Health care in the Netherlands
Encyclopedia
Healthcare in the Netherlands is financed by a dual system that came into effect in January 2006. Long-term treatments, especially those that involve semi-permanent hospitalization, and also disability costs such as wheelchairs, are covered by a state-controlled mandatory insurance. This is laid down in the Algemene Wet Bijzondere Ziektekosten
("General Law on Exceptional Healthcare Costs") which first came into effect in 1968. In 2009 this insurance covered 27% of all health care expenses. The Netherlands was ranked first in a study comparing the health care system
s of the US, Australia, Canada, Great Britain, Germany and New Zealand.
For all regular (short-term) medical treatment, there is a system of obligatory health insurance
, with private health insurance companies. These insurance companies are obliged to provide a package with a defined set of insured treatments. This insurance covers 41% of all health care expenses.
Other sources of health care payment are taxes (14%), out of pocket payments (9%), additional optional health insurance packages (4%) and a range of other sources (4%). Affordability is guaranteed through a system of income-related allowances and individual and employer-paid income-related premiums.
A key feature of the Dutch system is that premiums may not be related to health status or age. Risk variances between private health insurance companies due to the different risks presented by individual policy holders are compensated through risk equalization
and a common risk pool
. Funding for all short-term health care is 50% from employers, 45% from the insured person and 5% by the government. Children under 18 are covered for free. Those on low incomes receive compensation to help them pay their insurance. Premiums paid by the insured are about 100 € per month (about US$127 in Aug. 2010) with variation of about 5% between the various competing insurers.
From 1941 to 2006, there were separate public and private systems of short-term health insurance. The public insurance system was implemented by non-profit health funds, and financed by premiums taken directly out of the wages (together with income taxes). Everyone earning less than a certain threshold qualified for the public insurance system. However, anyone with income over that threshold was obliged to have private insurance instead.
through a risk equalization pool
. In this way, a compulsory insurance package is available to all citizens at affordable cost without the need for the insured to be assessed for risk by the insurance company. Indeed, health insurers are now willing to take on high risk individuals because they receive compensation for the higher risks.
A 2008 article in the journal Health Affairs suggested that the Dutch health system, which combines mandatory universal coverage with competing private health plans, could serve as a model for reform in the US. However,
an assessment of the 2006 Dutch health insurance reforms published in Duke University's Journal of Health Politics, Policy and Law in 2008 raised concerns. The analysis found that market-based competition in healthcare may not have the advantages over more publicly based single payer models that were originally envisioned for the reforms:
However, a comparison of consumer experiences over time yielded mixed results in 2009, and a 2010 review indicated it was too early to tell whether the reform has led to gains in efficiency and quality.
has a dual-level system. All primary and curative care
(i.e. the family doctor service and hospitals and clinics) is financed from private obligatory insurance. Long term care for the elderly, the dying, the long term mentally ill etc. is covered by social insurance
funded from earmarked taxation.
Private insurance companies must offer a core universal insurance package for the universal primary curative care, which includes the cost of all prescription medicines. They must do this at a fixed price for all. The same premium is paid whether young or old, healthy or sick. It is illegal in The Netherlands for insurers to refuse an application for health insurance, to impose special conditions (e.g., exclusions, deductibles, co-payments, or refuse to fund doctor-ordered treatments). The system is 50% financed from payroll taxes paid by employers to a fund controlled by the Health regulator. The government contributes an additional 5% to the regulator's fund. The remaining 45% is collected as premiums paid by the insured directly to the insurance company. Some employers negotiate bulk deals with health insurers and some even pay the employees' premiums as an employment benefit. All insurance companies receive additional funding from the regulator's fund.
The regulator has sight of the claims made by policyholders and therefore can redistribute the funds its holds on the basis of relative claims made by policy holders. Thus insurers with high payouts receive more from the regulator than those with low payouts. Thus insurance companies have no incentive to deter high cost individuals from taking insurance and are compensated if they have to pay out more than a threshold. This threshold is set above the expected costs. Insurance companies compete with each other on price for the 45% direct premium part of the funding and should try to negotiate deals with hospitals to keep costs low and quality high. The competition regulator is charged with checking for abuse of dominant market positions and the creation of cartels that act against the consumer interests. An insurance regulator ensures that all basic policies have identical coverage rules so that no person is medically disadvantaged by his or her choice of insurer.
