The London School of Economics and Political Science

Abstract

This thesis examines the usefulness of voluntary health insurance (VHI) as a lever for improving health system performance. It posits that VHI may further health policy goals if it addresses gaps in statutory coverage, if it does not make those who rely on statutory coverage worse off, and if those who need VHI have access to it. The thesis presents four studies that analyse markets for VHI in the European Union; developments in public policy towards VHI, including the implications of the EUlevel regulatory framework for VHI; the impact of VHI on health system performance; the effects of allowing people to choose between statutory and voluntary health insurance; and VHI’s influence on consumer mobility where insurers compete to offer statutory benefits. The thesis finds that while VHI is critical to financial protection in some countries, it does not always address key gaps in statutory coverage or reach those who need it, and the depth of its coverage has declined over time, even in heavily regulated markets. VHI has a regressive effect on equity in health financing, lowers equity in the use of health services and does not seem to have a positive effect on efficiency, partly because insurers in many countries lack appropriate incentives. What is more, a failure to align incentives across VHI and statutory health insurance can undermine the efficiency of public spending on health. Many of VHI’s negative effects can be attributed to poor policy design. Policy makers can try and ensure VHI contributes to rather than undermines health system performance through the following mechanisms: better understanding of VHI’s interaction with the health system; stronger policy design, focusing on aligning incentives in pursuit of health policy goals and ensuring efficiency in the use of public resources; willingness and capacity to regulate the market to secure financial and consumer protection; and regular monitoring and evaluation.