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Abstract
The crisis of welfare states in Europe has offered a growing market share to private health insurance companies. Health insurance is currently one of the fastest growing branches of private insurance business in developed countries. However, much remains to investigate about the origin and evolution of the companies in this sector. This article analyses the genesis, growth and organisational changes of health insurance companies in Spain from the creation of the first medical associations in the 1930s to the modern health insurance companies of today. Spain represents an interesting case study to investigate how changes in the public health model for the long period under study allowed private companies to maintain a changing relationship competitive and partnership with the state.
Acknowledgements
Both authors gratefully acknowledge financial support from European Union, European Regional Development Fund (ERDF) & Spain’s Ministerio de Economía y Competitividad, project entitled Management and Construction of the Spanish hospital system from the perspective of economic history: between public and private sectors Ref. HAR2015-66063-R.
Notes
1. In Europe, from a historical point of view, and although with significant variations in each case, public systems of health insurance coverage generally prevailed. These models contrast with the one that consolidated in the United States, where the population’s health care has mainly been covered by private insurance companies; a system considered to be more expensive in the long term. Chapin, in Ensuring America’s Health, examines from an institutional standpoint the management and consolidation of the model based on insurance companies, which determined the characteristics of the health system in the United States: its high cost, fragmentation and an anti-democratic corporate structure. The private interest groups involved in this process gained ascendency over the medical professionals and the politicians in government consolidating a system of private coverage. In a similar fashion, Thomasson, From Sickness to Health, analyses the creation of the model, although in this case he highlights the role of tax incentives and the fact that private insurance favoured hospitals.
2. More details on these aspects in Thomson and Mossialos, Private Health Insurance. Since the 1980s, public health insurance has suffered cuts and privatisations and has been opened up to management by private insurance companies in most developed countries. See Hassenteufel and Palier, “Towards Neo-Bismarkian”; Cabriedes and Guillén, “Adopting and Adapting Managed Competition”; Mossialos and Allin, “Interest Group”; Palier, A Long Goodbye to Bismark? Aguilar, Waitzkin, and Landwehr, Multinational Corporations.
3. Different forms of health care coverage took precedence in these countries depending on the period and the model adopted. The so-called mixed economy of welfare (coexistence of forms of solidarity, state action and private companies) was a preliminary step towards the creation of two basic models of health insurance by the mid-twentieth century; see Harris, The Origins. After the Second World War, state insurance prevailed in Western Europe, whilst private insurance companies took precedence in the United States. For more on these aspects, see Van der Linden, Social Security Mutualism; Beito, From Mutual Aid; Glenn, “Understanding Mutual”; Gorsky, “The Growth and Distribution”; Murray, Origins of American; and Dreyfus, Les assurances socials, among others.
4. Information taken from Table 2.7 of the OECD Health Project 2004, Private Health Insurance (https://www.oecd.org/health/privatehealthinsuranceinoecdcountries-theoecdhealthproject.htm), 51. Definition of functions of private health insurance in Box 2.2, 29.
5. The data from 1908 to 1940 in Pons, Las estrategias de crecimiento, and for 1950 to 1970 in Pons, The Difficulties of Spanish.
6. Tortella, Historia del Seguro, 344–7.
7. Public expenditure on health accounted for 71.7%, out-of-pocket payments 23.5% and all other private funds 0.9%. In Table 2.4 taken from OECD, Private Health Insurance (https://www.oecd.org/health/privatehealthinsuranceinoecdcountries-theoecdhealthproject.htm), 41.
8. There are a few exceptions, although outside the field of business history. These are works such as Murray, Origins of American, and Vonk, “In it for the Money?,” that analyse the behaviour of private health insurance companies in the United States and the Netherlands, respectively, but tangentially within their broader research that focuses on friendly societies. For his part, Chapin, “The American Medical Association,” studies the role of insurance companies in the creation of a health insurance system with a high-cost model in the United States. As for the impact of health insurance on private insurance business, the works on the 20 most important insurance markets in the world compiled in Borcheid and Hauter, World Insurance, highlight its emergence since the 1990s in countries such as Germany, France, Italy, and Japan, and also in emerging countries such as China and Brazil.
9. The interest of economists has certainly increased, and in some cases they include a brief history of the sector in their introductions, such as in Hurley and Guidon, Private Health, for the case of Canada, and in Buchmueller and Couffinhal, Private Health, for the case of France.
