Universal Private Health Insurance in the Netherlands: The First Year

Abstract

Rationale: After 30 years of discussions and failed attempts to integrate social (sickness funds) and private health insurance into a single mandatory scheme, a new scheme finally came into effect on 1 January 2006 under the Health Insurance Act. Adopted was a model with flat rate premiums under private law with public guarantees. Insureds can change insurer yearly, have to be accepted by the insurer (no risk selection allowed), and can opt to take out supplementary insurance (risk selection allowed). To compensate lower incomes for excessive premium burdens, a new tax-based compensation scheme, the Health Care Allowance Act, was installed.

Objectives: To examine the short-term, mid-term and long-term impact of the new Health Insurance and Health Care Allowance Acts and give an overview of the history and developments after introduction.

Methodology: A policy analysis, using a review based on literature, including 'grey' sources of information, official government documents and relevant journals.

Results: The transition into the new system so far has been fairly smooth, and the chaos that some informed observers expected has not become reality. The premium levels for 2006 and 2007 are lower than the premium levels expected by the government and some critics. The willingness to swap insurer was higher than expected. Around 25% changed health insurer in 2006, which must also be ascribed to the catalysing effect of the collective contracts that can be offered against a 10% discount. Some expected a chaos in the administration and payments of compensation. However, the tax department has executed this task without too many problems. Huge financial problems for health care providers as a result of problems with declarations and remunerations failed to materialise, thanks to advance payments supplied by the insurers. Furthermore, the reform led to a realignment of the health insurance market. Patients and patient organisations have more influence and choice. Currently there are 24 collective contracts concluded by patient organisations. Health insurers received more responsibility and instruments in contracting care, but face even fiercer competition, resulting in a stronger consolidation trend and yielding clear winners and losers.

Conclusions: The new system seems to empower patients and patient organisations. However, of key importance in the upcoming years is a working risk equalisation scheme, to keep 'higher risks' attractive customers for collective contracts, and a benefit catalogue that stays intact, so that higher risks do not become part of supplementary insurance for which risk selection is allowed. Furthermore some important questions remain: what happens to defaulters who can be cancelled under private law? Will it lead to an unacceptable increase of uninsured citizens? Will more competition truly bring about affordable health care of good quality? Is the system compatible with EU-law?

Keywords: health reform, health financing, private health insurance, universal coverage, Netherlands