Wynand Van Der Ven: Competition among commissioners

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  • 1. Competition among commissioners: experience from the NetherlandsErasmus University Rotterdam Nuffield Health Strategy Summit 24-25 March 2010 Wynand P.M.M. van de Ven Erasmus University Rotterdam vandeven@bmg.eur.nl Competition among commissioners: evidence from the Netherlands 1
  • 2. The Netherlands • Kaartje EuropeErasmus University Rotterdam Competition among commissioners: evidence from the Netherlands 2
  • 3. Three waves of health care reforms In many OECD-countries three consecutive waves of health care reforms can beErasmus University Rotterdam discerned: 1. Universal coverage and equal access; 2. Controls, rationing, and expenditure caps; 3. Incentives and competition. David Cutler, Journal of Economic Literature 2002(40) 881-906. Competition among commissioners: evidence from the Netherlands 3
  • 4. Key elements of reform debate 1.Who is the purchaser of care on behalf on the consumer?Erasmus University Rotterdam 2.Yes/No competition among: – Providers of care? – Purchasers of care (= insurers)? 3.Which benefits package? Which premium structure? Competition among commissioners: evidence from the Netherlands 4
  • 5. Dutch health care system • Health care costs 2006: 10% GDP; • Much private initiative and private enterprise: physicians, hospitals, insurers;Erasmus University Rotterdam • Still much (detailed) government regulation; • GP-gatekeeper; • Health insurance before 2006 a mixture of: mandatory public insurance (67%), voluntary private insurance (33%). • From 2006: mandatory private insurance (100%). Competition among commissioners: evidence from the Netherlands 5
  • 6. Reforms since the early 1990s The core of the reforms is that: Risk-bearing insurers will be theErasmus University Rotterdam purchasers of care on behalf on their members; Government will deregulate existing price- and capacity-controls; Government will “set the rules of the game” to achieve public goals. Competition among commissioners: evidence from the Netherlands 6
  • 7. Health Insurance Act (2006) • Mandate for everyone in the Netherlands to buy individual private health insurance;Erasmus University Rotterdam • Standard benefits package: described in terms of functions of care; • Broad coverage: e.g. physician services, hospital care, drugs, medical devices, rehabilitation, prevention, mental care, dental care (children); • Mandatory deductible: €165 per person (18+) per year. Competition among commissioners: evidence from the Netherlands 7
  • 8. Consumer choice • Annual consumer choice of insurer and choice of insurance contract:Erasmus University Rotterdam – in kind, or reimbursement, or a combination; – preferred provider arrangement; – voluntary higher deductible: at most €650 per person (18+) per year; – premium rebate (<10%) for groups. • Voluntary supplementary insurance. Competition among commissioners: evidence from the Netherlands 8
  • 9. Health Insurance Act (2) • Much flexibility in defining the consumer’s concrete insurance entitlements;Erasmus University Rotterdam • Selective contracting and vertical integration in principle allowed; • Open enrolment & ‘community rating per insurer’ for each type of health insurance contract; • Subsidies make health insurance affordable for everyone; • Risk equalization. Competition among commissioners: evidence from the Netherlands 9
  • 10. Evaluation Health Insurance Act dec09 The HI Act-2006 is a succes in the sense that:Erasmus University Rotterdam • No political party or interest group has argued for a return to the former system with a distinction between sickness fund and private health insurance. • There is broad support for the option to annually choose another insurer or health insurance contract. Competition among commissioners: evidence from the Netherlands 10
  • 11. Positive effects • Good system of cross-subsidies (‘solidarity’); • Standard benefits package available for everyone,Erasmus University Rotterdam without health-related premium; • Annual choice of insurer/contract; • Strong price competition among the insurers; • Increasing information about price and quality of insurers and providers of care); • Increasing insurers’ activities in purchasing care; • Quality of care is on top of the agenda. Competition among commissioners: evidence from the Netherlands 11
  • 12. Preconditions managed competition 1. Risk equalization 2. Market regulation:Erasmus University Rotterdam a. Competition Authority; b. Quality Authority; c. Solvency Authority; d. Consumer Protection Authority; 3. Transparency a. Insurance products (Mandatory Health Insurance & Voluntary Supplementary Insurance) b. Medical products Competition among commissioners: evidence from the Netherlands 12
  • 13. Preconditions managed competition 4. Consumer information; 5. Freedom to contract;Erasmus University Rotterdam 6. Consumer choice of insurer; 7. Financial incentives for efficiency; a. Insurers; b. Providers of care; c. Consumers; 8. Contestable markets: a. (sufficient) insurers; b. (sufficient) providers of care. Competition among commissioners: evidence from the Netherlands 13
  • 14. Are the preconditions fulfilled? Precondition 1990 (SF) 2010 Risk equalization -- +Erasmus University Rotterdam Market regulation: Competition Authority; - ++ Quality Authority; + + Solvency Authority; NA ++ Consumer Protection Authority; NA + Transparency Mandatory Health Insurance ++ + Voluntary Supplementary Insurance - - Medical products -- -/+ Competition among commissioners: evidence from the Netherlands 14
  • 15. Are the preconditions fulfilled? Precondition 1990 (SF) 2010 Consumer information -- -/+ Freedom to contract -- -/+Erasmus University Rotterdam Consumer choice of insurer -- + Financial incentives for efficiency: Insurers; -- -/+ Providers of care; - -/+ Consumers; -- + Contestable markets: (sufficient) insurers; -- ++ (sufficient) providers of care. -- -/+ Competition among commissioners: evidence from the Netherlands 15
  • 16. Key issues • Insurers are reluctant to selectively contract because of a lack of information on the quality of the (selected) providers of care;Erasmus University Rotterdam • Good risk equalization is a precondition to make insurers responsive to the preferences of the chronically ill people; • Who bears responsibility if a hospital goes bankrupt: government or the insurers? • Supplementary insurance should not hinder chronically ill people to switch insurer; • Managed competition under a global budget? Competition among commissioners: evidence from the Netherlands 16
  • 17. Conclusions • Evaluation of Health Insurance Act: On balance positive, despite some serious problems.Erasmus University Rotterdam • So far the reforms have been focussed on the health insurance market; • Although insurers have some degree of freedom to contract with providers of care, there is still a lot of government regulation with respect to prices. • The next years the reforms will focus on the provider market. Competition among commissioners: evidence from the Netherlands 17
  • 18. Conclusions • The Dutch health care reforms: still work-in-progress & too early for a full evaluation;Erasmus University Rotterdam • The implementation of the Dutch health care reforms is very difficult and lengthy. It is like dancing the Dutch procession of Echternach (or worse): three steps forward, then two back, so that five steps are required in order to advance one pace. Competition among commissioners: evidence from the Netherlands 18