What part does voluntary insurance play in European Union health care?

Summary of a HEN network member’s report

The issue

The role of voluntary health insurance (VHI) in financing health care is marginal in the European Union (EU), in contrast to the role it plays in the United States, Australia and Switzerland. The primary reason is that EU Member States have long sought to provide health care to all citizens, regardless of their ability to pay – and that requires the use of state funding or mandatory social insurance.

The relationship of VHI to statutory schemes takes three forms:

  1. a substitution for statutory coverage (found in Germany, the Netherlands and Spain, and confined primarily to high wage-earners and civil servants);
  2. a complement to statutory coverage (providing services that are otherwise excluded or incompletely covered); and
  3. a supplement to statutory coverage (providing faster access or more treatment choices).

In practice, there is often overlap between complementary and supplementary VHI.

Findings and discussion

The EU market for VHI is small but diverse. The amount of risk that insurers must bear and the ratio of specialists to non-specialists vary considerably from country to country. Non-profit mutual associations dominate the field in many places, yet commercial insurers have been increasing their market share. In 1998, a mere 25 firms – most of them German – wrote more than half of the VHI policies for all Europe, and further consolidation seems likely.

Although several hundred insurers operate in the EU, coverage levels remain low. While group employment schemes provided what little growth the market saw during the 1990s, the countries themselves have offered insurers minimal encouragement. The governments continue to provide fairly comprehensive benefits, and when they shift costs onto consumers, they usually promote user charges instead of VHI. They have also eliminated many of the existing tax incentives for VHI on grounds of complexity, high cost and inequity. Consumer demand has also been relatively weak, especially in countries where it is traditional to pay doctors directly.

By way of contrast, the EU has been promoting a single market that would enable insurers to do business in all of the Member States. In 1994, it deregulated complementary and supplementary insurance – a move that did more to encourage markets than to protect consumers. Since then, insurance firms have been free to set premiums on whatever basis they liked, often using individual risk. They’ve also been able to define benefit packages at their discretion, making it nearly impossible for a prospective buyer to compare policies.

The result is a one-way flow of information. While consumers find it daunting to make informed comparisons, insurers can cherry-pick, enrolling low-risk individuals and leaving high-risk individuals without coverage. Deregulation in this case has not led to the promised benefits of competition.

In addition, there are indications that giving VHI a heightened role in EU countries would:

  • encourage service providers to over-treat patients;
  • boost health sector spending through increased administrative and marketing costs;
  • undercut efficiency incentives (such as evidence-based guidelines and gatekeeping measures);
  • duplicate services unnecessarily; and
  • promote inequity in response time and quality of care. 


For EU countries, it is unlikely that voluntary insurance will dominate health care financing any time soon. But even a minor expansion of VHI could prove detrimental to the health care sector, promoting inequality and hamstringing attempts to improve efficiency. Any changes to VHI should establish a strong regulatory framework to provide consumers with better information, in order to protect their interests at least as much as the insurers’.

The views expressed in this summary are based on a publication of a HEN Network member agency and do not necessarily represent the decisions or stated policy of WHO/Europe.