Choice of public or private health insurance: learning from the experience of Germany and the Netherlands
Identifieur interne : 001A93 ( Istex/Corpus ); précédent : 001A92; suivant : 001A94Choice of public or private health insurance: learning from the experience of Germany and the Netherlands
Auteurs : Sarah Thomson ; Elias MossialosSource :
- Journal of European Social Policy [ 0958-9287 ] ; 2006-11.
Abstract
Several European countries have considered introducing choice of public or private health insurance - usually by allowing people to ‘opt out’ of the statutory scheme - under the assumption that enhancing consumer choice and stimulating competition between insurers will be beneficial. This article examines the impact of opting out on equity and efficiency in European health systems. Focusing on Germany and the Netherlands - the only European countries where this type of choice has been available to significant population groups for a prolonged period (from 1970 to the present day in Germany, and from 1941 to 1986 in the Netherlands) - the analysis suggests that current policy debates may overstate the potential benefits of opting out. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, choice of public or private coverage creates strong incentives for private insurers to select risks and leads to risk segmentation, thereby breaching equity in funding health care, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. Measures can be taken to correct these negative effects, but some forms of regulation may be politically and technically difficult to implement.
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DOI: 10.1177/0958928706068271
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<record><TEI wicri:istexFullTextTei="biblStruct"><teiHeader><fileDesc><titleStmt><title xml:lang="en">Choice of public or private health insurance: learning from the experience of Germany and the Netherlands</title><author wicri:is="90%"><name sortKey="Thomson, Sarah" sort="Thomson, Sarah" uniqKey="Thomson S" first="Sarah" last="Thomson">Sarah Thomson</name><affiliation><mods:affiliation>London School of Economics and Political Science, UK,</mods:affiliation></affiliation><affiliation><mods:affiliation>E-mail: s.thomson@lse.ac.uk</mods:affiliation></affiliation></author><author wicri:is="90%"><name sortKey="Mossialos, Elias" sort="Mossialos, Elias" uniqKey="Mossialos E" first="Elias" last="Mossialos">Elias Mossialos</name><affiliation><mods:affiliation>London School of Economics and Political Science, UK</mods:affiliation></affiliation></author></titleStmt><publicationStmt><idno type="wicri:source">ISTEX</idno><idno type="RBID">ISTEX:19D4F74DFF880E918BEBC808BA0492534CF4CC79</idno><date when="2006" year="2006">2006</date><idno type="doi">10.1177/0958928706068271</idno><idno type="url">https://api.istex.fr/document/19D4F74DFF880E918BEBC808BA0492534CF4CC79/fulltext/pdf</idno><idno type="wicri:Area/Istex/Corpus">001A93</idno><idno type="wicri:explorRef" wicri:stream="Istex" wicri:step="Corpus" wicri:corpus="ISTEX">001A93</idno></publicationStmt><sourceDesc><biblStruct><analytic><title level="a" type="main" xml:lang="en">Choice of public or private health insurance: learning from the experience of Germany and the Netherlands</title><author wicri:is="90%"><name sortKey="Thomson, Sarah" sort="Thomson, Sarah" uniqKey="Thomson S" first="Sarah" last="Thomson">Sarah Thomson</name><affiliation><mods:affiliation>London School of Economics and Political Science, UK,</mods:affiliation></affiliation><affiliation><mods:affiliation>E-mail: s.thomson@lse.ac.uk</mods:affiliation></affiliation></author><author wicri:is="90%"><name sortKey="Mossialos, Elias" sort="Mossialos, Elias" uniqKey="Mossialos E" first="Elias" last="Mossialos">Elias Mossialos</name><affiliation><mods:affiliation>London School of Economics and Political Science, UK</mods:affiliation></affiliation></author></analytic><monogr></monogr><series><title level="j">Journal of European Social Policy</title><idno type="ISSN">0958-9287</idno><idno type="eISSN">1461-7269</idno><imprint><publisher>Sage Publications</publisher><pubPlace>Sage CA: Thousand Oaks, CA</pubPlace><date type="published" when="2006-11">2006-11</date><biblScope unit="volume">16</biblScope><biblScope unit="issue">4</biblScope><biblScope unit="page" from="315">315</biblScope><biblScope unit="page" to="327">327</biblScope></imprint><idno type="ISSN">0958-9287</idno></series><idno type="istex">19D4F74DFF880E918BEBC808BA0492534CF4CC79</idno><idno type="DOI">10.1177/0958928706068271</idno><idno type="ArticleID">10.1177_0958928706068271</idno></biblStruct></sourceDesc><seriesStmt><idno type="ISSN">0958-9287</idno></seriesStmt></fileDesc><profileDesc><textClass></textClass><langUsage><language ident="en">en</language></langUsage></profileDesc></teiHeader><front><div type="abstract" xml:lang="en">Several European countries have considered introducing choice of public or private health insurance - usually by allowing people to ‘opt out’ of the statutory scheme - under the assumption that enhancing consumer choice and stimulating competition between insurers will be beneficial. This article examines the impact of opting out on equity and efficiency in European health systems. Focusing on Germany and the Netherlands - the only European countries where this type of choice has been available to significant population groups for a prolonged period (from 1970 to the present day in Germany, and from 1941 to 1986 in the Netherlands) - the analysis suggests that current policy debates may overstate the potential benefits of opting out. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, choice of public or private coverage creates strong incentives for private insurers to select risks and leads to risk segmentation, thereby breaching equity in funding health care, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. Measures can be taken to correct these negative effects, but some forms of regulation may be politically and technically difficult to implement.</div></front></TEI><istex><corpusName>sage</corpusName><author><json:item><name>Sarah Thomson</name><affiliations><json:string>London School of Economics and Political Science, UK,</json:string><json:string>E-mail: s.thomson@lse.ac.uk</json:string></affiliations></json:item><json:item><name>Elias Mossialos</name><affiliations><json:string>London School of Economics and Political Science, UK</json:string></affiliations></json:item></author><subject><json:item><lang><json:string>eng</json:string></lang><value>insurance selection bias</value></json:item><json:item><lang><json:string>eng</json:string></lang><value>Germany</value></json:item><json:item><lang><json:string>eng</json:string></lang><value>the Netherlands</value></json:item><json:item><lang><json:string>eng</json:string></lang><value>opting out</value></json:item><json:item><lang><json:string>eng</json:string></lang><value>private health insurance</value></json:item></subject><articleId><json:string>10.1177_0958928706068271</json:string></articleId><language><json:string>eng</json:string></language><originalGenre><json:string>research-article</json:string></originalGenre><abstract>Several European countries have considered introducing choice of public or private health insurance - usually by allowing people to ‘opt out’ of the statutory scheme - under the assumption that enhancing consumer choice and stimulating competition between insurers will be beneficial. This article examines the impact of opting out on equity and efficiency in European health systems. Focusing on Germany and the Netherlands - the only European countries where this type of choice has been available to significant population groups for a prolonged period (from 1970 to the present day in Germany, and from 1941 to 1986 in the Netherlands) - the analysis suggests that current policy debates may overstate the potential benefits of opting out. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, choice of public or private coverage creates strong incentives for private insurers to select risks and leads to risk segmentation, thereby breaching equity in funding health care, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. 