HI Reforms 1987-2003

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

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Abstract

A recent reform plan from the second purple government (1998-2002) proposed the integration of sickness funds and private health insurance into a national insurance scheme for curative health care services. After its realisation, envisioned in 2005, the national health insurance scheme would be expanded to include long-term care and mental health care.

Purpose of health policy or idea

Ultimate goal has been, and still is, to meet the competing goals of an efficient, equitable and universally accessible health care system

Already in 1987, the independent Dekker committee proposed a mandatory national health insurance scheme in order to guarantee universal access to 'basic' health care services, while regulated competition should create incentives for both insurers and providers to improve the efficiency of health care delivery.

The national basic insurance scheme would replace the segmented health care financing system and should cover about 85% of the total expenditure on health care and social services.

Switching health insurers would be made possible by mandatory open enrollment periods during which enrollees would be free to choose another health insurer at its prevailing community-rated premium.

In order to foster the efficiency of medical care, health insurers would be given the freedom to contract with selected providers and to differentiate the terms of the contractual arrangements. Hence, the obligation for sickness funds to contract with any willing provider at nationally determined conditions would be abolished.

Both price regulation and hospital capacity regulation would be reduced to expand the room for insurers to manage care.

The legal distinction between social health insurers and private health insurers would be abolished. Both types of insurers would be allowed to offer coverage of 'basic' benefits as well as optional supplementary health insurance.

Main points

Main objectives

To achieve an equitable and efficient health care system

Type of incentives

Financial incentives

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral

Political and economic background

In the 1980s, the Dutch government succeeded in gaining substantial control over health care expenditure, resulting in a stabilization of the proportion of GDP spent on health services at around 8.5% since the 1980s. During the 1980s skepticism about the effectiveness of this interventionist top-down approach in health care increased. The incorporation of the formerly corporatist health care system with a manifold of etatist policy measures had not only undermined the internal consistency of the health care system, but had also brought the government and private interests, health care providers and insurers, in a state of conflict. Moreover, the variety of separate budget constraints and supply rationing policies seriously hampered an efficient resource allocation.

Hence, the mounting dissatisfaction about the side effects of top down rationing created a 'window of opportunity' for path-breaking reforms in Dutch health care. Against this background, in 1986 the center/right government of the Christian-Democratic Prime Minister Lubbers decided to install the independent Dekker committee.

Change of government

Several changes of Government

Complies with

EU regulations

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Origins of health policy idea

The original idea was generated by the independent Dekker committee in 1987, based on Enthoven's ideas about competition in health care.

The Dekker proposals got almost unanimous political support. Even after a change of cabinet in 1989 from a center-right to center-left coalition the plan was only slightly modified and became known as the 'Simons-Plan', after the then Secretary of State for Health.

Given the broad political and societal support in favour of the Dekker-Plan, Simons expected to be able to implement his reform plan already in 1995.

Underneath the initially broad support of the Dekker-Plan there turned out to be important controversies about how equitable the system should be and whether it should be a competitive 'social' health insurance scheme or a regulated 'private' health insurance scheme.

A crucial strategic mistake by Simons was his choice of transition path towards the national health insurance scheme. The gradual expansion of AWBZ coverage (a compulsory national health insurance scheme, covering long-term care and mental health care) resulted in a reduction of private health insurance coverage and private co-payments. This effectuated a rise in the share of public expenditures, which was deemed undesirable given the economic recession. Moreover, since none of the preconditions for regulated competition were realized, the only visible effect of the reform was an expansion of social health insurance.

Simons-Plan became a rather easy prey for attack, not only by the liberal-conservative party, the employers and the private health insurers, but also by opponents from within the governing Christian Democratic party. They argued that Simons had pushed the reforms too far to the left by proposing a large basic benefits package (95% instead of Dekker's 85%) and a relatively small out-of-pocket premium.

In addition, the economic recession at the beginning of the nineties made employers increasingly wary about the introduction of a more market-oriented health care system because they feared that this would result in cost inflation.

In 1993 the Christian Democrats party effectively blocked any further implementation of the Simons-Plan and in 1994 a disillusioned Simons resigned before the centre-left cabinet fell.

After the fall of the centre-left coalition cabinet in 1994, the so-called 'purple' coalition cabinet came into office. The colour purple reflected the novel coalition of left (red) and right (blue) political parties, expelling the Christian Democrats from government for the first time since 1917. The new Social Liberal Minister of Health, Mrs. Borst, came to office under a tough budget constraint, set by the Ministry of Finance, in order to combat an economic recession. Her 1995 health care program, entitled "Cost containment in the health care sector", reflected the budgetary priority. Moreover, learning from the demise of the Simons-Plan, the new minister stressed that she was in favour of incremental change rather than radical reform plans. The idea of a single basic insurance scheme was abandoned and incremental reforms would leave the prevailing system of health care financing largely intact.

