Health Insurance Reform in the Netherlands

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

Abstract

After 30 years of discussions and failed attempts to reform the Dutch health insurance system, a new scheme came into effect 1 January 2006: the Health Insurance Act. The new Act integrates social (sickness funds) and private health insurance for curative care into a single mandatory scheme with flat rate premiums under private law. To compensate lower incomes for excessive premium burdens, a new compensation scheme (the Health Care Allowance Act) was installed simultaneously.

Purpose of health policy or idea

First of all, the old fragmented scheme was characterized by unfairness: Age, income and health status all had a potential influence on insurance form, premium level and accessibility. The introduction of a flat rate scheme in combination with a risk equalization system for all insureds and an obligation for health insurance to accept everyone should realize a level playing field for all health insurers and civilians. Secondly, the new system hopes to contain costs and increase efficiency through enhancement of the health insurers' competences (selective contracting) and introduction of more competition between health insurers. Thirdly, the new system hopes to increase transparency. The old system was characterized by a high level of government intervention, resulting in a fragmented insurance market with complex rules and regulations. 

Main points

Main objectives

The new health insurance system has the following characteristics:  

Statutory and mandatory healthcare package for all residents

As of January 1st 2006, all Dutch residents are obliged to take out health insurance. Under the old system, only those people with an income below the maximum wage level were compulsorily insured under the old Sickness Fund Act (ZFW), people above this level were free to take out private insurance. The entitlements of the new Health Insurance Act are comparable with the old ZFW entitlements.

The residents will pay a nominal premium, irrespective of income, age or health status. The residents can choose with which insurer they want to take out health insurance, and are free to change every year. Children under the age of 18 are financed through a government contribution into a new health insurance fund (see below), i.e. do not have to pay a nominal premium.

The insured can choose between deductibles of €100, €200, €300, €400 and €500 respectively, and the health insurer can decide the discount that will apply to these deductibles. These premiums should cover 50% of the total contribution burden and are paid directly to the health insurer.

Only private health insurers

The difference between sickness funds and private health insurers dissolves. They are now referred to as "health insurers". The health insurers operate under private law and can make profits and pay dividend to shareholders. This implies that the old sickness funds lose their public status and have to compete with private insurers. The actual level of the premiums can be defined by the health insurers. Furthermore, health insurers are obliged to accept everyone in their area of activity. Another consequence of the private law set up is that defaulters can be cancelled.

Income related premiums: the employers share

The Health Insurance Act obliges employers to contribute the other 50% of the total contribution burden. Therefore, the insured will have to pay an income related premium of 6.5% of their taxable income with a maximum of €1950, for which the employer has to compensate the employee. These contributions are paid into a new Health Insurance Fund (see below) and after risk equalization redistributed to the health insurers.

For retirees, unemployed and disabled: 6.5% of their income (pension), and 4.4% over any additional pensions (government pensions will be partially compensated for that, i.e. increased). Early retirees and self employed pay 4.4% until they reach 65.

No claim refund

There is a no claim scheme for all insured persons 18 years and older (<18 years don not pay premiums). Insureds who consume little -less than €255 per year- or no care at all will be refunded a maximum of €255.  

Additional private insurance

Health insurers are free to offer additional health insurance, for which they can define the benefits and premiums. In contrast to the basic insurance package, the insurers are allowed to select and assess the people who apply (e.g. surveys). However, for 2006 no insurer puts this right into practice. Furthermore, the insured - or collective - is not obliged to take out additional insurance with the same insurer as where they take out their compulsory basic insurance package.  

Health insurer funding

The health insurers are funded through the nominal premiums paid directly by the insureds and by equalization payments from the new Health Insurance Fund. The Health Insurance Fund is funded by the income related premiums of the employers/employee and a state contribution. The state contribution is put into place to meet the financing of children under the age of 18 (who do not pay a nominal premium).

Financing of General Practitioners

Only health provider whose funding is affected by the new system are GPs. Under the old system, there was a difference between sickness fund insureds (GP received a fixed contribution per year) and private insureds (GP were remunerated per consult). In the new system, the GPs are funded through a mix of the previous system, i.e. a fixed contribution of € 54 per enrolled patient and € 9 per consultation. 