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(1999)</title></host></json:item><json:item><host><author></author><title>Dutch Healthcare System: Facts and Figures</title></host></json:item></refBibs><genre><json:string>research-article</json:string></genre><host><volume>16</volume><publisherId><json:string>ESP</json:string></publisherId><pages><last>327</last><first>315</first></pages><issn><json:string>0958-9287</json:string></issn><issue>4</issue><genre><json:string>journal</json:string></genre><language><json:string>unknown</json:string></language><eissn><json:string>1461-7269</json:string></eissn><title>Journal of European Social Policy</title></host><categories><wos><json:string>social science</json:string><json:string>social issues</json:string><json:string>public administration</json:string></wos><scienceMetrix><json:string>economic & social sciences</json:string><json:string>social sciences</json:string><json:string>political science & public administration</json:string></scienceMetrix></categories><publicationDate>2006</publicationDate><copyrightDate>2006</copyrightDate><doi><json:string>10.1177/0958928706068271</json:string></doi><id>19D4F74DFF880E918BEBC808BA0492534CF4CC79</id><score>0.06996164</score><fulltext><json:item><extension>pdf</extension><original>true</original><mimetype>application/pdf</mimetype><uri>https://api.istex.fr/document/19D4F74DFF880E918BEBC808BA0492534CF4CC79/fulltext/pdf</uri></json:item><json:item><extension>zip</extension><original>false</original><mimetype>application/zip</mimetype><uri>https://api.istex.fr/document/19D4F74DFF880E918BEBC808BA0492534CF4CC79/fulltext/zip</uri></json:item><istex:fulltextTEI uri="https://api.istex.fr/document/19D4F74DFF880E918BEBC808BA0492534CF4CC79/fulltext/tei"><teiHeader><fileDesc><titleStmt><title level="a" type="main" xml:lang="en">Choice of public or private health insurance: learning from the experience of Germany and the Netherlands</title></titleStmt><publicationStmt><authority>ISTEX</authority><publisher>Sage Publications</publisher><pubPlace>Sage CA: Thousand Oaks, CA</pubPlace><availability><p>SAGE</p></availability><date>2006</date></publicationStmt><sourceDesc><biblStruct type="inbook"><analytic><title level="a" type="main" xml:lang="en">Choice of public or private health insurance: learning from the experience of Germany and the Netherlands</title><author xml:id="author-1"><persName><forename type="first">Sarah</forename><surname>Thomson</surname></persName><email>s.thomson@lse.ac.uk</email><affiliation>London School of Economics and Political Science, UK,</affiliation></author><author xml:id="author-2"><persName><forename type="first">Elias</forename><surname>Mossialos</surname></persName><affiliation>London School of Economics and Political Science, UK</affiliation></author></analytic><monogr><title level="j">Journal of European Social Policy</title><idno type="pISSN">0958-9287</idno><idno type="eISSN">1461-7269</idno><imprint><publisher>Sage Publications</publisher><pubPlace>Sage CA: Thousand Oaks, CA</pubPlace><date type="published" when="2006-11"></date><biblScope unit="volume">16</biblScope><biblScope unit="issue">4</biblScope><biblScope unit="page" from="315">315</biblScope><biblScope unit="page" to="327">327</biblScope></imprint></monogr><idno type="istex">19D4F74DFF880E918BEBC808BA0492534CF4CC79</idno><idno type="DOI">10.1177/0958928706068271</idno><idno type="ArticleID">10.1177_0958928706068271</idno></biblStruct></sourceDesc></fileDesc><profileDesc><creation><date>2006</date></creation><langUsage><language ident="en">en</language></langUsage><abstract xml:lang="en"><p>Several European countries have considered introducing choice of public or private health insurance - usually by allowing people to ‘opt out’ of the statutory scheme - under the assumption that enhancing consumer choice and stimulating competition between insurers will be beneficial. This article examines the impact of opting out on equity and efficiency in European health systems. Focusing on Germany and the Netherlands - the only European countries where this type of choice has been available to significant population groups for a prolonged period (from 1970 to the present day in Germany, and from 1941 to 1986 in the Netherlands) - the analysis suggests that current policy debates may overstate the potential benefits of opting out. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, choice of public or private coverage creates strong incentives for private insurers to select risks and leads to risk segmentation, thereby breaching equity in funding health care, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. Measures can be taken to correct these negative effects, but some forms of regulation may be politically and technically difficult to implement.</p></abstract><textClass><keywords scheme="keyword"><list><head>keywords</head><item><term>insurance selection bias</term></item><item><term>Germany</term></item><item><term>the Netherlands</term></item><item><term>opting out</term></item><item><term>private health insurance</term></item></list></keywords></textClass></profileDesc><revisionDesc><change when="2006-11">Published</change></revisionDesc></teiHeader></istex:fulltextTEI><json:item><extension>txt</extension><original>false</original><mimetype>text/plain</mimetype><uri>https://api.istex.fr/document/19D4F74DFF880E918BEBC808BA0492534CF4CC79/fulltext/txt</uri></json:item></fulltext><metadata><istex:metadataXml wicri:clean="corpus sage not found" wicri:toSee="no header"><istex:xmlDeclaration>version="1.0" encoding="UTF-8"</istex:xmlDeclaration><istex:docType PUBLIC="-//NLM//DTD Journal Publishing DTD v2.3 20070202//EN" URI="journalpublishing.dtd" name="istex:docType"></istex:docType><istex:document><article article-type="research-article" dtd-version="2.3" xml:lang="EN"><front><journal-meta><journal-id journal-id-type="hwp">spesp</journal-id><journal-id journal-id-type="publisher-id">ESP</journal-id><journal-title>Journal of European Social Policy</journal-title><issn pub-type="ppub">0958-9287</issn><publisher><publisher-name>Sage Publications</publisher-name><publisher-loc>Sage CA: Thousand Oaks, CA</publisher-loc></publisher></journal-meta><article-meta><article-id pub-id-type="doi">10.1177/0958928706068271</article-id><article-id pub-id-type="publisher-id">10.1177_0958928706068271</article-id><article-categories><subj-group subj-group-type="heading"><subject>Articles</subject></subj-group></article-categories><title-group><article-title>Choice of public or private health insurance: learning from the experience of Germany and the Netherlands</article-title></title-group><contrib-group><contrib contrib-type="author" xlink:type="simple"><name name-style="western"><surname>Thomson</surname><given-names>Sarah</given-names></name><aff>London School of Economics and Political Science, UK, <email xlink:type="simple">s.thomson@lse.ac.uk</email></aff></contrib></contrib-group><contrib-group><contrib contrib-type="author" xlink:type="simple"><name name-style="western"><surname>Mossialos</surname><given-names>Elias</given-names></name><aff>London School of Economics and Political Science, UK</aff></contrib></contrib-group><pub-date pub-type="ppub"><month>11</month><year>2006</year></pub-date><volume>16</volume><issue>4</issue><fpage>315</fpage><lpage>327</lpage><abstract><p>Several European countries have considered introducing choice of public or private health insurance - usually by allowing people to ‘opt out’ of the statutory scheme - under the assumption that enhancing consumer choice and stimulating competition between insurers will be beneficial. This article examines the impact of opting out on equity and efficiency in European health systems. Focusing on Germany and the Netherlands - the only European countries where this type of choice has been available to significant population groups for a prolonged period (from 1970 to the present day in Germany, and from 1941 to 1986 in the Netherlands) - the analysis suggests that current policy debates may overstate the potential benefits of opting out. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, choice of public or private coverage creates strong incentives for private insurers to select risks and leads to risk segmentation, thereby breaching equity in funding health care, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. Measures can be taken to correct these negative effects, but some forms of regulation may be politically and technically difficult to implement.