The Netherland System
Next we go to the Netherlands which is also one of the countries touted by many as an example of what we should model ourselves after. Again, the report is from the CATO institute report. The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World Michael D. Tanner Cato Institute: Policy Analysis
Netherlands
Aside from Switzerland, the Netherlands has perhaps the most market-oriented national health care system in Europe. That was the case even before 2006, when a series of reforms introduced even more market mechanisms.
The old pre-2006 Dutch system resembled Germany’s. Dutch workers with incomes below €€ 32,600 were required to enroll in one of 30 government-controlled “sickness funds.” Those with higher incomes had the option of enrolling in the funds if they wished, or opting out of the government system and purchasing private insurance. Sickness funds were financed through a payroll tax and a flat-rate, per-capita premium. (208)
The funds provided a uniform package of benefits including physician and hospital care, specialist care, diagnostic tests, prescription drugs, and dental care for children. (209) While consumers could switch funds annually, there was little competition between funds and few consumers actually switched.
The new Dutch system operates on the theory of managed competition like Switzerland (see below). Both the social health insurance program and the alternative private health insurance option were replaced by a requirement that all Dutch citizens purchase a basic health insurance plan from one of 41 private insurance companies. Although a fine may be imposed for failure to comply, there is no comprehensive system for identifying citizens who do not meet the mandate. An estimated 1.5 to 2 percent of the population is currently uninsured. (210)
The required plan, which covers minimum benefits set by the government, includes general practitioner and specialist care, hospital stays, some dental care, prenatal care, some medicines, and travel expenses. In one interesting innovation, most of the required benefits are specified in terms of “functions of care” rather than by provider category. Thus, “rehabilitation care” is required, but no particular type of rehabilitation provider is mandated. (211) This may mean that the benefits package will be less susceptible to manipulation by provider interest groups, but it is much too early to tell.
The Health Ministry sets premiums, which average around €€ 100 per month for an individual. Insurance companies can offer varying deductibles, ranging from €€ 150 to €€1,000 per year, allowing for a small level of price competition. Policies can also offer rebates of up to €€225 if a policyholder uses no health services in a given year beyond seeing a primary care physician. (212) About 90 percent of the population also buys supplemental insurance covering services over and above the required standard benefits package. (213)
Employers generally pay half of insurance premiums, with individual workers picking up the other half.(214) Individual premiums are tax deductible.(215) Subsidies, or care allowances, that help low- and middle-income income workers purchase the basic insurance plan are extensive and reach well into the middle class. Currently, 5 million Dutch citizens qualify for some level of subsidy on a sliding scale based on income. (216) Those subsidies are financed through a tax on salaried workers. Because of the high levels of subsidy, the Dutch government remains a large source of health spending, one area of significant difference with the Swiss system. (217)
Insurers negotiate quality, quantity, and price of services with providers. Notably, many insurers require providers to document the quality of the care they provide, frequently relying on evidence-based guidelines and performance metrics. (218)
Some insurers provide care directly, using their own staffs and their own facilities, such as primary care centers and pharmacies. Other insurers contract with a network of providers similar to U.S. preferred provider organizations (PPOs). Patients can go out of network but will receive only partial reimbursement. Most insurers require a referral from a primary care provider before a patient can see a specialist. (219) Pharmaceutical prices are capped nationwide at the average price of medicines in a therapeutic class. Individuals may choose more expensive drugs but must pay the difference out of pocket. (220)
The new system has been in place for only two years, which is not enough time to permit a thorough evaluation. However, preliminary indications suggest that it is an improvement over the pre-2006 system. (221)
Dutch consumers appear to have embraced the reforms. Consumer organizations are participating in negotiations with providers, insurers, and lawmakers. The system is becoming more transparent, with far greater information available regarding both price and quality.
