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Health Insurance Reform 2006
- Country:
- Netherlands
- Partner Institute:
- University of Maastricht, Department of Health Organization, Policy and Economics (BEOZ)
- Survey no:
- (7)2006
- Author(s):
- Hans Maarse
- Health Policy Issues:
Current Process Stages
| Idea | Pilot | Policy Paper | Legislation | Implementation | Evaluation | Change | ||
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| Implemented in this survey? |  |
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Featured in half-yearly report:
Health Policy Developments 7/8
Abstract
After years of debate a new health insurance law was approved last year and put into effect by January 2006. It integrates the former sickness fund scheme and private health insurance into a single mandatory scheme for all residents. Key words are consumer choice, regulated market competition within ‘public constraints’, contracting, solidarity. The reform is expected to significantly alter Dutch health care re efficiency, consumer-orientation, innovation in health care and quality of care.
Purpose of health policy or idea
The main objectives of the reform are:
- to make health care more consumer-driven
- to strengthen solidarity arrangements (by integrating the sickness fund scheme with private health insurance)
- to make health care more efficient and innovative
- to improve health care quality
The main incentives used are:
- market competition
- enhancing room for contracting between insurer and provider agents
- enhancing consumer choice
- risk pooling by means of adjusted capitation payments to health insurers to achieve fair market competition
- measuring the performance of health care providers and insurers
- government regulation is used to ensure universal access to health insurance
Affected players are:
- provider agents
- health insurers
- consumers/patients
Main points
Main objectives
The main objectives of the reform are:
- to make health care more consumer-driven
- to strengthen solidarity arrangements (by integrating the sickness fund scheme with private health insurance)
- to make health care more efficient and innovative
- to improve health care quality
Type of incentives
- market competition
- enhancing room for contracting between insurer and provider agents
- enhancing consumer choice
- risk pooling by means of adjusted capitation payments to health insurers to achieve fair market competition
- measuring the performance of health care providers and insurers
- government regulation is used to ensure universal access to health insurance
Groups affected
provider agents, health insurers, consumers/patients
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Characteristics of this policy
| Degree of Innovation | traditional |
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innovative |
| Degree of Controversy | consensual |
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highly controversial |
| Structural or Systemic Impact | marginal |
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fundamental |
| Public Visibility | very low |
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very high |
| Transferability | strongly system-dependent |
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system-neutral |
Innovative; consensual (but may easily become controversial in future); high systemic impact; high public visibility; system dependent
Political and economic background
The new health insurance legislation reflects a libertarian trend pervading many public policies of the present government - a coalition of the Christian Democrats (CDA), the Liberal Party (VVD)
and the Democrats (D'66). Yet, it is important to note that the new legislation draws in many respects upon policy ideas already put forward by the previous government - a coalition of the Labour
Party (PvdA), VVD and D'66 (the so-called purple Cabinet).
During the legislative process the EU has played a prominent role. The key-question was: is the new health insurance legislation EURO-proof? That questions stems from the fact that the new health
insurance scheme was designed as a scheme under private law with a prominent role for market competition. This implies that the Third Non-Life Insurance Directives applies which puts strict limits to
government regulation. Such regulation is only justified if it can be shown to be necessary and proportionate to achieve the 'Common Good' (e.g. an essential public regulation is that health insurers
must accept each applicant and that their premiums may not vary with health status; is such a regulation justified under European law?).
Another key issue concerned the system of risk pooling. The question here was whether risk pooling could be viewed as a kind of state support to private actors which, in principle, is forbidden under
European law. It is still uncertain whether the new legislation is in accordance with European law.
Purpose and process analysis
Current Process Stages
| Idea | Pilot | Policy Paper | Legislation | Implementation | Evaluation | Change | ||
|---|---|---|---|---|---|---|---|---|
| Implemented in this survey? | |
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Origins of health policy idea
The present health insurance reform goes back to the late 1980s when the Commission Decker published its ideas in its report Willingness to Change. The Commission was the first to advocate the
idea of regulated competition in health care and health insurance. Market competition was expected to boost efficiency, innovation, consumer-orientation and cost control. Market competition would
also increase flexibility and help to roll back the dominant position of the national government (the state) in health care.
The introduction of market competition fits in the emergence of a new policy paradigm stressing the need for liberalisation, privatisation and deregulation in public policymaking.
The ideas of the Commission Dekker were translated by the government in proposals for new health insurance legislation in the late 1980s/early 1990s. Due to increasing political resistance, the
legislative process was aborted in 1991/1992.
In the 1990s the government explicitly avoided a new debate on health care reform and followed a pragmatic approach of small steps that all nicely fitted in the ideas promulgated in the Dekker
report. Some examples are: introduction of nominal premiums (set by the sickness funds) on top of income-related contribution (set by the government); introduction of risk-adjusted capitation
payments to insurers from the Central Fund to increase the fund's financial responsibility; removing some health services from the benefits catalogue of the Sickness Fund Scheme; introduction of the
possibility of selective contracting of ambulatory physicians, physiotherapists by the funds.
The debate on health insurance reform was restarted in 2000 by a new government report.
Stakeholder positions
Generally speaking, one may say that there was broad support for the new health insurance scheme. The government in office wanted to push the reform forward rapidly. A further general observation is that the support of the insurers has always been stronger than the support of the providers and that among the providers the providers of long-term care have always been less supportive than hospitals. The employers were also generally positive, though they feared an increase of labour costs. The worker associations were more critical because of their fear for the reform's impact upon income. As far as the category of consumers is concerned, the overall picture seems mixed but the national consumer organisation have also argued pro the reform because, in its viewed, it strengthened the position of the consumer.