</p></abstract><kwd-group><kwd>insurance selection bias</kwd><kwd>Germany</kwd><kwd>the Netherlands</kwd><kwd>opting out</kwd><kwd>private health insurance</kwd></kwd-group><custom-meta-wrap><custom-meta xlink:type="simple"><meta-name>sagemeta-type</meta-name><meta-value>Journal Article</meta-value></custom-meta><custom-meta xlink:type="simple"><meta-name>search-text</meta-name><meta-value> Introduction Since 1945, governments across Europe have suc- cessfully worked towards the provision of universal or near-universal statutory (public) insurance for health care. The exceptions are Germany and the Netherlands, where the public insurance scheme covers 92 percent and 70 percent of the population respectively. A substantial number of people rely on voluntary (private) insurance, either by choice, as in Germany since 1970 and the Netherlands from 1941 to 1986, or through compulsion, as in the Netherlands since 1986 (Organisation for Economic Co-operation and Development, 2004). More recently, and in the context of universal health coverage, various European countries have considered emulating the German model. Among them are Italy, Portugal and the United Kingdom during the 1990s; and Croatia, Portugal, Russia, Slovakia and Slovenia in the last five years (Propper and Green, 2001; World Bank, 2003; Atella and Spandonaro, 2004). Debates about choice of public or private insurance tend to be framed in terms of offering some, or all, of the popu- lation the possibility of 'opting out' of the public insurance scheme. Arguments in favour of opting out, generally derived from economic theory, presuppose that enhancing consumer choice and stimulating competition between insurers will be beneficial for health policy goals such as equity and efficiency. But economic theory also suggests that, due to failures in markets for health insurance, choice of public or private coverage may Choice of public or private health insurance: learning from the experience of Germany and the Netherlands Sarah Thomson* and Elias Mossialos, London School of Economics and Political Science, UK Article Journal of European Social Policy 0958-9287; Vol 16(4): 315327; 068271 Copyright © 2006 SAGE Publications, London, Thousand Oaks and New Delhi, DOI: 10.1177/0958928706068271 http://esp.sagepub.com Summary Several European countries have considered introducing choice of public or private health insurance usually by allowing people to 'opt out' of the statutory scheme under the assumption that enhancing consumer choice and stimulating competition between insurers will be beneficial. This article examines the impact of opting out on equity and efficiency in European health systems. Focusing on Germany and the Netherlands the only European countries where this type of choice has been available to significant population groups for a prolonged period (from 1970 to the present day in Germany, and from 1941 to 1986 in the Netherlands) the analysis suggests that current policy debates may overstate the potential benefits of opting out. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, choice of public or private coverage creates strong incentives for private insurers to select risks and leads to risk segmentation, thereby breaching equity in funding health care, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. Measures can be taken to correct these negative effects, but some forms of regulation may be politically and technically difficult to implement. Key words insurance selection bias, Germany, the Netherlands, opting out, private health insurance * Author to whom correspondence should be sent: Sarah Thomson, LSE Health and Social Care (J301), London School of Economics and Political Science, Houghton Street, London WC2 2AE, UK. [email: s.thomson@lse.ac.uk] adversely affect equity and efficiency and could, in the longer term, restrict consumer choice (Barr, 1998). This apparent contradiction merits investigation. Our article therefore examines the European experience of choice of public or private health insurance to establish whether there is empirical support for economic theory regarding choice in health insurance markets, and to review and assess real policy outcomes using equity in funding health care and efficiency in production as evaluative criteria. The only European countries in which choice of public or private health insurance has been available to a significant part of the population for a pro- longed period are Germany (1970 to the present day) and the Netherlands (1941 to 1986).1 In 1986, the Dutch government abolished choice, changing to a system, still in place today, in which higher earners are simply excluded from public coverage. We focus on a comparative examination of the German and Dutch experience for three reasons. First, choice of public or private health insurance is an option increasingly raised in European policy debates but usually proposed without supporting evidence. Second, the small body of empirical literature addressing the impact of opting out draws on the Chilean experience (Bitran et al., 2000; Sapelli and Vial, 2003); to date, health insurance choices in Germany and the Netherlands have not been sys- tematically documented or evaluated. Third, the German and Dutch governments have responded differently to problems arising from choice of public or private health insurance, the former attempting to find solutions while maintaining choice, the latter preferring to replace choice with exclusion of higher earners from public coverage. A comparative approach allows us to examine the extent to which either response succeeds in tackling market failures relating to health insurance choices. Framework for analysis Based on economic theory regarding consumer choice, a key argument in favour of opting out assumes that the threat of voluntary exit from the public scheme will be sufficient to stimulate compe- tition between public and private insurers, leading to greater responsiveness and increased efficiency (Hirschman, 1970). A further argument more pertinent in countries with large informal sectors or where tax evasion is widespread, but also made in richer countries concerns the sustainability of public health care funding. Proponents claim that encouraging indi- viduals, particularly the wealthy, to opt for private coverage (the German model) will ease pressure on government budgets and allow public finances to be spent on improving the provision of health services for poorer people (Chollet and Lewis, 1997). If curbing public expenditure takes political prece- dence over boosting consumer choice, policy makers may even favour the outright exclusion of some groups from public coverage (the Dutch model). The implication is that either model will enhance equity in funding health care if those who opt out of, or who are excluded from, public coverage continue to contribute to public resources for example, through taxation. However, these arguments may be undermined by important aspects of economic theory as it applies to health insurance (Barr, 1992; Cutler and Zeckhauser, 2000). Markets for health insurance suffer from 'fail- ures' relating mainly to information. This means they can only operate efficiently if certain conditions hold: the probabilities of ill health must be independent, less than one and known about; and there should be no major problems with adverse selection, moral hazard and monopoly. Moral hazard and monopoly issues may feature in both public and private systems of health insurance. The issue of most relevance to this article concerns adverse selection, which arises because those seeking insurance are able to conceal information about their risk of ill health from insur- ers (Rothschild and Stiglitz, 1976). Where there is choice of more than one type of health insurance 'plan', plans offering a more gener- ous level of benefits and/or a lower level of cost sharing will attract individuals with a higher risk of ill health. In response to the ensuing risk segmenta- tion, plans with a concentration of high risks must raise their premiums, provoking low risks to switch to cheaper plans for example, those with fewer benefits or higher deductibles or forego cover alto- gether, if either of these options is open to them. This precipitates further premium rises and exacer- bates the problem of segmentation. Ultimately, more generous plans become financially unstable and are forced out of business. Researchers have shown how adverse selection led to the swift col- lapse of indemnity health insurance plans in the United States (Cutler and Zeckhauser, 1997). 