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The Compatibility of Private Health Insurance Schemes with EU Law: Applying the Health Insurance Exception beyond Substitutive Private Health Insurance

Published online by Cambridge University Press:  03 June 2020

Bruno NIKOLIĆ
Bruno NIKOLIĆ*
Affiliation:
University of Ljubljana
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Abstract

The lack of clarity as to the scope of the health insurance exception enshrined in Article 206 of the Solvency II Directive has created uncertainties surrounding the implications for government intervention in the private health insurance market. A contentious interpretation of the health insurance exception, offered by former EU Commissioner Bolkestein, and the approach subsequently taken by the Commission and the Court of Justice of the European Union in assessing the compatibility of Member State intervention in private health insurance have led to a divergence in the application of EU law, which further increases uncertainties around the legality of Member State intervention. This article proposes an alternative interpretation of the health insurance exception that draws on a contemporary understanding of private health insurance as a socio-economic institution aimed at achieving a highly competitive social market economy. This alternative interpretation extends the applicability of the health insurance exception from substitutive private health insurance to complementary private health insurance that covers statutory user charges and thus improves the compliance of national health insurance systems in several Member States with EU law and enhances the coherence of EU law.

Keywords

private health insurancehealth insurance exceptionThird Non-life Insurance DirectiveSolvency II Directiveservice of general economic interest
Type
Articles
Information
Cambridge Yearbook of European Legal Studies , Volume 22 , December 2020 , pp. 156 - 181
Copyright
Copyright © Centre for European Legal Studies, Faculty of Law, University of Cambridge

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Footnotes

*

Assistant Professor of Constitutional and EU law, Faculty of Public Administration, University of Ljubljana. The author would like to thank Professor Kenneth Armstrong and the anonymous reviewers for their helpful comments.

References

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2 For the purpose of this article, we follow the definition of private health insurance used by Mossialos and Thomson: ‘Private health insurance is health insurance that is taken up and paid for at the discretion of individuals or employers on behalf of individuals. It can be offered by public or quasi-public bodies and by for-profit (commercial and non-profit) private organizations’. See E Mossialos and Thomson, S, Voluntary Health Insurance in the European Union, European Observatory on Health Systems and Policies (WHO, 2004), p 15Google Scholar.

3 For more see Sagan, A and Thomson, S, Voluntary Health Insurance in Europe: Role and Regulation (WHO, 2016), p 30Google ScholarPubMed.

4 For more on the nature of and differences between the basic categories of private health insurance, see Thomson, S and Mossialos, E (a), ‘Voluntary Health Insurance in the European Union: A Critical Assessment’ (2002) 32(1) International Journal of Health Services 19Google Scholar; S Thomson and E Mossialos (b), Private Health Insurance in the European Union, Final report prepared for the European Commission, Directorate General for Employment, Social Affairs and Equal Opportunities (London School of Economics and Political Science, 2009); Thomson, S and Mossialos, E (c), ‘Private Health Insurance and the Internal Market’ in Mossialos, E, Permanand, G, Baeten, R, and Hervey, T K (eds), Health Systems Governance in Europe: The Role of EU Law and Policy (Cambridge University Press, 2010)Google Scholar.

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6 Belgium, Croatia, Estonia, France, Germany, Ireland, Italy, and Slovenia. Sagan and Thomson, note 3 above, p 25.

7 The regulation of private health insurance is based on two approaches: minimal financial or prudential regulation (protecting consumers from insurer insolvency) and material or contract regulation (ensuring access to healthcare through access to health insurance). Financial regulation focuses on ex post scrutiny of an insurer's financial returns on business, while material regulation involves ex ante scrutiny of an insurer's policy conditions and premium rates on the grounds that this eliminates the potential for insolvency. See S Thomson and E Mossialos (c), note 4 above, p 426; Thomson, S and Mossialos, E (d), ‘Regulating Private Health Insurance in the European Union: The Implications of Single Market Legislation and Competition Policy’ (2007) 29(1) Journal of European Integration 92CrossRefGoogle Scholar.

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13 Dôvera zdravotná poisťovňa, a.s. v Commission, C-262/18 P.

14 Thomson and Mossialos (d), note 7 above, pp 94–103; Thomson and Mossialos (b), note 4 above, pp 79–94; Thomson and Mossialos (c), note 4 above, 429–55.