Hospitals in the Netherlands are mostly privately run and not for profit, as are the insurance companies. Most insurance packages allow patients to choose where they want to be treated. To help patients to choose, the government gathers (Zichtbare Zorg) and discloses information about provider performance (kiesBeter). Patients dissatisfied with their insurer can choose another one at least once a year.
Insurance companies can offer additional services at extra cost over and above the universal system laid down by the regulator, e.g. for dental care. The standard monthly premium for health care paid by individual adults is about €100 per month. Persons on low incomes can get assistance from the government if they cannot afford these payments. Children under 18 are insured by the system at no additional cost to them or their families because the insurance company receives the cost of this from the regulator's fund.
If a person with a private health savings account changes his or her mind and wants to get insurance, the tax authorities release the remaining sum in the health account into the common risk pool.
The set of rules around the opt-out clauses have been designed in such way that people who do not want to be insured can opt-out but not engage in a free ride on the system. However, ultimately health care providers are obliged to provide acute health care irrespective of insurance or financial status.
AWBZ
The AWBZ is a Dutch health care law which first came into effect in 1968. Its full title is the Algemene Wet Bijzondere Ziektekosten .-References:...
("General Law on Exceptional Healthcare Costs") which first came into effect in 1968. In 2009 this insurance covered 27% of all health care expenses. The Netherlands was ranked first in a study comparing the health care system
Health care system
A health care system is the organization of people, institutions, and resources to deliver health care services to meet the health needs of target populations....
s of the US, Australia, Canada, Great Britain, Germany and New Zealand.
For all regular (short-term) medical treatment, there is a system of obligatory health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
, with private health insurance companies. These insurance companies are obliged to provide a package with a defined set of insured treatments. This insurance covers 41% of all health care expenses.
Other sources of health care payment are taxes (14%), out of pocket payments (9%), additional optional health insurance packages (4%) and a range of other sources (4%). Affordability is guaranteed through a system of income-related allowances and individual and employer-paid income-related premiums.
A key feature of the Dutch system is that premiums may not be related to health status or age. Risk variances between private health insurance companies due to the different risks presented by individual policy holders are compensated through risk equalization
Risk equalization
Risk equalization is a way of equalizing the risk profiles of insurance members in order to avoid loading premiums on the insured to some predetermined extent.- Health care :...
and a common risk pool
Risk pool
A risk pool is one of the forms of risk management mostly practiced by insurance companies. Under this system, insurance companies come together to form a pool, which can provide protection to insurance companies against catastrophic risks such as floods, earthquakes etc. The term is also used...
. Funding for all short-term health care is 50% from employers, 45% from the insured person and 5% by the government. Children under 18 are covered for free. Those on low incomes receive compensation to help them pay their insurance. Premiums paid by the insured are about 100 € per month (about US$127 in Aug. 2010) with variation of about 5% between the various competing insurers.
From 1941 to 2006, there were separate public and private systems of short-term health insurance. The public insurance system was implemented by non-profit health funds, and financed by premiums taken directly out of the wages (together with income taxes). Everyone earning less than a certain threshold qualified for the public insurance system. However, anyone with income over that threshold was obliged to have private insurance instead.
History
2006 Reform
The Netherlands has introduced a new system of health care insurance based on risk equalizationRisk equalization
Risk equalization is a way of equalizing the risk profiles of insurance members in order to avoid loading premiums on the insured to some predetermined extent.- Health care :...
through a risk equalization pool
Equalization pool
An equalization pool a fund created to level out differences in financial risk, often across long periods of time, in a process known as risk equalization...
. In this way, a compulsory insurance package is available to all citizens at affordable cost without the need for the insured to be assessed for risk by the insurance company. Indeed, health insurers are now willing to take on high risk individuals because they receive compensation for the higher risks.
