BigGovHealth Improve and Strengthen Health Care for all Americans

Case Study: Netherlands

“Managed competition”

The Dutch health care system, implemented in 2006, is based on “managed competition,” a combination of market mechanisms with some national control. Recently, insurers have been merging, leading to fears that fewer options will not sustain true competition. ¹

Insurance for all

Presently, the Netherlands requires all citizens to buy health coverage and penalizes those who do not purchase an insurance policy.

• Each insurance company must make a basic plan available to all Dutch residents, regardless of preexisting conditions or income. The poor receive subsidized coverage. ²
• Above the basic plan, insurers can offer additional coverage options, which vary in deductibles and the services included.
• Insurers offer incentives to become or remain healthy, giving discounts and rebates to those who purchase low-cholesterol foods, join a gym or lose weight. ³ They can also offer partial refunds to those who consume few health care resources. ⁴
• Insurers who take on lots of sick patients receive “risk-equalization” money from the government as compensation.
  • However, this applies only for patients with certain diseases. Currently the reimbursement covers 30 conditions, but excludes many serious and chronic illnesses that lead to extensive treatment and incur high costs. This can shortchanges insurer and make it difficult for patients with uncovered conditions to get supplementary insurance. ⁵

Cost-effective coverage

Health insurance in the Netherlands is linked to employment. Each person pays an “income-related contribution” - 7.2 percent of income up to €31,200 for 2008 - which is reimbursed by their workplace. This reimbursement money is taxable income. ⁶ In addition, the Dutch pay a premium per adult. Children are free. They also pay taxes that are used to subsidize people who cannot afford health insurance on their own.

While health care is less expensive in Holland than in many European countries, few citizens purchase only the basic coverage, the cost generally quoted in the press. Nearly 90 percent of the population opts to purchase further coverage. ⁷

• Base insurance costs around €1,028 in 2006 per adult, €1,100 in 2008 (~$1600). ⁸
• The normal deductible for the base coverage is €150, but those willing to accept higher deductibles can get lower premiums. ⁹
• Premiums are lower than government officials expected before the new health system debuted, signs that the increased competition is working. ¹⁰

Significant issues remain

• Although overall health care spending has decreased since the launch of the new system, some Dutch citizens have found that their premiums have actually gone up, and that they receive lower quality care. ¹¹

Poor accountability

• Although everyone must purchase an insurance policy, enforcement is a challenge because there is not a system to track who has coverage and who does not. ¹² Thus, approximately 1.5 to 2 percent of people in the Netherlands are outside the system. ¹³
• Another 1.5 percent of Dutch residents joined an insurer but failed to pay their premiums. ¹⁴

Too much bureaucracy

• Many doctors in the Netherlands dislike the new system and feel that bureaucrats are watching over their shoulders.
• Although positive attempts to tie quality of care to reimbursement have been made, they often use rigid “evidence based guidelines” that do not take into account individual patient needs. ¹⁵
• The required base plan forces some citizens to buy more coverage than they need or would prefer.
• Patients may be restricted to certain doctors who have a relationship with their insurance company or have to pay more to see an unaffiliated doctor. ¹⁶

The role of government

Government plays a large part in the Dutch health care system. Not only does the state help those who cannot afford to pay for insurance, but it also determines what must be included in the basic coverage package and decides the national premiums.

• Even solidly middle-class citizens often receive money from the government to pay for health insurance. The total number of people entitled to a subsidy is about 5 million, around 30 percent of the population. ¹⁷

Only some procedures’ prices are subject to negotiation between insurers and medical facilities. The government determines which procedures are on this list. Initially, 10 percent of procedures fell into this category. At the beginning of 2008, this increased to 20 percent. Though more and more services will be up for negotiation, in the meantime insurers may have to pay more.

American interest

The Dutch model was the basis for the Clinton health care plan of the 1990s. ¹⁸ U.S. Health and Human Services Secretary Michael Levitt visited the Netherlands in November 2007. He spoke with a variety of people, from leaders to patients, about the health system. HHS has said, however, that it “would not endorse a system like the Netherlands’.” ¹⁹

1. ¹ Naik.
2. ² Ibid.
3. ³ Ibid.
4. ⁴ Michael D. Tanner, “The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World,” Policy Analysis, no. 613, 18 March 2008, available at http://www.cato.org/pub_display.php
   ?pub_id=9272.
5. ⁵ Ibid.
6. ⁶ Wynanand P.M.M. van de Ven, and Frederick T. Schut, “Universal Mandatory Health Insurance in the Netherlands: A Model of the U.S.?,” Health Affairs, vol. 27, no. 3, (2008).
7. ⁷ Tanner.
8. ⁸ Naik; Van de Ven, and Schut.
9. ⁹ Van de Ven, and Schut.
10. ¹⁰ Naik.
11. ¹¹ John Tyler, “Nederlands zorgstelsel voorbeeld voor VS,” Radio Nederland Wereldomroep, 09 November 2007, http://wereldomroep.nl/actua/nl/samenleving/071109gezondheidszorg.
12. ¹² van de Ven, and Schut.
13. ¹³ Tanner.
14. ¹⁴ Van de Ven, and Schut.
15. ¹⁵ Tanner.
16. ¹⁶ Ibid.
17. ¹⁷ Tanner, percentage calculated based on population figures from CIA World Fact Book, June 2008 update, https://www.cia.gov/library/publications/the-world-factbook/geos/nl.html.
18. ¹⁸ Gautam Naik, “Dutch Treatment: In Holland, Some See Model for U.S. Health-Care System,” The Wall Street Journal, 6 September 2007.
19. ¹⁹ Harris.