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WHO: The problems with voluntary health insurance

September 20, 2019

Topics: Quote of the Day

By Sarah Thomson, Jonathan Cylus, Tamás Evetovits
World Health Organization

The Role of Voluntary Health Insurance (VHI)

In most countries, VHI exacerbates inequalities in access to health care rather than reducing them, because VHI is consistently more likely to be taken up by richer households.

Private insurance is only shown to be protective at health system level where it explicitly covers user charges and also covers most of the population, including most poor people.

Only three countries in Europe (and indeed globally) meet these conditions: Croatia, France and Slovenia. Table 8 (in the report at the link below) shows how VHI covering co-payments in these countries achieves very high rates of take up, covering over 80% of those who have to pay co-payments in Croatia, around 90% of the population in France and around 95% of those with compulsory health insurance in Slovenia.

The experience of these three countries suggests that VHI covering co-payments is not an equitable or efficient way of improving financial protection. Equity in financing is undermined by the high financial burden imposed on poor households compared to rich households, even where VHI is free for very poor people. Efficiency is undermined not only by the high administrative costs incurred by private insurers in all three countries compared to entities providing compulsory health insurance, but also by the high – and sometimes hidden – transaction costs involved in regulating a complex market.

Key messages on the role of VHI

  • VHI generally exacerbates inequalities in access to health services.
  • It is only shown to enhance financial protection at health system level where it covers co-payments, is accessible to and affordable for all those who need it and is heavily subsidized by the state for poor households.
  • Across countries it is not effective in reducing out-of-pocket payments, in contrast to public spending on health.
  • VHI is also a more regressive means of financing the health system than public spending on health.



By Don McCanne, M.D.

Yesterday’s Quote of the Day used this same WHO report to make the point that “even in Europe’s richest countries people are pushed into poverty” by the deficiencies in their health care financing systems. Today’s message is that European voluntary health insurance “exacerbates inequalities in access to health services;” “is not effective in reducing out-of-pocket payments, in contrast to public spending on health,” and it is also “a more regressive means of financing the health system than public spending on health.”

What is the lesson for the United States? A single payer Medicare for All program would provide all essential health care services for everyone while removing financial barriers to care. Instead we have a fragmented system that is dominated by voluntary plans including those in the individual market, the ACA marketplace plans, employer-sponsored plans, and the private Medicare Advantage plans. These perpetuate those deficiencies found in the European voluntary health insurance plans.

Right now there is an intensive effort to perpetuate our fragmented system of individual voluntary plans, and even expand it through private Medicare Advantage plans and ACA marketplace plans. That’s ridiculous when we could have an efficient, effective, equitable system that’s affordable for everyone by enacting and implementing Single Payer Medicare for All.

Yes, the Europeans have lessons for us, but we need to understand what they actually are and then apply them.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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