316 Thomson and Mossialos Journal of European Social Policy 2006 16 (4) Health insurance markets suffering from adverse selection are inefficient because they prevent low risks from purchasing full cover, (that is compre- hensive and free of cost sharing) or cover at an actu- arially fair price, while the threat of adverse selection creates strong incentives for insurers to engage in risk selection; that is, to attract low risks and deter high risks (Barr, 1998; Rice, 2001). Unless these incentives are curbed by regulation, older people and those in poor health may not be able to obtain any cover or cover at an affordable price. Giving consumers a choice of public or private health insurance, as in Germany and in the Netherlands prior to 1986, is similar in effect to offering a choice of more than one plan. It is likely to result in two main out- comes: (a) a market segmented by degree of risk; and (b) financial barriers to private coverage for high risks. Negative effects can be avoided, to some extent, by careful policy design, or can be addressed by regu- lation. Examples are: by abolishing choice and making health insurance compulsory for the whole population; by prohibiting voluntary exit from the public scheme by excluding some groups from public coverage, as happened in the Netherlands in 1986; and by introducing more incremental measures to tackle risk selection and increase access to coverage, such as cross- subsidies from private to public insurance, or tighter regulation of insurers, including risk adjustment (see Table 1 and Discussion on p. 324). In the following sections we examine whether the German and Dutch policies have led to risk segmen- tation and created financial barriers to private cover- age. We then assess their impact on equity in funding health care and efficiency in production, focusing on these particular analytical concepts partly because proponents of choice of public or private health insurance argue that it can enhance equity and effi- ciency, but also because they are commonly cited as key health policy goals (Aday, 1998; World Health Organization, 2000; European Commission, 2001).2 Before beginning our analysis, we make two caveats. First, the German and Dutch policies were not intended to curb public expenditure or stimulate com- petition by expanding consumer choice. In the context of partial rather than universal coverage, they aimed to increase equity in access to health care by offering public coverage to individuals who had previously relied on private coverage. Thus, they allowed people to opt into the public scheme, whereas contemporary proposals aim to enable people to opt out of it. However, once people had opted into the public scheme they were then also free to opt out of it, so analysis of the German and Dutch experience may use- fully inform current and future debates, not least by highlighting potential policy implications and demon- strating the nature and extent of regulation required to preserve the policy goals noted above. Second, the analysis which follows is not based on any ideal benchmark for equity and efficiency in health insurance markets. Rather, we broadly con- sider the impact of opting out (or exclusion from public coverage) in comparison to a system of uni- versal public coverage, as this is the starting point for current debates about health insurance choices in European health systems. Equity and efficiency may have multiple interpreta- tions. Here we consider whether similar individuals are treated equally based on the extent to which public contributions or private premiums are detached from characteristics such as age, income, family size and health status (horizontal equity); and the degree of pro- gressivity in funding health care based on the extent to which richer people contribute or pay proportionately more than poorer people (vertical equity). For effi- ciency in production, which can be defined as obtain- ing maximum output from given inputs, we consider whether competition based on risk selection (rather than price and quality) lowers incentives for private insurers in Germany and the Netherlands to make gains in productive efficiency; the extent to which private insurers minimize operating costs by avoiding administrative waste; and the extent to which they attempt to lower their prices by controlling provider payment and behaviour (Barr, 1998). Comparison of policy outcomes and regulatory responses in Germany and the Netherlands The development of choice of public or private health insurance Germany is currently the only country in Europe to offer individuals choice of public or private health insurance. Enrolment in the public scheme (Gesetzliche Krankenversicherung; GKV) is compul- sory for all non-public sector employees earning less than 46,344 a year (in 2004) (Busse and Riesberg, 2004).3 Those with earnings above this threshold and their dependants (about 20 percent of the population) Choice of public or private health insurance 317 Journal of European Social Policy 2006 16 (4) 318 Thomson and Mossialos Journal of European Social Policy 2006 16 (4) Policy outcomes Risk selection by private insurers leading to a segmented market Limited access to private plans for high risks Regulatory responses · Abolish choice of public or private health insurance; replace with a universal compulsory plan · Prohibit voluntary exit from the public plan by excluding some groups from public coverage · Introduce cross-subsidies from the private to the public plan · Restrict access to the public plan for those who choose the private plan · Tighten regulation of private plans through risk adjustment · Tighten regulation of private plans through open enrolment, lifetime cover and community-rated premiums · Tighten regulation of private plans by introducing mandatory pooling and product and price controls Implications · Adverse selection no longer a threat · Loss of public contributions and potential for concentration of high risks in the public plan · May not be sufficient to compensate the public plan · May be contested under supranational competition law · High risks may not be able to pay rising private premiums · Crude risk adjustment may encourage risk selection · Sophisticated risk adjustment mechanisms are technically difficult to implement · May encourage risk selection · May encourage risk selection Germany Proposed in current policy debates 1 994 restricted to < 65 2000 restricted to < 55 P rivate insurers must offer lifetime cover with ageing reserves to prevent premiums rising with age 2000 standard policy for > 55 Netherlands Effect from 2006 1986 higher earners excluded from public coverage 1986 cross- subsidy from private to public plan 1986 higher earners excluded from public coverage 1 986 standard policy for > 65 Table 1 Choice of public or private health insurance: policy outcomes and regulatory responses (Continued) have three options: (a) they can remain in the GKV; (b) they can opt for substitutive private health insur- ance, which exempts them from contributing to the GKV; or (c) they can abstain from health insurance altogether. The majority (76 percent) choose to remain in the GKV as voluntary members, most of the remainder purchase private coverage and only 0.1 percent of the German population has no health insurance (Busse and Riesberg, 2004). Choice of public or private health insurance was introduced in 1970, when legislation to promote equity in access extended compulsory enrolment in the GKV to white-collar workers with earnings below a specified threshold (Rosenberg, 1986). Previously, the GKV had only covered blue-collar workers. The same law also allowed white-collar workers with earnings above the threshold to enrol in the GKV on a volun- tary basis, again for equity reasons. In 1989, choice of public or private cover was made available to all non- public sector workers with earnings above the thresh- old, in order to eliminate the increasingly irrelevant distinction between blue- and white-collar workers. In the Netherlands, choice of public or private health insurance was available between 1941 and 1986. Health insurance had been voluntary for the whole population until German forces occupying the Netherlands during the Second World War introduced a public scheme which was compulsory for employees and voluntary for self-employed people (Cox, 1993). The rest of the population relied on private coverage. In 1966, the Dutch government reformed the system, establishing three public schemes (Ziekenfondswet; ZFW): two compulsory schemes for employees and older people and a voluntary scheme for everyone else. Eligibility for each scheme was subject to an earnings threshold (den Exter et al., 2004). Those not covered by the compulsory schemes, mainly self-employed people, could choose one of three options: public coverage through the voluntary scheme, substitutive private coverage,4 or no coverage at all. As in Germany, the primary reason for setting up the ZFW was to increase equity in access to health care, although it was also intended to put an end to the somewhat piecemeal development of