Private health insurance opportunities and threats

Topics: Insurance, Health economics, Health insurance Pages: 13 (2910 words) Published: April 18, 2014
Private health insurance: opportunities and threats

An Essay
Presented to the
University of Zagreb

Date, place:

11.03.2014, Zagreb

Contents
1. Introduction and overview ……………………………………………………………. 3 1.1. Why Germany as an example? ……………………………………………… 4 2. Public health insurance ………………………………………………………………... 5 3. Private health insurance ……………………………………………………………….. 7 4. Difference between public and private health insurances …………………………...... 9 5. Estimation of the difference between public and private health insurances ………….. 10 6. Opportunities of the private health insurances ………………………………………... 10 7. Threats of the private health insurants …………………………………………………11 7.1. Two-tier health care …………………………………………………………. 12 8. Conclusions …………………………………………………………………………… 12 9. References and internet sites ………………………………………………………….. 13

2

1. Introduction and overview
A health insurance as a part of the social insurance system is a type of insurance coverage, which pays for medical and surgical expenses that are incurred by the insured. The health insurance can either reimburse the insured for expenses incurred from illness or injury or pay the care provider directly.

According to the U.S. Department of commerce, the health insurance can be classified into either Private and non-government coverage or government-sponsored coverage.1 “While private health insurance represents, on average, only a small share of total health funding across the OECD area, it plays a significant role in health financing in some OECD countries and it covers at least 30% of the population in a third of the OECD members. It also plays a variety of roles, ranging from primary coverage for particular population groups to a supporting role for public systems.”2

In 2004 the private health insurance coverage of Australia, Austria, Ireland, the Netherlands and Belgium has been between 30% and 60%. In Germany, Spain, Portugal, Italy, Finland and the United Kingdom the coverage has been 10% to 30%. Almost all OECD countries have beside the public health insurance also a private system.3 The following chart shows the total health expenditure as a share of the gross domestic product in 2010 or the nearest year.

1

http://www.census.gov/hhes/www/hlthins/methodology/definitions/cps.html (11.03.2014) http://www.oecd.org/els/health-systems/33698043.pdf (11.03.2014) 3
http://www.oecd.org/els/health-systems/33698043.pdf (12.04.2014) 2

3

Chart 1: Total health expenditure as a share of GDP, 2010
(or nearest year)
% GDP
14

private

public

12
10
8
6
4
2

Estonia

(OECD Health Data 2012; Eurostat Statistics Database; WHO Global Health Expenditure Database)

Due to different regulations in several countries, I’ll focus in this essay on the German health insurance market and will explain the opportunities and threats on this example.

1.1. Why Germany as an example?
With origins dated back to 1883 Germany has the world’s oldest social health insurance system. In the year 2011 there have been 85% of the population covered by the government health insurance and 15% of a private health insurance.4 The percentage of the members of the private health insurances is constantly increasing. To be member of at least one of these systems is obligatory and ruled by law. This means all habitants of Germany are member of the public or private health insurance.

4

http://apps.who.int/whosis/database/core/core_select.cfm (11.03.2014)

4

Romania

Latvia

Lithuania

Poland

Bulgaria

Cyprus

Czech Republic

Croatia

Hungary

Luxembourg

Malta

Finland

EU27

Slovenia

Slovak Republic

Ireland

Itlay

UK

Sweden

Spain

Greece

Belgium

Austria

Portugal

Denmark

Germany

France

Netherlands

0

2. Public health insurance
The public health insurance is a government-sponsored health insurance based on plans constructed by the government, which are mostly on national level. The...
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