Voluntary Health Insurance in the European Union: A Critical Assessment

Abstract

The authors examine the role and nature of the market for voluntary health insurance in the European Union and review the impact of public policy, at both the national and E.U. levels, on the development of this market in recent years. The conceptual framework, based on a model of industrial analysis, allows a wide range of policy questions regarding market structure, conduct, and performance. By analyzing these three aspects of the market for voluntary health insurance, the authors are also able to raise questions about the equity and efficiency of voluntary health insurance as a means of funding health care in the European Union. The analysis suggests that the market for voluntary health insurance in the European Union suffers from significant information failures that seriously limit its potential for competition or efficiency and also reduce equity. Substantial deregulation of the E.U. market for voluntary health insurance has stripped regulatory bodies of their power to protect consumers and poses interesting challenges for national regulators, particularly if the market is to expand in the future. In a deregulated environment, it is questionable whether this method of funding health care will encourage a more efficient and equitable allocation of resources.

Opt Out or Top Up? Voluntary Healthcare Insurance and the Public vs. Private Substitution

“…Srivastava and Zhao (2008) document that Australia, in the late nineties, introduced several incentives and penalties to stem erosion in VHI. Similarly, a large use of tax incentives for the purchase of VHI is observed in Portugal, since 1999, and Ireland, since the 1970s (see Mossialos and Thomson (2004)). …”

“…Moreover, effectiveness is also questionable whenever incentives compensate individuals, with VHI that may be paying for better amenities, without reducing their consumption of statutory healthcare. Mossialos and Thomson (2004) notice that reduction in tax incentives, devoted to encouraging VHI , occurred in Austria, Greece, Ireland, Italy, Spain and the UK.…”

Supplemental Health Insurance and Equality of Access in Belgium

“…It is indeed obvious that both the degree of adverse selection in the voluntary insurance system and the (voluntary) insurance effect on health care consumption will crucially depend on the degree of population, service and cost coverage in the public (compulsory) system and thus on the type of voluntary insurance. The wide variety of possible arrangements has been described in the international comparison reports (Mossialos and Thomson, 2002;OECD, 2004), but until now there have not been many structured attempts to formulate and test specific hypotheses which are linked to these institutional differences. In fact, a careful analysis of the institutional setting may in some cases lead to empirical predictions of an insurance effect that does not in the first place induce increased consumption.…”

Public and Private Health Insurance in Brazil and European Union Countries

“…The following table, prepared by Mossialos E. & Thompson [2], shows the three modalities of relations between the public and private sectors according to the role of the private sector and extent of coverage: According to Thompson & Mossialos [3] there are only two financing policy designs in relation to the modalities presented in the table prevalence: -minimal financing and considerable regulation of the supplementary market, focused on the companies' solvency; and -price and product control and severe regulation of the substitutive market.…”