The New Dutch Health System;

Highly Regulated, Largely Private Sector Health Insurance

Pauline Vaillancourt Rosenau, Ph.D.Pauline Vaillancourt Rosenau, Ph.D.Management, Policy, and Community Health Management, Policy, and Community Health

UT Houston - School of Public Health UT Houston - School of Public Health Pauline.Rosenau@uth.tmc.edu

November, 2011November, 2011

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Can the US Learn from the Dutch Health Insurance System?

Same size as several US states in the USA; Netherlands is a country of 16 million people.

“Rapidly increasing expenditures and lowered political acceptance to commit public finance to cover the deficits”.* (Agrell & Bogetoft, 2007)

Incremental movement towards a neo-liberal, entrepreneurial, business-oriented, private sector health insurance system.

Values of the market, individual responsibility for health, and subsidies for the poor to purchase.

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The Dutch Experiment Is Market-Oriented Regulated-Competition;

It Tests Enthoven’s Model

Guaranteed issue (with risk equalization for insurers).

Universal coverage by individual mandate (required purchase).

Price competition for a standard health insurance benefits package

Community rating

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Goals of the Dutch Health Insurance Reform

Reduce costs.

Increase choice. “Improve efficiency and quality”.

Maarse and Ter Meulen, 2006)

Maintain access. Note: The government does not sell

health insurance policies!

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Substance of the Dutch Health Insurance Reform

Required purchase with subsidies for those with low-income (30%).

Community rating.

Guaranteed issue (with equalization pools for insurance companies).

All insurance companies (mostly for-profit) must compete on a level playing field by offering a basic health insurance package defined by law.

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Substance of the Dutch Health Insurance Reform (Contd)

Insurers compete on the price of the basic package (regulated as to content).

Citizens can change insurers during “open enrollment” if insurers make changes between annual renewal periods.

Insurance companies are expected to compete on quality.

Group purchasers are expected to lobby insurance companies to perform on quality as well as price.

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Substance of the Dutch Health Insurance Reform (Contd)

Insurance companies expected to make profits on basic and supplementary policies.

Policies may vary on “benefits in kind” or “reimbursement”.

Insurers may restrict the list of providers *

Insurers may selectively contract for discounted services from hospitals

Maximum fees for selected services for GPs and practice nurses in Q2,3,4 2011

Capitation feesInsured persons not living in deprived areas 2009 2011*Insured persons < 65 years € 13,00 € 17,83Insured persons 65-75 years € 14,70 € 24,83Insured persons > 65 years € 15,40 € 28,92

Insured persons living in deprived areasInsured persons < 65 years € 14,70 € 19,92Insured persons 65-75 years € 16,50 € 26,96Insured persons > 65 years € 17,20 € 31,42

Consultation fees 2009 2011*Consultation € 9,00 € 9,11Consultation >20 minutes € 18,00 € 18,22Home visit € 13,50 € 13,67Home visit >20 minutes € 22,50 € 22,78Telephone consultation € 4,50 € 4,56Prescription renewal (regardless of the number of prescription lines) € 4,50 € 4,56Vaccination € 4,50 € 4,56E-mail consultation (under certain conditions) € 4,50 € 4,56

Out-of-hours services in out-of-hours cooperatives, per hour € 50,20 € 65,81

* For the 2,3 and 4th quarter of 2011Source: Dutch Health Care Authority (Nza), 2008

Overview: paying health care providers

Provider Payment systemGeneral practitioners The remuneration is a combination of:

• Capitation fees• Consultation fees• Out-of-hours care: mainly per hour• Extra income from innovation and substitution• Prevention (influenza vaccination, cervical screening), medical examinations: fee-for-service• Some GP's are in salaried service of a GP practice or primary care centre

Practice nurses Same as above (except for out-of-hours care)Other primary care providers (dentists, etc.) Fee-for-serviceMedical specialists Independent professionals are paid via the DBC system, and they

reveive a normative hourly tariff for a normative time spent per DBC. A quarter of medical specialists are in salaried service of the hospital

Nurses SalaryHome helps Salary

Source: Dutch Health Care Authority (Nza), 2008

The Dutch Experiment in Regulation

• Given: the health insurance sector is an imperfect market

• Goal: move an imperfect economic sector towards fair market competition

• Assumption: government has the capacity to engineer a level playing field through regulation

• Assumption: the political will exists to do it

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The Regulatory “Devices” A government agency must monitor an insurer’s proposed “basic package of

services” for compliance with mandated minimum standards The Dutch Central Bank that monitors the financial viability of insurers The Dutch Healthcare Authority (NZa) regulates the market to assure that it is

functioning properly [ie is community rating respected] The Health Insurance Ombudsman takes complaints on the health insurance

industry and the supplementary health insurance policies The Health Care Insurance Board (CVZ) coordinates the Health Insurance Act The Health Care Inspectorate (IGZ) assures quality of care and checks on

provider errors The Netherlands Competition Authority (NMA) “enforces fair competition, takes

action in case of unfair competition, and approves mergers and acquisitions” A government agency supervises risk pools, calculates payouts, and distributes

risk adjusted compensation for the insurance company A government agency collects and verifies quality information and maintains a

webpage of provider and insurer performance

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Policy Makers Conclude: Engineering a level playing field is expensive! Regulation has controlled much, not all, health

insurers “gaming” for the healthiest patients Insurers will accept guaranteed issue and community

rating if risk pools protect them The fact that insurance companies report large losses

on the basic insurance policy, at an increasing is NOT an indication of failure

“Adam Smith said that profits go to zero in a near perfect market and they have….”