Consumers seem willing to make decisions and change insurers on the basis of price and quality. Price competition under the new system has increased significantly and at least 20 percent of Dutch consumers have switched insurers. (222) When the system was initiated, the Dutch government predicted premiums would cost €€1,106 on average. However, competition has forced the average premium down to €€1,028, 097.6 percent below the prediction.(223) Overall, the new system is estimated to have increased the purchasing power of Dutch households by as much as 1.5 percent.(224) However, not everyone has been a winner. The community rating requirement has resulted in steep increases in premiums for younger workers who were more heavily subsidized under the old system. (225)
Under the old system, waiting lists were widespread—for example, more than three months for a hip replacement and two months for a prostatectomy or hysterectomy. (226) One study estimated that at least 100 heart patients died each year while on waiting lists.(227) Early evidence suggests that some improvement has come as a result of the 2006 reforms.(228)
Hospitals are beginning to compete by expanding services such as neurosurgery and radiation therapy.(229) Although some experts have expressed concern that smaller hospitals offering these services may not have sufficient utilization rates to ensure quality and efficacy, the expanded availability of services will likely increase access to care and reduce queues.(230)
The new system may even be having a positive impact on health care costs. Since the new system took effect, health care costs have been growing at an annual rate of just 3 percent, compared to more than 4.5 percent in the year before the reforms. (231)
The jury is still out, and the Dutch system still falls well short of a true free market, but the Netherlands appears to have taken a big step in the right direction.
Netherlands
Aside from Switzerland, the Netherlands has perhaps the most market-oriented national health care system in Europe. That was the case even before 2006, when a series of reforms introduced even more market mechanisms.
The old pre-2006 Dutch system resembled Germany’s. Dutch workers with incomes below €€ 32,600 were required to enroll in one of 30 government-controlled “sickness funds.” Those with higher incomes had the option of enrolling in the funds if they wished, or opting out of the government system and purchasing private insurance. Sickness funds were financed through a payroll tax and a flat-rate, per-capita premium. (208)
The funds provided a uniform package of benefits including physician and hospital care, specialist care, diagnostic tests, prescription drugs, and dental care for children. (209) While consumers could switch funds annually, there was little competition between funds and few consumers actually switched.
The new Dutch system operates on the theory of managed competition like Switzerland (see below). Both the social health insurance program and the alternative private health insurance option were replaced by a requirement that all Dutch citizens purchase a basic health insurance plan from one of 41 private insurance companies. Although a fine may be imposed for failure to comply, there is no comprehensive system for identifying citizens who do not meet the mandate. An estimated 1.5 to 2 percent of the population is currently uninsured. (210)
The required plan, which covers minimum benefits set by the government, includes general practitioner and specialist care, hospital stays, some dental care, prenatal care, some medicines, and travel expenses. In one interesting innovation, most of the required benefits are specified in terms of “functions of care” rather than by provider category. Thus, “rehabilitation care” is required, but no particular type of rehabilitation provider is mandated. (211) This may mean that the benefits package will be less susceptible to manipulation by provider interest groups, but it is much too early to tell.
The Health Ministry sets premiums, which average around €€ 100 per month for an individual. Insurance companies can offer varying deductibles, ranging from €€ 150 to €€1,000 per year, allowing for a small level of price competition. Policies can also offer rebates of up to €€225 if a policyholder uses no health services in a given year beyond seeing a primary care physician. (212) About 90 percent of the population also buys supplemental insurance covering services over and above the required standard benefits package. (213)
Employers generally pay half of insurance premiums, with individual workers picking up the other half.(214) Individual premiums are tax deductible.(215) Subsidies, or care allowances, that help low- and middle-income income workers purchase the basic insurance plan are extensive and reach well into the middle class. Currently, 5 million Dutch citizens qualify for some level of subsidy on a sliding scale based on income. (216) Those subsidies are financed through a tax on salaried workers. Because of the high levels of subsidy, the Dutch government remains a large source of health spending, one area of significant difference with the Swiss system. (217)
Insurers negotiate quality, quantity, and price of services with providers. Notably, many insurers require providers to document the quality of the care they provide, frequently relying on evidence-based guidelines and performance metrics. (218)
Some insurers provide care directly, using their own staffs and their own facilities, such as primary care centers and pharmacies. Other insurers contract with a network of providers similar to U.S. preferred provider organizations (PPOs). Patients can go out of network but will receive only partial reimbursement. Most insurers require a referral from a primary care provider before a patient can see a specialist. (219) Pharmaceutical prices are capped nationwide at the average price of medicines in a therapeutic class. Individuals may choose more expensive drugs but must pay the difference out of pocket. (220)
The new system has been in place for only two years, which is not enough time to permit a thorough evaluation. However, preliminary indications suggest that it is an improvement over the pre-2006 system. (221)
Dutch consumers appear to have embraced the reforms. Consumer organizations are participating in negotiations with providers, insurers, and lawmakers. The system is becoming more transparent, with far greater information available regarding both price and quality.