the public scheme (den Exter et al., 2004). However, the gov- ernment was prevented from introducing universal public coverage by pressure from private insurers, who wanted to ensure that they would still be able to sell policies to a significant proportion of the population, and medical professionals, who were keen to maintain access to more profitable private patients (Maarse and Okma, 2004).5 Risk segmentation and risk selection Risk segmentation can be demonstrated by differ- ences in the characteristics of those covered by public and private health insurance. In both coun- tries, policies introducing choice of public or private coverage have developed in such a way as to result in risk segmentation. In Germany the demand for substitutive private cover is heavily influenced by age, sex, income and family size. Those most likely to be privately insured are young, single people, couples with double incomes and adult males living in what used to be West Germany (Datamonitor, 2000). Consequently, the GKV covers a disproportionate number of women and children, older people and larger families (Rupprecht and Tissot, 2000). For example, in 1999, men accounted for 52.7 percent of those with private coverage, while women and children only accounted Choice of public or private health insurance 319 Journal of European Social Policy 2006 16 (4) Policy outcomes Regulatory responses · Raise the earnings/ income threshold making more people eligible to join the public plan Implications · May entrench existing risk segmentation Germany Annually; higher than average increase in 2003 Netherlands 1994, 1997, 1998, 2000 Table 1 (Continued) Notes: = not applied. = applied. Source: Authors' estimates. for 32 percent and 15.3 percent respectively (PKV, 2000). People aged 65 and over account for 22 percent of all those covered by the GKV but only 11 percent of those covered by the largest private insurer, and voluntary members of the GKV have almost twice as many dependants (0.76 per contribu- tor) as compulsory members (0.47) (Schneider, 2003; Schnitzler, 2005). Risk segmentation can be attributed to important differences in the rules governing public and private insurers, creating opportunities for risk selection by the latter (see Discussion on. p. 324). Private premi- ums are rated according to age, sex and health status, with women facing premiums which are 3050 percent higher than premiums for men (PKV, 2002a). Private insurers can reject applications, exclude cover of pre-existing conditions, charge extra for depen- dants and offer discounted premiums in exchange for high deductibles. However, they cannot terminate contracts, must offer lifetime cover and should not raise premiums as policyholders age, unless required to do so by unexpected discrepancies between actuar- ial forecasts and the current cost of providing benefits. The problem of risk segmentation became acute soon after the 1989 law extended choice of public or private health insurance to all higher earners. During the early 1990s private premiums rose sharply for older policyholders, partly due to mismanagement and partly due to exploitation of loopholes in the regulatory framework. Private insurers had based premium calculations on average life expectancy, failing to account for the longer life expectancy enjoyed by substitutive policyholders, who come from higher socio-economic groups. This 'unexpected' dis- crepancy between premiums and benefit costs allowed them to raise premiums. Some private insurers also barred new policyholders from joining existing risk pools, which meant that existing policyholders were unable to benefit from lower premiums arising from the entry of younger people (Riemer-Hommel et al., 2003). The GKV subsequently faced an influx of older people who had previously chosen private cover but could no longer afford the premiums (Wasem, 1995). Increased risk segmentation and other factors fuelled the growth in the GKV's deficits and prompted steady rises in average GKV contribution rates (from 12.4 percent in 1991 to 13.2 percent in 1993 and 13.6 percent in 1997), which in turn created even stronger incentives for younger people to opt for private cover (Busse and Riesberg, 2004; Busse and Wörz, 2004). Financial pressures precipitated a series of reforms aimed at restricting voluntary exit from, and return to, the GKV. In 1994, the decision to leave the GKV became irreversible for those aged 65 and over, and in 2000 for those aged 55 and over (Comité Européen des Assurances, 2000). The legislation passed in 2000 also aimed to prevent future age- related premium increases in the private market by imposing a surcharge of up to 10 percent on all new private policies and 2 percent a year for five years for existing policyholders (Bundesaufsichtsamt für das Versicherungswesen, 2001). While these regulatory responses addressed, in part, the problem of people returning to the GKV and benefiting from public cover, even though they had not previously contributed to it, they largely failed to tackle risk segmentation. High risks and the risk averse are now much less likely to leave the GKV, to the advantage of private insurers, who have been swift to highlight the fact that private cover is best value for the young, single and healthy (PKV, 2002b). Prior to the establishment of the ZFW in 1966, private insurers in the Netherlands operated on rela- tively egalitarian lines; most offered community-rated premiums. During the 1970s, however, a major private insurer decided to offer discounted premiums to students, prompting others to follow suit (Tapay and Colombo, 2004). This coincided with further changes in private insurers' conduct: some began to reject applications for cover and risk-rate premiums, to exclude cover of pre-existing conditions to, and market policies with reduced premiums but high deductibles, all of which encouraged younger and healthier individuals to leave the ZFW's voluntary scheme in favour of cheaper private cover (Gresz et al., 2002b). At the same time, private cover became significantly more expensive for older and unhealth- ier people, many of whom returned to the ZFW, con- tributing to its rising deficits (Wasem, 1995). The Dutch government responded by abandoning its policy of choice of public or private health insur- ance. In 1986, it abolished the compulsory scheme for older people and the voluntary scheme for the self- employed, transferring most of their members to the remaining compulsory scheme for employees. It also changed the rules for enrolment in this scheme, estab- lishing the system in place today. Those with earnings above a threshold (32,600 a year in 2004), and their dependants, are no longer eligible for public cover. If they want health insurance, they can purchase private 320 Thomson and Mossialos Journal of European Social Policy 2006 16 (4) cover for themselves and their dependants (den Exter, 2004). Currently, the ZFW covers about 63 percent of the population and substitutive private insurance, including the WTZ (Wet op de Toegang tot Ziek- tekostenverzekeringen) scheme (see next section), 30 percent (Maarse and Okma, 2004). By prohibiting voluntary exit from the ZFW, while maintaining a market for private insurance, the gov- ernment successfully dealt with adverse selection and risk selection between public and private coverage. However, it was less successful in addressing risk segmentation. In fact, the 1986 reform of the ZFW served to entrench the unequal distribution of high risks. For example, Table 2 shows that the ZFW covers a much higher proportion of older people, and a much lower proportion of younger people than private insurers. To compensate the ZFW for the financial burden this entails, the government introduced the MOOZ (Wet Medefinanciering oververtegenwoordig- ing Oudere Ziekenfondsverzekerden) scheme (1986), which requires all private policyholders to subsidize the ZFW through an annual flat-rate contribution (den Exter et al., 2004). Financial barriers to private coverage In both Germany and the Netherlands, measures taken to restrict voluntary exit with a view to protecting the finances of the public scheme had the unintended effect of lowering access to health care for specific groups of people. Some of those who were no longer eligible for public coverage faced financial barriers to private coverage for themselves and their dependants for example, older private policyholders in Germany and older people and younger self-employed people with pre-existing conditions in the Netherlands. This problem has precipitated further reforms involving mandatory