The paper answers questions about the role of private health insurance, what characterizes it and what are the potential advantages or disadvantages compared to mandatory health insurance, and analyzes the development and availability of private health insurance services in the EU. Funding sources and market participants are defined, which characterizes the insured, among whom private health insurance is the most represented. By comparing and analyzing the private health insurance market in the European Union, its effectiveness is assessed and possible challenges are defined. The provision of health care in Europe indicates that although there are significant differences in the way in which the private sector is involved in the provision of health care, there are various ways of providing it efficiently. Private health insurance is more likely to be purchased by those who are relatively wealthy, employed, educated, and living in urban areas. It should be considered whether the development of the private sector should be left to the market or whether the state should have partial/full control over the development of the private sector. Private health insurance often undermines health policy goals within the market, particularly equity in financing and equity in access to health care. However, it helps provide financial protection in the wider health care system. Insurers play an important role in providing financial protection to subscribers, but their presence in the market can also undermine other health policy goals. For example, allowing high earners to choose between statutory and private insurance leads to risk segmentation and strains the resources of the statutory system, which not only loses contributions from high earners, but also covers a disproportionately high-risk population.