Consumers seem willing to make decisions and change insurers on the basis of price and quality. Price competition under the new system has increased significantly and at least 20 percent of Dutch consumers have switched insurers. (222) When the system was initiated, the Dutch government predicted premiums would cost €€1,106 on average. However, competition has forced the average premium down to €€1,028, 097.6 percent below the prediction.(223) Overall, the new system is estimated to have increased the purchasing power of Dutch households by as much as 1.5 percent.(224) However, not everyone has been a winner. The community rating requirement has resulted in steep increases in premiums for younger workers who were more heavily subsidized under the old system. (225)
Under the old system, waiting lists were widespread—for example, more than three months for a hip replacement and two months for a prostatectomy or hysterectomy. (226) One study estimated that at least 100 heart patients died each year while on waiting lists.(227) Early evidence suggests that some improvement has come as a result of the 2006 reforms.(228)
Hospitals are beginning to compete by expanding services such as neurosurgery and radiation therapy.(229) Although some experts have expressed concern that smaller hospitals offering these services may not have sufficient utilization rates to ensure quality and efficacy, the expanded availability of services will likely increase access to care and reduce queues.(230)
The new system may even be having a positive impact on health care costs. Since the new system took effect, health care costs have been growing at an annual rate of just 3 percent, compared to more than 4.5 percent in the year before the reforms. (231)
The jury is still out, and the Dutch system still falls well short of a true free market, but the Netherlands appears to have taken a big step in the right direction.
Labels: healthcare reform, Netherland
posted by Anonymous at 5:45 AM
4 Comments:
I'm looking forward to CATO's view on health care in Upper Volta, a nation not wealthy, powerful and god-endowed enough to offer health care to its people.
Wait ... evidently, neither are we.
American's skepticism about Obamacare has nothing to do with wealth, power or Godly endowment.
The problem is credibility.
Obama has yet to credibly tell us how this will work - who will pay, who will benefit - and how this "reform" will avoid the costly failures of just about every other federal program.
Does anyone really believe there is $500 billion of easily avoidable waste, fraud, and abuse in Medicare?
At the end of the day, eloquent BS is still BS.
It matters not if one is speaking of Upper Volta or Pontevedro, the facts as outlined by the CATO article is government health care does not work anywhere, not as Americans want as a service.
Our governments, local, state and federal are broke! They are in debt. They have obligations they can never pay. What they have promised in current and future benefits would be fraud in the private sector. More empty political promises will not fix anything. Our wealth is gone, and our power will also soon be gone.
The only slim chance is gutting the federal government of most of what it claims to be doing for us with the exception of defense and law enforcement, reducing the debt by reducing tax rates and stimulating real job growth.
By the way, if Obama can reduce 500 billion in medicare waste, why does he not just go ahead and do that first? The answer, he cant and he knows it!
Good point about the Medicare waste figure. If they know there is $500 billion in waste and fraud, does not that beget the question: Why is nothing being done about it now?
By the way, during the campaign Obama promised he was going to go through the federal budget line by line and eliminate unnecessary programs. Wonder how that's going?
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