pooling, product and price controls and changes to the threshold for public coverage. In 2000, the German government introduced a 'stan- dard' policy to protect older private policyholders who could no longer return to the GKV, even if their earn- ings fell below the threshold. Open to those aged 55 and under, who have been privately insured for at least 10 years, and whose earnings are below the threshold, the standard policy guarantees access to the same level of benefits as the GKV for a premium that cannot exceed the average maximum GKV contribution (or 1.5 times the contribution for married couples) (PKV, 2001). In order to address information problems in the private market, the government also requires private insurers to inform policyholders of the irreversibility of the decision to opt out of the GKV, the likelihood of premiums rising with old age and the possibility of changing to a standard policy (Bundesaufsichtsamt für das Versicherungswesen, 2001). Every year, the government raises the threshold for compulsory enrolment in the GKV in line with increases in average earnings. In 2002, to prevent younger and healthier individuals from opting for private cover, the government proposed raising the threshold by as much as a third (Busse and Wörz, 2004). It was eventually raised by about 11 percent in 2003, from 41,400 to 45,900, but the threshold for returning to the GKV remained at 41,400 (Busse and Wörz, 2004). The Dutch government introduced the WTZ scheme in 1986 to guarantee private policyholders access to a standard policy providing a similar level of benefits to the ZFW for a fixed premium (calculated as the typical private premium for someone of average risk) and no exclusion of pre-existing conditions (den Exter et al., 2004). The standard policy covers all pri- vately insured people aged 65 and over (since 1989), or whose private premiums have been higher than the WTZ premium for three consecutive years (since 1991), and students eligible for financial assistance (since 1992). As the WTZ premium only covers part of the standard policy's costs, private insurers are compensated through a centrally administered equal- ization fund financed by annual contributions from non-WTZ private policyholders (Zorgverzekeraars Nederland, 2005). The WTZ scheme currently covers about 12 percent of privately insured persons (Ministry of Health, Welfare and Sport, 2002). Choice of public or private health insurance 321 Journal of European Social Policy 2006 16 (4) Table 2 Age distribution in the Dutch population and public and private coverage in 2000 Substitutive Population ZFW1 private and WTZ2 Age % % % 019 24.4 21.3 30.9 2064 62.0 63.4 59.0 65+ 13.6 15.2 10.1 Total 100.0 100.0 100.0 Notes:1 ZFW: public scheme covering non-long-term care. 2 WTZ: scheme created in 1986 to ensure access to private coverage for specific groups. Source: Vektis, (2000). Over time it has become clear that the WTZ scheme alone is unable fully to remove financial barriers to private cover, partly due to requirements to purchase separate policies for dependants. Consequently, the government has taken measures to increase access to public cover. Since 1998, ZFW members aged 65 and over have been permitted to stay where they are, even if their earnings rise above the threshold, while pri- vately insured persons aged 65 and over are eligi- ble for public cover if their annual household taxable income (not earnings) is less than 20,750 (in 2004) (den Exter et al., 2004). However, once they have enrolled in the ZFW they are no longer able to leave it. The Dutch government has also used the borderline between public and private coverage to benefit those just above the threshold (den Exter et al., 2004). However, any concern for equity of access has been constrained by the politics of health insurance notably, the government's interest in ensuring a stable market share for private insurers (Maarse and Okma, 2004). Impact on equity and efficiency Horizontal and vertical equity in funding health care Contributions to public insurers in Germany and the Netherlands are mainly set as a proportion of wages and are therefore independent of ability to pay. Making contributions entitles the payer, and any non- working dependants he or she may have, to a package of benefits defined by the government. The existence of a ceiling on contributions breaches vertical equity, and individual sickness funds are allowed to set their own contribution rates (Germany), or additional flat- rate premiums (the Netherlands), which breaches hor- izontal equity (Busse and Riesberg, 2004; den Exter et al., 2004). However, the degree to which public cover breaches horizontal equity is limited when compared to private cover: determined by an individual's age, sex and health status, private premiums do not cover dependants, and depend on ability to pay. This means that there may be significant differences in funding health care among the privately insured and between those with public and private coverage, even if they share the same characteristics. It is diffi- cult to demonstrate the magnitude of these differ- ences in financial terms as data regarding public contributions and private premiums are either pre- sented as average amounts (both countries) or do not distinguish between different types of privately insured persons (Germany), and cannot therefore give sufficient indication of the level of benefits covered. Nevertheless, the distribution of high risks among public and private insurers shown in the pre- vious section strongly suggests that private coverage is likely to be expensive for older people and larger families and may not even be available to those in poor health. Although the German and Dutch governments have taken action to ensure that private cover is affordable for older people and those in poor health, financial barriers probably remain. For example, the Dutch standard policy premium is still 20 percent higher than the average ZFW contribution, and neither the Dutch nor the German standard policies cover dependants, who must be separately insured. As level of earnings determines eligibility for public coverage in both countries, the public pool is funded by people with lower earnings and loses the poten- tially larger contributions of higher earners who choose private cover (Germany), or who were subsequently excluded from public cover (the Netherlands). The combination of a public pool pre- dominantly funded by lower earners and covering a disproportionate concentration of high risks means that the burden of paying for health care largely falls on those with public cover. Consequently, people pub- licly insured contribute proportionately more towards health care costs than privately insured higher earners. Over time this burden will worsen as those who have opted for private cover return to the public scheme and claim benefits towards which they have not previ- ously contributed. The public scheme may be forced to raise contribution rates, not only to cover the costs of caring for high risks, but also to compensate for the influx of new members, many of whom may them- selves be high risks. The Dutch government's MOOZ scheme attempted to rectify this anomaly, but the size of the subsidy involved is small (about 5 percent of the average private premium) and does not adequately compensate the ZFW for its concentration of high risks or for the loss of contributions from higher earners (Hamilton, 1996). Paradoxically, as ZFW contributions are based on earnings rather than income, some private policy- holders may in fact be subsidizing ZFW members who are low earners but have large non-wage incomes (Westerhout, 1999). 