Prepared for EvidenceNetwork.ca by Dr. Lee Tunstall
The Dutch health care system is often cited as an example of an efficient, universally-accessible system that has successfully integrated a strong competitive market component into it. In a June 2014 report by the Commonwealth Fund, the Dutch system was ranked in the middle of the pack of the 11 countries under study.
Historically, the Dutch health care system has gone through three waves of development. Between about 1940 and 1970, the Dutch system moved towards offering universal health care coverage for its citizens. The second wave, between 1970 and 1990, focused on policies that were designed to help the government contain rising health care costs. The third wave, from about 2000 to the present day, has seen the government attempt to promote efficiency through “managed competition.”
There are three “compartments” of the current Dutch health care system. The first focuses on long-term care, is legislated under the Exceptional Medical Expenses Act (AWBZ), and cost about €27 billion in 2013. The second is the core component, which is for basic health insurance, described below. This is legislated under the Health Insurance Act (ZVW), and cost about €41 billion in 2013. Finally, there is voluntary supplemental health insurance available as well.
The (Social) Insurance System
In 2006, the Dutch government introduced reforms to the health care system designed to provide health insurers a more prominent role. The Netherlands is the only country that has used Alain Enthoven’s concept of managed competition as an inspiration for their reforms of basic health care (second compartment). Managed competition is where there is a market of health care insurers that consumers can choose from, but these are regulated by government.
Within the basic health insurance compartment, every citizen must be covered by a health insurance policy, but they can choose this policy from a number of private insurers who compete for their business. There are currently four major insurance companies that provide insurance coverage to 90 per cent of the population. In order to provide this consumer choice, the insurers can negotiate with health care providers regarding price, volume and quality of care to some degree. These private insurers are allowed to make a profit, but currently only one of the four largest insurers is for-profit. They must accept new applicants; they cannot turn applicants away due to their age, medical condition, and must charge one common premium that is rated by specific communities within a given geographic area.
Children under the age of 18, asylum seekers and illegal immigrants who do not have enough money to pay premiums are covered by the government.
In order to help insurers manage the costs of having to offer insurance to people who are higher-risk, the government established a Health Insurance Fund. Dutch employers pay a contribution of 7.75 per cent, based on the employee’s income, and this is deducted through the payroll of their employees. These payments are transferred to the Health Insurance Fund, and are then allocated to insurers using a risk adjustment system. In essence, this fund compensates insurers for accepting higher-risk individuals.
Consumers are allowed to change insurers annually if they want to, as the maximum contract length is only one year. Seniors seem less likely to change insurers, because they fear they will not qualify for the same voluntary insurance benefits with the new insurer. Voluntary insurance is not compulsory like the basic health insurance plans and therefore insurers can refuse applicants or charge higher premiums. More than 90 per cent of the Dutch population also purchases this voluntary supplemental health insurance.
The government still plays a large role in basic health care in the Netherlands, although it has changed from directly managing the health care system to controlling its quality, accessibility and affordability at a distance. It also provides most preventative health care and health promotion activities. There are also several government watchdog agencies that try and manage market conditions within the system. Perhaps the biggest role the government has is to ensure all citizens can afford basic health care insurance by providing tax subsidies for low-income individuals and families in the form of “care allowances.” About two-thirds of Dutch households are eligible to receive these care allowances.
The Dutch basic health care system provides the following services:
Focus on Primary Care
The Dutch health care system puts a priority on the relationship between the patient and their doctor. Family doctors are the first point of contact for patients and only doctors have the ability to refer patients on to more specialized health care services, like mental health or cardiac care.
On average, people in the Netherlands see their family doctor over six times a year, and each doctor has approximately 2,350 patients in their practice. Most Dutch family doctors do not practice on their own. In 2012, only 25 per cent had their own practice, 39 per cent worked in a practice with two doctors, while a further 36 per worked in group practices of two or more doctors. This follows an integrated team approach, where many health care professionals work together and share resources, while providing easier one-stop access to health services for their patients. They are paid for the services they provide as well as for how many patients they have in their practice (capitation).
There is also a strong focus put on using practice nurses and professional assistants in order to free up doctors’ time. Many family doctors have also joined “out of hours” consortia, in order to provide health care outside of regular business hours. Family doctors and academics often collaborate on research to help improve the primary care system.
Long-term Care Insurance
Three-quarters of people accessing the long-term care system are seniors over 65, but the system is in place for any individual with physical or mental disabilities who needs chronic and continuous care. It includes home care and nursing and care in residential settings. Care is provided after an assessment of a person’s needs and is provided through a network of care offices (Zorgkantoren). These are independent, but some are closely associated with health insurers. Some patients (those who would otherwise have to move into a residential or nursing home) can also choose to purchase care services themselves through receiving funds for a personal care budget. Others will receive the care in kind, meaning care services are arranged and provided for them.
The system is funded through salary deductions which are scaled to a person’s income. When people need to use the system, they are required to share costs through a complicated payment system which is again tested against their income (means test).
Reforms to the system are coming in January of 2015. The Exceptional Medical Expenses Act (ABWZ) will be replaced by the Long-term Care Act (WIz), for persons unable to live at home. Home care will be transferred to the municipalities and added to the pre-existing Social Support Act (Wmo), while home nursing care will be provided and organized by health care insurers.
