The 2006 Health Insurance Reform in the Netherlands – introducing universal coverage

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

2. 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

3. 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 Dutch health insurance until 2006

4. 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)

5. 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

6. The fate of the Dekker committee report 1987 • 1988 government accepts the Dekker plans. • 1989 shift of government coalition from Christian-democrats and conservative liberals to Christian-democrats, labour party and liberal democrats. • 1990 adapted Dekker plan, known as plan Simons. • 1993 end of plan Simons. • 1994 shift of government coalition to labour, liberal democrats, and conservative liberals; no-regret policy of small steps.

7. 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

8. 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

9. Universal health insurance after 1 January 2006

10. Health insurance and insuredinsurance policy • 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)

11. Health insurance and insuredfinancing • 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

12. Health insurance and insuredaccess • 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

13. Uninsured May 2006: 173.000 May 2007: 151.000 May 2008: 153.000 May 2009: 152.000 Approx. 1% of total population Over-representation of migrants and younger people Bad payers Dec. 2006: 190.000 Dec. 2007: 240.000 Dec. 2008: 279.000 Dec. 2009: 318.500 Approx. 2% of adult population Over-representation of migrants, social security dependents, one-parent families Health insurance and insuredaccess

14. Health insurance and insuredswitching health insurer Source: Dutch Health Care Consumer Panel

15. Health insurance and insuredWhat were reasons for switching? Source: Dutch Health Care Consumer Panel

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

17. Health insurance and insuredCollectives Source: Dutch Health Care Consumer Panel

18. Health insurance and insuredCollectives • 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

19. Health insurance and insuredCollectives • 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

20. Health insurers and providerscontracts 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

21. Health insurers and providerscontracts and financing • 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

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

23. Competition in my work is ….. Percentage with (very) much trust in good intentions Very small 68% Small 68% Not big, not small 62% Big 48% Very big 37% Unintended consequences of competition: less trust among providers of health care

24. Provider and patientaccess • 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

25. Provider and patientaccess 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

26. 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

27. 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

28. 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