322 Thomson and Mossialos Journal of European Social Policy 2006 16 (4) Taking these factors into account, and assuming that private premiums are, on average, cheaper than public contributions, it is possible to conclude that a health system offering choice of public or private insurance is regressive in funding health care, and therefore breaches vertical equity. International analy- sis confirms that funding from all sources together (public insurance, taxes, private insurance and direct payments) was regressive in Germany and the Netherlands at the end of the 1980s, and in the Netherlands in the early 1990s (Wagstaff et al., 1999). However, funding through public insurance alone was not only regressive, but considerably more so than funding from all sources together due to the voluntary exit or exclusion of richer people. Because the private pool consists almost exclusively of higher earners, funding from private insurance alone was found to be mildly progressive. The analysis concluded that health care funding in the Netherlands was pro-rich in its redistributive effect, a factor attributed to the dual system of income-related public contributions for lower earners and non-income-related private premi- ums for higher earners; the same conclusion can be drawn for Germany (Wagstaff and van Doorslaer, 1997; Wagstaff et al., 1999). Efficiency in production The private market in both countries is character- ized by weak incentives to compete on the basis of efficiency in production. First, private insurers have strong incentives to avoid financial risk, either through risk selection or by shifting risk to other entities (such as the GKV in Germany and the WTZ scheme in the Netherlands; as a result of the latter, Dutch private insurers do not bear any financial risk for unhealthy and older policyholders). So rather than competing on the basis of their ability to operate more efficiently than their rivals, for a given level of quality, private insurers are more likely to compete on the basis of their ability to select risks. Analysis of Dutch private insurers' non-medical expenditure, based on a sample, shows that they spend 14 times as much on selection (28 per insured) as on efficiency measures (2 per insured) (Douven and Westerhout, 2000). Public insurers spend less on selection (10 per insured) and more on efficiency measures (3 per insured). Second, levels of competition among private insurers are low, measured by level of policyholder movement, because those who have been privately insured for some time are likely to find it difficult to change from one insurer to another without incurring higher premi- ums. Risk-rated premiums combined with rejection of applications, exclusion of pre-existing conditions, non- transferability of claims histories, and, in Germany, the existence of ageing reserves and surcharges on new policies, mean that individuals become 'locked in' to their existing policies. Consequently, movement between private insurers is minimal in both countries (Datamonitor, 2000). In contrast, a survey carried out in Germany in 1999 showed that 7.3 percent of the population had changed from one public insurer to another since the introduction of competi- tion among public funds in the mid-1990s (Zok, 1999). The proportion switching in the Netherlands is lower but has been increasing over time (Gresz et al., 2002a). In the private sector, competitive efforts focus on attracting new entrants to the market and (in the Netherlands) sales to groups (Westerhout, 1999). Private insurers that succeed in attracting new entrants will probably keep them for as long as those individuals remain in the private market, partly due to the constraints on mobility already noted, but also because market exit is determined by income level rather than choice. Not only does this encourage some insurers to behave in ways which disadvantage consumers in the long run (Riemer- Hommel et al., 2003), it also means they are less likely to compete through avoiding administrative waste and exerting control over provider payment and behaviour. For example, private insurers spend almost three times as much of their income on admin- istration as sickness funds: 16.7 percent versus 6.1 percent in Germany in 2002 and 12.7 percent versus 4.4 percent in the Netherlands in 2000. (Vektis, 2000; PKV, 2003; Busse and Riesberg, 2004). In both countries, private insurers have been slow to adopt strategies to contain costs, such as vertical integration, selective contracting or monitoring of providers' behaviour (Mossialos and Thomson, 2004). Effective negotiation of lower prices with providers and control of provider behaviour by private insurers are also limited by market fragmentation and provider power (Schut, 1995; Westerhout, 1999; Busse and Riesberg, 2004). Cost inflation tends to be much higher in the private than the public sector. For example, in Germany between 1992 and 2002, per capita expenditure among private insurers rose by 1.4 times as much as the rise in spending by sickness funds; some of this increase is due to the fact that Choice of public or private health insurance 323 Journal of European Social Policy 2006 16 (4) doctors are permitted to charge their privately insured patients higher fees (Busse and Riesberg, 2004). Discussion This review of policy outcomes in Germany and the Netherlands provides some empirical support for inequity and inefficiency in markets where there is choice of public or private health insurance, as pre- dicted by economic theory. It shows that choice of public or private coverage breaches horizontal and ver- tical equity in funding health care, heightens the degree of financial risk borne by the public scheme and lowers incentives for private insurers to operate efficiently. Policies introducing choice of public or private cov- erage have developed in such a way as to result in risk segmentation, partly through poor design and partly through the incentive structures they bring about. First, eligibility for this choice depends on level of earnings, and as income is usually correlated positively with health status and negatively with old age, it seems inevitable that the public scheme will cover a dispro- portionate amount of poorer, unhealthier and older individuals (Whitehead, 1992). Second, the choice itself creates incentives for insurers to select risks. Third, rules aimed at preventing public insurers (sick- ness funds) from explicit risk selection for example, open enrolment, wage-related contributions, auto- matic coverage of dependants at no extra cost and ben- efits defined by government make it even easier for private insurers, free from similar regulation, to attract low risks and deter high risks. It is difficult to establish the separate influence of these three factors on risk segmentation in the German and Dutch markets for health insurance. Our aim here has been simply to demonstrate how policy design and regulation have combined to facilitate risk selection by private insurers. Regulatory responses to risk segmentation and risk selection differ in their effectiveness and have varied across the two countries. German efforts to deal with these issues at the same time as maintaining choice have had the unintended consequence of limiting access to coverage for some groups. However, the more radical Dutch solution of moving from choice to exclusion of higher earners from public coverage, while protecting the public scheme from adverse selec- tion, has entrenched existing levels of risk segmenta- tion and led to problems of access. More incremental measures, such as cross-subsidies from private to public insurance, tend to be limited in their impact and could be contested under supranational competition law for example, European single market legislation (Neudeck and Podczeck, 1996; Palm, 2002). Others, such as risk adjustment and tighter regulation of insur- ers, are not only technically difficult to implement but may also be resisted by insurers (Puig-Junoy, 1999; van de Ven et al., 2000). It is beyond the scope of this article to examine why governments prefer some measures to others, but stakeholder interests are likely to have had considerable influence on the policy making process. In practice, neither country's regulatory approach has resolved the underlying issues, even after succes- sive reforms. From a theoretical perspective, abolish- ing choice and making health insurance compulsory for the whole population is the most effective means of dealing with adverse selection a conclusion which governments in both countries have recently reached (Hsiao, 1995; Barr, 1998). German proposals for com- pulsory universal health insurance are still under debate, but Dutch plans to introduce a compulsory universal scheme were approved by parliament and took effect in 2006 (Maarse, 2002; Busse and Riesberg, 2004; Rürup-Kommission, 2004). Proponents of choice of public or private health insurance argue that this type of choice is valued by consumers and may curb public expenditure on health care. The absence of relevant data makes it difficult to address the first issue. However, the extent to which individuals appreciate choice of public or private coverage may be determined by attitudes towards risk: uncertainty about future health care needs, family size, earnings and regulation all compli- cate decision making. A choice made at one point in time may, at a later stage, turn out to have been sub- optimal. Importantly, the conduct of private insurers and technical and information