10. We find cases of some advanced projects in health coverage for women coming from the world of friendly societies, such as the Montepío de Santa Madrona founded in 1900 for health care provision for women, mainly maternity care. From 1920, the foundation of the Caixa de Pensiones integrated the Montepío into the Institut de la Dona que Treballa, which, as well as this friendly society, also encompassed dispensaries and clinics, a maternity service, a nursing school and housing for poor families: https://www.memoriaesquerra.cat/publicacions/3/52_1934317/IGUALADI_19340317_11.pdf. This example may be seen as indicative of Spain’s participation in a trend of European specialisation in social maternity (Nash, Maternidad y Construcción).
11. The local and fragmented offer of sickness coverage provided by mutuals and friendly societies may, from the point of view of supply, be seen as an obstacle to the rationalisation of the sector; nevertheless, some studies have also demonstrated the advantages that these societies offered to the population in general and to the working class in particular by introducing a culture of insured people which provided health care coverage, security and citizen identity (Harris, Welfare and Old Age). Other works such as Cordery, “Friendly Societies,” and Gorsky, Mutual Aid, reinforce the idea that the friendly societies offering sickness coverage, founded on the basis of worker solidarity, also created a sense of identity and respectability in the fight against social exclusion and division.
12. During much of the twentieth century there were different legal demands for private insurance companies in terms of minimum and subscribed capital, deposits and reserves depending on the branch of insurance. The demands for the health branch were lower (Pons and Vilar, El seguro de salud, 68). In particular, the 1908 law established a paid-up capital of 25%, but with no minimum capital; the Royal Decree-Law of 18 February 1927 introduced minimum capital, but set very low (50,000 pesetas with an exiguous outlay of 15,000 pesetas or payment of 15% when the subscribed capital was 60,000 pesetas or more). In 1920, only three of the 22 insurance entities in the branch of health and death insurance that appear in the yearbook Anuario Financiero y de Sociedades Anónimas (1921) had a share capital of more than 60,000 pesetas. Pons and Vilar, El seguro de salud, 67 (Table 1.11); Frax and Matilla, “Centenario de la Ley.”
13. Pons and Vilar, “Friendly Societies,” 81.
14. This was the case of Fomento Nacional. This health insurance company was founded on 3 April 1912 with a share capital of 50,000 pesetas, of which 12,500 were paid up. One of its first executives was Antonio Cabrer Sagauas, manager, a position he combined with the vice-presidency of La Unión y El Fénix Español in Barcelona until his death on 21 October 1918 (La Vanguardia newspaper, November 13, 1918). This situation seems to be a clear indication of the connection between Fomento Nacional and the leading company in the sector at this time. Anuario Financiero y de Sociedades Anónimas, 1921, 311.
15. ABC newspaper, June 4, 1929, 12.
16. This is Vonk’s argument in “In it for the Money?” to explain the limited development of private health insurance before the Second World War.
17. Some mining companies created hospitals that also treated sick workers (Martínez Soto and Pérez de Perceval, “Asistencia sanitaria,” 99; Pérez Castroviejo, “La asistencia sanitaria,” 139; Menéndez Navarro, “Hospitales de empresa,” 334–5). For more on the medical infrastructure of the employers’ industrial accident mutuals, see Pons, “El seguro de accidentes.”
18. For the case of the large German companies, see Hilger, “Welfare Policy in German.”
19. In 1924, the Board of Directors of Mutua General de Seguros, created in 1907 as an employers’ industrial accident mutual, decided to offer associated employers health insurance coverage for their workers, which would allow them to cash in on their considerable health care infrastructure of clinics and hospitals. This branch of insurance, however, did not generate very high profits, see Pons, “El Seguro Obligatorio de Enfermedad,” 230–1.
20. Aubanell, “La elite de la clase trabajadora.”
21. Pons and Vilar, “Labor Repression”; Vilar and Pons, “The Introduction of Sickness Insurance.”
22. To this end, many commercial insurance companies created mutuals in order to collaborate in the provision of compulsory health insurance. The company Hispania created the Mutualidad de Previsión Hispania (MUTUANIA) on 2 June 1944. By 1945 this mutual covered the health insurance of 8090 companies, 60,979 workers and 174,338 beneficiaries (Pons, 130 años de promesas, 99).
