Ireland shown the benefits of going ‘Dutch’ on health

Gary Culliton heard about the Dutch health system at a recent seminar on health spending in Dublin — the model favoured by Fine Gael

The Dutch health insurance system was an administrative disaster when it was introduced in 2006, a seminar on health funding in Dublin was told recently. This is of interest here because it is Fine Gael’s preferred model for reforming the health service. After a difficult beginning in Holland however, there have been improvements.
Under Fine Gael’s proposals for universal health insurance, Ireland will move towards the Dutch system, where everyone has mandatory health insurance, either subsidised or fully financed by the State. The State will subsidise the less well-off up to 100 per cent of the premium. Private insurance companies would compete in offering a basic healthcare package with community rating and a ‘sophisticated’ risk equalisation element.
Total healthcare expenditure is 9.8 per cent of GDP in the Netherlands, compared to 7.6 per cent in Ireland. However, the proportion of health spending coming from the public sector in Ireland is 80 per cent, compared to just over 60 per cent in the Netherlands.
Seminar in Dublin
Mr Enne Osinga, a Dutch actuary, told the recent Institute of Public Administration seminar in Dublin about the reform of Holland’s healthcare system that occurred in 2006. Since the Dutch system was introduced, premiums are 7 per cent lower than they would have been had the system not been changed – about €80 per individual per year, Mr Osinga said.
There is compulsory insurance for consumers in Holland, where the Health Insurance Act provides an umbrella for public and private healthcare. Prior to these reforms, there was a fragmented insurance market and a lack of efficiency among providers.
Now it is possible to compare premiums for basic policies. There is open enrollment: the insurer has to accept everybody who applies and must charge the same premium. The number of uninsured people in Holland is estimated at 1.5 per cent.
Managed competition
The premium range between Dutch insurers was huge in the beginning. This reduced with ‘managed competition’. Still, that would be a considerable problem facing its introduction in Ireland. Initial high premiums might make the whole idea unworkable. In Holland, consumers are free to switch their insurance company every year. Insurers compete on premium, quality and service levels. This, over time, does result in lower premiums for customers and lower prices for health services eventually.
Services are bought from providers, who in turn compete for contracts. Aligning financial incentives with desired objectives is key. Problems have arisen: as competition has increased, there has been a rise in financial risk. Hospitals now face serious problems, Mr Osinga said.
The Netherlands has a dual-level health system. There is a good ‘gatekeeper’ healthcare model, involving GPs working as teams in primary care centres. This model has been developed using electronic patient records, evidence-based guidelines and ambulance specialist facilities — again things that are much desired by many medical professionals here but are still a long way off in terms of implementation.
In Holland, for short-term medical treatment, there is a system of obligatory health insurance with private health insurance companies, which must provide a defined set of insured treatments. All primary and curative care (the family doctor service and hospitals and clinics) is financed from private compulsory insurance.
An extra government allowance is paid to ensure everyone can pay for their healthcare insurance. Premiums are set at a flat rate for all purchasers, regardless of health status or age. Long-term care for the elderly, the dying, the long-term mentally ill and so on, is covered by social insurance funded from taxation.
Risk adjustment fund
Premiums paid by the insured are about €100 per month, with variations of about five per cent between the various competing insurers. A common risk adjustment fund provides a subsidy, which makes it more attractive for insurers to insure risky clients.
The idea is to compensate the insurance companies in such a way that they can accept every individual consumer. Those on low incomes receive compensation to help them pay their insurance. Employers pay 6.5 per cent of an individual employee’s wage to the risk adjustment fund. The State also contributes to this fund. The insurance companies may then charge premiums.
Minimal waiting lists
The Netherlands spends only slightly more than us on health on a per capita basis, but the country has minimal waiting lists and is ranked number one in Europe for health, Fine Gael contends.
As budgets come under more pressure, this country will not be able to avoid reforming our €16 billion a year health system, Fine Gael Health spokeperson Dr James Reilly – who attended the seminar – argues. Fine Gael has placed the Dutch model firmly on the political agenda for the future.
And it should be of interest to everyone involved in the health service in Ireland as the likelihood is that Fine Gael will lead the next Government.
And if that happens, we may well be going ‘Dutch’ on our healthcare financing.