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Is the Dutch Experiment a Success? Short-Term Results Consumer premiums have increased. Total health system costs have not been

reduced. Insurers have failed to negotiate efficiently

with providers Incentives for personal accountability are

being revised. Competition for “market share” is razor-sharp.

Is the Dutch Experiment a Success? Short-Term Results (Contd)

Consumers note insurance premiums have increased since the 2006 reform; 10% anticipated in 2011.

The first year consumers aggressively “shopped” for insurance and many changed insurers

But many fewer “shopped” in subsequent years.

Stock holders are asking, “Should the private sector insurance companies continue to subsidize social policies”

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0%

2%

4%

6%

8%

10%

12%

14%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Statistics Netherlands

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Expenditure on care by government (t-1)

11

11,4

11,8

12,2

12,6

13

13,4

13,8

14,2

14,6

15

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Statistics Netherlands

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Expenditure on health care and welfare as a percentage of the GDP (t-1)

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Is the Dutch Experiment a Success? Short-Term Results (Contd)

Consumers are not choosing policies on the basis of price alone; equally important are:

belonging to a group-purchaser plan attractiveness of supplementary policies

Consumers are largely dissatisfied and slow to adjust (18% like it better ):

choosing a policy is said to be harder quality is perceived to be lower There is a problem of “too many choices”

2009 Survey2009 Survey http://www.hpm.org/en/Surveys/BEOZ_Maastricht_-_Netherlands/13/Health_care_reform_-_more_evaluation_results.html

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Positions and Influences at a glance

The Future in the Netherlands Dutch policy makers intend to go forward with market-

oriented regulated competition, undeterred – “they will make it work”.

They are increasing “transparency” as more quality indicators are going online.

The proportion of the hospital sector open to “negotiations” is to be increased dramatically by the 2010 new government

The political fall-out to date is low.

Oct 1, 2010: the new minority right-of-center coalition announced it will ban mergers between insurers and providers

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2010 Elections & Health Policy Minority coalition of right-of-center parties “tolerated” by

the far right anti-immigration party worries many but unrelated to health policy

Health policy does have some new elements End to “mergers” of insurers and providers Still greater role for primary care and “local” hospitals Emphasis of centralization and volume for complicated hospital

procedures – patients must travel for this level of care More control of drug prices Will cover only 1st in vitro fertilization, fewer physio and mental

health visits Abolish 5 year goal to increase primary care physicians by 25%

2020

Update for 11/1/2011

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Health care costs are increasingThe Minister of Health decided on severe budget cuts in general practice.

Primary care doctors respond with October 6 day of protest, an ‘Action Day’ ( a kind of a rally) in Amsterdam.General practitioners will only emergency shifts (only one doctor on duty in a region (Wijk bij Duurstede for example)General practitioners will travel to Amsterdam in busses for their protest

Prices of hospital services will be opened up for negotiations with insurers on prices (approximately 70% of all hospital services)

But this will be regulated with maximum of 3% increases or better zero increases (enforcement?????)

Health Insurers will be totally accountable for their benefits and costs (there will be no more government subsidies).

Negotiations expected to be very tough between the insurance companies and hospitals. If not succeed and if too much money is spent, government will make them refund it.

--The content of the basic health insurance policy package --that all are required to purchase --will be reduced going forward – (physio, mental health care, smoking cessation programs, etc). --The number of uninsured has remains the same despite all efforts to reduce it (250,000 our of 16 million)--Premiums may be increased by about 4% in 2012. The chairman of DSW (an insurer) reported in a TV interview in October that the DNB(Dutch National Bank) warned insurers to increase reserves – suggesting that they had not done so sufficiently in the recent past. This is one of the reasons for the proposed 2012 increase.--Individuals who are handicapped have a personal health budget in the Netherlands (kind of a voucher to purchase health care) but these will be reduced or possibly completely eliminated. --Parliament is very critical about the way the former minister of Health (Klink) managed Mexican Flu (called Swine Flu in the US). The current Minister, Minister Schippers, is being called to account

for this.

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ConclusionsConclusions Based on the Dutch experience caution for Based on the Dutch experience caution for

market-oriented health system reform is market-oriented health system reform is warranted.warranted.

