When private insurance buys faster access to public care

Supplemental private health insurance is becoming more common in universal healthcare systems as a way to secure faster access to specialists, diagnostics, and elective care. This column examines how such insurance affects healthcare use and access. New evidence from Sweden shows that gaining coverage increases and expedites healthcare use, while much of the extra care is still delivered and financed within the public system through referrals back from private providers. As coverage is concentrated among higher-income workers while health needs are greater among lower-income individuals, the benefits and spillovers are distributed unequally.

In many European healthcare systems, the central policy challenge is no longer the mere existence of universal healthcare, but whether timely access to care is provided on equal terms (e.g. Fredriksson 2024). This concern has become increasingly salient as health systems are under pressure, facing ageing populations and workforce shortages.

In universal systems, low or zero prices at the point of use imply that access is governed by non-monetary mechanisms such as waiting times, referral rules, gatekeeping, and administrative prioritisation rather than market prices (Cutler 2002, Siciliani and Hurst 2005). These delays may become both inefficient and harmful to health (Siciliani et al. 2013, Godøy et al. 2024).

The growing pressure on the public healthcare system help explain the broader expansion of privately financed healthcare over the past two decades (OECD and European Commission 2024, Propper 2026). Individuals can supplement their public coverage with private health insurance, offering faster access to specialists, diagnostics, and elective procedures. Coverage is now substantial in many countries, ranging from around 15% in countries such as France and the UK to well above 50% in countries such as Australia and Denmark (OECD 2025). In Sweden, the market has expanded rapidly: coverage has quadrupled since 2006 and now reaches around 15% of the working-age population.

Whether these trends should reassure or worry policymakers remains contested. Supporters see supplemental health insurance (SHI) as an efficient complement that expands choice and may ease pressure on the public system by shifting some care to private providers. Critics see the risk of a two-tier allocation of care, in which higher-income patients can buy shorter waits inside a system that is meant to allocate treatment according to need (Einav and Finkelstein 2023). Despite the prominence of this debate, there is limited evidence on three questions that matter for policy design: Who gets the supplemental insurance? Does it expand access to valuable care? Does it relieve pressure on the public system or instead reallocates access within it?

In a recent paper (Palme et al. 2026), we address these questions using administrative data linking SHI contracts to healthcare use, diagnoses, waiting times, and mortality for the entire Swedish population. Sweden is useful not just because the private market has grown quickly, but because its institutional mix of universal public coverage, long queues, and optional supplemental insurance is representative of a wider set of European healthcare systems.

Who enrols?

The first striking fact is how unequal the enrolment in supplemental insurance actually is. As Figure 1 shows, coverage is below 5% near the bottom of the income distribution but closer to 50% at the top. Yet healthcare need follows the opposite pattern: lower-income individuals have substantially higher mortality and healthcare use. That broad socioeconomic gradient in health is familiar from other settings too (Chetty et al. 2016;, Hagen et al. 2025).

Figure 1 Supplemental health insurance coverage rises steeply with income, while mortality and healthcare costs move in the opposite direction

This mismatch is not explained by sicker people being directly denied access. The simple explanation is that supplemental insurance in Sweden is mostly provided through employers, and the income gradient reflects whether and where people work rather than differences in healthcare needs. That is, higher-income workers are much more likely to be employed at firms that offer insurance as a fringe benefit. As a result, those who may have the most to gain from faster access are the least likely to be insured.

What does SHI do?

To estimate the effects of supplemental insurance, we compare workers who receive employer-sponsored coverage earlier with otherwise similar workers who receive it later.

The effects are large and persistent. As the left panel of Figure 2 shows, total healthcare utilisation rises by about 23% relative to pre-coverage spending after SHI take-up. The increase extends beyond specialist consultations to hospital admissions, surgical procedures, and prescription drug use. At the same time, primary-care visits fall, as shown in the right panel.

Figure 2 After SHI take-up, total healthcare costs rise sharply and persistently

That pattern fits the Swedish institutional setting and is consistent with binding rationing in public care. SHI allows patients to bypass some of the usual bottlenecks by arranging care with private specialists and clinics outside the public system. Patients first meet a private provider through SHI; if that provider identifies a condition requiring more complex, hospital-based, or highly specialised treatment, the patient may then be referred back into publicly funded care (Socialdepartementet 2022).

The effects are especially large for lower-income individuals. For workers in the bottom income quartile, healthcare spending rises by more than 50%, more than twice the increase observed at the top of the distribution. Among lower-income patients, the extra care shows up especially in hospital admissions and prescription drug use, suggesting that insurance expands access to treatment that would be constrained otherwise.

The clearest evidence that this matters for health comes from cancer care. Supplemental insurance increases screening and cancer-related diagnostic activity, which leads to more detected cancers. Our most conservative estimate implies an increase in diagnoses of 0.04 percentage points relative to a baseline diagnosis rate of 0.23%. Conditional on malignant cancer diagnosis, patients with supplemental insurance are diagnosed at an earlier stage and have better subsequent survival. Still, the causal effects on all-cause mortality are small and imprecisely estimated, as the enrolees are at working-age and thus face low baseline mortality rates.

Figure 3 Among malignant cancers, insured patients are more likely to be diagnosed at earlier stages

How does it spill over to the public system?

A common argument for supplemental insurance is that it should relieve pressure on the public sector by shifting patients into private care. Institutionally, that is where SHI starts in Sweden: it buys faster access to private providers outside the public system. But that is not where the care pathway necessarily ends. Roughly two-thirds of the additional healthcare spending generated by supplemental insurance is still publicly financed. The reason is not that SHI contracts with public hospitals directly. Rather, SHI often speeds up the first stages of care for enrolees through private consultations and diagnostics, often to be referred back into the public system for treatment. SHI thus buys a faster private front door rather than a fully separate healthcare system.

Moreover, when patients enter publicly funded care, those with SHI move faster through it. As Figure 4 shows, waiting times for publicly funded care fall by about 7.4 days after insurance take-up, relative to a baseline of 48 days. These gains are facilitated by insured patients being more likely to have referrals marked for priority review. They are also largest for conditions with the longest queues.

Figure 4 Once patients enter public care, waiting times fall by about 7.4 days after SHI take-up

In a capacity-constrained system, this has an unavoidable implication: more care and faster access for some patients means longer waits for others. Supplemental insurance therefore creates both a fiscal externality, because it increases publicly funded utilisation, and a congestion externality, because it reshuffles queue positions inside the public system.

A return to inequality in access?

These findings point to two broader lessons about how private care can increase rather than release pressure on the public healthcare system and how it reintroduces the inequality that universal healthcare systems aim to tackle.

A simple welfare calculation in the paper suggests that the average private value of supplemental insurance is around SEK 2,000 per enrolee per year, while the associated fiscal and congestion externalities amount to roughly SEK 1,190. Because coverage is heavily concentrated among higher-income workers, the overall incidence is regressive: lower-income individuals are less likely to benefit directly from insurance, but still bear part of the waiting-time and fiscal costs it creates.

A key regulatory question is how to let private access interact with scarce public capacity. In Sweden, SHI complements public coverage formally but lets it enrolees compete for access in practice: it buys a faster private entry point and helps moving quickly through the public system.

In mixed systems, the question is thus not only who pays, but also who waits. Private insurance can improve access to valuable care, especially when public systems ration heavily. But when that insurance is unequally distributed and tightly intertwined with public treatment, it can also undermine the core principle that care should be allocated according to medical need rather than ability to pay.

Source : VOXeu