15 Sagan and Thomson, note 3 above, pp 86–89.

16 W Sauter, Health Insurance and EU Law (TILEC, 2011) Research Paper 021/2011, pp 13–15.

17 Hervey and McHale, note 11 above.

18 Thomson and Mossialos (c), note 4 above, 429–55; Thomson and Mossialos (d), note 7 above, 94–103.

19 Thomson and Mossialos (c), note 4 above, pp 436, 455.

20 See also ibid, p 458.

21 See also Thomson and Mossialos (d), note 7 above, p 103.

22 Thomson and Mossialos (c), note 4 above, p 458.

23 Ibid, p 426.

24 Council Directive 73/239/EEC [1973] OJ L228/3. For more on establishment of an integrated insurance market, see Nemeth, K, European Insurance Law: A Single Insurance Market? (EUI, 2001)Google Scholar Working Paper Law, 2001/4.

25 Thomson and Mossialos (c), note 4 above, p 426.

26 Article 2(1)(d) of the First Non-life Insurance Directive specifically exempts statutory social insurance from the scope of the Non-life Directives.

27 Directive 92/49/EEC and Amending Directive 73/239/EEC and Directive 88/357/EEC (Third Non-Life Insurance Directive) [1992] OJ L228/1.

28 Nemeth, note 24 above, p 32; Sharma, P and Cadoni, P, ‘Solvency II: A New Regulatory Frontier’ in Kempler, C, Flamée, M, Yang, C, and Windels, P (eds), Global Perspectives on Insurance Today, A Look at National Interest Versus Globalization (Palgrave Macmillan, 2010), p 54Google Scholar; Welf, W, ‘Multilateral Insurance Liberalization, 1948–2008’ in Pearson, R (ed), The Development of International Insurance (Routledge, 2015), p 96Google Scholar.

29 Thomson and Mossialos (c), note 4 above, pp 426–28; Thomson and Mossialos (d), note 7 above, p 93; Sauter, note 16 above, p 12.

30 For more on the general good exception, see Thomson and Mossialos (c), note 4 above, pp 429–55; Thomson and Mossialos (d), note 7 above, p 93; Sauter, note 16 above, p 13.

31 The general good exception was also enshrined in the health insurance exception (Article 54(1) of the Third Non-life Insurance Directive). For more, see Sauter, note 16 above, p 13.

32 Thomson and Mossialos (c), note 4 above, p 428; Thomson and Mossialos (d), note 7 above, p 93; Sauter, note 16 above, p 12.

33 Thomson and Mossialos (c), note 4 above, p 430; Thomson and Mossialos (d), note 7 above, p 94.

34 Thomson and Mossialos (c), note 4 above, pp 429–55; Thomson and Mossialos (d), note 7 above, 94–103.

35 Directive 2009/138/C (Solvency II) [2009] OJ L335.

36 There are some exceptions to the full harmonization objective, which are further explained in Dreher, M, ‘Harmonization of Insurance Supervisory Law’ in Dreher, M (ed), Treatises on Solvency II (Springer Berlin, Heidelberg, 2015CrossRefGoogle Scholar, first published as ‘Die Vollharmonisierung der Versicherungsaufsicht durch Solvency II’ (2011) VersR), pp 3–25.

37 Ibid, p 23.

38 See also Thomson and Mossialos (c), note 4 above, p 457.

39 The objective of the drafters of the Directive was to assimilate private health insurance that serves as a substitute to the social health insurance system into statutory insurance. This assimilation was justified by the fact that in practice, all residents are covered by health insurance (universal health coverage) through either the social health insurance or private health insurance. For more on the importance of travaux préparatoires for the interpretation of EU law, see Lenaerts, K and Gutiérrez-Fons, J A, To Say What the Law of the EU Is: Methods of Interpretation and the European Court of Justice (EUI, 2013)Google Scholar Working Paper AEL, 2013/9.

40 The regulatory measures outlined in Article 54(2) of the Third Non-life Insurance Directive and Recitals to the Directive are identical to the regulatory measures already in place in countries with fully developed substitutive private health insurance markets (Germany, the Netherlands, and Ireland). For more, see Thomson and Mossialos (d), note 7 above, p 95. See also Thomson and Mossialos (c), note 4 above, p 430; Sauter, note 16 above, p 14.

41 The Dutch Minister of Health, Welfare and Sport sent a request to the Commissioner for the Internal Market for clarification of Article 54 of the Third Non-life Insurance Directive with regard to the compatibility of the Dutch compulsory health insurance reform with EU law. For more on his request and Bolkestein's reply, see also Thomson and Mossialos (c), note 4 above, pp 431 ff; Thomson and Mossialos (d), note 7 above, pp 95 ff; Sauter, note 16 above, pp 14 ff.

