The 2006 Health Insurance Reform in the Netherlands – introducing universal coverage Prof. Peter P. Groenewegen, PhD Dublin, December 6, 2010

Health care insurance law Introduced on 1 January 2006 Abolition of distinction between private and public insurance Insurance under private law with public limiting conditions Obligation for every citizen to take health insurance Part of larger reform, aiming at higher quality and lower costs

Dutch health insurance until 2006 Public insurance (65%): obligatory for all employees and dependents below income ceiling; no risk selection; no premium differentiation; premiums largely income related with small nominal premium administered through sickness funds Private insurance (35%): not obligatory; for people above income ceiling; admitted after risk selection; premium differentiation premiums nominal and risk related administered through damage insurance companies and sickness funds

Introduction period Large number of switchers (18%); now stabilized at former levels of appr. 4% No big administrative problems for insurance organisations More administrative problems for GPs (concurrent change of payment system)

Why did it run so smoothly? Long history: starting in 1987 From early 1990’s: many small steps in regulation Anticipation and adaptation by key actors in the system These steps made insurance reform both possible and inevitable

The fate of the Dekker committee report government accepts the Dekker plans shift of government coalition from Christian- democrats and conservative liberals to Christian- democrats, labour party and liberal democrats adapted Dekker plan, known as plan Simons end of plan Simons shift of government coalition to labour, liberal democrats, and conservative liberals; no-regret policy of small steps.

Between 1990 and 2006 the following (small) steps were taken regional monopolies of sickness funds abolished, publicly insured free to chose a sickness funds, switch once a year, financial responsibility of sickness funds gradually increased, obligation to contract all providers removed for ambulatory care providers, development of a risk adjustment system, from fixed tariffs to maximum tariffs

Anticipation and adaptation: the case of one health insurer Mergers with other sickness funds (competition, financial risks) Integration of administrative procedures Harmonization of insurance policies Customer orientation Contracting collectives in private insurance Developing the purchasing function

Universal health insurance after 1 January 2006

Basic package (identical for everybody) Choice between in-kind and restitution policy Additional insurance (no obligation to accept everybody) Obligatory deductable €165 Free choice of extra deductible (min. €100, max. €500) Health insurance and insured insurance policy

Health insurance and insured financing Premium: nominal (circa €1100 per year) plus income dependent (via taxation, obligatory restitution by employer) Collective arrangements against reduced nominal premium Compensation for low income persons Nearly 40% of adults benefit from compensation; on average €480 Compensation for chronically ill and disabled obligatory deductable is compensated

Health insurance and insured access Obligation to accept everybody, risk selection and premium differentiation forbidden Free choice between insurance organizations Risk equalization between insurers Possibilities for risk selection Additional insurance Collective insurance Preferred provider contracts

Uninsured May 2006: May 2007: May 2008: May 2009: Approx. 1% of total population Over-representation of migrants and younger people Bad payers Dec. 2006: Dec. 2007: Dec. 2008: Dec. 2009: Approx. 2% of adult population Over-representation of migrants, social security dependents, one-parent families Health insurance and insured access

Source: Dutch Health Care Consumer Panel Health insurance and insured switching health insurer

Health insurance and insured What were reasons for switching? Source: Dutch Health Care Consumer Panel

Health insurance and insured Collectives Employers Patient organizations Unions All other kinds of groups (lotteries, stores, etc) 65% has collective insurance Discount on average 7%

Source: Dutch Health Care Consumer Panel Health insurance and insured Collectives

For employers : premium, discount for basic and additional insurance were most important For patient organizations: service, coverage and discount for additional insurance were most important Source: questionnaire amongst 42 organizations. Van Ruth, De Jong and Groenewegen, 2007 Health insurance and insured Collectives

Employers base their choice on price Patient organizations value content Quality improvement is possible through patient organizations efforts However, they are a minority, and mobilize less insured It took more effort and they received lower discounts Health insurance and insured Collectives

Health insurers and providers contracts and financing Obligation to contract enough care to provide for insured with in-kind policy Obligation to mediate between providers and insured with restitution policy Preferred provider contracts For 34% of hospital care prices are negotiable

Health insurers need information about performance of providers Performance information is still scarce Examples: Consumer Quality-index and indicators required by the Health Care Inspectorate Contracts can then be related to performance indicators Health insurers and providers contracts and financing

Erosion of mutual trust, affecting the willingness to cooperate Crowding out of professional values Much supervision – high costs, low trust Health insurers and providers unintended consequences of competition

Competition in my work is ….. Percentage with (very) much trust in good intentions Very small68% Small68% Not big, not small62% Big48% Very big37% Unintended consequences of competition: less trust among providers of health care

Provider and patient access Gate keeping system: no free access to specialist care Freedom of choice of provider can be restricted for insured with in-kind policy Insurance organization may have negotiated specific care programmes

Can insurers guide patients? There are positive incentives: the obligatory deductable is not paid for preferred providers Only few examples of insurance policies with selective contracting Provider and patient access

Effects of reforms: Quality of care Quality is hardly part of negotiations between insurers and providers, price is most important Insured choose their insurer based on premium, not on quality

Effects of reforms: Cost containment Cost containment is difficult in demand driven system Micro versus macro efficiency: Prices may decrease, volume is increasing Options in case of increasing costs: - restriction of basic package - shifts towards additional insurance - increased cost sharing - decreased compensation for lower income people

Conclusions Smooth introduction (after 15 years of small steps) It is still work in progress; monitoring is very important Long term (unintended) consequences unknown Quality of care is hardly included in negotiations Cost containment is difficult