23. They were also leaders in terms of premiums collected, see Pons and Vilar, El seguro de salud, Table 2.4, 131. On 31 December 1954, the Minister of Labour terminated all the agreements signed with the collaborating bodies since 1944, and most of them were not renewed. Greater demands made by the Ministry in terms of deposits and reserve funds, and the reduction of profit margins, did not favour the continuation of this collaboration.
24. Pons and Vilar, El seguro de salud, 170.
25. In line with the arguments of Guerrero, “Salud. Situación del ramo,” 217.
26. Pons, “Biografía de Marcial Gómez Gil,” 430.
27. Rodríguez, “Sanidad, Farmacia,” 32–5.
28. Pons, “El Seguro Obligatorio de Enfermedad,” 71.
29. For more on the health care reform during the transition to democracy, see the works of Ortega and Lamata, La década de la reforma sanitaria; Elola and Navarro, “Análisis de las políticas sanitarias”; and Pons and Vilar, El seguro de salud, 293‒313.
30. Pons and Vilar, El seguro de salud, 325–7.
31. Guerrero, “Salud. Situación del ramo”; Sáez, “Las prestaciones y servicios.”
32. Guerrero, “Salud. Situación del ramo,” 226.
33. Pons, “Spain: International Influence,” 204.
34. Pons and Vilar, El seguro de salud, 413.
35. Carreño, “La intercooperación,” 167.
36. For a complete list of the firms absorbed, see Pons and Vilar, El seguro de salud, 338.
37. Pons and Vilar, El seguro de salud, 335; Rodríguez, “Sanidad, Farmacia,” 35.
38. Muñoz, Delgado, and Seara, Las estructuras del bienestar, 224.
39. Guerrero, “Salud. Situación del ramo,” 15.
40. Uri, “Seguros de salud en España,” 2.
41. This tax deduction was maintained until the passage of Law 40/1998 which abolished the 15% deduction related to medical services and private health care insurance. Freire, La nueva fiscalidad, defends doing away with the deduction as it was detrimental to the national health service. In the United States, tax subsidies led to an increase in the purchase of insurance, not only reducing its relative price but also stimulating the growth of group insurance (Tomasson, From Sickness to Health).
42. Thanks to this tax change the premiums for this product increased by 30%. Companies extended this social benefit to their workforces. “Un buen momento para el negocio colectivo de salud,” Aseguranza: revista de los profesionales del seguro, 73 (2003): 16–27.
43. See, for example, López Nicolás, “Seguros sanitarios,” 28; Guerrero, “Salud. Situación del ramo,” 16.
44. Herce et al., Rol de las aseguradoras, 53.
45. Tortella, Historia del seguro, 424–6.
46. For 1973, Anuario Español de Seguros, 1973–1974, 24–5. The data for 2013 from the Directorate General of Insurance. Accessed September 20, 2015. https://www.dgsfp.mineco.es/sector/documentos/Informes%202014/Memoria%20Estad%C3%ADstica%20Anual%20de%20Entidades%20Aseguradoras%202013.pdf
47. The concentration of the sector through mergers and acquisitions may introduce positive aspects in terms of the scale of companies, but the result may be different if the process is analysed from the consumer’s point of view. Ethnographers such as Narotzky, “El lado oscuro,” have evaluated the learning costs for families when it came to facing the disappearance of mutuals or small local and regional firms as they were replaced by large companies, with complex information and marketing systems.
48. Tortella, Historia del seguro, 426.
49. In line with Serra, Gómez, and Landete, “Resultados de las fusiones,” 1001.
50. In the 1980s the era of strictly regulated and isolated national insurance markets came to an end, with the liberalisation of markets, especially in the European Economic Community: Borscheid, “Europe Review,” 59–60. Spain’s incorporation into the EEC obliged an opening up and liberalisation and encouraged the entry of foreign capital.
51. Herce et al., Rol de las aseguradoras, 7.
52. For the role of this mutual in British health insurance, see Doyle and Bull, “Role of Private Sector,” 563–5.
53. For an exhaustive list of the mergers, see Pons and Vilar, El seguro de salud, Table 4.41, 419–20.
54. According to the information it provides itself, Ribera Saludis is the leading health care management company in the sector of health care administration licences in Spain. It was founded in 1997 to develop initiatives in public‒private partnerships. Accessed September 27, 2015. https://www.riberasalud.com/
55. For more on the health care networks of the main insurance companies, including the administration of public hospitals in 2008, see Pons and Vilar, El seguro de salud, 423, Table 4.42.