Influences in policy making and legislation
Health insurance reform has led to new health insurance legislation. Without further research it is not possible to disentangle the specific influence of the major players in health care. However, gaining a political majority in the parliament was only possible by accepting some political compromises. Furthermore, one may assume that bilateral contacts between the MoH and the stakeholders, in particular the health insurers, have strongly influenced the design of the new legislation.
Legislative process: outcome
Health insurance reform has led to new legislation that has come into force by January 1, 2006. The most important new pieces of legislation are:
- Health insurance law (Zorgverzekeringswet): lays down the basic framework for the new health insurance scheme
- Health insurance income support law (Wet op de Zorgtoeslag): this law compensates lower-income groups for the substantial increase of the nominal premium rate they must pay. The objective of the law is to preserve income solidarity in health insurance
- Health Market Structure Law (Wet Marktordening Gezondheidszorg): sets out the basic governance structure in health care. An essential element of it deals with the design of the new supervision structure in health care
- Furthermore , there is new legislation to create room for market contracting between insurers and providers and strengthen the position of new entrants in health care. If they meet the criteria laid down in legislation they will be licensed.
Note that the new legislation has also led to the abolishment of previous health insurance legislation. The most important abolished schemes in health insurance are: Sickness Fund Act (Ziekenfondswet), the Law on Health Insurance Access (Wet Toegang tot de Ziektekostenverzekering). The former Hospital Planning Law has been replaced with a new law.
Legislative outcome
major changes
Adoption and implementation
The new health insurance legislation has come into effect by January 1, 2006. A critical aspect of the implementation will be the room for market contracting between insurers and providers. This room not only depends upon legislation but also upon market structure such as absence of regional monopolists. As far as legislation is concerned, an important observation that the room for market contracting is now about 10% of total hospital expenditures. In some areas there is also room for competitive bidding. There is a trend to competitive bidding, for instance in home care .
Monitoring and evaluation
The effects of the new legislation are closely monitored, not only by the government and a number of administrative institutions (formal monitoring), but also by consumer and other societal organisations (informal monitoring). Note that the Health Market Structure Law has set out a completely revised scheme for market supervision in health care. Key players in this respect are: Dutch Market Competition Authority (Nederlandse Mededingingsautoriteit) and the newly created Care Authority (Zorgautoriteit). Other players are the Medical Inspectorate and the Dutch Bank (Nederlandse Bank).
Results of evaluation
Given the short time period, there are no systematic evaluations. A few preliminary observations are possible yet:
- Consumer mobility: while consumer mobility was expected to be restricted (<5%), it seems to have been massive. There are indications that perhaps more than 20% of all insured switched to another insurer. Group contracts seem to be an important determinant of switching. Some health insurers have lost a significant number of insured (20% or even more).
- Income distribution: some groups (families without children<18, singles and retired people) seem to have pay much more for health insurance than in the past. There is political rumour on this, because the government had promised that nobody would be negatively affected by the new legislation with the exception of some groups who had always clearly benefited from the previous legislation (in other words: that they now have to pay more is fair!).
- Competition for value: great mystery yet. The great fear is that competition will lead to lower quality because most competition will take the form of pure price competition. In some areas prices have already been lowered and are expected to drop further in future. But how will this affect the quality of care? Many insurers believe however hat it is possible to combine lower prices with better quality.
- Cost control: remains to be seen. The nominal premiums are on average €50 less than the government had predicted (the government's prediction was €1100). Many questions remain, however. For instance, a lower premium rate than predicted is fine, but will it be compensated next by significant increases? Many health insurers seem to have used their reserves to accept a loss. Another intriguing question is whether insured who are not in a group contract pay significantly more than those with a group contract.
- Administrative efficiency: an issue of great concern because market contracting may lead to a rise of transaction costs without an at least equivalent rise of benefits (in terms of service levels, better care, et cetera)
- Professional accountability. In particular, physicians fear a growing interference of health insurers in their medical practice which is denied categorically by the insurers. One insurer uses a financial incentive to encourage physicians to prescribe the cheapest generic drugs whenever possible. This instrument is highly contested but so far the insurer has won all court rulings.
- Number of uninsured. Each resident must have insurance. Those who do not purchase a policy are no longer insured. Those who do not pay their premiums properly will also loose health insurance. The fear is that the number of people without insurance will significantly grow in future (some mention a figure of 1 million people in this respect). It remains to be see how the number of insured develops.
Expected outcome
It is too early to make clear statements on whether market competition will work in health care. The coming 2-3 years will be critical. However, one additional comment can be made. One may say that there is now significant market competition in health insurance. Whether that competition will work also depends on the liberalisation at the supply side (more room for market contracting). This is a critical issue, however. The Minister of Health opts for a cautious (=stepwise) approach. Another critical element in this respect is market structure (presence of monopolists, cartels, barriers to new entrants, information asymmetry, et cetera). Supervisory authorities are expected to pay a key role in combating these obstacles. But how effective will they be?
Too early to assess
References
Sources of Information
Health insurance legislation
Government reports
Other reports
Journal articles
Own research
Author/s and/or contributors to this survey
Hans Maarse