In terms of legal status, three types of insurers are present in the EU market for VHI: mutual and provident associations (distinguished by their non-profit sta-tus) and commercial companies (distinguished by their for-profit stasta-tus). The distinction between non-profit and for-profit is important because an insur-er’s profit status is likely to influence its motivation and may have a significant bearing on its tax burden.
Mutual and provident associations in the European Union have a long history of involvement in social protection-based solidarity principles (Palm, 2001). AIM12
12 The international grouping of autonomous health insurance and social protection bodies operating according to the principles of solidarity and non-profit-making.
Section 2 The market for VHI in the European Union
Table 9. Examples of the benefits provided by complementary and supplementa-ry VHI in the European Union, 2001
Country Complementary Supplementary
Austria • hospital per diem charge (cash benefit)
• alternative treatment
• physician costs
• supplementary hospital costs
• faster access/increased choice Belgium • legal co-payments for non-reimbursed in
patient/outpatient costs
• carer costs (loss of independence)
• supplementary hospital costs
Denmark • co-payments for drugs, dental care, physiother-apy, corrective lenses etc.
• access to private hospitals in Denmark and abroad
Finland • some public sector hospital costs
• travel expenses
• private care for children
• faster access
• increased choice (including access to private hospitals)
France • co-payments (including differences between ne-gotiated and real prices)
• treatments excluded by public sector
• home help
• hospital per diem charge
• faster access to specialist consultations
• choice of private room in hospital
Germany • outpatient care
• dental care
• hospital daily allowance (cash benefit)
• choice of specialist
• amenity beds
Greece • hospital daily allowance (cash benefit) • faster access
• choice of private provider and accom-modation
Ireland • outpatient cover for general practioner visits, specialist consultations, X-rays and other items (subject to a deductible)
• outpatient cover for alternative treatment (BUPA Ireland)
• hospital per diem charge
• cost of occupational therapy, X-rays, lab tests, drugs in hospital
• consultants’ fees for inpatient, day care and some outpatient treatment
• maternity benefits
• convalescence in a nursing home
• cost of hospital accommodation in vate beds in public hospitals and pri-vate hospitals (including day care sur-gery)
Italy • co-payments
• non-reimbursed services
• dental care
• hospital per diem charge
• increased choice of provider
• increased access to private hospitals
Luxem-bourg
• hospital co-payments
• pre- and postoperative and convalescence costs
• dental prostheses
• surgical treatment abroad
• partial reimbursement where no agreement on the cost of a treatment
• additional charges for a private room in hospital
Nether-lands
• mainly dental care
• drug co-payments (marginal)
• cross-border care
• alternative treatment
• faster access to acute and long-term care
Portugal • dental care
• ophthalmology
• co-payments
• cash benefits
• access to private providers
Spain • dental care • increased choice of provider Sweden • some reimbursement of co-payments, drugs,
dental care, alternative treatment
• faster access to elective outpatient care
• access to private hospitals United
Kingdom
• cash benefits
• dental care
• alternative treatment
• faster access to specialists and elective treatment
• choice of amenities in public hospitals Sources: National reports prepared for this study.
69 defines solidarity as a mechanism that enables everyone to “contribute according to their financial resources and benefit from services according to their needs”.
AIM’s member organizations in 11 member states therefore “strive to maintain access to high quality care for everyone regardless of age, sex, health status, in-come or any other social, professional, religious or ethnic criterion”. However, as there is variation in the extent to which the principle of solidarity is pursued by mutual or provident associations in different member states at the present time (even among AIM member organizations), we cannot make assumptions about insurers’ conduct on the basis of their legal and non-profit status.
Mutual or provident associations are present in most member states. The ex-ception is Austria. For largely historical reasons, such organizations dominate the market in many countries, including Belgium, Denmark, France, Ireland , Luxembourg and the Netherlands. Nevertheless, their share of the VHI market is declining in some member states, notably in Finland (where it was already insignificant), Denmark, the United Kingdom and, to a lesser extent, France.
Provident associations in the United Kingdom used to enjoy about two thirds of the market in the 1990s, but in 1999 the second largest provident associa-tion (and second largest voluntary health insurer) was acquired by a commer-cial undertaking (AXA Sun Alliance) (Laing, Buisson, 1999). Provident associa-tions now account for about half of all premiums in the United Kingdom, with the largest provident association holding a market share of 40% (Laing, Buis-son, 2001). In France the mutual associations ( mutuelles) gained market share between 1980 and 1996, a period when the proportion of total expenditure on health care financed by them rose from five to seven per cent (Lancry, Sand-ier, 1999), while the proportion financed by commercial insurers stabilized at around three per cent (Smosarski, Jack, 1998). Since then, however, the mutu-al associations’ share of the market appears to have declined slightly, and they now account for 61% of the overall VHI market in terms of number of people covered. Commercial insurers account for 22% and provident associations (in-stituts de prévoyance) for 17% (Sandier, Ulmann, 2001).
The Irish market is dominated by Vhi Healthcare (previously the Voluntary Health Insurance Board or VHIB), which was established in 1957 as a non-profit, quasi-public but independent body and developed as a virtual monopo-ly until the market was opened to limited competition in 1994, in order to com-ply with the third non-life insurance directive. To date only one other compa-ny (BUPA Ireland , a subsidiary of BUPA International) has established itself in the Irish market. Since entering the market in 1996, BUPA Ireland has gained a 14% share of the market. The Irish government’s 1999 white paper on VHI in-cluded plans to convert Vhi Healthcare to a state-owned public limited compa-ny with full commercial freedom, in the hope that privatizing the compacompa-ny and removing its links with the Department of Health and Children would encour-age a more level playing field (Department of Health and Children, 1999), but
Section 2 The market for VHI in the European Union
the effect this will have on competition remains to be seen. For the time being at least, the government does not show signs of privatising Vhi Healthcare.
The third non-life insurance directive does not distinguish between different types of insurer and specifically outlaws the preferential treatment of one type of insurer over another. For example, mutual and provident insurers are cur-rently exempt from the insurance premium tax that is levied on policies sold by commercial insurers in Belgium, France and Luxembourg. Member states that use national tax laws to favour non-profit over commercial insurers may con-travene EU competition law (for further details see sections 2.4 and 4.3). More broadly, the French government has so far failed to transpose the third non-life directive with regard to mutual associations, and in December 1999 the Eu-ropean Court of Justice ruled against this incomplete transposition ( EuEu-ropean Commission, 2000b). The French government has since agreed to transpose this aspect of the directive, although the legislation will not be implemented until the beginning of 2003 (see section 5.3.1) ( European Commission, 2000b).