False collectivization of private health insurance: expansion, premium increases and judicialization (2014-2019)

Abstract

False collectivization is a growing phenomenon in the Brazilian health insurance market, stemming directly from regulatory decisions that affect the sector, especially the diferences between the rules applicable to individual and collective contracts. Hence, this paper sought to analyze the recent evolution of this phenomenon under three aspects: (i) expansion of this type of contract, simultaneous to the disappearance of individual private health plans; (ii) premium increases for “false collectives”; (iii) its judicialization and treatment in the jurisprudence. Data was collected from the Brazilian Regulatory Agency for Private Health Insurance and Plans, detailed by company, between 2014 and 2019; the agency’s Product Registration Technical Notes database, between 2015 and 2019; and primary data produced by analyzing rulings by the São Paulo Court of Justice, issued in 2018 and 2019. Results show the growth of “false collectives,” associated with the gradual disappearance of individual private health plans. They also demonstrate the gap between premium increases and the ceiling set by the Brazilian Regulatory Agency for Private Health Insurance and Plans for individual private health plans. Analysis of the rulings reveal that the Judiciary’s understanding on the matter is not uniform, neither in terms of the outcome, nor of its legal reasoning. These findings support the interpretation that such contracts allow insures to circumvent relevant aspects of the sector’s regulation, to impose higher premiums and, when contested in court, to evade consumer legislation.