No. 46: Voluntary Health Insurance In The European Union: A Critical Assessment

Mossialos, Elias* and Thomson, Sarah M. S. *

*London School of Economics

  1. International Journal of Health Services, Volume 32, Number 1, Pages 19–88, 2002;
  2. World Health Organization, on behalf of the European Observatory on Health Systems and Policies, 2004


In the coming months, a trial will begin in the Supreme Court of British Columbia, the outcome of which will determine the future of the heath care system not only in BC, but across Canada. At issue is whether the BC Medicare Protection Act, the companion legislation to the Canada Health Act, is unconstitutional in preventing private payment – including private insurance – for medically necessary hospital and physician care already covered under BC’s provincial insurer (MSP), and in not allowing physicians who are enrolled in MSP to bill patients for their services in excess of the fee schedule.

What does the international evidence tell us about how private voluntary health insurance (VHI) affects health care in predominantly publicly-funded systems, including those in which physicians are allowed “dual practice” in both the publicly- and privately-funded systems? In this study, the authors examined the role of VHI in the European Union (E.U.), and the nature of the market for VHI, to review the impact on public policy. The authors characterize and report on three types of VHI:

1) Substitutive VHI for high earners who elect to entirely opt-out of the public insurance system, and a prohibition on returning to the publicly-funded statutory system once they have left it, except under rare circumstances (available only in Germany, Spain, and the Netherlands).

2) Complementary VHI provides full or partial cover for services that are excluded (e.g. dental, drugs) or not fully covered by the statutory health care system (e.g. co-payments) (available in many European countries including Belgium, Denmark, France, and Luxembourg).

3) Supplementary VHI, sometimes referred to as “double coverage”, increases consumer choice and access to different health services, traditionally guaranteeing upgraded accommodation and amenities (e.g. a single room with en suite bathroom) and, crucially, faster access to treatment, particularly in areas of health care with long waiting lists, such as elective surgery (prevalent in countries with national health service (NHS)–type systems such as Greece, Italy, Portugal, Spain, and the United Kingdom).

Canada already allows what this study characterizes as complementary VHI. Canada currently has no substitutive VHI for patients who may wish to entirely opt-out of Medicare. What is not permitted through any kind of VHI sold in Canada is insurance that buys faster access to treatment within Canada, even in areas of health care with waiting lists, such as elective surgery.


This research is based on an analysis of the literature. In addition to academic literature identified through a search of the main electronic databases (IBSS, EconLit), the authors also carried out systematic Internet searches and made extensive use of gray literature, including industry and government reports in English and other European languages.


The study was constrained by a lack of available data in some areas. Some literature exists on the interaction between public and private VHI payment, but the issue

of physician dual practice and VHI has received little attention in the peer-reviewed literature.


On the whole, this research did not find evidence of E.U. countries favouring expansion of VHI.

Substitutive VHI (fully replacing the statutory plan) is still only available for high earners and self-employed people in Netherlands and Germany, and for civil servants in Spain. Other governments have considered, but have not enacted it. Complementary and supplementary VHI show a strong bias in favor of high-income groups. In instances where the insurance product allows for faster access to care, this raises questions about equity. In the Netherlands, for example, a report produced by the Dutch Council for Health and Social Services (an independent governmental advisory body) expressed concern about the consequences of E.U. insurance law for health policy objectives, such as accessibility and solidarity.

Price and product controls for complementary and supplementary VHI were eliminated in 1994, resulting in an abundance of different insurance products. Consequently, the cost of premiums in many E.U. member states has consistently risen, and many find premiums unaffordable. Market deregulation did not have the anticipated effect of lowering health care costs, and the British experience suggests that the E.U. regulatory framework does not provide regulatory bodies with sufficient power to ensure a level of product and cost transparency sufficient to protect consumers.

Though the E.U. market for VHI is diverse in terms of the insurance products, the number if insurers decreased as market consolidation took place. Non-profits insurers previously dominated, but their preferential tax treatment has been challenged by the European Court of Justice. For-profit commercial insurers have gained an increasing share of the market.

Cream skimming appears to accompany supplementary and complementary VHI in some E.U. countries, leading to coverage gaps for the most vulnerable, such as the elderly. Insurers offering complementary and supplementary VHI are free from controls on premium prices and prior notification of policy conditions, so coverage can be eliminated at the discretion of insurers. The Association of British Insurers claims that contracts are generally automatically renewed by insurers from one year to the next, but there is no evidence to indicate whether this actually happens in practice.

Access to VHI varies across the E.U. In France, access to complementary VHI varies according to income and social class, and those who have little or no access to complementary VHI are much more likely to be from the lowest social classes. The regressive nature of complementary VHI can be seen in France where evidence shows that 59% of unskilled workers have little or no supplementary and complementary VHI, compared to 24% of executives and professionals. In Austria, the distribution of supplementary and complementary VHI varies among provinces. In Ireland, 70% of professionals and managers have supplementary or complementary VHI, compared with only 11% of semi-skilled and unskilled manual workers.

There is some evidence that third-party insurance incentives in the VHI sector leads to the promotion of unnecessary or ineffective treatment.

Despite little evidence regarding the impact of “double coverage” on the efficiency and equity of health care systems in the E.U, where the boundaries between public and private health care delivery are weak, the authors suggest that it is reasonable to anticipate there may be negative consequences in instances where VHI gives rise to faster access only for some.

Survey data from English NHS patients reveals that although those who take out VHI are more likely to be dissatisfied with the NHS, their dissatisfaction is tied to broader sociopolitical values that emphasize individual responsibility, free-market principles, and consumer sovereignty, rather than to actual performance of the NHS. Another study found that users of private health care, and VHI subscribers in particular, were less supportive of the equity goals of the NHS and increases in NHS spending.

The authors conclude that as a means of funding health care, it is questionable whether voluntary health insurance encourages a more efficient and equitable allocation of resources.


This review of the literature on private voluntary health insurance in E. U. countries provides evidence of a number of concerns about equity and access to care. The analysis suggests that the market for health insurance in the E.U suffers from significant failures that seriously limit its potential for competition or efficiency, reducing equitable access to care, especially where “dual practice” for physicians is permitted. If the outcome of the constitutional challenge in BC favours the plaintiffs, physicians will be permitted payment from both public and private sources, and private health insurers will be allowed to insure services already covered under Medicare. It is anyone’s guess whether regulatory bodies in Canada would have any more success than those in the E. U at protecting consumers who purchase private insurance products, particularly given the limits placed on regulatory power under NAFTA, CETA, and the TPP. Under these trade agreements, barriers to enter cross-border insurance markets are also weakened. This study from the E.U. shows that in countries where private health insurance is allowed to co-exist in parallel to statutory state funding, though it increases consumer choice for some, it is not a panacea and brings with it a host of challenges. To the extent they are demonstrably excessive, wait times can be improved by changes in health care policy, organization, management, service delivery, and public funding. Adding private duplicative insurance to the mix of possible solutions creates a whole other set of problems, including greater inequity in accessing hospital and physician services for some patients.

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