1. Risk sharing and risk pooling:
perspective from the Netherlands
Erasmus University Rotterdam
Nuffield Trust
Health Policy Summit 2012
29 February 2012
Wotton House, Surrey
Wynand P.M.M. van de Ven
Erasmus University Rotterdam
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2. Dutch health care system
• Health care costs 2009: 12% GDP;
• National Health Insurance (NHI, 2006)
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• Mandate for everyone in the Netherlands
to buy individual private health insurance;
• Broad coverage: e.g. physician services,
hospital care, drugs, medical devices,
rehabilitation, prevention, mental care,
dental care (children).
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3. Health Insurance Act (2006)
• Insurers are assumed to be(come) the
purchaser of care for their enrollees;
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• Selective contracting allowed;
• Free consumer choice of insurer;
• Open enrolment;
• PBRA-budget (risk equalization);
• Risk sharing and risk pooling;
• Insurer: ‘Budgetholding commisioning entity’
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4. Risk sharing and risk pooling
• For each enrollee an insurer receives an
ex-ante determined budget (‘equalization
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payment’) which is based on the PBRA-
formula and the risk characteristics of
that person.
• This budget equals the predicted next
year’s expenses for that person covered
by the NHI minus a fixed amount (to be
compensated by the consumer’s out-of-
pocket premium).
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5. Risk adjusters in the Netherlands
Year New risk adjuster
1992 Age/gender
1995 Region, yes/no employee, disability
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1997 Age/disability
2002 Pharmacy-based Cost Groups (PCGs)
(13 PCGs and about 7% of population)
2004 Diagnostic Cost Groups (DCGs) (about 2% of pop)
yes/no self-employed
2007 Multiple PCGs allowed (co-morbidity);
(20 PCGs and about 16% of population)
2008 Indicator of Socio-Economic Status
2012 Indicator of “multiple-years high-expenses”
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6. Why risk sharing and risk pooling?
1. Imperfections in the PBRA-formula
an incentive for risk selection;
no level playing field for the insurers;
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2. Government regulation with e.g. prices
and capacity
Insurers can not be held responsible for high
expenses
3. Imperfections of next year’s predicted
macro-budget to be allocated to the insurers
4. Protection against the risk of going
bankrupt (via voluntarily reinsurance).
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7. Forms of risk sharing and risk pooling
• Excess loss sharing: a percentage of each
consumer’s annual expenses above a threshold (e.g.
20,000 euro) is reimbursed
• Mandatory mutual pooling: a percentage of
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each insurer’s annual profit or loss must be pooled
among the insurers
• Proportional profit/loss-sharing:
a percentage of each insurer’s annual profit/loss is
shared with the risk equalization fund
• Outlier-profit/loss-sharing: each insurer’s
annual profit/loss outside a bandwidth is shared with
the risk equalization fund
• Macrobudget-compensation
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8. Reduction of the risk sharing
Last 20 years:
• Improvement of the PBRA-formula;
• liberalization of the health care system:
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 the insurers increasingly got more
tools to be an active purchaser of care.
Therefore the Dutch government
gradually reduced the extent of risk
sharing and risk pooling.
Consequently the financial risk for an
insurer (the ‘proportion of its profit/loss
for which the insurer is at risk’) increased.
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9. Average financial risk insurers
(excl. mental health care expenses)
Gem iddeld financieel risico van zorgverzekeraars (exclusief
m acronacalculatie en bandbreedteregeling)
100%
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90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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10. Conclusion
Over a period of 20 years the financial
risk of the Dutch ‘budgetholding
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commissioning entities’ increased
from 0 in 1992 to about 90% in 2012.
If they exceed their PBRA-determined
budget, they have to raise their
premium or lower their financial
reserves.
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11. The Netherlands - England
Although the budgetholding
commissioning entities in England
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and the Netherlands both receive an
ex-ante determined budget based on a
sophisticated PBRA-formula, there
are some striking differences which
may evoke interesting discussions.
(Bevan and Van de Ven, 2010)
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12. Budgetholding commissioning entities
The England England
Netherlands (PCT) (CCG)
Out-of-pocket yes no no
premium paid
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by consumer?
Consumer yes no as yet
choice of (but choice of unknown
commissioner? hospital)
Financial yes (>11%) no; end of year as yet
reserves? underspend unknown
SHA
Sanction if higher management as yet
persistently premium; ‘challenge’; unknown
exceeding the less financial adjustment by
budget? reserves;
bankruptcy. SHA (ex-post)
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