The no-claim arrangement in health insurance

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

Abstract

The no-claim arrangement (NCA) is a mandatory prepaid co-payment.

Purpose of health policy or idea

The main purpose of the no-claim arrangement (NCA) in health insurance was to make consumers more cost-conscious when consuming health care. Each insured is required to pay a mark-up of € 255 on his insurance premium. This pre-payment is refunded by the end of the year proportional to the medical consumption in that year.  If an insured does not consume medical care, the prepayment is fully refunded. If an insured uses medical services, the costs of that care are subtracted from the refund (thus, an insured does not get a refund when his medical costs exceed €255). The costs of a visit to a general practitioner are excluded from the NCA.

Main points

Main objectives

To make the user of health care more cost-conscious.

Type of incentives

financial

Groups affected

Health insurers, users of health care

Degree of Innovation	traditional		innovative
Degree of Controversy	consensual		highly controversial
Structural or Systemic Impact	marginal		fundamental
Public Visibility	very low		very high
Transferability	strongly system-dependent		system-neutral

Poor idea.

Political and economic background

The NCA well fits in the general policy of the present Dutch government to place a stronger emphasis upon individual responsibility. Consumers should be made more cost-conscious when using health care. For that reason, they must bear a part of the costs of the care they use. The NCA can be regarded a disincentive. It was a very contested policy tool when adopted. Recently, criticism has even become stronger, now it has turned out that the NCA is much less effective than assumed (or hoped for) by its advocates. It is questionable whether the NCA will be continued in future.

There is no link with EU or any other international regulations.

Purpose and process analysis

Current Process Stages

	Idea	Pilot	Policy Paper	Legislation	Implementation	Evaluation	Change
Implemented in this survey?

Origins of health policy idea

The origins of the NCA were several failed attempts in the 1980s and 1990s to introduce cost-sharing arrangements in the statutory health insurance (Ziekenfondswet). Most of these arrangements were abolished after only a few years because of political/social opposition. It was considered unfair that the sick had to pay for their health care. It was also feared that cost sharing would have an adverse impact upon public health, because it could induce sick people not to visit their doctor. When the new coalition government negotiated its political program in 2003, a mandatory deductible proved to be politically unfeasible again. The NCA was accepted as a political compromise. In order to get the compromise accepted, it was agreed that the costs of a visit to a general practitioner would be excluded from the NCA.

Initiators of idea/main actors

• Government: The NCA was part of the political program of the current government.

• Providers: Physicians were not supportive because, in their view, there should be no financial barrier to medical consumption for sick people.

• Payers: Health insurers were not supportive because of their concern for the administrative complexity of the NCA; furthermore, they did not believe in the effectiveness of the NCA.

• Patients, Consumers: Patient groups, in particular those representing the chronically ill, were very much opposed because the NCA rewards the healthy and punishes the sick.

Approach of idea

The approach of the idea is described as:
new:

Stakeholder positions

See section "Initiators / main actors".

Actors and positions

Government
Liberal party	very supportive		strongly opposed
Christian Democrats	very supportive		strongly opposed
Left-wing political parties	very supportive		strongly opposed
Providers
Physicians	very supportive		strongly opposed
Payers
Health insurers	very supportive		strongly opposed
Patients, Consumers
Patient groups	very supportive		strongly opposed

Influences in policy making and legislation

Despite political opposition, the NCA became a constituent element of the new Health Insurance Law that has come into effect by January 2006. The Christian-Democrats in he coalition took the initiative to exclude GP care and maternity cae from the arrangement.

Legislative outcome

success

Actors and influence

Government
Liberal party	very strong		none
Christian Democrats	very strong		none
Left-wing political parties	very strong		none
Providers
Physicians	very strong		none
Payers
Health insurers	very strong		none
Patients, Consumers
Patient groups	very strong		none

Positions and Influences at a glance

Adoption and implementation

The no-claim arrangement is implemented by the health insurers.

Review mechanisms

Final evaluation (external)

Results of evaluation

VEKTIS recently estimated the average refund at €91. But tis avarage is different for specific groups: elderly (65+) €37; chronically ill €1; social security recipient € 85; employed and self-employed €117 (www.vektis.nl).

There is no official evaluation of NCA. But there is much criticism:

Structure: the implementation is expensive because of the administrative complexity of the arrangement.

Process: the NCA is dificult to explain to the insured/users of health care

Outcomes: difficult to assess but the cost-saving impact is probably much less than expected or hoped for. The NCA hardly increases cost-consciousness because of the absence of immediate cost-sharing. An insured notices the financial consequences of medical not earlier than at the moment of refunding. Another basic and principal criticism is that the NCA rewards being healthy and punishes being sick. In other words, it is considered an unfair policy tool.

Expected outcome

There are now clear voices to abolish the NCA but the Minister of Health rejects this idea. Yet, it remains to be seen whether the NCA survives politically.

A simpler and more effective alternative would be to introduce a compulsory deductible.

Impact of this policy

Quality of Health Care Services	marginal		fundamental
Level of Equity	system less equitable		system more equitable
Cost Efficiency	very low		very high

A poor policy instrument; not very effective; high adminstration costs.

References

Author/s and/or contributors to this survey

Maarse, Hans

Suggested citation for this online article

Maarse, Hans. "The no-claim arrangement in health insurance". Health Policy Monitor, October 2006. Available at http://www.hpm.org/survey/nl/a8/2