A 2008 article in the journal Health Affairs suggested that the Dutch health system, which combines mandatory universal coverage with competing private health plans, could serve as a model for reform in the US. However,
an assessment of the 2006 Dutch health insurance reforms published in Duke University's Journal of Health Politics, Policy and Law in 2008 raised concerns. The analysis found that market-based competition in healthcare may not have the advantages over more publicly based single payer models that were originally envisioned for the reforms:
The first lesson for the United States is that the new (post-2006) Dutch health insurance model may not control costs. To date, consumer premiums are increasing, and insurance companies report large losses on the basic policies. Second, regulated competition is unlikely to make voters/citizens happy; public satisfaction is not high, and perceived quality is down. Third, consumers may not behave as economic models predict, remaining responsive to price incentives. If regulated competition with individual mandates performs poorly in auspicious circumstances such as the Netherlands, how will this model fare in the United States, where access, quality, and cost challenges are even greater? Might the assumptions of economic theory not apply in the health sector?
However, a comparison of consumer experiences over time yielded mixed results in 2009, and a 2010 review indicated it was too early to tell whether the reform has led to gains in efficiency and quality.
Insurance
The NetherlandsNetherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
has a dual-level system. All primary and curative care
Curative care
Curative care or curative medicine is the kind of health care traditionally oriented towards seeking a cure for an existent disease or medical condition...
(i.e. the family doctor service and hospitals and clinics) is financed from private obligatory insurance. Long term care for the elderly, the dying, the long term mentally ill etc. is covered by social insurance
Social insurance
Social insurance is any government-sponsored program with the following four characteristics:* the benefits, eligibility requirements and other aspects of the program are defined by statute;...
funded from earmarked taxation.
Private insurance companies must offer a core universal insurance package for the universal primary curative care, which includes the cost of all prescription medicines. They must do this at a fixed price for all. The same premium is paid whether young or old, healthy or sick. It is illegal in The Netherlands for insurers to refuse an application for health insurance, to impose special conditions (e.g., exclusions, deductibles, co-payments, or refuse to fund doctor-ordered treatments). The system is 50% financed from payroll taxes paid by employers to a fund controlled by the Health regulator. The government contributes an additional 5% to the regulator's fund. The remaining 45% is collected as premiums paid by the insured directly to the insurance company. Some employers negotiate bulk deals with health insurers and some even pay the employees' premiums as an employment benefit. All insurance companies receive additional funding from the regulator's fund.
The regulator has sight of the claims made by policyholders and therefore can redistribute the funds its holds on the basis of relative claims made by policy holders. Thus insurers with high payouts receive more from the regulator than those with low payouts. Thus insurance companies have no incentive to deter high cost individuals from taking insurance and are compensated if they have to pay out more than a threshold. This threshold is set above the expected costs. Insurance companies compete with each other on price for the 45% direct premium part of the funding and should try to negotiate deals with hospitals to keep costs low and quality high. The competition regulator is charged with checking for abuse of dominant market positions and the creation of cartels that act against the consumer interests. An insurance regulator ensures that all basic policies have identical coverage rules so that no person is medically disadvantaged by his or her choice of insurer.
Hospitals in the Netherlands are mostly privately run and not for profit, as are the insurance companies. Most insurance packages allow patients to choose where they want to be treated. To help patients to choose, the government gathers (Zichtbare Zorg) and discloses information about provider performance (kiesBeter). Patients dissatisfied with their insurer can choose another one at least once a year.
Insurance companies can offer additional services at extra cost over and above the universal system laid down by the regulator, e.g. for dental care. The standard monthly premium for health care paid by individual adults is about €100 per month. Persons on low incomes can get assistance from the government if they cannot afford these payments. Children under 18 are insured by the system at no additional cost to them or their families because the insurance company receives the cost of this from the regulator's fund.
Opting out
Specific minority groups in Dutch society, most notably certain branches of orthodox Calvinism and Evangelical Christian groups, refuse to have insurance for religious reasons. To take care for these religious principled objections, the Dutch system provides a special opt-out clause. The amount of money for health care that would be paid by an employer in payroll taxes is in those cases not used for redistribution by the government, but instead, after request to the tax authorities, credited to a private health care savings account. The individual can draw from this account for paying medical bills, however if the account is depleted, one has to find the money elsewhere. If the person dies and the account still contains a sum, that sum is included in the inheritance.If a person with a private health savings account changes his or her mind and wants to get insurance, the tax authorities release the remaining sum in the health account into the common risk pool.
The set of rules around the opt-out clauses have been designed in such way that people who do not want to be insured can opt-out but not engage in a free ride on the system. However, ultimately health care providers are obliged to provide acute health care irrespective of insurance or financial status.