(Compare/Contrast of Public and Private Insurers Research Paper)
https://studentshare.org/other/1408845-compare-contrast-of-public-and-private-insurers.
“Compare/Contrast of Public and Private Insurers Research Paper”, n.d. https://studentshare.org/other/1408845-compare-contrast-of-public-and-private-insurers.
  • Cited: 0 times

CHECK THESE SAMPLES OF Compare/Contrast of Public and Private Insurers

The Joint Law Commission Proposals for the Reform of the Law

Critically appraise the Joint Law Commission proposals for the reform of the law relating to Business Insureds, considering further the case for differential treatment of Micro-Businesses [Name] [Institution] Critically appraise the Joint Law Commission proposals for the reform of the law relating to Business Insureds, considering further the case for differential treatment of Micro-Businesses....
7 Pages (1750 words) Essay

Private Correctional Facilities

private Correctional Facilities (Name) (University) private Correctional Facilities Introduction The American correctional system has experienced an unparalleled growth during the last couple of decades, as congressional records reveals that prison numbers have grown by over 400% with 2.... As a result, both state and federal governments have argued for privatization or public-private partnerships, because they are experiencing not just financial difficulties but administrative challenges in managing the correctional facilities....
17 Pages (4250 words) Case Study

Does Privity of Contract Confer Rights and Obligations

Privity of contract is a legal concept applicable principally to contracts involving the sale of goods or services.... Privity of contract occurs only between the parties to a contract.... A third party which, benefits under a contract does not have the right to proceed legally against the parties to the contract for entitlement in excess of its benefits as provided in the contract....
26 Pages (6500 words) Case Study

Insurance regulation

This will provide the ground work for developing an insurance regulatory framework for Kuwait.... Assessing current insurance regulations and… These developments and modifications would probably have a positive affect on the insurance industry and mostly would benefit all sectors of society....
33 Pages (8250 words) Essay

Public Management in Health Care Reform: Germany and Britain

On the other hand, in the insurance-based system found in Germany, hospitals and other health care providers can be both public and private organizations.... New Public Management is the change to professional management in the public sector with more clearly defined standards and measurement of performance, greater emphasis on outcomes than input, disaggregation of units in the public sector, greater competition and contract-based… In the health care sector, reforms are distinguished by organizational changes such as the establishment of an internal market and consumer-based improvements The planning of health care reform by the New Public Management (NPM) emphasized several targets including public/ private partnerships and a concern for quality through total quality management (Thomas & Lakhani, 2006: 141)....
12 Pages (3000 words) Essay

Insurance Law and International Business

This paper analyzes the role of insurance laws in governing international business as well as the influence of dissimilarities concerning national contract laws with that of international insurance industry with the aim of giving liberty to deliver services and the freedom to… The obligation is to perform an investigation so as to assist in probing whether dissimilarities in contract laws are a stumbling block to international business in insurance products....
20 Pages (5000 words) Essay

Comparison of the American and Canadian Healthcare Systems

The greatest providers of health care insurance in the United States are private companies.... Unlike in the United States, private insurance companies only have the freedom to offer coverage for the services not included in the provincial plans.... The single-layer healthcare system seems to deliver outcomes, which are more positive, explaining why members of the public have exhibited preferences for it.... This paper will compare the Canadian healthcare system with the American healthcare system....
13 Pages (3250 words) Essay

Public to Private Partnerships

Therefore, the public-private partnership is an official contract between the public and private companies.... n other cases, the cost of the investment is borne exclusively by the private investor during the contract with the government on the provision of the specified services of public interest while the total cost of the project is borne by the government.... Secondly, the PPP protects the public sector in making borrowing during the process of delivery of certain services of public interest....
10 Pages (2500 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us