Costs may not be containedCosts may not be contained

Access can be maintainedAccess can be maintained

Quality will not suffer in the short-termQuality will not suffer in the short-term

Limitations apply: results may change in the Limitations apply: results may change in the future in either direction.future in either direction.

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Methodology of this studyMethodology of this study

Careful reading of government documents.

Synthesis of already existing data from national polls.

Statistics available in the public domain (Dutch National Bank).

Reports from private sector consulting firms.

Qualitative interviews with Dutch Parliamentary policymakers.

Learn MoreLearn More http://www.npr.org/templates/story/story.php?storyId=91973552

BELOW: In a series about the health care systems in five countries, the NewsHour examines the Netherlands and its massive health care overhaul. "When the Netherlands redesigned its national health care system in 2006, there were three main goals: continue universal coverage, unleash competition between private insurers, and keep down costs for the long run. Every citizen is required to buy a basic package that typically costs about $160 a month. The insurance companies are required to offer the same prices to all customers, regardless of age or medical history. Low-income residents have their premiums subsidized. Health care shoppers can choose to pay more for coverage, for things like dentistry, cosmetic surgery, or physiotherapy." The NewsHour interviewed Abraham Klink, the Dutch minister of health, who said: "Health care had to be accessible and affordable to everyone, but on the other hand, there had to be competition" (PBS Suarez, 10/06/2009).

http://www.pbs.org/newshour/video/share.html?s=news01n320aqbdf

What the U.S. Can Learn From Health Care Abroad http://www.pbs.org/newshour/bb/health/july-dec09/healthcare2_10-07.html

 In Netherlands, Insurers Compete Over Quality of Care http://www.pbs.org/newshour/bb/health/july-dec09/netherlands_10-06.html 

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References References

Centraal Bureau voor de Statistiek Persbericht. (2006). Slower Increase in Care Spending; (press release No. PB 06-060). Netherlands: Centraal Bureau voor de Statistiek Persbericht.

Centraal Bureau voor de Statistiek Persbericht. (2007). Care Spending Up by 4.4 Percent (Press Release No. PB07-041). Amsterdam: Centraal Bureau voor de Statistiek Persbericht.

Consumentenbond. (2006). Zorgstelsel: kennis groeit maar nog altijd weinig vertrouwen (The New Health Care System: Measurement 2; summary of poll No. full report requires special access). Den Haag, Netherlands: Consumentenbond.

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References (Contd)References (Contd)

De Nederlandse Bank. (2007). The New Health Care System; So Far So Good. In Central Bank and Prudential Supervisor Financial Institutions (Ed.), Quarterly Bulletin March 2007 (of the Dutch Central Bank) (28-March 2007 ed., pp. 41-44). Netherlands: De Nederlandse Bank NV.

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References (Contd)References (Contd)

Marse, H and Meulen, R.T. (2006) Consumer Choice in Dutch Health Insurance after Reform” Health Care Analysis, 14, 37-49.

Nederlandse Patiënten Consumenten Federatie - NPCF. (2006). Financiele Gevolgen Zvw. Utrecht, Netherlands: Nederlandse Patiënten Consumenten Federatie.

Netherlands Ministry of Health, W. a. S. (2006). Health Insurance System. Retrieved June 5, 2006, from http://www.minvws.nl/en/themes/health-insurance-system/.

Netherlands Ministry of Health, Welfare and Sport (2006), "The New Care System in the Netherlands: Durability, Solidarity, Choice, Quality, Efficiency," DVC 60078 (January 1, 2006), 1-22.

Okma, K.G.H., Marmor, T.R., and Oberlander, J. (2011). Managed Competition for Medicare? Sobering Lessons from the Netherlands. The New England Journal of Medicine, 365;4

Parliament of the Netherlands. (2006, December 16). Afschaffen no-claim zorg pas vanaf 2008: Parliamentary Press Release. Telegraaf.

Partij van de Arbeid (PvdA). (2006). Zorgen om premiestijging blijken tereccht. Netherlands: partij van de Arbeid.

References (Contd)References (Contd)Rigoglioso, M. (2007, February 7). Managed Competition in Health Care Finds

Base in Netherlands. Stanford Report, 2.Pauline Vaillancourt Rosenau and Christiaan Lako, “An Experiment with

Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System,” vol. 33, # 6, Journal of Health, Politics, Policy and Law, December, 2008, pp. 1055-1079. Available for download at www.prosenau.com - click on “publications” and then “the new Dutch Health System”

Pauline Vaillancourt Rosenau and Christiaan Lako, “Health Insurance Experiments in the Netherlands and Switzerland: A Rejoinder with Updates,” vol. 33, # 6, Journal of Health, Politics, Policy and Law, vol 33, #6 , December, 2008, pp 1073-1077.

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van Nobelen, D. (2006). Het nieuwe zorgstelsel: meting 2: Wat is er, nu het nieuwe zorgstelsel een feit is, veranderd in de kennis van en mening over het nieuwe stelsel? (No. POD06037). Amsterdam: Consumentenbond.

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