Nevertheless, during the 1990s, several incremental changes towards a model regulated competition have been implemented. Taken together, these incremental changes enhanced the technical and institutional feasibility of regulated competition.

The failure to resolve the problem of waiting lists created a new 'window of opportunity' for a new reform plan in the late 1990s. In 2001, the Dutch government published a new reform plan which was strikingly similar to the Dekker and Simons-Plans.

Having learned from the downfall of the Simons-Plan, the second purple government (1998-2002) now proposed an opposite transition path, starting with an integration of sickness fund scheme and private health insurance into a national insurance scheme for curative health care services. The proposed national health insurance scheme was largely modelled after the sickness fund scheme in which the conditions for regulated competition were already largely fulfilled. After its realisation, envisioned in 2005, the national health insurance scheme would be expanded to include AWBZ services.

Approach of idea

The approach of the idea is described as:
new:

Stakeholder positions

First, the Dutch health care system has been built upon corporatist arrangements whereby the state has delegated public regulatory authority to the various associations of providers, insurers, trade unions and employers. Hence, especially when it concerns major institutional reforms as the introduction of a National Health Insurance in combination with a model of regulated competition, the government is dependent on the cooperation of involved interest organisations.

Secondly, the autonomy of the Ministry of Health to accomplish its own reform program is increasingly constrained by the policy programs of other ministries, notably the Ministry of Finance, the Ministry of Social Affairs and the Ministry of Economic Affairs.

Although the Ministry of Health supported the Dekker-Plan, it should be emphasized that the Ministry was more in favor of a National Health Insurance than of a model of regulated competition. Nevertheless, the Ministry realized that both elements were indispensable and indissoluble related to each other.

As have been said above, the Simons-Plan was not only opposed by the liberal-conservative party, the employers and the private health insurers, but also by opponents from within the governing Christian Democratic party. Moreover, the economic recession at the beginning of the nineties made employers and the Ministry of Finance increasingly wary about the introduction of a more market-oriented health care system because they feared that this would result in cost inflation.

Although the Simons-Plan had been abandoned in 1994, important technical and institutional preconditions for regulated competition have gradually been realized in subsequent years.

These adjustments not only resulted in an alteration of the incentive structure under which individual providers and insurers had to operate. They also strengthened the alliance in favor of regulated competition because individual providers and insurers got more and more to gain from market-oriented reforms. By allowing individual providers and insurers more autonomy, in exchange for risk bearing, the locus of power in Dutch health care has shifted from the national associations towards individual health care providers and health insurers.

Many of these technical and institutional adjustments have been developed and negotiated between the Ministry of Health and the national associations of health care providers and insurers.

In 2000, the government requested two major advisory bodies, the Social and Economic Council (SER 2000) and the Council on Public Health and Care (RVZ 2000) to give advice about the need for more structural health care reforms. Both Councils recommended the introduction of a comprehensive national health insurance scheme with regulated competition. Both the SER and the RVZ are permanent advisory bodies. The SER is consists of representatives of the employers, employees and independent experts, advising the government on social-economic and related policy issues. The RVZ is a permanent advisory body for health policy issues and is composed out of independent experts.

The 2001 reform plan has received broad political and societal support. However, the political issue of waiting-lists, together with major political changes, have delayed the actual implementation of the 2001 reform plan.

Today, political parties strongly disagree about the method of premium setting in the proposed national insurance scheme. The Labour Party adheres to a largely income-related contribution and a relatively small flat rate premium as already present in the sickness fund scheme. The conservative Liberal Party and the Christen-Democrats favour a fully community-rated premium with a tax compensation for income effects.

Influences in policy making and legislation

It has led to several adjustments during the course of the policy process and it has resulted in several pieces of legislation. Some examples:

Major revisions of the Sickness Fund Act made it possible for sickness funds to selectively contract with health care professionals and to compete for enrollees.

In 1992 the legally protected regional monopolies of the sickness funds were abolished, and sickness funds were permitted to define their own geographical market.

At the same time, sickness funds were required to have biennial open enrollment periods, during which enrollees were free to switch their sickness fund, irrespective of their health status.

By a revision of the Health Care Prices Act in 1992, sickness funds and private health insurers were permitted to negotiate lower fees than those officially approved.

Furthermore, in 1993 the system of retrospective reimbursement of sickness funds was replaced by a system of prospective risk-adjusted capitation payments, making sickness funds bear some risk for the medical expenses of their enrollees.

By the end of 2000, the government permitted commercial home health care organisations to provide services covered by the AWBZ.

In the curative sector, we should mention the abolition of the system of fee-for-service payments to medical specialists in exchange for lump-sum payments to be paid from the hospital budget.

A further major change entails the replacement of the hospital budgeting system and the lump sum funding of medical specialists by a payment system based on about 400 to 600 Diagnosis and Treatment Combinations (DBCs). After several years of preparation, the new system is expected to come into force in 2004.

