Health insurance pricing in Spain. Consequences a nd alternatives

For health insurance contracts, the actuarial technical bases are different depending on the country where the contract is issued. In Spain, private health insurance contracts have a very simple pricing rule based on non-life insurance techniques. The premiums are settled for different ranges of ages and the contracts are yearly renewed (risk contracts) until the insured reaches the age of 65. From this age on, most of the companies do not renew the contract and the insured losses the private health coverage. In other European countries, where the public health system does not provide universal health coverage, the private health insurance contracts are regulated by law. Life insurance techniques have to be applied to price lifelong contracts with level premiums. The present paper aims to start a discussion, from a technical point of view, on the private health insurance sector in Spain. We analyse what are the consequences for the insured (in terms of the total amount of premiums paid) arising out of the fact of applying non-life or life actuarial techniques to price the contracts. Particular attention is paid on how to index the premiums in both techniques in order to incorporate the medical inflation.