Voluntary health insurance and out-of-pocket payments in European OECD countries

Voluntary health insurance (VHI) and out-of-pocket payments (OOP) supplement medical services provided by public health schemes. While most literature on this topic deals with national specificities, we examine at the cross-country market level, the determinants of VHI and OOP, and the impact of financial development on choosing between the two for 26 European Organization for Economic Co-operation and Development countries between 2000 and 2018. We show that citizens from less developed countries with lower gross domestic products tend to compensate for dissatisfaction from insufficient public coverage through VHI and OOP. Additionally, the findings reveal that VHI is preferred over OOP when financial development is higher. Countries with formal financial activities have high levels of financial literacy and trust in healthcare services, and VHI prevails. Conversely, countries more prone to informal financial activities prefer OOP. We outline the triggers for using VHI to supplement public health spending to address the financial burden of OOP. •Voluntary health insurance or out-of-pocket sums offset low public health payouts.•High-income citizens are more inclined to supplement core medical services.•Financial development positively affects voluntary health insurance (VHI).•Formal financial activities and literacy and trust in healthcare increase VHI.•Informal financial activities lead to out-of-pocket health payments.