Compensation Scheme: the Health Care Allowance Act  (Wet op de Zorgtoeslag, Wtz)

Lower incomes will be compensated through a new Healthcare Allowance Act. The healthcare allowance will be an income-related contribution to prevent that could mount to €400 for singles and €1155 for couples. The healthcare allowance will be administered by a new organisation linked to the Tax Department and is based on last years income and expected income for the following year. The allowance will be paid to the insureds at the start of every month, before the nominal premium is due, and is paid from tax money. To encourage citizens to assess the various insurance policies also on the basis of price, the healthcare allowance will be tailored not to the actual premium but to the average of the nominal premiums in the marketplace.

The normative costs of health insurance for an insured person with a partner have been set at 5% of the threshold income (a percentage of the minimum wage) defined in the Health Care Allowance Act plus 5% of the means-tested income in excess of the threshold income. The normative costs of health insurance for an insured person without a partner have been set at 3.5% of the threshold income plus 5% of the means-tested income in excess of the threshold income. These percentages are adjustable by general administrative order. The minister of Finance and the Minister of Social Affairs and Employment jointly determine these percentages. A person with personal assets does not lose the right to the allowance. The income tax return and other tax information will be used in due course to determine the final healthcare allowance. Any overpayment or underpayment during the year will then be corrected. School going children older than the age of 18 - who still live in with their parents - will be granted €560 to compensate the parents from having to pay an additional nominal premium per child.

Type of incentives

Health insurers

Financial: Company under private law allowed to make profits

Patients:

Financial: 1)  Premium level. 2) Health Care Allowance always calculated on basis of the average premium in the market, i.e. insured receives higher allowance than if it were based on the actual nominal premium. Hence, another indirect financial incentive to decide on premium. 3) Allowed to close private contracts, for which insurers can give discounts up to 10% discount.

Non-financial 1) quality and service of standard package. 2) possible additional insurance benefits

GPs

Limited financial incentive through remuneration per consultation.

Groups affected

Health insurers, Patients, GPs

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

Political and economic background

Plans to reform the health insurance system are more than 30 years old and all political parties agree on the goal of basic health insurance. However, not until the short-lived right coalition under Prime Minister Balkenende (CDA) was installed on 22 July 2002 - consisting of Christian Democrats (CDA), right populists (LPF) and the former coalition member the liberals (VVD) - were the plans adopted stemming from the policy document "A question of demand" from July 2001. However, the Balkenende I cabinet did not copy the plans from the previous centre coalition, but opted for flat-rate premiums in stead of income related premiums. Coalition partner LPF soon proved to be an unstable factor and, due to internal struggle, the Balkenende I administration resigned after just 87 days in office. After new elections in 2003, Balkenende won a second term in office, forming a new centre-right cabinet, consisting of Christian Democrats, Liberals and Social Liberals. Balkenende II continued the plans of Balkenende I and announced its intention to introduce basic health insurance by 1 January 2006 and made the decision to operate the system under private law with public guarantees, in stead of under public law.

After the decision to go private, some questions were raised about whether the new private set-up would comply with EU law.  In order to ensure free competition throughout the EU, the European Non-life Insurance Directives prohibit governments from imposing statutory regulations on private insurance in respect of the person they accept, the extent of cover and the premiums payable. However, an exception clause exists that states that Non-life Insurance Directives do not apply to insurance schemes that fully or partly replace social insurance. A clause assumed applicable by Dutch lawmakers. A letter from the European Commission, in response to questions raised by the Dutch cabinet, stated that it is possible, provided that government regulation did not go beyond what was strictly necessary and did not intervene more than necessary in the insurance market.

Another huge obstacle was overcome on 22 December 2004, when the House of Representatives of the Dutch Parliament-without the support of the biggest opposition party the Social Democrats- passed legislation that introduces a compulsory standard insurance policy for everyone (Health Insurance Act) and a compensation scheme (Health Care Allowance Act), scheduled to come into effect 1 January, 2006. This made acceptance in the Senate of the Dutch Parliament a formality (House of Representatives decisions are hardly ever repealed), which took place 14 June 2005.

Change of government

Complies with

EU regulations

Change based on an overall national health policy statement

Report ?A question of demand? which embroiders on the Simons (1992), Dekker (1987) and Hendriks (1974) plans.

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 Hendriks plan, published in 1974 was the first government policy document that -in vain- proposed the idea of a single social health insurance scheme.