42 F Bolkestein, Letter from the European Commission to the Dutch Minister of Health, Welfare and Sport, 25 November 2003, Ministry of Health, Welfare and Sport (The Hague, 2003).

43 In Germany, households with earnings over a certain threshold, certain self-employed occupational groups, and civil servants can opt out of the statutory health insurance. See Sagan and Thomson, note 3 above, pp 42–43.

44 In Cyprus, the Czech Republic, and Slovenia, certain categories of foreigners are not entitled to participate in the statutory health insurance scheme. See Sagan and Thomson, note 3 above, pp 42–43.

45 See also Hervey and McHale, note 11 above, pp 241–42; Thomson and Mossialos (d), note 7 above, p 96; Thomson and Mossialos (c), note 4 above, pp 432–33; Sauter, note 16 above, p 14.

46 C McCreevey, Answer given by Mr. McCreevey on behalf of the Commission, European Parliament, Doc. No. E-3829/05EN, 12 December 2005; C McCreevy, Answer given by Mr. McCreevey on behalf of the Commission, European Parliament, Doc. No. E-3828/05EN, 5 January 2006; C McCreevy, Answer given by Mr. McCreevey on behalf of the Commission, European Parliament, Doc. No. E-3830/05EN, 24 January 2006. See also Thomson and Mossialos (c), note 4 above, p 432.

47 In 2005, Slovenia adopted an amendment to the Health Care and Health Insurance Act, which imposed several obligations on health insurers providing complementary private health insurance. The Commission had taken the legislative amendment under scrutiny and notified Slovenia that mandatory prior approval of the Ministry of Health for general insurance conditions, the requirement for insurers to notify the Insurance Supervision Agency of general insurance conditions, and the actuary's prior approval of the premium increase were not compatible with the provisions of Article 8(3) of the First Non-life Insurance Directive and Articles 29 and 39 of the Third Non-life Insurance Directive. In addition, the Commission held that the requirement for foreign health insurers to appoint a representative in Slovenia would discourage them from providing services in Slovenia which constitutes an obstacle to the freedom to provide services under Article 49 EC Treaty. The Commission also complained of a violation of the free movement of capital under Article 56 EC Treaty, due to the obligation to return one half of the profit from complementary private health insurance activity back to the management of this activity. For more, see M Osenar, ‘Opomini Evropske komisije v zvezi z dopolnilnim zdravstvenim zavarovanjem’ in Dopolnilno zdravstveno zavarovanje in zdravstvena reforma (Slovensko zavarovalno združenje, 2011) and Hervey and McHale, note 11 above, p 242.

48 The Commission's additional formal notice to Slovenia C(2009) 4852, sent on 25 June 2009, para 3.

49 Ibid; Press release of the 83rd regular session of the Government of the Republic of Slovenia. Ljubljana, 20 May 2010.

50 Thomson and Mossialos (c), note 4 above, p 437; Thomson and Mossialos (d), note 7 above, p 97; Sauter, note 16 above, pp 13–16.

51 Thomson and Mossialos (c), note 4 above, p 457.

52 For more on Article 106(2) TFEU, see, eg, Burke, J, A Critical Account of Article 106(2) TFEU, Government Failure in Public Service Provision (Hart Publishing, 2018)Google Scholar; Lenaerts, K. ‘Defining the Concept of “Services of General Interest” in Light of the “Checks and Balances” Set Out in the EU Treaties’ (2013) 19(4) Jurisprudencija/Jurisprudence 1247Google Scholar; V Hatzopoulos, The Concept of ‘Economic Activity’ in the EU Treaty: From Ideological Dead-ends to Workable Judicial Concepts (College of Europe, 2011) Research Paper in Law 06, pp 30 ff; Wehlander, C, Services of General Economic Interest as a Constitutional Concept of EU Law (T.M.C. Asser Press, 2016)CrossRefGoogle Scholar.

