Voluntary health insurance and out-of-pocket payments in European OECD countries

Voluntary health insurance (VHI) and out-of-pocket payments (OOP) supplement medical services provided by public health schemes. While most literature on this topic deals with national specificities, we examine at the cross-country market level, the determinants of VHI and OOP, and the impact of financial development on choosing between the two for 26 European Organization for Economic Co-operation and Development countries between 2000 and 2018. We show that citizens from less developed countries with lower gross domestic products tend to compensate for dissatisfaction from insufficient public coverage through VHI and OOP. Additionally, the findings reveal that VHI is preferred over OOP when financial development is higher. Countries with formal financial activities have high levels of financial literacy and trust in healthcare services, and VHI prevails. Conversely, countries more prone to informal financial activities prefer OOP. We outline the triggers for using VHI to supplement public health spending to address the financial burden of OOP.

Automated summary

This study examines the determinants of voluntary health insurance (VHI) and out-of-pocket payments (OOP) at the cross-country market level and the impact of financial development on the choice between the two in 26 European OECD countries from 2000 to 2018. The findings suggest that citizens from less developed countries with lower GDP tend to rely on VHI and OOP to compensate for insufficient public coverage. Moreover, VHI is preferred over OOP in countries with higher financial development and formal financial activities.