International health insurance demand and future evolution

Everyone prefers being healthy than sick. Individual Health insurance demand derives from the financial risk emanating from illness and the consequent cost of the care needed to return healthy. One thing makes health care different from most other goods and services: it is also an investment; money spent on being healthy today will also have benefits in the future (impact on mortality rates).


  • The economics of health is different, and complicated by adverse selection and moral hazard issues.
  • At the global level, total health expenditure (HE) is growing faster than GDP, and increasing more rapidly in low and middle income countries (close to 6% annual growth on average) than in high-income countries (4%).
  • In Europe the stability in the HE growth rate reflects a rising coverage gap, only partially offset by private insurance (now €140 billions); high heterogeneity among countries reflects differences in public vs. private coverage.
  • There is a statistically stable long-term link between national income and private health insurance. The average income elasticity of private health insurance is significantly higher than one. So, on average and net of other factors, the importance of private health insurance is bound to grow along with economic development.
  • Empirical evidence for Italy shows that Voluntary Health insurance (VHI) is driven by income, households size, sex, age and education. The subscription to term life insurance on the household head is strongly and positively correlated to that of health insurance.

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Market Compass July 2020
Edited by the Macro & Market Research Team. The team of 13 analysts based in Paris, Cologne, Trieste, Milan and Prague runs qualitative and quantitative analysis on macroeconomic and financial issues.
The team translates macro and quant views into investment ideas that feed into the investment process.