 | 0 |
| 0 |
| 0 |
The Dutch government is contemplating the introduction of a ‘standard medical care insurance’ with effect from January 2006. Maud Rommers describes the plans.
The medical care insurance market in the Netherlands is of interest due to the relatively large private sector. The overall market consists of three parts:
Of this market, one third of ‘common medical care’ and all the voluntary private insurances are provided by the private sector1. The Dutch government feels that the current medical care system is not working as it should and, although it has attempted to manage the costs, year-on-year expenditure increases remain high.
Problems stem from the division of the provision of ‘common medical care’ into two parts, as it obstructs effective medical care purchase and control by the insurers as well as reducing the choices the insured have. Further, with different systems applying through the AWBZ and those delivering ‘common medical care’ (through a combination of the ZFW and voluntary private insurance), this also limits the possibilities for holistic medical care supply. To solve the current problems, the Government has decided to move from a central ‘supply-led’ system to a decentralised ‘demand-led’ system.
The Government plans to introduce a ‘standard medical care insurance’ that would be operational from 1 January 2006. This insurance would be a private sector product, albeit with elements of the existing public controls that apply, implying further market regulation. The advocates for change to a single type of insurance claim it will give all parties involved in the market the same (and appropriate) financial interest and incentives.
The idea of a ‘standard medical care insurance’ is, however, not new. The first politician to attempt to introduce the idea was Secretary of State Hendriks in 1974. He was followed by the Dekker Committee that proposed a standard insurance in 1987 and then Secretary of State Simons in the early nineties. Although these attempts were unsuccessful, the current plans are more advanced, have significant support and seem highly likely to be introduced.
If the plans are approved, the new ‘standard medical care insurance’ will be a private sector product subject to certain statutory guarantees enshrined in law. The new insurance primarily replaces the existing ‘common medical care’ cover, but also replaces elements of the other two constituent parts of the existing market. Figure 1 below explains further.
click image for larger version
The State will set high level guidelines for the product, for example, the introduction of a ‘no claim’ refund to increase customer awareness of health costs. This will be to a maximum of €250, although for some sectors of health provision, such as general practitioners (GPs), any costs of consultation/treatment incurred will not, or will only partially, be taken into account when deciding on entitlement to a ‘no-claim’ refund (to discourage deferment of needed medical advice/treatment).
Insurers will, however, be able to differentiate and compete amongst each other in terms of the details of the design. For example, insurers are to be allowed to introduce different deductibles and can offer different packages in different regions of the country. They can also decide on whether to refund payments to the insured through a ‘restitution system’ or provide ‘in kind’ insurance by settling bills directly with the medical care supplier. Purchase of insurance will be compulsory, as will be the acceptance of the insured.
Premium differentiation based on age or health status will no longer be allowed. To compensate the insurers that take on a disproportionate share of the poorer risks within their portfolio, a risk equalisation system will operate. Such a system is already in place for the ZFW.
Premiums will consist of two elements, one related to income, the other on a ‘per person’ basis (that is, for a specific insurer, all insureds must be charged the same). The income dependent element will be paid by employers, the ‘per person’ element by employees. The self-employed will have to pay both elements. To ensure cover for minors, the government will cover all of their premiums.
Income dependent premiums will be set by the State and added to the fund to be used for risk equalisation. The ‘per person’ premiums are set by each insurer (and so may be different) and are paid direct (from the individual to the insurer). Such a system is similar to the current set-up for the ZFW.
The ‘per person’ premiums will, however, form a larger part of the total premium than is currently the case under the ZFW. This would mean that individuals on lower incomes would tend to pay more than they do currently, and in some cases the increase would be considerable. As a result, lower income groups may be compensated through the granting of tax relief. This could be a contentious issue in achieving agreement to implement the current proposals.
Insurers are not automatically able to offer the proposed insurance cover – they will have to meet certain requirements to receive authorisation.
Once authorised, insurers will be able to compete both on the basis of the ‘per person’ premiums offered and the quality of the available care/services, remembering that poorer risks will not necessarily be unprofitable because of the risk equalisation system. Any profits generated by insurers can be distributed to their shareholders.
The insurers will also have a stronger position in their negotiations with the medical care suppliers. They will no longer be obliged to contract with every supplier. That is, if the insurer and the medical care supplier cannot agree on care services to be supplied and the prices, the insurer can decide to exclude that specific supplier.
Although the proposals still have to be approved, a ‘standard medical care insurance’ contract seems more likely than it ever has been in the past, with significant implications for the medical care insurance market. With these changes, the Government hopes to both balance supply and demand more effectively and reduce costs. Whether, an alternative means of funding provides the solution remains to be seen.
| 1. | For more details, refer to the October 2003 edition of the Healthcare Market Review |
Copyright 2010 Towers Watson. All rights reserved.
Terms of Use
Privacy Policy
See all locations
Contact us
Request services
