Does voluntary health insurance improve health and longevity? Evidence from European OECD countries

The financing structure of the healthcare system and, particularly, the voluntary health insurance (VHI) constituent, has been a vital pillar in improving the overall quality of life. Consequently, this study aims to shed light on the effect of VHI on the population’s health and longevity in a sample of 26 European OECD countries. The methodology employed covers both hierarchical clustering and the novel dynamic panel threshold technique. First, the descriptive cluster analysis unveils a delimitation of the countries into four main groups with respect to a broad set of health status indicators. Second, the estimates show that VHI is a significant determinant of health and longevity. More specifically, we find that the relationship between variables is characterized by a threshold effect, whose estimated value is roughly 6.3% of the total healthcare financing. Also, the heterogeneity analysis unveils consistent differences regarding the impact of VHI on health and longevity for the supplementary and complementary types of VHI. Overall, results are strongly robust, the signs and the significance of the coefficients being preserved in the presence of several additional control factors. From a policy perspective, the study’s findings can be used nationwide to stimulate regulatory policies to encourage the achievement of a satisfactory level of private health insurance.