53 In the field of healthcare, Article 106(2) could be invoked in relation to free movement, public procurement, and competition rules (private conduct and state aid). V Hatzopoulos, note 52 above, pp 30 ff. For readings on the application of Article 106(2) TFEU, see also Wehlander, note 52 above, pp 130–45; D Gallo, Social Security and Health Services in EU Law: Towards Convergence or Divergence in Competition, State Aids and Free Movement? (EUI, 2011) Working Paper RSCAS 2011/19; Mortelmans, K JM, ‘Towards a Convergence of the Application of the Rules on Free Movement and Competition?’ (2001) 38 CMLRev 613Google Scholar; Lenaerts, note 52 above. On the other hand, Bekkedal argues that Article 106(2) TFEU may not operate as a derogation from the Treaty provisions on free movement. See Bekkedal., T ‘Article 106 TFEU Is Dead. Long Live Article 106 TFEU!’ in Szyszczak, E, Davies, J, Andenæs, M, and Bekkedal, T (eds), Developments in Services of General Interest (Springer, 2011), pp 61–102CrossRefGoogle Scholar.

54 For the simultaneous application of free movement and competition rules to a single factual situation, see the Opinion of Advocate General Lenz in Union Royale Belge des Sociétés de Football Association Asbl v Jean-Marc Bosman, Royal Club Liégeois SA v Jean-Marc Bosman and Others and Union des Associations Européennes de Football (UEFA) v Jean-Marc Bosman, C–415/93, EU:C:1995:463, para 253; and Odudu., O ‘The Meaning of Undertaking within 81 EC’ (2005) 7 Cambridge Yearbook of European Studies 235Google Scholar (and references listed therein).

55 Commission Decision N541/2004 of 3 May 2005 – Netherlands Retention of financial reserves by sickness funds and risk equalization schemes C(2005) 1329 final, OJ C/324. The Dutch compulsory health insurance scheme could also be considered substitutive private health insurance according to Commissioner Bolkestein's interpretation.

56 Commission Decision 2015/248 of 15 October 2014 on the measures SA.23008 (2013/C) (ex 2013/NN) implemented by the Slovak Republic for Spoločná zdravotná poisťovňa, a. s. (SZP) and Všeobecná zdravotná poisťovňa, a. s. (VZP) C(2014) 7277, OJ L41; Dôvera v Commission, T-216/15, EU:T:2018:64.

57 Commission Decision N46/2003 of 13.5.2003 C(2003) 1322 final, OJ C186; BUPA and Others v Commission, T 289/03, EU:T:2008:29.

58 Commission's additional formal notice to Slovenia C(2009) 4852, sent on 25 June 2009; Commission v Republic of Slovenia, C-185/11, EU:C:2012:43.

59 See Thomson and Mossialos (c), note 4 above, p 457.

60 Commission v Kingdom of Belgium, C-41/10, EU:C:2010:653, para 24.

61 Commission v Kingdom of Belgium, C-206/98, EU:C:2000:256, para 45. See also Bovis, CH, EU Public Procurement Law (Edward Elgar Publishing Limited, 2012), pp 16–17CrossRefGoogle Scholar; Buendía, JL, ‘Finding the Right Balance: State Aid and Services of General Economic Interest’ in Liber Amicorum Francisco Santaolalla, EC State Aid Law (Kluwer Law International, 2008), p 205Google Scholar.

62 Commission v Republic of Slovenia, EU:C:2012:43.

63 For more on divergence between different areas of EU law, see Gallo, note 53 above; Mortelmans, note 53 above.

64 Commission Decision N541/2004, OJ C/324; Dôvera v Commission, EU:T:2018:64; BUPA and Others v Commission, EU:T:2008:29; AG2R Prévoyance v Beaudout Père et Fils SARL, C-437/09, EU:C:2011:112.

65 Commission Decision 2015/248, OJ L41; AOK Bundesverband and Others, C-264/01, C-306/01, C-354/01, and C-355/01, EU:C:2004:150.

66 For more on the concept of undertakings engaged in an economic activity and criteria determining the nature of health insurance schemes, see Commission Decision 2015/248, OJ L41, paras 79–82; Hervey and McHale, note 11 above, pp 227–47; Odudu, note 54 above; Hatzopoulos, note 52 above; Lear, Mossialos, and Beatrix, note 12 above.

67 Commission Decision 2015/248, OJ L41; Poucet and Pistre v Assurances Générales de France and Others, C-159/91 and C-160/9, EU:C:1993:63; AOK Bundesverband and Others, EU:C:2004:150.

68 Commission Decision N541/2004, OJ C/324.

69 Commission Decision 2015/248, OJ L41, para 89.

70 Dôvera v Commission, EU:T:2018:64, para 68. It is worth mentioning that at the time of writing this article, case C-262/18 P is still pending before the CJEU.

