Private Insurance Is Public, Too

Jim Hufford

First published 4/14/11 on Organon

There are lots of ways to set up a system of health insurance. You can involve the government to varying degrees in regulation and payment, and to the extent that the government takes it upon itself to bear the population’s major health risks, you have a system of public insurance. To the extent you allocate risk through market mechanisms, you have a system of private insurance. But either way, at bottom the concept of insurance is about distributing risk through a population. That’s what gives insurance its social utility, and it’s the reason people buy insurance. And so in an abstract sense, all insurance is public insurance. It is people pooling money through premiums or taxes to cover their collective health risk.

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