Finally, as an offspring of European integration, in 1998 a new stringent Competition Act was adopted under the responsibility of the Ministry of Economic Affairs. The newly established Dutch Competition Authority (NMa) soon made it clear that it would safeguard any room for competition in health care created by the government. In a number of important decisions the NMa forbid horizontal price-fixing and market sharing agreements, entry regulations and collective contracting practices by general practitioners, physiotherapists, pharmacists and other independent medical practitioners.

Taken together, these adjustments and legislative measures paved the road towards a national health insurance and regulated competition.

Adoption and implementation

It has led to several adjustments during the course of the policy process and it has resulted in several pieces of legislation. Some examples:

Major revisions of the Sickness Fund Act made it possible for sickness funds to selectively contract with health care professionals and to compete for enrollees.

In 1992 the legally protected regional monopolies of the sickness funds were abolished, and sickness funds were permitted to define their own geographical market.

At the same time, sickness funds were required to have biennial open enrollment periods, during which enrollees were free to switch their sickness fund, irrespective of their health status.

By a revision of the Health Care Prices Act in 1992, sickness funds and private health insurers were permitted to negotiate lower fees than those officially approved.

Furthermore, in 1993 the system of retrospective reimbursement of sickness funds was replaced by a system of prospective risk-adjusted capitation payments, making sickness funds bear some risk for the medical expenses of their enrollees.

By the end of 2000, the government permitted commercial home health care organisations to provide services covered by the AWBZ.

In the curative sector, we should mention the abolition of the system of fee-for-service payments to medical specialists in exchange for lump-sum payments to be paid from the hospital budget.

A further major change entails the replacement of the hospital budgeting system and the lump sum funding of medical specialists by a payment system based on about 400 to 600 Diagnosis and Treatment Combinations (DBCs). After several years of preparation, the new system is expected to come into force in 2004.

Finally, as an offspring of European integration, in 1998 a new stringent Competition Act was adopted under the responsibility of the Ministry of Economic Affairs. The newly established Dutch Competition Authority (NMa) soon made it clear that it would safeguard any room for competition in health care created by the government. In a number of important decisions the NMa forbid horizontal price-fixing and market sharing agreements, entry regulations and collective contracting practices by general practitioners, physiotherapists, pharmacists and other independent medical practitioners.

Taken together, these adjustments and legislative measures paved the road towards a national health insurance and regulated competition.

Monitoring and evaluation

This comprehensive reform of the Dutch health care system aims to set new directions and boundaries for national health policy (in other words, this piece of policy is about a national health policy).

Evaluation did take place during the course of the reform processes. For example, an evaluation of the Simon-Plan by the Sickness Fund Council showed that sickness funds neither used the option of selective contracting nor negotiated lower than officially approved provider fees. The Council concluded that the main causes of the lack of effective competition were the absence of substantial financial incentives for insurers, collusion by both providers and insurers, and increasingly stringent price and supply regulation by the government.

Evaluations led to change and policy learning processes about the overall direction of the reform but also about necessary elements, such as: adequate systems of risk-adjustment, consumer information, and product classification.

Since the government is dependent on the cooperation of providers, health insurers, employers and employees to get reforms implemented, the political system itself seems to be a save-guard against undesirable effects or unanticipated side effects.

Review mechanisms

Abschlussevaluation (extern)

Expected outcome

Given the technical, institutional and political complexity of these reforms, it is not surprising that it takes such a long time. Given the broad political support for these reforms, any new government coalition is likely to proceed with its implementation and the implementation is now scheduled for 2006.

However, many pieces of these reforms are already implemented. There are, however, some important possible pitfalls:

First, individual providers, health insurers and the government are now in the process of learning about the pitfalls and opportunities of social entrepreneurship in health care. Monitoring their behaviour asks for new regulatory measures.

New problems may also emanate from the ongoing process of European integration. The gradual extension of EU regulation to formerly national-sheltered sectors such as health care may form another obstacle for the market-oriented reforms, since the Dutch hybrid model of competition within social health insurance does not seem to fit the rather rigid distinction made by European legislation between social and private health insurance.

Finally, although regulated competition seems to address policy goals of a more efficient and consumer-oriented health care system, it still cannot guarantee macro cost-containment. Uncontrolled total health care cost inflation may erode universal access to basic health services.

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch

References

Sources of Information

Helderman, J.K., F.T. Schut, T.E.D. van der Grinten and W.P.M.M. van de Ven (2003), Market-oriented health care reforms and policy learning in the Netherlands, forthcoming in the Journal of Health Politics, Policy and Law, 2003

Author/s and/or contributors to this survey

Jan-Kees Helderman

Empfohlene Zitierweise für diesen Online-Artikel:

Jan-Kees Helderman. "HI Reforms 1987-2003". Health Policy Monitor, 6 May 2003. Available at http://www.hpm.org/survey/nl/b1/6