The Netherlands
161 rests on the understanding that mutual associations will not encroach on
com-mercial insurers’ dominance of the market for pensions and other types of in-surance.
AIM26 defends such laws on the basis of mutual associations’ commitment to solidarity and their ambition of “mutually improving social conditions” (AIM, 2001). It states that mutual associations are typically committed to open enrol-ment, lifelong affiliation and non-selection of risks. It argues that this justifies special status under national laws that explicitly acknowledge mutual associa-tions’ more comprehensive role, including their involvement in activities relat-ed to prevention, health relat-education, social cohesion, solidarity and rrelat-educing so-cial inequalities in health ( AIM, 2001; Palm, 2001). Because commerso-cial insur-ers do not aim to provide access to more deprived groups and generally exclude coverage for mental health care and chronic illnesses, they fail to cover the full range of health care (Palm, 2001).
Through the creation of a single market for VHI, the open and unregulat-ed confrontation of these different approaches to protection against the nega-tive consequences of ill health may be detrimental to VHI provided by mutual associations, as low risk individuals could be siphoned off from mutual asso-ciations’ riskpool by insurers who rate premiums according to individual risk, leading to premium increases for those still insured by mutual associations.
The end result would be a forced shift towards lowest-common-denominator market practices, with potentially serious consequences for vulnerable groups of people such as those with low incomes or those in poor health (particularly where substitutive and complementary VHI are concerned).
It is not clear whether the European Commission anticipated harmoniza-tion towards the lowest common denominator when it set in place the frame-work for a single VHI market in the European Union. However, the principle of home country control specifically aims to prevent national regulators from erecting barriers to the entry of insurers from other member states, which may bring national regulatory regimes into competition by placing insurers in a strictly regulated member state such as Germany at a competitive disadvan-tage in relation to insurers in member states with more liberal regulatory re-gimes (Rees, Gravelle, Wambach, 1999). AIM argues that the third non-life di-rective demonstrates an unwelcome assumption “that the fundamental mech-anism of the market economy is the ideal instrument for [ensuring] best qual-ity services and goods at the best price” (AIM, 2001). It would prefer an alter-native in which all voluntary health insurers observe “commonly agreed rules of general interest”.
Policy-makers could debate whether the equal treatment of commercial in-surers and mutual or provident associations in the VHI sector is an issue that
26 An international grouping of autonomous health insurance and social protection bodies operating according to the principles of solidarity and non-profit-making.
Section 5 Trends and challenges
needs to be addressed at an EU level. As we noted in section 2.2.1, the distinc-tion between non-profit and for-profit entities is important in so far as an in-surer’s profit status determines its motivation and influences its conduct. We also note that because there is variation in the extent to which solidarity princi-ples are pursued by mutual or provident associations in different member states (even among AIM member organizations) it is not possible to make assump-tions about insurers’ conduct solely on the basis of their legal and non-prof-it status. However, non-prof-it may be that insurers offering greater access to VHI (par-ticularly substitutive and complementary VHI) through open enrolment, life-time cover and community rating should be distinguished in law from insurers that operate on the basis of individual risk and exclude people with pre- exist-ing conditions. Policy responses to this issue should not be based on technical considerations alone, but should also take into account the principles and val-ues of health care systems in the European Union.
5.3.3 Clarification of the general good
There seems to be a consensus, among stakeholders making submissions to this study, that the third non-life insurance directive’s lack of a clear definition of the general good has created legal uncertainty, and that there is a need for greater clarity in this area (see section 1.4 for a more detailed discussion of the general good). While it is clear that the directive permits application of the gen-eral good to substitutive VHI (with due respect to the principle of proportion-ality), it is much less clear whether (and how) the general good may be applied to complementary and supplementary VHI.
In its submission to this study, BUPA Limited noted that the enforcement of the general good should be simplified, stating that:
the process of testing [the questionable use of the ‘general good’ provision]
either through Commission Services or the ECJ has proved prohibitive – typically the Commission declines to rule in a socially sensitive area and the time scales for the ECJ make reference unattractive. The insurer can face a dilemma, where a successful launch requires market confidence, while any challenging of doubtful rules is portrayed by the media as challenging fair-ness – and therefore confidence. This can act as a serious barrier to cross-border competition (BUPA Limited, 2001).
BUPA Limited suggested that:
national measures taken ‘in the general interest’ should be subject to scru-tiny, if necessary, on the ‘case by case’ basis preferred by the ECJ – health insurance in the European Union is too diverse for very general principles to be workable. Our concern is that in practical matters, influencing market
163
evolution in the interests of the citizen, the delays in obtaining ECJ judge-ment are themselves barriers to the developjudge-ment of a single market. More interpretative guidance from the Commission on the application of ‘gener-al good’ criteria to non-state he‘gener-alth insurance could be welcome, in the in-terests of ‘legal certainty’. (BUPA Limited, 2001)
CEA also pointed out that, while guidance on the general good is not clear enough, its definition should be left to member states rather than the European Commission (Pierotti, 2001). Its recommendation is for the European Commis-sion to provide a central register of information on measures taken by member states to protect the general good in the health insurance sector.
Section 5 Trends and challenges
165
In this study we have reviewed the following: the types of VHI available in the European Union; demand and levels of VHI coverage; the EU framework for regulating VHI; the operation of VHI markets; the role of these markets in pro-viding access to health care; their impact on the free movement of people and services; and recent trends and challenges for voluntary health insurers and policy-makers at national and EU levels.
The remarks we make in this section should be seen in the context of pub-lic popub-licy objectives for health care systems ( equity, efficiency, responsiveness, choice). We should also emphasize that the operation and impact of VHI mar-kets are under-researched areas.
There is a need for greater scrutiny of VHI markets in the European Un-ion. The third non-life insurance directive established a framework for a sin-gle market in VHI, in the expectation that increased competition among volun-tary health insurers would lead to efficiency gains for insurers and benefits for consumers in terms of greater choice and lower prices. In the absence of care-ful monitoring of VHI markets, it is not possible to say whether these expecta-tions have been fulfilled. If policy-makers are to be persuaded that the current regulatory framework works to the advantage of consumers (and not just in-surers), they must have access to better information about how the market op-erates, and in whose interest.
Current levels of data availability are inadequate. A more systematic col-lection of data would assist policy-makers in monitoring the extent to which the current regulatory framework has increased competition and the extent to which the expected benefits of a competitive VHI market have been passed on to consumers.
Better coordination of and cooperation among supervisory authorities would assist efforts to collect data and might have the added advantage of fa-cilitating the removal of some barriers to the free movement of people and