The role and uptake of private health insurance in different health care systems: are there lessons for developing countries?

Abstract

Background: Social and national health insurance schemes are being introduced in many developing countries in moving towards universal health care. However, gaps in coverage are common and can only be met by out-of-pocket payments, general taxation, or private health insurance (PHI). This study provides an overview of PHI in different health care systems and discusses factors that affect its uptake and equity.

Methods: A representative sample of countries was identified (United States, United Kingdom, The Netherlands, France, Australia, and Latvia) that illustrates the principal forms and roles of PHI. Literature describing each country's health care system was used to summarize how PHI is utilized and the factors that affect its uptake and equity.

Results: In the United States, PHI is a primary source of funding in conjunction with tax-based programs to support vulnerable groups; in the UK and Latvia, PHI is used in a supplementary role to universal tax-based systems; in France and Latvia, complementary PHI is utilized to cover gaps in public funding; in The Netherlands, PHI is supplementary to statutory private and social health insurance; in Australia, the government incentivizes the uptake of complementary PHI through tax rebates and penalties. The uptake of PHI is influenced by age, income, education, health care system typology, and the incentives or disincentives applied by governments. The effect on equity can either be positive or negative depending on the type of PHI adopted and its role within the wider health care system.

Conclusion: PHI has many manifestations depending on the type of health care system used and its role within that system. This study has illustrated its common applications and the factors that affect its uptake and equity in different health care systems. The results are anticipated to be helpful in informing how developing countries may utilize PHI to meet the aim of achieving universal health care.

Keywords: developing countries; health care systems; private health insurance; social health insurance.

Figure 1

Growth of private health insurance in Latvia between 1997 and 2005. Note: Prices are shown in real terms, deflated by use of the consumer price index for 1997 prices. Data from Tragakes E, Brigis G, Karaskevica J, et al. Latvia: health system review. Health Syst Transit. 2008;10:1–253. © with permission. Abbreviation: LVL, Latvia currency.

Figure 2

Estimated private health insurance hospital coverage in Australia – Lifetime Health Cover plus 30% tax rebate maintained or withdrawn. Econtech Pty Ltd, reproduced with permission. Abbreviation: LHC, Life-time Health Cover.