What characterises the privately insured in universal health care systems? A review of the empirical evidence.

OBJECTIVES: This paper reviews the empirical literature on what characterises individuals with voluntary private health insurance (VPHI) in universal health care systems and assesses how well the empirical evidence corresponds with the theoretical predictions.
METHODS: Empirical studies were identified by performing searches in electronic databases.
RESULTS: The literature search identified a total of 24 articles and 15 working papers, the majority of which were published within the recent decade. Socioeconomic characteristics are generally found to be important determinants of VPHI coverage. In accordance with economic theory, the probability of taking out VPHI on an individual basis is consistently found to increase with income. Likewise, the empirical evidence generally supports the theoretical prediction of individuals selecting themselves into duplicate VPHI based on the quality of care available within the universal health care system, just as the demand for VPHI is consistently found to be negatively affected by the insurance premium. On the contrary, the empirical evidence on the importance of risk preferences is sparse and points in different directions. Finally, with a few exceptions, the privately insured are found to be in equal or better health compared to the remaining population. In most settings, the positive association between health and VPHI coverage may be attributed to risk rating of insurance premiums and eligibility requirements, while it may be interpreted as evidence of advantageous selection in their absence.