The European welfare states are facing considerable economic challenges. The current economic crisis has increased the pressure on public financing and strengthened the need to find political responses without jeopardizing the core principles of the welfare state. Two policy options under development, also in the Nordic countries, are a) to increase the use of private financing of welfare services via voluntary, private health insurance (VPHI) and b) to open up for private for-profit hospitals in provision of health care services either funded through VPHI, out-of-pocket payments or public budgets.
The two solutions can potentially provide benefits in terms of both behavioral changes and revenue generation. However, a turn to private financing of welfare services also represents a shift to a more individualistic way of financing welfare and a more direct link between payments and benefits.
Alexandersen et al (2016) and Tynkkinen (2018) describe the development of the market for VPHI in the Nordic countries, including similarities and differences between the countries and provide discussion of the rationale for the existence of different types of VPHI. It seems that the main roles of VPHI are to cover out-of-pocket payments for services that are only partly financed by the public health care system (complementary), and to provide preferential access to treatments that are also available free of charge within the public health care system, but often with some waiting time (duplicate).
Alexandersen, Hagen and Kaarbøe (2016) have analyzed the growth in private health Insurance in Norway. The analysis indicate that the probability of purchasing VPHI increases with number of employees and the share of men in the firm. Contra intuitively, firms within industries with lower sickness absences are more likely to purchase private health insurance than those with higher sick absence. Moreover, we find that employers decision to purchase private health insurance is influenced by employees preferences and employers perception that private health insurance can be used as a recruitment strategy. On average the firms/employers report that they are satisfied/very satisfied with the medical services that their employees receive via private health insurance.
In a preliminary analysis Hagen, Alexandersen and Kaarbøe analyse the effects of VPHI on sich leave and find a significant albeit small reduction. However, for some industries Investment in VHPI can be cost effective.
How to set prices for private-for-profit hospitals is analyzed by Hagen, Holom and Ameyu (2016). Setting prices for elective patient treatments in private-for-profit hospitals (PFPs) in traditional tax funded systems are challenging since these hospitals have both an organization and tasks that differ considerably from what we find in public hospitals. As one of few countries, Norway from year 2002 gradually implemented a procurement system based on tendering competition that was used when outsourcing elective surgery. The conclusion is that PFPs perform day surgeries at markedly lower price than the national DRG prices and that use of tendering competition triggered the price reduction. We speculate that the PFPs? lack of acute services, less severe patient population, reduced teaching responsibilities, ability to streamline production and other factors explain the lower costs at PFPs.
Holom, Alexandersen and Hagen (2017) compare the socioeconomic status (SES) and case-mix among day surgical patients treated at private for-profit hospitals (PFPs) and non-profit hospitals (NPs) in Norway to test whether the use of PFPs in a universal health system has compromised the principle of equal access to care regardless of SES. Lower Level of education and income are underrepresented in PFP hospitals. While not consistently significant, comorbidity and previous hospitalisation were associated with lower odds of having surgery at PFPs across procedures.
This analysis is followed up by Holom and Hagens (2016) analysis of quality of care among patients treated at PFPs, private non-profit hospitals (PNPs) and public hospitals (PUBs) in Norway. As quality measure, unplanned 30 days readmissions at any hospital for patients with hip and knee replacement were analyzed. PUBs had the highest and PFPs the lowest readmission rates across both procedures in bivariate analyses. However, the patient population differed between the hospital groups. PNPs had the oldest patients and PUBs the most severe patients. Among both surgical procedures, mean age and number of comorbidities were lowest in PFPs. Based on instrument variable methods PNPs were found to have significantly lower readmission rates compared to PUBs for hip procedures. For knee procedures and for PFPs and PUB there were no significant variations.
The European welfare states are facing considerable economic challenges. The current economic crisis has increased the pressure on public financing and strengthened the need to find political responses without jeopardizing the core principles of the welfa re state. Two policy options under development, also in the Nordic countries, are
a) to increase the use of private financing of welfare services via voluntary, private health insurance (VPHI) and
b) to open up for private for-profit hospitals in provis ion of health care services either funded through VPHI, out-of-pocket payments or public budgets.
The two solutions can potentially provide benefits in terms of both behavioral changes and revenue generation. However, a turn to private financing of welf are services also represents a shift to a more individualistic way of financing welfare and a more direct link between payments and benefits. This project proposal is based on the observation that the growth of VPHI and private for-profit hospitals raises a number of important questions about the future of the welfare states. That the expansion of these solutions also encompasses the Nordic countries, including Norway with its booming petroleum revenues, indicates that the current economic crisis is not t he only cause. A more fundamental shift in funding and organization of health care services might be under way.
The project is built upon seven work packages that together cover the analyses of VPHIs and private for-profit hospitals:
WP1: Theoretical dis cussion of the VPHI market
WP2: Supply and demand for VPHI among individuals and firms
WP3: VPHI and out-of-pocket payment as ?top up? funding mechanisms in specialist care ? selection effects
WP4: Theoretical discussions of the regulation of private prov iders
WP5: The supply and demand for services from private for-profit hospitals
WP6: Use of public and private hospitals ? effects on patient selection and quality
WP7: Normative aspects of a mixed welfare state