January 22, 2013 3:49 pm

Dutch health system hopes fall short

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Of all the universal healthcare systems in the world, the one that most resembles the one the US will begin putting into place this year is that of the Netherlands.

Reforms implemented in 2006 replaced the Netherlands’ previous, heavily centralised system with a market-based one that resembles the so-called “Obamacare” reforms.

People are required by law to purchase insurance from private providers, while government subsidies ensure the policies are affordable. Primary healthcare providers are almost entirely private-sector, while hospitals are a mix of private and public.

As in the US, the Dutch government expected this market-oriented system would lead to cost savings as private providers competed with each other to provide better, more efficient care. But those expectations have not panned out.

“Market competition has not yet helped to contain costs,” said Casper van Ewijk, an economist at the Netherlands' Central Planning Bureau. “It has increased quality, and it has also increased the volume of care.”

Total health spending hit 13.2 per cent of gross domestic product in 2011, up from 10.3 per cent in 2001. It is growing faster than in comparable European countries such as Germany and Sweden, and even faster than in the US, according to the OECD

As centralised budgeting was replaced by market competition, waiting lists vanished. But both prices and the total amount of healthcare consumed went up.

According to studies by the CPB, much of the problem is that private healthcare providers can “create their own demand”. One study found that a 10 per cent increase in the number of hernia specialists would lead to a 7 per cent increase in the number of operations.

Another study found that having more providers led to a large increase in demand for operations when the providers were paid by the procedure, rather than on salary – suggesting the demand was being induced by the providers themselves.

That has led many in the Netherlands to call for a turn away from market-based competition and towards greater co-operation among providers, in order to use resources more efficiently.

Meanwhile, Edith Schippers, the health minister, has revamped the old practice of setting limits on hospital budgets. And coalitions of healthcare providers have negotiated covenants with the government, pledging to hold the growth in volume of care to 2.5 per cent by 2015.

Mr van Ewijk and other economists are optimistic that new measures such as paying providers for health results rather than procedures will lead to lower costs. But they warn that every strategy has its risks.

“In a [market-based] system of regulated competition, you're never sure [whether costs will be contained[,” said Mr van Ewijk. “Setting budget limits will work, but it could lead to waiting lists again.”

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