problems in private markets in Germany and the Netherlands have severely restricted choice for certain individuals and prevented others from exercising any choice at all. Furthermore do not know what effect choice for some has on those who do not qualify for choice or who cannot exercise choice due to poor health. The voluntary nature of choice of public or private health insurance also makes it hard to establish whether there will be a net cost or net benefit to public finances in the long term, but the possibility of adverse selection against the public scheme makes the prospect of lower per capita public expenditure unlikely. Total levels of public expenditure might fall if governments follow the 324 Thomson and Mossialos Journal of European Social Policy 2006 16 (4) Dutch model of excluding higher earners from public coverage. But given that private insurers have limited incentives to operate efficiently, increasing private cov- erage may actually lead to rises in total levels of spend- ing on health care. Advocates of opting out or excluding some groups from public coverage should also be explicit about the distributional implications. The osten- sible aim of such policies may be to shift health care costs from public to private insurance. In reality, how- ever, costs tend to be shifted in the opposite direction, from private to public coverage, as the public scheme finds itself paying for a disproportionate amount of high risks with a lower level of contributions. Our examination of the German and Dutch expe- rience suggests that the potential benefits of opting out, or excluding higher earners from public cover- age, may be overestimated in current policy debates. These policies give rise to perverse incentives and, while measures can be taken to correct any negative impact on equity and efficiency, some forms of regulation will face opposition from interest groups; others may be technically difficult to implement. Notes 1 Governments in Austria (1999), Portugal (1993) and Spain (1975) have introduced arrangements that increase access to private health insurance for specific groups, but the Austrian system involves collective rather than individual decision making, while the Portuguese and Spanish systems still require the pay- ment of statutory contributions, so the choice is one of public or private provision rather than insurance (Mossialos and Thomson, 2004). 2 Due to space constraints, lack of data, and analytical complexity, we do not consider other criteria such as efficiency in resource allocation, quality, responsive- ness, sustainability or impact on health status. 3 The article does not intend to provide detailed infor- mation about the German and Dutch health systems. This can be found elsewhere (Busse and Riesberg, 2004; den Exter et al., 2004). 4 'Substitutive' private coverage replaces coverage that would otherwise have been provided by the public scheme. 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Choice of public or private health insurance 327 Journal of European Social Policy 2006 16 (4)</meta-value></custom-meta></custom-meta-wrap></article-meta></front><back><notes><p><list list-type="order"><list-item><p>1 Governments in Austria (1999), Portugal (1993) and Spain (1975) have introduced arrangements that increase access to private health insurance for specific groups, but the Austrian system involves collective rather than individual decision making, while the Portuguese and Spanish systems still require the payment of statutory contributions, so the choice is one of public or private <italic>provision</italic> rather than <italic>insurance</italic> (Mossialos and Thomson, 2004).</p></list-item><list-item><p>2 Due to space constraints, lack of data, and analytical complexity, we do not consider other criteria such as efficiency in resource allocation, quality, responsiveness, sustainability or impact on health status.</p></list-item><list-item><p>3 The article does not intend to provide detailed information about the German and Dutch health systems. This can be found elsewhere (Busse and Riesberg, 2004; den Exter et al., 2004).</p></list-item><list-item><p>4 ‘Substitutive’ private coverage replaces coverage that would otherwise have been provided by the public scheme. It usually offers a similar level of benefits to the public scheme.</p></list-item><list-item><p>5 More detailed analysis of institutional arrangements and stakeholder views is beyond the scope of this article.</p></list-item></list></p></notes><ref-list><ref><citation citation-type="book" xlink:type="simple"><name name-style="western"><surname>Aday, L. 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Accessed February 2005 at: [<uri xlink:type="simple">http://www.zn.nl</uri>].</citation></ref></ref-list></back></article></istex:document></istex:metadataXml><mods version="3.6"><titleInfo lang="en"><title>Choice of public or private health insurance: learning from the experience of Germany and the Netherlands</title></titleInfo><titleInfo type="alternative" lang="en" contentType="CDATA"><title>Choice of public or private health insurance: learning from the experience of Germany and the Netherlands</title></titleInfo><name type="personal"><namePart type="given">Sarah</namePart><namePart type="family">Thomson</namePart><affiliation>London School of Economics and Political Science, UK,</affiliation><affiliation>E-mail: s.thomson@lse.ac.uk</affiliation></name><name type="personal"><namePart type="given">Elias</namePart><namePart type="family">Mossialos</namePart><affiliation>London School of Economics and Political Science, UK</affiliation></name><typeOfResource>text</typeOfResource><genre type="research-article" displayLabel="research-article"></genre><originInfo><publisher>Sage Publications</publisher><place><placeTerm type="text">Sage CA: Thousand Oaks, CA</placeTerm></place><dateIssued encoding="w3cdtf">2006-11</dateIssued><copyrightDate encoding="w3cdtf">2006</copyrightDate></originInfo><language><languageTerm type="code" authority="iso639-2b">eng</languageTerm><languageTerm type="code" authority="rfc3066">en</languageTerm></language><physicalDescription><internetMediaType>text/html</internetMediaType></physicalDescription><abstract lang="en">Several European countries have considered introducing choice of public or private health insurance - usually by allowing people to ‘opt out’ of the statutory scheme - under the assumption that enhancing consumer choice and stimulating competition between insurers will be beneficial. This article examines the impact of opting out on equity and efficiency in European health systems. Focusing on Germany and the Netherlands - the only European countries where this type of choice has been available to significant population groups for a prolonged period (from 1970 to the present day in Germany, and from 1941 to 1986 in the Netherlands) - the analysis suggests that current policy debates may overstate the potential benefits of opting out. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, choice of public or private coverage creates strong incentives for private insurers to select risks and leads to risk segmentation, thereby breaching equity in funding health care, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. Measures can be taken to correct these negative effects, but some forms of regulation may be politically and technically difficult to implement.</abstract><subject><genre>keywords</genre><topic>insurance selection bias</topic><topic>Germany</topic><topic>the Netherlands</topic><topic>opting out</topic><topic>private health insurance</topic></subject><relatedItem type="host"><titleInfo><title>Journal of European Social Policy</title></titleInfo><genre type="journal">journal</genre><identifier type="ISSN">0958-9287</identifier><identifier type="eISSN">1461-7269</identifier><identifier type="PublisherID">ESP</identifier><identifier type="PublisherID-hwp">spesp</identifier><part><date>2006</date><detail type="volume"><caption>vol.</caption><number>16</number></detail><detail type="issue"><caption>no.</caption><number>4</number></detail><extent unit="pages"><start>315</start><end>327</end></extent></part></relatedItem><identifier type="istex">19D4F74DFF880E918BEBC808BA0492534CF4CC79</identifier><identifier type="DOI">10.1177/0958928706068271</identifier><identifier type="ArticleID">10.1177_0958928706068271</identifier><recordInfo><recordContentSource>SAGE</recordContentSource></recordInfo></mods></metadata><serie></serie></istex></record>Pour manipuler ce document sous Unix (Dilib)
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