Comparing Public And Private Health Insurance For Children

Some may reflexively assume that private health insurance is more efficient or more effective than public insurance. However, the available evidence indicates that public health coverage is less expensive than private insurance and provides comparable, and in some cases better, access to health care for children.
Health Care Costs. Economists Jack Hadley and John Holahan of the Urban Institute have shown that, after accounting for the fact that children and adults covered by Medicaid have a higher incidence of health problems and thus tend to require more care, it is less expensive to provide health care with Medicaid than private insurance (Figure 1). They found public insurance was about 10 percent less expensive for children and about 30 percent less expensive for adults.[2]
In addition to having higher medical costs, private health insurance has administrative costs that, on average, are about twice those of public insurance — 14 percent for private coverage as compared to 7 percent for Medicaid.[3] Finally, private health insurance premiums have risen faster than per capita Medicaid costs in the last few years, which suggests that the differences found above (which are based on data from a few years ago) likely have widened further.[4]
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