The Dekker report, published in 1987, prompted a government response which recommended removing the divisions between cover under the ZFW, private insurance and insurance schemes for public servants and having a national insurance scheme providing basic cover for everyone. The idea was to have an income-related premium with a small flat-rate component and people would be able to take out supplementary private insurance for care not included in the basic package. The changes were to be phased in from 1989, with the gradual disappearance of the distinction between sickness funds, private insurance and public servant schemes.

The attempt to unite all social and private health insurance schemes into a single mandatory scheme -now under the Simons Plan (1992), which included key components of the Dekker report- failed in the beginning of the 1990s, mainly through strong opposition from health insurers, employers and physicians.

During the 1990s, however, many incremental reforms were implemented -often introduced in the Simons and Dekker plans- and helped pave the way for basic health insurance for the whole population before its final and successful attempt in 2006.

Initiators of idea/main actors

• Regierung

• Parlament

• Leistungserbringer

• Kostenträger

• Patienten, Verbraucher

• Bürgergesellschaft

• Privatwirtschaft, privater Sektor

• Medien

• Politische Parteien

Approach of idea

The approach of the idea is described as:
renewed: The idea of a single insurance scheme was first voiced in the Hendriks plan (1974). However, to operate the scheme under private law was decided through the Balkenende II administration in 2003.
amended: Health Insurance Act (Zorgverzekeringswet, Wtz) and Health Care Allowance Act (Wet op de zorgtoeslag, Wtz), both repeal the Sickness Fund Act (ZFW) and Health Insurance Access Act (WTZ)

Stakeholder positions

The lessons learned from the Simons Plan was that interest groups can successfully challenge reform plans. However, although stakeholders have been critical throughout the whole process - without rejecting the idea for reforms - they did not really react until the House of Representatives of the Dutch Parliament already passed the Health Insurance and Health Care Allowance Acts. Hence, too late to effectively challenge the plans.

An unexpected position paper drafted in November 2004 by an alliance of employers, private insurers, hospitals and mental care interest groups caused the most commotion. The subscribers -although supporting and welcoming reforms- feared that the new plans could increase the employer share to health insurance by 20 to 30% and expressed doubts about the lack of competition opportunities, higher administrative costs and the complexity of the new scheme.

Also the professional organisation for General Practitioners remained critical on issues such as privacy for patients, professional secret for GPs, accessibility and financing under the new scheme.

Consumer groups welcomed reforms, seeing opportunities for patients, e.g. more choice and a stronger role for patients but also risks, e.g. in regard to quality of care and competition. Their lobby made possible that collective contracts are not exclusively for employers only, but also for united patients groups.

Furthermore, the biggest opposition party, the Social Democrats, did not support the plans. Although they acknowledged the need for reforms, they did not agree on the execution as proposed (flat-rate vs. income related).

Actors and positions

Regierung
Ministry of Health Welfare and Sports	sehr unterstützend		stark dagegen
Parlament
House of Representatives	sehr unterstützend		stark dagegen
Senate	sehr unterstützend		stark dagegen
Leistungserbringer
GPs	sehr unterstützend		stark dagegen
Kostenträger
Health Insurance Companies	sehr unterstützend		stark dagegen
Patienten, Verbraucher
Patients	sehr unterstützend		stark dagegen
Bürgergesellschaft
civil society	sehr unterstützend		stark dagegen
Privatwirtschaft, privater Sektor
Private health insurers	sehr unterstützend		stark dagegen
Medien
Media	sehr unterstützend		stark dagegen
Politische Parteien
Christian Democrats (CDA)	sehr unterstützend		stark dagegen
Liberals (VVD)	sehr unterstützend		stark dagegen
Left opposition (Social Democrats, Socialists, Green Party)	sehr unterstützend		stark dagegen

Influences in policy making and legislation

Two new pieces of legislation were successfully accepted: The Health Insurance Act and the Health Care Allowance Act. The original pieces were modified on details and definitions. Crucial in the discussions was whether a new Healthcare Allowance Act guarantees sufficient compensation for lower income groups and whether the new Health Insurance Act has enough public guarantees. Important were assurances made by Minister of Health Hans Hoogervorst to keep monitoring and help out if unforeseen problems occur, i.e. unacceptable levels of uninsured and/or exceptionally high contribution burdens.

