The Netherlands' Health Care System Could Be a Model for the US

But There is a Role for Private Insurance as Well

 

by Frank Thomas, August 2, 2019

 

I agree that Sanders reform plan [Medicare for All] which puts most insurers out of business is not acceptable by a large segment of the population. I like the Dutch Basic Plan reform plan that replaced the division between public and private health insurance by one universal social health insurance. But that one universal insurance keeps insurers in business. It does so under a central Oversight competitive mechanism that manages effectively and efficiently Basic Plan quality, price, per coverage, provider costs  - resulting in a much lower cost per capita for good coverage than the U.S sky high capita cost for less coverage. (see TABLE 1)   

 

Under the Dutch Basic Plan a medical procedure will cost almost exactly the same anywhere in the country. In America, the insured in any state is hit with 3,6,9 or more different prices for the same medical procedure.  Why? Many things are insanely wrong. A fundamental one is that the insurers are running the system with one primary goal - maximum profits for shareholders. And they are selling policy covrages that vary all over the place in concert with wildly varying out-of-pocket costs for premiums and deductibles. Systemically, there's simply LITTLE to NO standardization of coverage, prices, costs and quality in our failing, egregiously humanly unfair healthcare system only the top 20% can afford with decent coverage. It is drowning and fragmented with too many insurers and giant monopolist firms that are dictating our system of social health care for their own profit benefit first and the insured second. Hospitals and doctors also largely operate as profit-making entities. This is in sharp contrast to the Dutch universal healthcare system which is driven by "central oversight and managed competition."  

 

This leads me to the question:

 

Why Can't Sanders and U.S. Healthcare Reformers Come Up With a Version of the Netherlands' Basic Plan of Universal Healthcare Plan for All That Doesn't Put Most Insurers Out of Business, But Does Provide Better Healthcare at a Much Lower Cost for All?

 

In 2006, the Netherlands transformed its government healthcare insurance system into one Basic Plan of universal social health insurance where "government managed competition" was introduced among private insurers as the driving force in the healthcare system. All living or working adults must be covered by the Basic Plan healthcare insurance. Coverage is required regardless of ability to pay. For low income people, the government subsidizes the Basic Plan individual premium up to 70% of the fixed monthly premium charge which is reset every year, 

 

The mandatory Basic Plan is sold by private non-profit insurance firms. Hospitals are also non-profit entities. Of all the competing insurer firms, six insurers handle about 90% of the Basic Plan for all of Holland's 18 million people. The medical services and medicines covered by the Basic Plan are centrally controlled and approved. They apply uniformly for all of Holland's 18 million people. Upgrades to the Basic Plan are mostly entirely in the hands of the insurers, Government oversight management of the Basic Plan extends importantly to quality, coverage, insurer price, and provider costs (e.g., hospitals,doctors). 

 

The medical services and medicines covered by the Basic Plan are exactly the same for everybody. This generates enormous cost efficiencies (e.g., in purchasing, and provider costs) and stimulates improvements in quality care at reasonable cost. Monthly premiums vary less than +-6% among competing insurers. Today, the Basic Plan monthly premium is euro 120,00 ($ 136.00) for every individual, except children under age 18 who are not charged for Basic Plan coverage. The yearly deductible for everyone is euro 375,00 ($ 425.00).  Links below provide in-depth explanations/critical analyses of Holland's outstanding mandatory Basic Plan universal healthcare.

 

(https://transferwise.com/us/blog/healthcare-system-in-the-netherlands)  

 

See: Health Systems in Transition - vol 18.  No. 2  2016:   "Netherlands- Health System Review," by Madelon Kroneman, Wienke Boerma, et al. 

 

Healthcare performance measurement reports generally give the Netherlands' universal healthcare system high rankings. Of course, problems arise and are emerging in the future with many, many more older people, but the Dutch pragmatically confront and come together to solve them in a timely fashion together to solve them. 

 

TABLE 1                   UNIVERSAL HEALTHCARE COMPARISON CHART - 2017

 

	Type	% of GDP	Per Capita Cost
Australia	2-tier	9.6%	$ 4,798
Canada	single	10.6%	$4,752.00
France	2-tier	11.0%	$4,600.00
Germany	mandate	11.3%	$5,550.00
Netherlands	mandate	13.3%	$5,691.00
Switzerland	mandate	12.4%	$7,919.00
UK	single	9.7%	$ 4,193
US	private	18.0%	$9,892.00

 

Sources: 

  https://www.statista.com/statistics/576000/total-health-expenditure-as-share-of-gdp-in-the-netherlands

             

  https://www.statista.com/statistics/575988/total-health-expenditure-per-capita-in-the-netherlands

 

ADDENDUM I

The Dutch total healthcare system is operated according to four basic related healthcare Acts: the 2006 Health Insurance Act, the Long-Term Act, the Social Support Act, and the Youth Act. The Health Insurance Act is the Dutch comprehensive Basic Healthcare Insurance package required for All and administered by private insurers.

I believe a credible variation to Sanders’ Medicare for All without insurers is a Medicare Basic Healthcare Option” (MBHO) for All. This would be a standard healthcare package contractually competed for by insurers, sold to the public and administered by private insurers. I see this approach, or some variation thereof, as a potential credible alternative to Sanders’ Medicare for All without insurers. The MBHO insurance plan is similar to the Dutch mandatory Basic Plan for All with one Big exception – it’s optional. It would be a marked improvement on Obama’s healthcare plan option which has been made worse by the Trump Administration’s changes. