CAIRN-INT.INFO : International Edition

■ The ins and outs of private health care insurance in the EU

1In the European Union, the objectives of universal health care protection and access to treatment with no financial barriers have been concretised by the application of the principle of solidarity on a national scale.

2Originally, the “Bismarckian social state” introduced the institutionalisation of the guarantee against social risks, with a view to pacifying class conflicts. Immediately following World War II, the economic development of European industrial societies enabled the funding of this social construction and the deployment of each state’s different socio-economic components. This dynamic enabled European nations to elevate their level of social cohesion.

3In the early 1970s, private protection, other than that with “mutualistic” characteristics (mutual-benefit insurance), was practically inexistent in the EEC, with the exception of the Netherlands and Belgium. In these two countries, private insurers address themselves to sectors of the population (the wealthiest) that are not covered by legal (mandatory) health insurance. The first fuel crisis ushered in a change of context. Neo-liberal ideas dominated contemporary theory. Individualism grew more powerful. Social protection was the object of much criticism, fuelled by the continuing growth of health care expenditure. This is the mould from which theories in favour of “privatising” the social protection system were developed, first in the pensioners’ sector, with the circulation of the “three-pillar theory”, and then in the health care sector. From this time on, numerous insurance providers launched themselves upon this “market”, with reinforcement from conferences and publicity campaigns, proposing collective contracts (the second pillar) to employers for their employees and individual contracts for private citizens. At the same time, public expenditure administrators developed an arsenal of measures, a great number of which affected the patient/socially insured persons’ wallets. These were mainly provisions having the effect of limiting social coverage by increasing patient contributions (co-payment), introducing set prices and supplemental costs as well as removing certain medical acts or techniques from the reimbursement nomenclature. Such provisions favour the development of the potential market of private protection.

The potential market of private protection

4Throughout the past four decades, the health care sector’s share in the states’ economic activity has not ceased to grow. Table 1 gives the measure of this tendency. Generally, the portion of the GDP devoted to health care has practically doubled during this period.

Table 1

Evolution of total health care expenditure as a share of GDP (1960 – 2002)

Table 1
1960 1970 1980 1990 1995 2000 2002 Austria 4.3 5.3 7.6 7.1 8.6 7.2 7.3 Belgium 4.0 6.4 7.4 8.7 8.4 8.7 Czech Republic 5.0 7.3 6.8 7.1 Denmark 9.1 8.5 8.2 8.1 8.6 Finland 3.9 5.6 6.4 7.9 7.5 6.5 7.0 France 8.6 9.6 9.1 9.5 Germany 4.8 6.3 8.8 8.7 10.2 10.3 10.6 Greece 6.1 6.6 7.5 8.9 9.2 9.0 Hungary 7.5 6.9 7.4 Iceland 3.3 4.9 6.1 7.9 8.2 9.0 Nr Ireland 3.6 5.1 8.4 6.6 7.2 5.7 6.5 Italy 3.6 5.1 8.0 7.4 7.7 8.0 Luxembourg 3.6 5.9 6.1 6.4 5.5 6.2 Netherlands 7.5 8.0 8.4 7.8 8.7 Norway 2.9 4.4 7.0 7.8 8.0 7.1 8.1 Poland 5.3 6.0 5.5 5.9 Portugal 2.6 5.6 6.2 8.3 9.0 9.1 Slovak Republic 5.4 5.7 Spain 1.5 3.6 5.4 6.6 7.7 7.2 7.4 Sweden 4.5 6.9 9.1 8.5 8.1 8 8.8 United Kingdom 3.9 4.5 5.6 6.0 7.0 7.1 Nr Source: OECD Health Data. 2004

Evolution of total health care expenditure as a share of GDP (1960 – 2002)

5Social protection has been the principal source of funding for health care expenditure ever since it was institutionalised in all EU countries immediately following World War II. Table 2 reveals that, on average, 75% of total health care expenditure is funded by the public social protection systems.

Table 2

Evolution of public health care expenditure in total health care expenditure (1970 – 2002)

Table 2
1970 1980 1990 2000 2002 Austria 63 68.8 73.5 69.6 69.9 Denmark 87.8 82.7 82.4 82.9 Finland 73.8 79 80.9 75.1 76.3 France 75.5 80.1 76.6 75.8 76.1 Germany 72.8 78.7 76.2 78.6 78.6 Greece 42.6 55.6 53.7 52.6 51.6 Ireland 81.7 81.6 71.9 73.3 75.2 Italy 79.1 73.5 75.4 Luxembourg 88.9 92.8 93.1 89.7 85.4 Netherlands 69.4 67.1 63.1 62.5 Poland 5.3 5.5 5.9 Portugal 59 64.3 65.5 69.5 70.5 Spain 65.4 79.9 78.7 71.6 71.3 Sweden 86 92.5 89.9 84.9 85.3 United Kingdom 87 89.4 83.6 80.9 83.4 Source: OECD Health Data. 2005

Evolution of public health care expenditure in total health care expenditure (1970 – 2002)

6In most EU countries, the level of public health care expenditure fluctuated within a range of approximately 5 points during the period spanning 1970 – 2002. Generally, the share of public health care expenditure in total expenditure increased until the early 1980s. Then it levelled out and decreased. The principal explanation for this was the so-called “health care expenditure control” measures that were applied. These had the effect of reducing the level of social coverage, leaving the coverage of a growing share of health care expenditure to the initiative of private citizens.
Figure 1 illustrates the potential market for private protection. We define this as being the area not covered by the collective funding of the total health care expenditure.

Figure 1

Potential market of supplementary protection

Figure 1

Potential market of supplementary protection

Source : OECD Health Data 2005.

Typology of private protection

7Solidarity was and shall doubtless remain the principle structuring all health care policies and access to care in the European Union. It can be considered as the pedestal of the “European social model”. It was implemented by the “mutualist” movement at the beginning of the industrial era. The first form of institutionalisation of compulsory social coverage appeared in Germany, under Bismarck. During the first half of the 20th century, all the European Union’s Western countries acquired similar organisational methods, and immediately following World War II, each member state adopted a law for compulsory health care insurance.

8Another model emerged starting with the Beveridge Plan that was drawn up in 1941. It was concretised, for the first time, in 1948, under the auspices of the British National Health Service. The principle of universalisation that it implements encouraged, in Europe, a progressive extension of social coverage (at first reserved for employees) to the entire population.
Figure 2 illustrates the two models of socialised protection in effect within the European Union.

Figure 2

Typology of socialised protection

Figure 2

Typology of socialised protection

Social insurance systems

9Social insurance systems generally offer category-specific protection. In Belgium, there are two distinct regimes: the largest one is comprised of approximately 90% of the population and that of independent workers is limited to covering “big risks”. [1] In France, there are three main regimes: that of employees and public sector workers, that of non-salaried workers and that of farmers. In Germany, people whose income is over the affiliation ceiling are not obliged to take out insurance policies. In the Netherlands, people whose income is over the affiliation ceiling were excluded from the public system until 31 December 2005. These different systems are managed by social partners.

10In countries with compulsory social insurance, two methods of covering health care costs emerge.

11• On the one hand, countries practicing the reimbursement of medical costs, such as Belgium, Luxembourg and France. The beneficiary has freedom in choosing their health care provider, which can be state-approved or not.

12• On the other hand, countries delivering benefits in kind: Austria, Germany and the Netherlands. In these countries, the patient, who is affiliated with a health care insurance provider, receives the treatment they need without paying anything, as long as they consult a health care provider authorised by their health care insurance provider. The social protection
system ensures the patient the delivery of health care services necessary to their state of health. The access to care is staggered: the general practitioner refers the patient to specialised doctors.

Countries with national health care services

13In these countries, the organisation of the health care system and access to health care are integrated. The central or decentralised state provides health care on demand for their citizens by guaranteeing them access to health care services. In general, the patients do not pay for anything, with the exception of set prices in certain cases. Protection is usually universal. Nevertheless, in certain countries, there are throwbacks to previous category-specific protection. This is notably the case in Denmark (in relation to the criterion of the patient’s free choice of provider) and in Ireland (based on income level: free health care for category I and paying for category II). In most of the countries concerned, funding for the national health care services operates through taxation (United Kingdom, Ireland, Denmark, Finland, Sweden, Norway and Portugal).

The different forms of private protection

14In each member state, the forms of the development of private protection are related to the mode of socialised protection (Lewalle 1993).

15Generally, a distinction can be made between three types of voluntary private health care insurance (Hermesse et al. 1992):

  • Substitutive coverage is aimed at persons excluded from or exempt from compulsory protection;
  • Alternative or supplementary protection is designed to cover medical care services dispensed by private health care providers outside the limits of compulsory protection;
  • Complementary coverage covers costs billed to patients for medical goods and services not covered or partially covered by compulsory protection.

Private substitutive health care insurance

16This is essentially proposed in Germany and in the Netherlands. [2] In Germany, persons with high incomes (exceeding the affiliation ceiling), independent workers and public sector workers can obtain private health care insurance. They can choose between the mandatory social insurance and private health care insurance. [3] If they leave the public system, they can reintegrate it [4] (Busse 2000). In the Netherlands, the entire population is covered for chronic and long-term treatment by the AWBZ (first tier). [5] For regular health care (second tier), until 31 December 2005, employees and independent workers with high incomes [6] were excluded from compulsory health care insurance and could obtain private health care insurance. At 65 years of age, persons with private insurance whose income descends beneath a certain level [7] can choose to return to the compulsory system. In Spain, only public sector workers can leave the national health care service and sign a contract with a private health care insurance provider (MUFACE, MUGEJU or ISFAS) to which the employer (the state) contributes. [8] In Belgium, independent workers who are only protected against “big risks” by compulsory insurance can take out a substitutive insurance policy to cover their “small risks” or ambulatory care.

Private alternative health care insurance

17It allows access to private medical care offered in parallel to the benefits dispensed by the public health care system. Policyholders’ demand for this coverage is motivated by long waiting periods for care in the national health care services, the desire to be treated by “renowned” health care providers or to benefit from a higher level of comfort (private rooms, etc.). [9]

Private complementary health care insurance

18This insurance is more linked to social insurance systems that participate in the patients’ medical costs. It also exists in countries endowed with a national health care service since the introduction of patient cost sharing, or when social coverage is not equivalent for everyone. In Denmark, it concerns the 3% of the population that opted for freedom in consulting a doctor, so as to cover the resulting supplementary costs. In Ireland, it concerns the two thirds of the population that do not have the right to free medical care and who partially or totally pay for certain treatment (dental care, for example).

Figure 3

Typology of private protection

Figure 3

Typology of private protection

19Compulsory health care insurance systems determine both the form of private insurance and its level of necessity. Although the impact of private protection on health care systems remains weak, it is regularly examined by decision-makers responsible for matters of social protection and fosters increasingly diverse and varied products that attract policyholders to the extent that they are generally offered as part of the package of supplementary welfare benefits for insured workers.

20Ever since 1990, the private health care insurance market has undergone continual development. Cost controlling policies implemented by national governments have transferred part of health care expenditure to households, accentuating the latter’s need to have recourse to complementary insurance policies. In the national health care services, insufficient funding has generated quality problems and has increased waiting lists, forcing patients to find treatment in the private sector, and thus stimulating the need for alternative private insurance.

■ Two types of players in health insurance

21The level of demand for private health care insurance and access to health insurance is influenced, in great part, by two types of players with different objectives: mutual (or mutual-benefit) insurance providers and health care insurance providers.

Mutual insurance systems

22Historically, the first forms of organised protection against the risk of illness were developed by mutual insurance organisations and provident societies. They were destined to compensate the loss of work capacity in case of illness or to aid the worker to restore said capacity. The risks were mutualised, organised on a not-for-profit base, within the framework of spontaneous local initiatives, professional organisations or diverse social groups.

23In most European countries, mutual insurance providers are at the base of public health care insurance. In certain member states, public health insurance is still managed by them. Today, most mutual organisations propose complementary coverage that is built around compulsory health care insurance.

Table 3

Place occupied by mutual insurance providers in the management of health care protection1

Table 3
Compulsory Substitutive Alternative Complementary Belgium yes yes (a) - yes Denmark no - yes yes France yes, partially (b) - - yes Germany yes no - no Greece no - yes yes Ireland no - yes yes Italy no - yes yes Luxembourg no - - yes Netherlands yes yes (c) - yes (d) Portugal no - yes yes Spain no yes yes yes United Kingdom no - yes yes

Place occupied by mutual insurance providers in the management of health care protection1

24Owing to their historic role and their number of policyholders, mutual insurance providers play a major role. [10] In the health care field, the functions they fulfil go beyond the insurance activities performed by commercial insurers. Mutual insurance providers are not-for-profit associations of individual policyholders, which offer protection and democratically defined social services [11] financed through solidarity, with the purpose of improving the social conditions of their members. They do not practice risk selection or segmentation and offer a life annuity guarantee. In order to ensure their social mission and their specific commitments vis-à-vis their members, they generally benefit from a specific legal status. National legislation concerning defines their sphere of activity as encompassing, within the field of health care, the functions of prevention, health education, social cohesion actions, reinforcement of solidarity and reduction of inequalities, among others.

The insurers

25With the exception of Germany and the Netherlands, commercial insurers’ interest in the health care sector is, historically, rather recent. They propose group contracts and products designed for sections of the population with average and high incomes. They purely insurance-related commercial management techniques: risk selection, segmentation of potential policyholders and the limitation or exclusion of bad risks. They do not aim to offer health care access to the most unstable population groups, or to cover chronic and psychiatric treatment.

26The income of the health care insurance branch in the EU with 12 and 25 member states, as indicated in European Insurance Committee (CEA) statistics (95% of the insurance market) has doubled over the last decade.

27Table 5 shows the constant growth of the health care branch’s annual income in the non-life insurance sector, i.e. close to 4 points in one decade. This progression underscores the importance of this activity for insurance providers today, while in the early 1990s, the health care branch was above all seen as a product to draw customers.

Table 4

Evolution of the income of the health care branch of insurance, in millions of euros

Table 4
Health care branch EU 25 EU 12 1992 39,153 34,447 1993 43,487 38,483 1994 47,026 41,549 1995 51,018 45,295 1996 53,924 47,781 1997 56,514 49,060 1998 61,829 51,150 1999 61,899 52,987 2000 65,760 55,340 2001 69,212 58,355 2002 73,823 62,460 2003 78,818 66,856 Source: CEA June 2005.

Evolution of the income of the health care branch of insurance, in millions of euros

Table 5. Evolution of the health care branch’s share in non-life insurance

tableau im8
Health care branch 1992 1997 2002 2003 Cea insurers EU 25 21.0% 24.1% 23.7% 24.1% Cea insurers EU 12 24.4% 27.6% 27.8% 28.1% Source: CEA June 2005.

Table 5. Evolution of the health care branch’s share in non-life insurance

■ The emergence of tensions between players: examination of a mutualist initiative for cost solidarity in Belgium’s private protection system

28In Belgium, commercial insurers occupy a rather marginal place in the health care field. This can mainly be explained by the crucial role played by mutual insurance providers in the management of the health care system. Ever since the introduction of the compulsory insurance system, they have fulfilled the function of an insurance organisation for almost the whole of the population. [12] They participate in health care insurance management organs and negotiate agreements to set reimbursement rates with health care professionals. In addition, they manage supplementary services, the first purpose of which is to overcome the deficiencies of compulsory insurance. [13] Finally, they initiate and participate in the development of numerous health care and social activities.

Risk mutualisation

29In January 2000, The French-Speakers’ National Alliance of Christian Mutualities (Alliance National des Mutualités Chrétiennes francophones) [14] launched an original initiative by creating a service complementary to compulsory health care insurance for covering hospitalised patients’ outof-pocket expenses. They observed, after various studies, that households’ out-of-pocket expenses were constantly growing and were posing a certain number of financial difficulties for sectors with low to average incomes. Affiliated members of these mutual insurance providers now only have to pay a €250 excess fee per hospitalisation, [15] and €500 per family per year, regardless of the number of hospitalisations. All patient co-payments, supplementary costs, medication and diverse equipment (notably implants and prostheses) are covered, with the exception of supplementary fees and room charges for private rooms. [16] No affiliate is excluded. Each one benefits from this coverage regardless of age or the pathologies from which he or she suffer. There is no medical examination for admission, no preliminary inquiry or questionnaire on previous medical history. The funding is ensured by a compulsory family contribution of around €3 per month.

30This service is also innovative in the contractual relationship it offers hospital establishments. Labour agreements were negotiated with most of the hospitals in the French-speaking section of the country. The authorised establishments are invited to participate in “quality circles”. These are composed of hospital and mutual insurance provider doctors who examine freely chosen themes with a view to improving the quality of treatment. This process favours exchanges, allows information to be shared, provokes reflection and outlines plans to evaluate the quality of treatment and access to health care. Brought together in this way, the various players in the system now have constructive dialogues on the pursuit of common objectives, where there was once tension between them.
The new hospitalisation service of the Belgian Mutualités Chrétiennes Francophones reintroduces the principle of solidarity into complementary social insurance protection, where competition is the rule. This competition is exercised first between the mutual insurance providers, which each have the possibility of creating the services they judge to be useful to and necessary for their policyholders. On this level, we have not observed any change in the strength of mutual insurers following the arrival of this service, but there have been modifications in the structure of their affiliates. Elderly persons switched to a different mutual insurance provider in order to benefit from this form of coverage, while employees, generally covered by group contracts through their companies, refused to pay the required increase in contributions and opted for another mutual insurance policy. Competition is also exercised vis-à-vis commercial insurance providers looking to capture this constantly growing market.

The reaction of insurance companies

31Commercial insurers [17] offering classic insurance products have hardly appreciated these initiatives by the Alliance Nationale des Mutalités Chrétiennes Francophones. One month after this new service was launched, they lodged a complaint with the Brussels commercial court demanding the application of the Belgian law on commercial practices, evoking unfair competition, distortion of competition, abuse of a dominant position, etc. The insurers’ legal action aimed to render the law on mutual insurance providers inoperative and to have legislation on insurance applied to these organisations.

32Following a question of law submitted by the Brussels commercial court, the Belgian court of arbitration judged the new mutual insurance service to respect legislation on mutual insurance providers, on the basis of judicial precedent in Belgium. The commercial court judged that while the case was admissible, it was not founded, and when the matter was then brought before the court of appeal by the insurance providers, the court judged that if the mutual insurance providers were businesses, they were bound by a specific law that obliged them to respect values and rules such as solidarity, that competition was applicable within the competent legal field and that the legal provisions on commercial practices upon which the insurance providers had founded their charges were not applicable. Consequently, the health care insurance providers’ case was dismissed.
This conflict is particularly interesting as it lies at the confluence of two philosophies on health care risk coverage. The question that emerges from this situation is that of the place of solidarity in the protection of health care risks. Can it still be brought into play? As soon as it appears to gain ground, it is attacked. This is doubtless because it disturbs and questions the insurance providers’ mode of operation. By excluding all risk selection, it contradicts the application of private insurance providers’ management rules and, consequently, the privatisation of solvent risks.

■ Must regulations be introduced on an EU-wide scale?

33Insurance providers and mutual insurance providers have historically operated in different segments of the health care risk field. In the past two decades, the evolution of this sector has modified the players’ position and behaviour. The growing need of patients/policyholders to have recourse to alternative or complementary protection as well as the development of the internal market of health insurance increases the potential for conflict between the players. Currently, accentuating regulation in this field has become not only desirable but also necessary.

34Tax issues are also a sensitive question. In 1993, the French federation of insurance providers (Fédération Française des Sociétés d’Assurance, FFSA) lodged two complaints against French authorities. The FFSA considered that mutual insurance providers and provident societies were fiscally favoured in terms of corporate income tax and insurance premiums. The FFSA alleged that the 7% tax exemption on insurance premiums and other advantages were in conflict with the rules of competition and likely to discourage foreign insurance providers. After several years of silence, the European Commission’s Competition Directorate General began proceedings against the French authorities in February 2001, enjoining them to take the appropriate measures to abolish the fiscal advantages accorded to mutual insurance providers and “provident institutions”. The Competition DG nevertheless accepted selective taxation measures for not-forprofit organisations.

Freedom to provide services

35The single market for private health care insurance went into effect on 1 July 1994 with the third generation of non-life-insurance directives. The first generation [18] had allowed insurance providers to establish a branch office or an agency in another member state. The second generation [19] implemented the principle of freedom to provide services solely for industrial risks. The third non-life insurance directive [20] completed the process of applying freedom to provide services to all risks, including the health care branch for private citizens.

36The entire legal framework is based upon the principle of free competition within the EU. From now on, governments are no longer authorised to regulate the prices and conditions of insurance products in order not to distort competition between insurers. As for consumer protection, it is essentially reduced to financial safeguards against the consequences of the insolvency of insurance providers. [21]

37The member states’ jurisdiction over the control and regulation of insurance conditions within their territories is not, however, abolished in the case of conflict having a bearing upon legal provisions in terms of public interest in the state in which the risk is situated. [22] The notion of public interest has been defined, since 2000, by a statement from the European Commission, [23] based on the jurisprudence of the CoJEC (Court of Justice of the European Communities).

38The “insurances included in legal social insurance regimes” are explicitly excluded from the insurance directives’ field of application. [24] The CoJEC affirmed this in the Garcia ruling [25] by recalling that not only were the social insurance organisations excluded, but so were the types of insurance and operations that they offered in this capacity.

39Nevertheless, certain doubts surfaced concerning the status of voluntary public health care insurance, as it applies to “high income policyholders” in Germany or “low risk independent workers” in Belgium. These insurances are generally administered by social insurance agencies and integrally apply the same rules as those in effect for compulsory insurance. Given that legal voluntary health care insurance is in competition with private insurance, some consider it to be a commercial activity, whether it has commercial objectives or not (Mossialos et Thomson 2001).
In view of the extent of this coverage, the national governments concerned have intervened to ensure access to them is guaranteed. In the Netherlands, in 1986, voluntary public health care insurance was abolished, transferring 700,000 persons to private insurance. In order to avoid any form of exclusion or risk selection, a “standard” insurance policy was introduced within the framework of the law on access to health care insurance (WTZ). It fulfils the function of a substitutive insurance comparable to the legal coverage for which the premium amount is defined by law. A similar legislation was introduced in Germany. It obliges health care insurance providers to offer policies to persons over 55 years of age who have been insured by the private sector for a minimum of 10 years. These contracts cover benefits comparable to those of legal health care insurance for a rate equivalent to the average contribution for legal health care insurance. In Germany, substitutive health care insurance is based on life insurance rules and health care insurers cannot terminate contracts or increase premiums because of age.

The notion of public interest

40In order to preserve public interest, it is admitted within the EU that the states adopt or maintain legal provisions that guarantee policyholders access to health care insurance regardless of their age or state of health. Article 54 of the third non-life insurance directive authorises regulatory exceptions founded on public interest as stated in article 28 in the domain of private health care insurance. When private insurance is partially or entirely substituted for compulsory health care coverage, a member state can require that the contract conform to the legal provisions specifically protecting public interest. It can, moreover, require the prior notification of the policy’s general and specific conditions. Exclusively in Germany, article 54-2 allows the requirement that the health care insurance technique be analogous to that of life insurance, with specific provisions regarding premiums, the constitution of old age reserves, the termination of contracts, etc. Under these circumstances, the original member state must receive all statistical data pertinent to controlling the premiums’ calculation base.

41Although article 54 refers to substitutive private health care insurance, it can also apply to complementary coverage. In Ireland, national health care service benefits are completed by a regulated complementary health care insurance system for average and high-income groups (category II) who do not benefit from entirely free access to care. This private insurance is provided on a not-for-profit basis, mainly by the Voluntary Health Insurance Board (VHIB). [26] In order to preserve this system, Ireland used the notion of public interest as defined by the third non-life insurance directive. They agreed to open their market to commercial insurance providers while imposing a law, the Health Insurance Act, with rules to respect. [27] This legislation, which went into effect on 28 March 1996, obliged insurers to mutualise risks (community rating), prohibited risk selection and guaranteed life annuity. In order to ensure the application of these rules, Ireland created a risk-balancing fund.

42The establishment of freedom to provide services in terms of health care insurance inevitably brought about debates on fair competition. Any preferential practice or treatment likely to distort competition is, in principle, prohibited. [28] Anti-competitive behaviour or measures can nonetheless be justified for reasons of public interest. [29]
If private health care insurance, independent of its not-for-profit nature, is considered to be an economic activity, it is subject to the rules of competition. [30] under certain conditions, nevertheless, these rules need not be applied. in the albany international [31] case, the cojec considered that the compulsory participation in a pension fund established in a sectorial collective labour agreement is not a matter covered by article 81-1 of the treaty prohibiting any agreement between providers likely to affect intercommunity trade and intended to hamper, restrain or distort competition. the court based its ruling on the objective of attaining a high level of employment and social protection as stated in article 2 of the treaty. for the court, “the objectives in terms of social policies pursued by such agreements would be seriously undermined if their administration was subject to article 85-1 of the treaty when they are collectively seeking to adopt measures aiming to improve work and employment conditions.” this decision was subsequently confirmed for substitutive health care insurance based on collective labour agreements. [32]

For regulation based upon an adapted conception of competition

43European integration is principally based on opening markets within the EU. The application of this principle in the health care domain requires detailed preliminary reflection given that health care is a particular sector.

44• The risk is highly concentrated: 5% of the population absorb 60% of health care expenditure; 20% total 80% of all costs. This concentration is higher in hospitals as 10% of the population is responsible for 90% of hospital expenditure.

45• The risk in terms of health care treatment is predictable in a certain number of situations. Persons presenting high risks can easily be identified through factors such as age, gender, medical history (past), social situation, etc. In addition, with the new developments in genetics, these risks become predictable.

46Although the private health care insurance market is not regulated, forprofit insurance providers are above all seeking to attract good risks by proposing relatively low premiums to these categories of the population. To do this, they are likely to implement severe exclusions and limit guarantees after carefully cream-skimming good risks.

47As complementary health care insurance is today almost indispensable for accessing health care, new rules are necessary to make the health care insurance market work effectively by working economic principles into the European social model and European values (Mossialos et Thomson 2001) In December 2000, the European Parliament adopted a resolution in terms of complementary health care insurance that proposed the inclusion in the EU Charter of Fundamental Rights of the right of access for every citizen to necessary high-quality treatment within reasonable time limits. In addition, the resolution suggested applying ethical principles and demanded that the following rules be observed by all private insurance providers, whether non-profit or not, so as to define a basic universal service that does not discriminate on the basis of finance or state of health:

48• The use of personal medical data (e.g. genotype) is prohibited.

49• Practicing preliminary medical examinations (with the exception of medical questionnaires) is prohibited.

50• Transparency in planning modifications of premiums in relation to age.

51• Organisation of a cost-balancing system to cover the costs of serious illnesses or pathologies ( “catastrophic illnesses”).

52• Mediation procedures.

53This new parliamentary awareness is welcome insofar as no norm existed in the EU for consumer protection. There are no directives concerning policyholders’ rights or those of patients.

54It is presently incumbent upon the European Commission to formulate concrete propositions. Some suggest developing a fourth generation of directives in terms of insurance to create a larger regulatory framework for insurance against human and social risks so as to prohibit any risk selection, to offer life-annuity health care insurance and to avoid all contract termination due to age or state of health.

55European authorities are implementing changes to the EU Services Directives. Following the European Parliament’s amendment of the text of the 15 February 2006 plenary session excluding health care from the field of this proposition, the Commission rapidly published a communication on public interest social services, also excluding health care from the field of application. [33] Notwithstanding, this communication entrusts the member states with the responsibility of defining their social services’ public interest missions.
Some time will be necessary for the European legislative process to make headway in these domains. Reflection on these questions is nonetheless progressing. In the beginning of April 2006, the European Commission agreed to circulate a preliminary note in June 2006 on the appropriate instruments to adopt for regulating the health care sector. This is all the more necessary in that judicial insecurity is on the rise, and new questions emerged immediately following the announcement of the AOK [34] ruling by the CoJEC on the application of criteria defined for compulsory health care insurance to private coverage.

■ In perspective: the progressive institutionalisation of the “three-pillar” model

56In the early 1990s, member states encountered numerous financial difficulties in access to health care, principally among those categories that had been weakened by health problems (principally chronic illness) and social problems resulting from an accumulation of delicate situations that were economic (unemployment, debt, etc.), family-related (separation, divorce, single-parentage), legal (civil and/or criminal convictions) in nature. In order to tackle the emergence of this “social fracture”, certain member states adopted positive selectivity measures to improve financial accessibility to health care.

57In Belgium, since the end of 1994, a provision exonerates categories of persons with low income (guaranteed minimum income beneficiaries, the handicapped, the elderly, the unemployed, the disabled, orphans, widows/ widowers, etc.) from co-payments above and beyond the amount of €450 in out-of-pocket expenses for care received.

58In France, the socially insured have been exonerated from co-payments for certain pathologies (long-term affections, Affections de Long-Durée, ALD) for several decades. However, in the last 20 years, this instrument has proved to be insufficient to cover the increase in patients’ out-ofpocket expenses for treatment. This was the principal reason for the establishment of “universal health care coverage” (couverture maladie universelle, CMU) in 2000. This system offers two types of coverage: the first provides access to mandatory health insurance for those who are no longer entitled to it (150,000 beneficiaries); the second offers complementary health insurance for six million beneficiaries who are not able to pay for complementary protection, which has become indispensable (Volovitch 1992). The CMU beneficiary has nothing to pay, as the “third-party payer” (direct payment by insurers) system is systematically applied. Fee agreements are notably negotiated for dental and optical prostheses.

59In short, the CMU restores the right to free health care when a household’s or individual’s income is inferior to a ceiling that has been determined according to regulations. It reintroduces the cost sharing principle insofar as the funding of complementary insurance is principally borne by those who have complementary coverage, i.e. over 80% of the population.

60This recent compromise within French society could doubtless be negotiated thanks to the introduction of a new article (Article 21) into French labour regulations. This stipulates that: “In a company, when employees are not covered by a branch agreement or a company agreement defining the workings of a provident health care regime, the employer is bound to engage in negotiations on this theme each year.” This text does not only open the way for the development of collective complementary insurance providers, it also institutionalises them. This is of unquestionable advantage to the insurers and provident institutions occupying a dominant position in this complementary insurance market segment (group). Conversely, the legal incitement to make collective contracts could have repercussions on the volume of individual contracts insofar as some employees will no longer need to keep personal complementary coverage.

61These social adjustment mechanisms allow us to understand the architecture of health care coverage, which is progressively structuring itself according to the “three-pillar theory”: the first is constituted by compulsory social insurance, the second by collective complementary coverage and the third by personal insurance encouraged by aversion to risk. The obstacle that could have been represented by the low-income categories of the population to the application of this architecture has been lifted in France with the establishment of the CMU.

62This “pillarisation” of health care protection is a compromise between the different players and, principally, public authorities, social partners, administrators in the sectors of compulsory and complementary health care insurance, and health care professionals. Policymakers can guarantee the maintenance of social coverage while adjusting it according to budgetary needs without the fear of raising strong protests, because the other pillars are in a position to absorb part of the growth in expenditure and the remaining costs. Employers have less risk of seeing their social health care contributions increase. They can also use the leverage provided by a group insurance contract to set the rates of their complementary insurance contributions, while benefiting from an instrument for managing human resources. The insurers can hope to reinforce their positions in this market and can pursue the experiments they have implemented to increase their knowledge of this sector.
In this scenario, the socially insured whose living conditions are superior to those benefiting from the CMU (France) or the MAF (Belgium) will lose out because the health care insurance systems are becoming increasingly fragmented and they always end up footing the bill of the increase in costs. “Positive” selectivity (measures of protection in favour of disadvantaged categories through the CMU and the MAF) favours coverage by social insurance and the recourse to complementary insurance.
This scenario is currently taking hold in the Netherlands with the reform that was implemented 1 January 2006, and in Germany since the introduction of patient co-payments in 2004, while the national health services are also adopting this approach to the transformation of health care protection and its financing methods.

■ Conclusion

63Health care insurance systems were originally governed by public norms imposed on everyone. These resulted in a social compromise between the

64systems’ principal financers, in order to demarcate the contribution effort and define the field of social coverage. It then became necessary to implement labour agreement mechanisms establishing the health care providers’ commitments regarding rates. Health care providers played an increasingly decisive role in the administration of health care systems, to the point that this labour agreement regulation became its keystone. Nevertheless, existing structures do not always seem to be able to attain the allotted objectives in terms of controlling health care expenditure. The increasingly pronounced use of competitive practices doubtless constitute one of the principal causes, especially given public policy administrators’ weakness in implementing tools to regulate the medical technology market, the heavy concentration of production of medical goods, the increasing scarcity of certain health care professionals, the emergence of centres of excellence, and so on.

65The interdependent structure of health care insurance systems is today faced with the pervasion of the health care sector with market principles, resulting from the worldwide influence of liberalism and economic constraints imposed on social policies.

66• This context of market internationalisation and the development of mobility creates a demand for trans-national, uniform protection from social risks, which favours the development of equivalent health care coverage, regardless of the country in which the treatment is dispensed.

67• Reforms of public health care systems have authorised the introduction of rules of competition that have increased the vulnerability of social coverage, notably with respect to the principles of the European Union Treaty. Diverse rulings by the CoJEC testify to this fact.

68• The ever-greater transferral of health care costs to household budgets has led to increased recourse to private health insurance coverage. Private insurance amplifies the competitive dynamic within health care systems by proposing guarantees for non-covered treatment, treatment dispensed by private providers and the reinsurance of co-payments and supplemental costs.

69These trends pose the central question of the future of compulsory social insurance and, at the same time, the level of state intervention in the health care system. These societal transformations are rooted in the evolution of values (Brechon and Tchernia 2000). To what extent might the growing individualisation that increasingly shapes social relationships facilitate the emergence of a demand for a personal definition of levels of solidarity and the group to which one belongs?

70If this is the general trend, the role of public authorities risks being limited to managing a basic universal service (for unprofitable persons and services) and regulating, from the sidelines, competition between private players in order to safeguard a minimum of rules governing public interest.
Companies will be responsible for managing the second tier of coverage for their employees, according to their financial capability and desire to use this opportunity as an instrument for managing human resources. Finally, the third pillar of coverage will be reserved for categories with average and superior incomes who have an aversion to risk and who can progressively, as their incomes increase, offer themselves maximal protection.
Such a scenario has a high probability of developing in coming years, as we can see the beginnings of the fragmentation of social insurance coverage systems. It would echo the one that has emerged in pension funding.


  • [*]
    Mission Head for European Affairs and cross-border health care cooperation at the National Alliance of Christian Mutualities (Belgium).
  • [1]
    Mainly hospitalisation benefits.
  • [2]
    Ever since the Dutch health care insurance reform that went into effect on 1 January 2006, legal health care insurance has been generalised for the entire population, rendering substitutive-type insurance policies inoperative, in favour of private complementary insurance policies.
  • [3]
    Employees can leave the compulsory health care insurance system when their salaries exceed the threshold of €46,800 per year in 2005.
  • [4]
    75% of employees whose income is superior to this threshold prefer to remain in the legal health care insurance system. Those who leave are generally young, single or couples with two incomes. Public sector workers can easily change systems given that the state subsidises 80% of their insurance policies.
  • [5]
    AWBZ comprises hospital care after one year, psychiatric care and home care.
  • [6]
    In 2005, employees whose annual salary exceeded €33,000 and independent workers whose taxable income exceeded €21,050.
  • [7]
    €21,000 per household in 2005.
  • [8]
    Almost 85% of public sector workers are covered by substitutive health care insurance.
  • [9]
    In Ireland, almost 40% of the population have alternative health care insurance.
  • [10]
    In Belgium, mutual insurance providers aggregate 99% of the population. In France, mutual insurance providers cover over 50% of the population and account for 59% of health care costs of complementary health insurance. In the United Kingdom, the British United Provident Association (BUPA) covers almost 40% of the market.
  • [11]
    In their capacity as associations of persons, mutual insurance providers function along “selfmanagement” lines. Members directly intervene in the definition of the mutual insurance provider’s policy. This aspect generates a specific dynamic based on the health-care-related interests of the member-consumer, allowing the latter them to adapt services to specific needs.
  • [12]
    98% of the Belgian population are members of a mutual insurance organisation. There is a public health care provider (CAAMI), instituted when compulsory health care insurance was implemented in order to guarantee each citizen the free choice of taking out a policy with a mutual insurance provider or a public establishment. But this organisation insures less than 1% of all social beneficiaries.
  • [13]
    These are primarily services financing the transportation of the ill, convalescence, home care, health care equipment, aid for the elderly and handicapped, among others. These services are funded with contributions, the annual amount of which is around €100 per family.
  • [14]
    The Alliance Nationale des Mutualités Chrétiennes insures 45% of the Belgian population. In the French-speaking part of the country, they aggregate over one million beneficiaries, i.e. 10% of the total population.
  • [15]
    €125 when concerning children under 18 years of age and €50 in case of outpatient hospital treatment.
  • [16]
    Private rooms are comforts demanded by the patients. The provider can request supplementary fees that generally range from 100% to 150% but that can reach 300% in certain private hospitals. Admissions to individual rooms account for 20% of hospital stays.
  • [17]
    These are mainly DKV, AG Fortis, Axa Royale Belge and the professional association of Belgian insurance providers, Assuralia.
  • [18]
    First non-life insurance directive 73/239/CEE of 16 August 1973.
  • [19]
    Second non-life insurance Council directive 88/357/CEE of 22 June 1988.
  • [20]
    Council Directive 92/49/CEE of 18 June 1992 relating to coordination of legislative, regulatory and administrative provisions concerning direct insurance other than life insurance and modifying the directives 73/239/CEE and 88/357/CEE (third non-life insurance directive), Journal Officiel L 228, 11 August 1992.
  • [21]
    Article 31 of the third non-life insurance directive guarantees prior communication by the insurer of the legislation applicable to the contract and claims processing.
  • [22]
    Article 28 of the third non-life insurance directive.
  • [23]
    EC Communication, C (1999) 5046 of 2 February 2000, “Freedom to provide services and public interest in the insurance sector”.
  • [24]
    Directive 73/239/EEC article 2-1d.
  • [25]
    CoJEC, 1996, Garcia and others/Mutuelle de Prévoyance Sociale d’Aquitaine and others, C-238/94
  • [26]
    The VHI covers 95% of 1.5 million persons having voluntary health care insurance policies.
  • [27]
    The VHI, previously under state administration, was transformed into a public provider with total commercial freedom.
  • [28]
    Articles 81 to 88 of the Treaty.
  • [29]
    Articles 81-3, 86-2 and 87-2,3 of the Treaty.
  • [30]
    CoJEC, 16 November 1995, Fédération Française des Sociétés d’Assurance/Caisse Centrale de la Mutualité Sociale Agricole (Coreva), C-244/94.
  • [31]
    CoJEC, 21 September 1999, Albany International BV/Stichting Bedrijfspensioenfonds Textielindustrie, C-67/96.
  • [32]
    CoJEC, 21 September 2001, van der Woude/Stichting Beatrixoord, C-222/98.
  • [33]
    EC Communication on “public interest social services in the European Union”, Com (2006) 177 final, Brussels, 26 April 2006.
  • [34]
    CoJEC, 16 March 2004, AOK Bundesverband e.a./Ichthyol-Gesellschaft Cordes, Hermani
    & Co C-264/01, C-306/01, C-354/01 and C355/01


The health care systems that have been developed in the EU share common values and principles which constitute the “European social model”. They are structured upon the logic of Bismarckian or Beveridgean solidarity and cover the entire population. For two decades, they have been confronted with a strong growth in health care expenditure, given the evolution of medical practices, which are more and more costly, the growth in demand for care and demographic ageing. By adopting measures to control expenditure, European countries have increased patients’ participation in costs, consequently increasing the need for complementary health insurance to cover the “remaining costs” or to access private care. Notwithstanding, private health care insurance only fulfils a secondary function. The scope of compulsory protection and the manner in which it is organised fundamentally determines the demand for and forms of private protection. Generally, this develops where there are gaps in social coverage. Commercial and non-commercial players have traditionally operated in different segments of the market. However, the widening of the field and the European integration process have modified their strategies. Tension has surfaced and conflicts have developed, creating a need for regulation. It appears that only the European Union is in a position to undertake this task at a time when many member states are devising scenarios for threetier protection within a context of fragmentation of social protection.


  • AIM (2002), Les systèmes de protection de la santé, structures et tendances dans 14 pays, Commission des systèmes d’assurance maladie, Brussels, 266 pp.
  • AIM (2005), Protection santé aujourd’hui, structures et tendances dans 12 pays, Groupe sur la réforme des systèmes de santé, Brussels, 253 pp.
  • AVALOSSE H. and H. LEWALLE (1999), « Le projet hospitalisation », M information, no. 189, ANMC, Brussels, pp. 3-12.
  • BRÉCHON P. and J. F. TCHERNIA (2000), « L’évolution des valeurs des Français », Futuribles, no. 253, May, pp. 5-20.
  • BOCOGNAGNO A., A. COUFFINHAL, S. DUMESNIL and M. GRIGNON (2000), La couverture complémentaire en France : qui bénéficie de quels remboursements ?, CREDES, October, 150 pages.
  • BUSSE R. (2000), Health care systems in transition: Germany, Copenhagen, WHO Regional Office for Europe/European Observatory of Health Systems, 145 pages.
  • CAUDRON J., J. P. DOMIN, N. HIRAUX and C. MILLS (2005), Assurance-Maladie, la privatisation programmée, résister et reconstruire un système de santé efficace et solidaire, Paris, Syllepse et Fondation Copernic, 174 pages.
  • COMITÉ EUROPÉEN DES ASSURANCES (1992), Recueil technique santé, Paris, 231 pages.
  • COMITÉ EUROPÉEN DES ASSURANCES (1998), Health insurance in Europe, Paris. CHADELAT J.-F. (2003), La répartition des interventions entre les assurances maladie obligatoires et complémentaires en matière de dépenses de santé, Social Insurance Assessment Commission, report for the French ministry of health.
  • HAMILTON G. J. A. (1999), Towards a fourth generation of European insurance directives, AIMS, March, no. 5, 1-3.
  • HAMILTON G. J. A. (2000), “Interne markt en (aanvullende) ziektekostenverzekeringen”, Tijdschrift voor Gezondheidsrecht, no. 1, 37-48.
  • OnlineHERMESSE J., H. LEWALLE and W. PALM (1992), La protection privée contre le risque de maladie dans la Communauté européenne, Brussels.
  • LEQUET SLAMA D. and M. DURIEZ (1998), Les systèmes de santé en Europe, Paris, PUF, Que sais-je ? collection, 127 pages.
  • LEQUET-SLAMA D. (2000), « Le choix des priorités de santé publique en Europe », Actualité et dossier en santé publique, no. 31, pp. 70-72.
  • LEWALLE H. (1993), « L’assurance maladie privée », Solidarité Santé, Études statistiques, no. 2, April – June, pp. 39-44.
  • MOSSIALOS E. and S. THOMSON (2001), Voluntary health insurance in the European Union, LSE Health and Social Care Discussion Papers, no. 19, May, London School of Economics and Political Science, 68 pages.
  • OnlineNIHOUL P. and A. C. SIMON (eds.) (2005), L’europe et les soins de santé, marché intérieur, sécurité sociale, concurrence, Brussels, Larcier, 405 pages.
  • OECD (2004), L’assurance maladie privée dans les pays de l’OCDE, Paris.
  • PALIER B. (2005), « La réforme des systèmes de santé », Paris, PUF, Que sais-je ? collection, 128 pages.
  • PALM W. and H. LEWALLE (2001), « La protection maladie volontaire dans l’Union européenne », Revue belge de sécurité sociale, Brussels, pp. 893-927.
  • ROCARD M. (1999), « Mission mutualité et droit communautaire », report, Paris, La Documentation Française, May.
  • SCHNEIDER M., (1995) Complementary health schemes in the European Union, Augsburg, BASYS, 247 pages.
  • VOLOVITCH P., (1992) « Égalité devant les soins, égalité devant la santé : quel rôle pour l’assurance-maladie ? » Revue de l’IRES, no. 30, Paris, pp. 149-171.
Henri Lewalle [*]
  • [*]
    Mission Head for European Affairs and cross-border health care cooperation at the National Alliance of Christian Mutualities (Belgium).
This is the latest publication of the author on cairn.
Uploaded on on 05/12/2014
Distribution électronique pour La Doc. française © La Doc. française. Tous droits réservés pour tous pays. Il est interdit, sauf accord préalable et écrit de l’éditeur, de reproduire (notamment par photocopie) partiellement ou totalement le présent article, de le stocker dans une banque de données ou de le communiquer au public sous quelque forme et de quelque manière que ce soit.
Loading... Please wait