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In France, the Ani reform mandates all private sector employers to offer sponsored Complementary Health Insurance (CHI) to all of their employees beginning on January 1st, 2016. If this mandate may reduce the cost of CHI coverage for employees, it may also prevent them choosing their optimal level of coverage given their health care needs, their income and their risk preferences. Furthermore, as employees are on average in good health status, the mandate is going to deteriorate the health risk of the pool of insured covered by individual policies, which may increase premiums. Welfare of individuals not affected by the reform (as retired and long term unemployed) may thus decrease. Wages may also potentially decrease by the employer subsidy amount.
This research simulates the likely effects of this employer CHI mandate on the social welfare of the population making the most likely scenarios on the increase in individual policies premiums and the decrease in wages. It is based on the 2012 Health, Health Care and Insurance survey linked to the administrative data of the National Health Fund, which provides information on socio-economic characteristics, CHI, health status, risk preferences and health care expenditures.
The first results using an utilitarian social welfare function and an expected utility theory framework show that, if wages do not decrease and if we consider the lowest increase in individual CHI premiums, the Ani reform may induce a very weak increase in social welfare. This positive effect of the reform is mainly driven by the employer subsidy rather by the reduction of financial risk exposure and exists despite the loss of welfare of those who previously chose to be uninsured. However, as soon as we assume a decrease in wages by the employer subsidy, the reform may greatly reduce social welfare. The loss of welfare that may suffer insured on the CHI individual market is therefore hardly offset by the gain in welfare that may benefit private sector employees, while the former are more often vulnerable. There may be a lot of losers while the part of winners is rather small. Those first results will be completed by an additional analysis using an Atkinson social welfare function in order to explore the consequences of various degrees of inequalities aversion in the evaluation of this reform.
