Vol. 50 August 15, 2011 “Want To Go Dutch?” …or French…or German?

Before we learn FROM other countries’ experiences with medical care,

we first need to learn ABOUT them. (1)

Since all other developed countries have universal health care insurance it is a no-brainer that we, the sole remaining developed country without universal health care insurance, should look to other countries’ experiences for help in our incremental struggle towards it. Looking to the United Kingdom’s NHS has been the most frequent step because of our common language. It has also been the most politically risky one because of the potential stigma of being labeled as “soft on Socialism”. All Dr. Berwick had to say was that there were parts of the NHS that he thought were good, and he was immediately barraged by Congressional criticism as the interim head of Medicare.

So, what about France and Germany that have 5% administrative costs as compared to our 20%? (Remember, Capital One Visa card charges about 7-8% to its users.) We spend around 16% of our gross domestic product on healthcare while the French (see SICKO by Michael Moore, 2007) and the Dutch spent around 10-11% in 2007. You are already familiar with peri-natal morality rates and other measures of quality showing that our health status is no better and is sometimes even worse than those countries despite our higher costs.

2007    Infant      Mortality  Life Expectancy
Germany    4.1 79
France    4.2 79.9
Canada    4.6 80.3
U.K.    5 78.7
U.S.    6.4 78

…the DUTCH ? !

The recent proposal from Congressman Paul Ryan (R-WI) to replace traditional Medicare with a voucher system for individuals to purchase private health insurance brought the Dutch universal health care system into our spotlight. Both Ryan’s Plan and the Dutch system rely on regulation of private insurance, so-called “managed competition”. In 2006 the Netherlands switched from a system of mandatory social insurance administered by nonprofit sick funds to mandatory basic insurance that citizens had to buy from private insurance companies.

A recent analysis of the Dutch system (1) indicates that despite the intention to control costs while continuing universal access, the reality of “managed competition” has fallen short in four key areas:

1. the growth of health care spending has NOT slowed and the administrative cost and complexity has increased (600 workers were added to the tax department to verify eligibility and dispense vouchers),

2. the number of Dutch people who have “defaulted” on their premiums and have, therefore, become “uninsured” has increased the number of uninsured from 1.5% to 3%,

3. the value of “consumer choice” has proved to be very small with an average of only 4% per year changing their insurance between the 4 insurance conglomerates that control 90% of the health insurance market,

4. the amount of government regulation did not decrease; price controls, global budgets, and patient cost-sharing remained in effect. (In 2010 payments to specialists were reduced in response to budget overruns)

The Dutch Ministry of Health requires that insurance companies accept all applicants regardless of health status and must charge only community-rated premiums to avoid “cherry picking” of the most healthy portions of the population. Also, risk equalization formulas are used to protect insurance companies from excessive losses incurred by the sicker, higher-risk populations. Insurance companies are expected to compete in price and quality through SELECTIVE contracting with networks of hospitals and physicians. These same policies are shared by many of the health care reform proposals in the U.S., including Ryan’s Plan.

The actual outcomes of this “managed competition” in the Netherlands include:

  • total costs of health insurance for Dutch families has increased by 41% since 2006
  • the country now spends 15% of its gross domestic product on health care rather than 10%
  • more than 40% of Dutch families receive government subsidies to pay their health insurance premiums, and that will increase as the government moves to protect “defaulters” from losing their insurance after six months of non-payment of premiums.
The article ends with this statement:
“The idea that the Dutch reforms provide a successful model for U.S. Medicare is bizarre.”
The Ryan Plan is based on the same principles, but would also gradually reduce governmental contributions so that a 65 year old beneficiary would pay for 2/3 of his or her medical costs. It is obviously no panacea for U.S. health care insurance problems.

References:
1. Managed Competition for Medicare? Sobering Lessons from the Netherlands , NEJM 365:4 , p. 287, July 28, 2011, Okma, Marmor, and Oberlander

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