Does private health insurance prevent the onset of critical illness and disability in a universal public insurance system?

There are numerous studies investigating the effect of health insurance on healthcare utilisation, but there is little empirical evidence examining the effect of private health insurance on objective health outcomes in a universal public health system. Tracking each individual’s health status using panel data, we explore whether there is a difference in the probability of contracting a critical illness or becoming disabled between the privately insured and uninsured. The empirical analysis showed that the incidence of severe disease and disability was 0.76–0.52 times and 0.63–0.31 times lower, respectively, for those with private health insurance. Many theoretical and empirical studies have argued that excessive healthcare utilisation caused by owning health insurance incurs social costs. However, if health insurance lowers the likelihood of serious illness and disability, in the long run, it may lower healthcare utilisation and have a positive effect on human capital and social welfare.