OECD report on private insurance impact on costs
Private Health Insurance in OECD Countries
OECD (Organisation for Economic Cooperation and Development)
Policy Brief
September 2004
Has (private insurance) helped relieve cost pressures?
Policy makers often look to private health insurance markets as an alternative or additional source of funding for publicly financed health systems, especially when these budgets are stretched to capacity. Yet health systems in OECD countries continue to be predominantly financed from public sources, which account, on average, for 72% of total health expenditure, compared to 6.3% for private health insurance and 19% for out-of-pocket payments. Only in the United States does private health insurance exceed a third of total health expenditure, at 35%, while it goes above 10% only in the Netherlands, Canada, France, Germany and Switzerland.
Whatever the role played in a health system, private health insurance has added to total health expenditure. Most OECD countries apply less government control over private sector activities and prices, compared to public programmes and providers. Private insurers tend to have less bargaining power over the price and quantity of care as compared with public systems, particularly single-payer ones. Countries that have multiple sources of primary coverage, including those with significant private health insurance market size, tend to be those with the highest total health spending levels per capita, such as the United States, Switzerland, Germany and France.
http://www.oecd.org/dataoecd/42/6/33820355.pdf
Comment:
By Don McCanne, MD
The OECD (Organization for Economic Cooperation and Development) “brings together the governments of countries committed to democracy and the market economy from around the world.” This Policy Brief, published three years ago, describes the economic impact of private health insurance in OECD countries.
As we address reform in the United States, high health care costs are a concern that we all share. This highly credible OECD report reveals that reform based on private health plans would add even more to our total health expenditure - not exactly the solution we seek.
A recent Quote of the Day discussed a report from WHO (World Health Organization), also on private health insurance. Although OECD is oriented more towards economic considerations (a concern for all of us), and WHO is oriented more towards the health of the people (a concern for advocates of social justice), both reports came to similar conclusions on the impact of private insurance.
From the WHO report:
“Evidence shows that private sources of health care funding are often regressive and present financial barriers to access. They contribute little to efforts to contain costs and may actually encourage cost inflation.”
How much more evidence do we need that private insurance models of reform should be rejected as we proceed with health care financing reform in the United States?