71 The opinion of Advocate General Pikamäe with regard to the economic nature of insurance is that the General Court erred in law in that it overestimated the impact of the degree of competition permitted under the Slovak compulsory health insurance scheme and thus wrongly concluded that Slovak compulsory health insurance scheme is considered economic in nature. Opinion of Advocate General Pikamäe, EU:C:2019:1144, para. 130.

72 BUPA and Others v Commission, EU:T:2008:29; AG2R, EU:C:2011:112.

73 The CJEU considered Belgian mutuals offering complementary health insurance to be entities engaged in an economic activity. See Commission v Kingdom of Belgium, EU:C:2010:653, para 23.

74 Commission Decision N541/2004, OJ C/324; Dôvera v Commission, EU:T:2018:64.

75 Wehlander argues that SGEI is not merely a legal concept of EU law but emerges as a broad constitutional concept of EU law. See Wehlander, note 52 above.

76 Commission Decision N46/2003, OJ C186.

77 Ibid, para 61; BUPA and Others v Commission, EU:T:2008:29, para 333.

78 BUPA and Others v Commission, EU:T:2008:29, para 103.

79 Commission Decision N541/2004, OJ C/324.

80 The reason for a different approach is a stricter interpretation of the fourth Altmark condition.

81 Commission Decision N 214/2010 of 9 July 2010 – Netherlands Risk equalization system in the Dutch Health Insurance C/333. C (2010)/4893, OJ 333/2010.

82 AG2R, EU:C:2011:112, para 65; see also Gyselen, L, ‘Public Service and EU Competition Law’ (2011) 2(6) Journal of European Competition Law and Practice 573CrossRefGoogle Scholar.

83 AG2R, EU:C:2011:112, paras 79–81; see also Gyselen, note 82 above, p 574.

84 Thomson and Mossialos (c), note 4 above, 447.

85 Nikolić, B, ‘Slovenian Complementary Health Insurance as a Service of General Economic Interest’ (2015) 13(1) International Public Administration Review 49CrossRefGoogle Scholar.

86 See note 63 above.

87 José García and Others v Mutuelle de Prévoyance Sociale d'Aquitaine and Others, C-238/94, EU:C:1996:132, para 16. For more, see van de Gronden, J W, ‘Free Movement of Services and the Right of Establishment. Does EU Internal Market Law Transform the provision of SSGI?’ in Neergaard, U, Szyszczak, E, Gronden, J W van de, and Krajewskivan, M (eds), Social Services of General Interest in the EU (T.M.C. Asser Press, 2013), pp 137–39Google Scholar.

88 F Bolkestein, note 42 above. Ministry of Health, Welfare and Sport (The Hague, 2003); McCreevy, note 46 above.

89 See the third paragraph of Part III of this article.

90 For more on natural asymmetries, see Gallo, note 53 above.

91 For more, see the proposal for the Third Non-life Insurance Directive, especially the explanation to Article 43a of the Third Non-life Insurance Directive.

92 See also D Stuckler, A B Feigl, S Basu, and M McKee, ‘The Political Economy of Universal Health Coverage’ (Montreux, 2010) Background paper for the global symposium on health systems research, first global symposium on health research, p 12.

93 For more on deficiencies, see Normand, C and Weber, A, Social Health Insurance, A Guidebook for Planning, 2nd ed (WHO, 2009)Google Scholar.

94 Ibid, p 120. Nyman presented an alternative theory which defies the findings of the conventional theory by arguing that moral hazard increases welfare. Nyman, J A, The Theory of the Demand for Health Insurance (Stanford University Press, 2002)Google Scholar.

95 There are exceptions (‘safety nets’) for the financially disadvantaged population. Usually they are not subject to user charges or their user charges are covered by other sources.

96 Bonča, P Došenović, ‘Dileme in rešitve financiranja slovenskega zdravstva’ in Tajnikar, M (ed), Prenova gospodarskih vidikov slovenskega zdravstva (Ljubljana, 2016), p 64Google Scholar.

97 Statutory user charges are determined by state authorities (legislation, the government, or the managing body of the statutory health insurance).

98 The services with the highest user charges were needed by more than 8,000 patients in 2013. A Mikeln, ‘Pomen zasebnih sredstev za dolgoročno stabilnost zdravstvenega sistema’, lecture at the conference Zdravstvena polemika: Kakšna bo cena vašega zdravja v prihodnje (Ljubljana, 2014).

99 Mortelmans, note 53 above.

100 See note 60 above.