Experiences Abroad: Health Care Reform in The Netherlands

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By Ab Klink
Minister of Health, Welfare and Sport
The Netherlands 

The Netherlands is undergoing a reform in health care, concerning both the insurance market and the care purchase market. We are using competition and a certain amount of regulation to pursue what many in the US-especially interesting in this year of Presidential elections-hunger to achieve: health insurance for everyone, coupled with incentives and controls to prevent a cost explosion.

The introduction of a universal, private health insurance in 2006 was one of the eye-catching moments and regarded by some as a possible model for the US health care system.

Of course we have to take into account the different scale of our countries and our diverse cultural, historical and institutional background. The health care reform in the Netherlands aims to provide a Dutch solution for a Dutch situation and culture. We hope our system can be of inspiration, rather than to copy.

Challenges and Ambitions

All the western countries face comparable challenges: population aging, an increase of chronic patients, increasing costs, the advantages of new medical technologies. A health system must cope with the ambitious goals of a healthy society on the one hand and on the other hand the pressure of rising demand and costs on the system. Curing the health care system is also required from the perspective of a competitive economy.

To become 21st century proof, the Dutch health care system in recent years has undergone enormous changes, adopting a-still quite regulated-private health insurance model. The main objective behind the introduction of our new Health Insurance Act in 2006 was to strengthen solidarity and to simultaneously create a more efficient and cost-effective system. I want to emphasize that the Netherlands never had a state-run system. We didn't, and still don't, deliver "socialized medicine". Unlike many other European nations, the Netherlands has a private health care system with primary care physicians and practices, hospitals, nursing homes, mental health providers, and other health care organizations negotiating contracts and budgets with various health insurers.

...after decades of debate and talks about "systems", now we can finally debate more important issues, such as how to improve the health of our population and help innovation in health care.

The ambitions behind the changes are larger than introducing an individual mandate to take out health insurance. We have worked to achieve greater freedom and greater responsibilities. The health care consumer is central to the changes, acquiring both more opportunities as well as more responsibilities. After all, he or she is the primary stakeholder. Care providers are stimulated, even challenged, to be innovative and to improve their quality (including: patient friendliness). By implementing a new payment system in hospital care, we introduce new incentives and create a system that is more dynamic than the former budget system. Health insurers will be responsible for fine tuning the desires of care consumers and the possibilities offered by the providers. They have to "buy the best care", at a reasonable price.

  The Dutch Model

I want to highlight some important cornerstones of our health insurance. Every Dutch citizen must buy insurance (individual mandate). As the Netherlands is a very "insurance minded" country we had no problems with acceptance of this mandate, nor did the enforced solidarity raised questions from the public. The coverage of the health insurance policy includes essential curative care such as primary care, hospital care and pharmaceuticals.

All insurers are required to accept all applicants and an insurer must charge the same premium for the same coverage. Risk selection is not allowed. Children up to the age of 18 are insured without any costs attached. Low income groups receive a tax-allowance for their premium. Adults can join a group contract if they so wish-resulting in a maximum premium discount of 10 percent-or can enter into an individual contract with an insurer. Currently, around 55 percent of the population is insured via a group contract. This can be their employer but increasingly patient associations or groups representing the elderly offer group contracts.

Insurers get compensation for their high risk patients according to a risk-adjustment scheme. This is paid out of a fund. Employers pay an income-related contribution to this fund. In this way it can be profitable for an insurer to focus and even specialize on people who have a certain physical condition instead of targeting only the young and healthy. This risk-adjustment scheme is essential to create a level playing field for competing health insurers. To assure a fair play we installed a health care authority as market referee (supervising competition). The Health Care Inspectorate (supervising quality) focuses on patient safety, effective care and care that is patient oriented.

Results 2006-2008

Initially, society was rather skeptical. Now, more then two years after the introduction of the Health Insurance Act, the public view has changed. Research conducted internationally by the Commonwealth Fund shows that the Dutch are highly satisfied with their system. The results thus far support this positive view.

There is true competition on insurance premiums. Three years in succession the average premium has been lower than initially estimated/projected. Or, in other words, there is an incentive for insurers to set a competitive price. Mobility of the insured exceeded expectations in the first year (2006), 18 percent switched health insurer. In the second and third year this was still evident, when less than 5 percent switched insurers (enough to keep competition going). Insurance companies really feel a drive to perform well in this contestable market; clients have noticed that it's easy to switch.

An interesting development is the group contracts between insurers and patient's associations. The Dutch Diabetic association, for instance, has an agreement with five preferred insurers. Members of the association get a discount on the premium and are enrolled in a special diabetic program, which focuses not only on the best treatment but also on prevention. Insurers are similarly using these kinds of agreements to build up a good reputation. The system gives incentives to improve the performance when lagging behind and is a motivating factor to do better. In my view the fact that ‘expensive' patients groups are attractive for insurers who are motivated to set up special programs for them is a true value for money. Isn't that the focal point of a health system? Caring for the vulnerable and sick? The Dutch system intends to alter the attention of the insurers - traditionally focusing on the clients with low costs-to clients which are interesting from a business point of view: you can earn by insuring people who are costly patients!

As said before, we are moving towards a more competition-based system which aims at safeguarding a solid and cost-effective system. Although the introduction of the Health Insurance Act was a big step forward, we are not there yet. In the next couple of years it is my challenge to take the next steps forward.

Steps Ahead: Technical Modifications

The Dutch government still regulates most of the prices. Since January 2008, 20 percent of hospital care is freely negotiable. I hope to gradually increase this to-in the end-70 percent, but only when we have enough evidence there are enough checks and balances in the system. I expect the prices of the last 30 percent, being acute care and top-end academic care, will not be negotiable as this expenditure requires specific attention due to the public character. A free market may not automatically lead to a desired outcome.

But for the most part, dynamics are a desirable and logic result of decreased government intervention. I am increasing the possibility for hospitals to distinguish themselves by integrating the costs of buildings in the price of hospital care, which is new for the Netherlands. This will stimulate hospitals to make their own investment decisions. Transparency is essential in the quest for better quality and safer care and will help patients and insurers with the choices and negotiations. Hospital ratings in newspapers have a tremendous effect, especially on those lagging behind.

Improving Performance: More Value for Money

The improvements of the system are necessary to prevent market failures and to get rid of existing government failures. But even more importantly: after decades of debate and talks about "systems", now we can finally debate more important issues, such as how to improve the health of our population and help innovation in health care.

Innovation is crucial for the sustainability of the health care system. New medical technologies will increase the quality of health care. But also the presence of enough, and well trained, personnel is of utmost importance. To repair the growing mismatch between more health care needs and fewer available health care workers, we especially need innovations that increase productivity and self-care.

The prevention of avoidable ill health is a responsibility that everyone shares. Total reliance on the curative care system to resolve all of our health problems is not realistic. Disease management programs for the chronically ill are increasingly offered to the insured as part of the basic package.

Conclusion
To conclude, the Netherlands is moving towards a more competition-based system which aims at safeguarding a solid and cost effective system. So far the first results are promising, and the Dutch population seems highly satisfied, according to international research. Although hard to copy and paste, the Dutch approach may have interesting elements for policy makers around the world.

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