1 augustus ’15 The Dutch Health Insurance System Wout Dekker, manager of Communications & International Relations Association of Dutch Health Insurers Prague, March 12, 2009

Outline A.Background information Association of Dutch Health Insurers B.The Dutch health insurance system C.Discussions D.Results so far E.Future challenges Prague, March 12, 2009

A. Background Zorgverzekeraars Nederland (ZN): Association of Dutch Health Insurers –Members: all Dutch health care insurers that offer basic health insurance (as well as supplementary insurance) –Currently: 12 independent conglomerates and health insurance companies –Central role in health care financing: almost entire health care budget (€ 58+ bln) is financed through health care insurers –Lobby and PR; collective agreements (e.g. privacy and switching facility); services for members (e.g. ICT standards and statistics) –And of course: member of AIM Prague, March 12, 2009

B. The health care system HEALTH INSURANCE MARKET Insured person SUPPLYDEMAND DoctorPatient INSURANCE FINANCING MARKET ‘Manager’ FinancierInsurer GOVERN- MENT CARE MARKET Prague, March 12, 2009

B. The old system Exceptional Medical Expenses Act Care for elderly and disabled, psychiatric care Health Care Insurance Act (sickness fund) Public Insurance for civil servants Private insurance Acute & regular medical care Supplementary private insuranceAll remaining care Prague, March 12, 2009

B. The new system ( ) Community Support ActCommunity care for elderly and disabled Exceptional Medical Expenses Act Long term care for elderly and disabled Health Insurance ActAcute & regular medical care (including psychiatric care) Supplementary private insuranceAll remaining care Prague, March 12, 2009

B. Reasons for reform Fairness, transparancy, efficiency Unfair differences in health care contributions, depending on personal situation Different set of rules for public and private insurers: lack of transparancy High level of government intervention led to inefficiencies and lack of innovation Quality not always clear Prague, March 12, 2009

B. Health insurance act: private insurance.. Private insurers (including for profit) Open enrollment Private contracts (insurance policies) Insurer free to set level of insurance premium Deductibles up to € 655 a year Insurer free to contract health care suppliers and to set conditions/ prices Prague, March 12, 2009

B...…with public safeguards Health insurance compulsory for all residents and tax paying non-residents Obligation of insurers to accept everyone on specific policy without differentiation in premiums Broad coverage defined by government (but: choice in specific insurance policies) Risk equalisation scheme, funded by income related contributions (half of total costs) Children pay no insurance premiums Tax credit system for lower incomes Prague, March 12, 2009

B. Types of insurance and coverage Supplementary Health Insurance Health Insurance Act General Exceptional Medical Expenses Act Long term care for elderly, disabled, and psychiatric patients Legally determined coverage: Hospital Care, GP, Psychiatric Care, Pharmaceutical Care Supplementary coverage by choice: Physical Therapy, Dental Care, Cosmetic Surgery, Alternative Treatments and so on Prague, March 12, 2009

B. Flow of funds health insurance (2008 in billions) (€ 1,4) Government Health care allow. (€ 3,6 ) state disbursement children (€ 2,1) Employers compulsary allowance (€ 13,4) Risk adjust- ment fund income related contr. (€ 16,6) (covers 50% of health care consumption) Insured Health Insurers Care providers Operating costs & Profit premiums (€ 13,3) healthcare coverage (€ 30,5) co-payments (€ 1,3) (€ 1,4) (€ 18,6) Prague, March 12, 2009

C. Policy discussions 1.Private social insurance and EU law 2.Funding: income and wage cost effects 3.Risk equalisation 4.Free rider problems (defaulters ) Prague, March 12, 2009

C. European dimension Long debate: can government force public guarantees upon private insurers? Exemption clause in non-life insurance guidelines State aid aspects: risk equalisation and financial reserves of sickness funds Application of social security regulation 1408/71 (pensioners!) In all cases: final decision up to European Court of Justice Prague, March 12, 2009

C. Income and wage cost effects Average nominal premium € a year (sickness funds: € 400) Employer contribution 7,2% of wage (5,1% for pensioners and self-employed) up to € Tax credit maximizes nominal premiums as percentage of household income (3,5% or 5%) Net result: € 1 billion lower taxes and premiums But: winners (elderly and chronically ill with private insurance, families with children) And losers: young healthy singles, civil servants Prague, March 12, 2009

C. Risk adjustment Twofold purpose: prevent risk selection and create level playing field Ex ante compensation on the basis of objective criteria (age, gender, health status) of insurer’s population Temporary ex post compensation based on relative performance of insurers Good results: we even see special policies (with discount) offered to chronic patient groups Prague, March 12, 2009

C. Free rider problem Uninsured –Before reform: ¼ million - Now: a little less –Actual sanction: 130% fine –In preparation: intensifying information and eventually active tracking of uninsured. Defaulters –Preventive measures (insurers and social authorities) –No switching during indebtedness –Intensifying process of premium collection by private and eventually public means Prague, March 12, 2009

D. Results so far Smooth transition: everyone received insurer’s offer Strong competition Low premiums Active switching by consumers Stronger position patient groups Administrative problems in first year Unhappy providers Debate on income consequences Angry expats Free rider problems Prague, March 12, 2009 NegativePositive

D. Consumer empowerment free choice and appropriate information to make a good choice maximum safety and quality of health care information, permission, filing and privacy effective and easily accessible complaints- and assignment bureaus >>thus enabling the patiënt to occupy the centre stage! Prague, March 12, 2009

D. Some promising results overall growth in costs has fallen quality, safety and performance of health care providers are improving there are more and better choices for the consumer there is a growing interest of the intermediary for health insurance more transparancy in performance and quality for both insurers and health care providers less regulation and administration but more supervision Prague, March 12, 2009

D. Simply the best? New report finds Dutch healthcare system best in EU?! “The report puts the Netherlands at the top of a healthcare ‘league table’, saying US president-elect Barrack Obama would do well to use the Dutch system as a source of inspiration for his own country.” Source: Euro Health Consumers Index 2008, Brussels Prague, March 12, 2009

D. The insurers perspective The new health insurance lead to: huge change in administration in 2006 in 2006 more than 25% of insured changed insurer some insures lost others gained clients new mergers of insurance companies strong competition on premiums; no profits cuts in costs of administration; less than 4% Operation succesfully completed; compliments from the government Prague, March 12, 2009

D. The insurers perspective II substantial rise in group contracts better service to employers in health mediation and prevention firm negotiations with healthcare providers on quality and patient rights A switch from price competition to competition on quality and performance  improving consumers satisfaction! Prague, March 12, 2009

E. The European perspective Can lessons be learned for new developing systems in other EU-member states? all member states dealing with costcontainment mainstream within EU: social/public system EU lobby on social insurance is still strong political climate, sense of urgency and co- operation of health insurers is necessary for change mainly local market; cultural and social determined Prague, March 12, 2009

E. Lessons? Privatising social health insurance is possible, but: Take time to prepare (risk equalisation, turning sickness funds into market players) Be prepared to compromise on key elements (but not on ultimate goals!) Look to consumers for support Pay attention to health care providers And: when momentum is there, keep it going (and don’t try to win a popularity contest…) Prague, March 12, 2009