15th June 2026
Healthcare debates are often framed as political arguments about public versus private provision. In reality, the underlying issue is more technical and more important: the stability of any healthcare system depends on how risk is shared across the population.
Recent changes in the United States, including the reduction of enhanced Affordable Care Act subsidies, have brought this question into focus again. As premiums rise, millions of Americans face higher monthly costs and some are reconsidering whether to remain insured at all.
While the immediate impact is personal, the broader effect is structural.
Insurance only works when participation is broad
Health insurance is built on a simple principle: many people contribute relatively small amounts into a shared pool, which is then used to cover the costs of those who require expensive care.
The system depends on balance. Most people are healthy most of the time, and their contributions effectively subsidise those who are not.
However, this balance is sensitive to price.
When premiums rise, the first people most likely to leave are often younger and healthier individuals. For them, the cost may appear greater than the perceived benefit.
This creates a structural shift in the insurance pool:
the average customer becomes older and less healthy
claims costs rise per insured person
insurers raise premiums to cover those costs
Higher premiums then encourage further exit from healthier individuals.
This feedback loop is known as adverse selection, and it can gradually weaken the stability of an insurance market even without any formal collapse.
The key question is not public vs private, but participation
This mechanism helps explain why healthcare systems can behave very differently even when they rely on similar private insurance structures.
The crucial variable is not ownership of insurers, but who is required or encouraged to remain in the system.
Two European countries illustrate this clearly: Switzerland and the Netherlands.
In both cases:
health insurance is mandatory
private insurers compete to provide coverage
insurers cannot exclude people based on health status
lower-income households receive financial support
These rules ensure that participation remains broad. Healthy individuals stay in the system alongside those with higher medical needs, which keeps the risk pool large and relatively stable.
As a result, private insurance functions as a universal system without fragmenting into separate pools of high-risk and low-risk individuals.
The United States: participation is more sensitive to price
The United States operates differently. Although the Affordable Care Act expanded access and reduced exclusions, participation in the insurance market is still more sensitive to affordability and subsidy levels.
When financial support is reduced or premiums rise, healthier individuals are more likely to exit coverage. This does not immediately destabilise the system, but it gradually changes the composition of those insured.
That shift increases average costs for insurers, which can feed into further premium increases.
The result is not an abrupt failure, but a steady pressure on affordability in parts of the market, particularly for those who do not receive significant subsidies.
Why comparisons with the NHS are not directly equivalent
At this point, it is often asked why systems such as the UK’s National Health Service are not part of this comparison.
The reason is that the NHS operates on a fundamentally different structure. It is primarily funded through taxation and provides care at the point of use without relying on an insurance pool in the same way.
That means its main constraints are not driven by insurance participation, but by:
public funding decisions
capacity and staffing
demand pressures within the system
It is therefore a different economic model, with different trade-offs. Comparing it directly with insurance-based systems can obscure rather than clarify the mechanics being discussed here.
Conclusion: stability depends on design, not ideology
The comparison between the United States, Switzerland and the Netherlands highlights a central point.
Healthcare systems are not defined simply by whether they are public or private. They are defined by how they manage participation in the underlying risk pool.
Private insurance can successfully support universal healthcare, but only when participation is broad and sustained through regulation or compulsion. Without that, insurance markets can become increasingly fragmented, with rising costs reinforcing further exit from the system.
The United States illustrates the pressures that emerge when participation is more sensitive to price. Switzerland and the Netherlands show that private systems can remain stable when participation is structurally maintained.
The broader lesson is that healthcare is not primarily a question of ideological choice between state and market. It is a question of system design: how to ensure that the financial burden of illness is shared widely enough to remain sustainable over time.