Private health insurance increases public healthcare burden, study finds

A new study challenges the claim that private health insurance reduces pressure on public healthcare systems, instead showing it increases the overall demand for tax-funded medical services, Swedish public broadcaster SVT reports.

Researchers from Stockholm University, the London School of Economics, and the University of Gothenburg found that privately insured patients—predominantly high earners with employer-provided coverage—receive faster access to specialist care, including earlier cancer diagnoses. However, this accelerated care leads to higher long-term healthcare use, including more investigations, treatments, hospital stays, and medication, much of which is publicly funded.

“Private providers often detect conditions not fully covered by insurance, directing patients back to the public system,” said David Seim, professor of economics at Stockholm University and co-author of the study. “This shifts costs to taxpayers rather than relieving the public burden.”

The study also revealed that insured patients face shorter wait times in public healthcare, partly because their referrals are more frequently marked as priority cases by doctors. Seim noted that limited resources mean “shorter waits for some likely mean longer waits for others,” raising questions about equity when publicly funded patients effectively subsidize faster care for the insured.

While private insurance reduces primary care visits by routing patients directly to specialists, the researchers found that the resulting increase in specialist and hospital care—largely publicly funded—far outweighs any savings.

The findings are based on Swedish registry data from 2006–2015, comparing individuals before and after their employers offered private health insurance. Wait times were analyzed using regional healthcare data, and public costs were tracked through changes in publicly funded care usage post-insurance. The study, published as a working paper by the Centre for Economic Policy Research, has not yet undergone peer review but has been presented in international academic settings.