To What Extent Does Employer-paid Health Insurance Reduce the Use of Public Hospitals?

Objective: This study examines the extent to which employer-paid health insurance has led to substitution of public with private hospital use in Denmark.
Methods: Individual-person-level data for the entire Danish privately employed, full-time working population is used in an observational design. The effect of having employer-paid health insurance on the utilisation of public hospitals is estimated using propensity score matching in order to control for risk selection, based on a number of individual- and company-level characteristics. The outcome is defined as the total consumption of health care services provided by public hospitals.
Results: The effect of employer-paid health insurance is estimated to correspond to a significant 10% reduction in the total use of public hospitals. The effect appears to be robust to alternative methodological specifications and is supported from the analysis of alternative outcome measures.
Conclusion: The rise in the number of individuals with employer-paid health insurance seems to have alleviated the pressure on public hospitals in Denmark. Future studies should confirm the magnitude of this effect, preferably based on empirical data with repeated measurements of insurance status.