Legislative outcome

success

Actors and influence

Regierung
Ministry of Health Welfare and Sports	sehr groß		kein
Parlament
House of Representatives	sehr groß		kein
Senate	sehr groß		kein
Leistungserbringer
GPs	sehr groß		kein
Kostenträger
Health Insurance Companies	sehr groß		kein
Patienten, Verbraucher
Patients	sehr groß		kein
Bürgergesellschaft
civil society	sehr groß		kein
Privatwirtschaft, privater Sektor
Private health insurers	sehr groß		kein
Medien
Media	sehr groß		kein
Politische Parteien
Christian Democrats (CDA)	sehr groß		kein
Liberals (VVD)	sehr groß		kein
Left opposition (Social Democrats, Socialists, Green Party)	sehr groß		kein

Positions and Influences at a glance

Adoption and implementation

Throughout 2005, the ministry monitored whether the sickness funds and private insurers were ready to start the new scheme in 2006. A PricewaterhouseCoopers investigation published September 2005, commissioned by the Ministry of Health Welfare and Sports, showed that all insurers had project groups in place implementing the new system and that introduction as of 2006 was feasible. These project groups organised the necessary changes in IT management, development of personnel, information to insureds and the new regulation in regard with in collective contracts.

As requested by the Ministry of Health, Welfare and Sports (VWS), all health insurers managed to offer a new insurance policy to their insured population in December 2005. This personalized insurance policy offer had to be equal in benefits to the old and in case the insured would not react to this, this policy would automatically come into force in January 2006.

The Ministry of VWS on its turn also made the deadlines as proposed. On 5 September 2005 the Ministry of VWS published the entitlements of the basic insurance package and the details of the risk equalization scheme and on 15 September the Health Insurers heard the contribution they would receive from the Health Insurance Fund. In July 2005 the Minister of VWS Hans Hoogervorst sent a letter to all households explaining the new system and what it implies for all insureds.

Furthermore, the ministry initiated websites (to help make an informed decision for a new insurance policy), advertisements on radio and television and newspapers, and supplied free brochures and booklets. To give the insureds more time to assess the various insurance policies, the deadline to change insurer for 2006 was extended to 1 March 2006.

In 2005, the Dutch government estimated an average nominal premium around 1106 €. However, the insurers came out with lower premiums, averaging €1050. An explanation gives the possibility for collective contracts, for which the insurers are allowed to offer discounts up to 10% compared to the individual premiums. These collective contracts often contain thousands of people, and are, therefore, of enormous importance to the health insurers. This is especially the case on the short term (2006-2007) when mobility is expected to be the highest. In order to have more playing field to offer the cheapest collective contract and to maintain or even expand their market share, insurers were forced to lower their premiums.

Consequence of this new battle for insureds is that among the insurers there are winners and losers. Some insures report losses up to 25% of insureds and some report increases up to 30% of insureds.

Monitoring and evaluation

The Health Insurance Act (Zvw) contains a regulation that request an assessment of the effectiveness and the effects of this legislation within 5 years after coming into force. Furthermore, the risk equalisation system will be evaluated yearly by the Dutch Health Care Insurance Board (College voor Zorgverzekeringen, CVZ), and also 2 and 5 years after coming into effect by a team of international experts.

The health insurance market is also supervised by the Netherlands Competition Authority (Nederlandse Mededingingsautoriteit, NMa) and in a later stadium by a new independent administrative body with legal personality, the so-called Netherlands Care Authority (Nederlandse Zorgautoriteit, NZa). The NZA, as laid down in the Health Care Market Conditions Act, will absorb the National Health Tariffs Authority (College Tarieven Gezondheidszor, CTG) and the Supervisory Board for Care Insurance (College Toezicht Zorgverzekeringen, CTZ) and will act as regulator and supervisor in the Dutch health insurance market.

Review mechanisms

Halbzeitevaluation, Abschlussevaluation (extern)

Expected outcome

Whether the Health Insurance Act (Zvw) and the Health Care Allowance Act Wtz achieve their objectives remains to be seen. At this early stage it is difficult to say what the effects will be. However, some trends are visible.  

Positives

It seems that the transition into the new system as yet was fairly smooth, and the chaos that some critics expected has not become reality:

1. the premium level averaging €1050 are lower than the €1106 expected from government and the €1300 feared by some critics (and insurers as late as August 2005), a result of fierce competition.
2. the willingness to swap insurer was higher than expected. Around 25% changed health insurer, which must also be ascribed to the catalyzing effect of the collective contracts.
3. critics expected a chaos in the administration and payments of health care allowance. However, the tax department has executed this task without too many problems.
4. the financial problems foreseen by the health care providers as a result of problems with declarations and remunerations are not fulfilled thanks to advance payments supplied by the insurers.