Basic health care insurance costs individuals approximately €100 per month ($145 CAD per month). There is also a contribution based on income mentioned above, equivalent to 7.75 per cent of taxable income, up to €50,853 (approximately $73,000 CAD). Additionally, individuals pay 12.65 per cent of taxable income, up to €33,363, for long-term care contributions.
Consumers also pay a deductible of €360 (approximately $510 CAD) annually for health care services, which includes coverage for most medications. Visits to family doctors and maternity care are not subject to this deductible and all costs are therefore covered. Insurers can also offer a maximum 10 per cent discount to consumers if they are part of a group plan.
Employers pay 7.75 per cent of their employee’s income, which goes towards the risk adjustment system.
The Dutch government still carries considerable costs for the health care system. Although difficult to estimate the total costs of the system including long-term care, estimates are that in 2011, the Netherlands spent 11.9 per cent of national GDP on health care. In comparison, Canada in the same year spent 11.2 percent of GDP on health care. Costs are also rising significantly, as the Dutch spent 8.9 per cent of GDP only four years earlier in 2007.
In 2007, the health care system was financed primarily by compulsory contributions and premiums (66 per cent, of which 36 per cent was for basic health care and 31 per cent for long-term care), followed by private expenditures (14 per cent, of which 10 per cent was for out-of-pocket payments, and four per cent for complementary voluntary health insurance), government (14 per cent), and other sources (six per cent).
How well is the system performing?
The Dutch system is performing well, but does have its challenges. The 2014 Dutch Health Care Performance Report found that although there was easy access to the system, an increasing number of people are not using the system due to user fees, especially for visits to family doctors. Costs continue to rise, but at a slower pace than in previous years. While the quality of care seems quite high, there are sometimes stark differences between health care providers. Long-term care in particular is under pressure, with increasing demands and few qualified staff.
There are mixed results about the effects of managed competition and how the plans report their performance. The quality of the comparative information remains a concern.
Although health care costs to government rose substantially since the reforms, the new health insurers have succeeded in developing a good system of purchasing pharmaceuticals through a tendering strategy, which saved €348 million in 2008.
There was also a failed experiment which included introducing a free market pricing structure with no maximums for dental services not covered under the basic health care package in January 2012. The experiment only lasted one year, as it led to dangerous accessibility and affordability issues.
Emerging Issues with the Dutch System
Whether or not the 2006 reforms were successful is still up for debate. Although there is consensus that more reforms are needed, there is no agreement on what these reforms should look like. Costs are still rising, as insurers are not purchasing health services efficiently or economically. Although some costs have seen improvement, like medications, patient choice and equitable access have suffered.
Additionally, there are a growing number of individuals who do not apply for the mandatory insurance; many are also behind in payments. This costs the system money just to chase them down. If they are expelled from one program after not paying for six months, another insurer must accept them if they apply. The fear is that certain individuals will continue this pattern and cycle through all insurers.
Less healthy and lower income individuals have less choice than those who are more affluent, because insurers are marketing to healthier, educated consumers. This leads to a type of risk selection by the insurers. Insurers are also able to merge with health care providers, and therefore can operate their own pharmacies or health clinics.
It is also feared that lower income individuals who receive care allowances, which are paid in cash, may not be using these payments for health insurance purchases, as intended.
Higher costs also happen because of the growth of specialized health clinics (men’s health, acne, menopause, etc.) and the ongoing discussions around what will be covered under the basic health care package.
The reforms of 2006 were meant to open up a market system where numerous insurers would be able to negotiate and contract with health providers to produce a better quality of service for consumers. To date, quality has not been a driving force in these negotiations. More ways to measure quality of service and health outcomes need to be developed in the future.
Experts available to interview
Dr. Ewout van Ginneken
Dep. of Health Care Management
WHO Collaborating Centre for Health Systems
Research and Management
Berlin University of Technology
Our commentaries on the Dutch system
Why Canadian medicare should neither ‘go Dutch’ or ‘to the dogs’ – See more at: http://umanitoba.ca/outreach/evidencenetwork/archives/19385#sthash.3130Hcbd.dpuf
Why Canada shouldn’t compete with the U.S. for the worst performing health system in the developed world – See more at: http://umanitoba.ca/outreach/evidencenetwork/archives/19414#sthash.UhV7t5GF.dpuf
Alain Enthoven’s original article which inspired the Dutch reforms: A.C. Enthoven, “Consumer-Choice Health Plan: A National-Health-Insurance Proposal Based on Regulated Competition in the Private Sector,” New England Journal of Medicine 298, 13 (1978): 709–720.
For an historical look at the Dutch health care system, see: Ralf, Götze, The changing role of the state in the Dutch healthcare system.
For up-to-date reviews and descriptions of the Dutch system, see the Netherlands page of the European Observatory on Health Systems and Policies.
For more opinions and descriptions of the 2006 reforms, see:
Comparisons of the Dutch system to other major health care systems:
For the continuing care system (Exceptional Medical Expenses Act (AWBZ)), see E. van Ginneken, et al. Personal healthcare budgets: what can England learn from the Netherlands? BMJ 344 (2012): e1383.
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