The Effects and Implications of Private Health Insurance in Sweden

In recent years, Sweden has witnessed an emergence of private health insurances.

The number of individuals covered by a private health insurance has increased from 200 000 to 600 000 between 2006 and 2015 (Palme, 2017) and the trend has continued in recent years.

Sweden seems to be approaching a market where public and private health care providers act simultaneously, not very different from e.g. the U.S. system.

Despite the dramatic increase in private health insurance coverage, there is almost no research on why this parallel system has emerged.

There is an extensive theoretical literature on general issues about health insurance design, but predictions and implications from those theories are rarely tested empirically, mainly due to a lack of adequate data.Our project aims to fill gaps in the literature by asking a number of questions. Who purchases private health insurance and why?

In particular, do those with a higher risk of sickness enroll to a higher extent? How are firms affected by offering private health insurance to their workers? Does private health insurance lead to increased health care consumption and to better health? We will also study how the quality of public care is affected by an increase in privately insured individuals.

One hypothesis is that private insurances carry some of the burden of the public sector, increasing the quality of public health care. Another hypothesis is that private insurances absorb resources and talent, thereby constraining public care. We study these considerations and their equity-implications.

Do private insurances imply a more unequal health care system? The answers to these questions constitute two types of contributions.

First, they inform the Swedish debate surrounding private health insurance and inform design considerations in the public health care system.

Second, we contribute to the academic literature that tries to understand how private and public care providers can act on one and the same market.