The new system empowers civilians and patient groups. On an individual level, insureds have more choice and have to be accepted by all insurers. For example, rich chronic patients or disabled, who were obliged to take out (expensive) private insurance, now have to be accepted against the same premiums as everybody else.  Patient groups, who in the old system barely had access (influence) to health insurers, now represent thousands of new potential insureds, who, through the risk equalization system, have become profitable and therefore interesting customers.

Negatives

Short term

What happens when the advance payments to health providers dry up and the books need to be adapted to reality? Many people changed insurer, and it is still not exactly clear whether the administration of the health insurers is completely updated now. It is possible that there are thousands of people who have double insurance, because their former insurer did not terminate their contract.

Mid term

First, under private-law, defaulters can be cancelled. The list of potential defaulters is long, e.g. unemployed, illiterates, addicts, but maybe also students, elderly and self-employed. Some fear up to 500000 to 800000 uninsured.  Second, the discussions about whether the new scheme guarantees enough compensation for certain groups (lower incomes self employed, pensioners etc) will be a source for debate for many years to come, i.e. civil unrest. Third, how will health insurers deal with the great losses and increases in their insured population? Many problems come to mind, ranging from administrative and financial problems to problems in regard to (insufficient?) contracts with providers. Fourth, many fear that for 2007, the nominal premiums have to increase substantively, because for 2006 the nominal premiums were supposedly offered below cost-covering in order to maintain market share.

Long term

On the longer term the big question will be whether more competition will be able to ensure affordable health care of good quality. Will fiercely competing health insurers really be the representative of the insurers' needs (as is assumed by the government), or will the insurers be mainly price-oriented as to offer the cheapest possible premium?

Also, in government plans, the health insurers will be "director" of the Dutch health care market, in which the government only sets the rules. However, do the insurers have the instruments to take up this role? How can insurers make selective contracts when there is scarcity and regional monopolies?

Another big question mark remains whether the private health insurance is truly compatible with EU law. Although the European Commission comments are supportive, the European Court of Justice still has the last word in this matter, in case anyone (insurer?) decides to lay the matter up before the court.

Impact of this policy

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

At this point it is too early to rate the impact on quality, equity and cost efficiency, therefore "neutral" (also see "expected outcome").

References

Sources of Information

Busse R, van Ginneken E, Schreyögg J, Wisbaum W. The health care system and reforms in the www.euro.who.int/Document/Obs/EuroObserver7_1.pdf (download from February 10, 2006)

Den Exter A, Hermans H, Dosljak M and Busse R (2004): Busse R, van Ginneken E, Schreyögg J and Wisbaum W (eds). Health care systems in transition: Netherlands, Copenhagen: European Observatory on Health Care Systems and Policies www.euro.who.int/Document/E84949.pdf (download from February 10, 2006)

Ministry of Health Welfare and Sport. A question of demand. The Netherlands, 2002. www.minvws.nl/images/broch-question-demand_tcm11-45284.pdf  (download February 10, 2006)

Ministry of Health Welfare and Sport. Health Insurance in the Netherlands. the new health insurance system from 2006: The Netherlands, 2005. www.minvws.nl/images/health-insurance-in-nl_tcm11-74566.pdf  (download January 10, 2006)

Ministry of Health Welfare and Sport. Supplement: The new health insurance system in brief. The Netherlands, 2005.  www.minvws.nl/images/health-insurance-system_tcm11-62646.pdf  (download January 10, 2006)

Ministry of Health Welfare and Sport. The new health insurance system in brief. The Netherlands, 2004). www.minvws.nl/images/The%20new%20healh%20insurance%20system%20in%20brief_tcm11-56142.pdf  (download January 10, 2006)

Ministry of Health Welfare and Sport.Transitional arrangements for introduction of the Health Insurance Act and Health Care Allowance Act on 1st January 2006. The Netherlands, 2005. www.minvws.nl/images/transistional-arrangements_tcm11-74568.pdf  (download February 15, 2006)

Author/s and/or contributors to this survey

Ewout van Ginneken

Empfohlene Zitierweise für diesen Online-Artikel:

Ewout van Ginneken. "Health Insurance Reform in the Netherlands". Health Policy Monitor, March 2006. Available at http://www.hpm.org/survey/ger/a6/1