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Solidarity in competitive health insurance markets: analysing the relevant EC legal framework

Published online by Cambridge University Press:  23 March 2006

Francesco Paolucci ,
Andre Den Exter  and
Wynand Van De Ven
Francesco Paolucci
Affiliation:
Department of Health Policy and Management, Erasmus University Rotterdam, The Netherlands
Andre Den Exter
Affiliation:
Department of Health Policy and Management, Erasmus University Rotterdam, The Netherlands
Wynand Van De Ven
Affiliation:
Department of Health Policy and Management, Erasmus University Rotterdam, The Netherlands
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Abstract

In this article we perform an economic analysis of different regulatory frameworks that aim at guaranteeing solidarity in competitive health insurance markets. Thereafter, we analyse the legal conformity of these intervention strategies with EC law. We find that risk compensation schemes are the first-best intervention strategy because they guarantee an ‘acceptable level of solidarity’ without hindering free trade and competition and without reducing efficiency. Second-best options are premium and excess-loss compensation schemes, which guarantee solidarity at the expense of some efficiency. Premium rate restrictions and open enrolment should be avoided because they reduce efficiency and are unnecessary, not proportional, and undesirable to the pursuit of the general good. These conclusions are relevant for EU countries that adopt premium rate restrictions and open enrolment in combination with a risk compensation scheme, such as Ireland and the Netherlands. In these countries policy makers should design the health insurance schemes in conformity with EC law, for example by replacing premium rate restrictions and open enrolment with premium and/or excess-loss compensation schemes.

Type
Article
Information
Health Economics, Policy and Law , Volume 1 , Issue 2 , April 2006 , pp. 107 - 126
Copyright
Cambridge University Press 2006

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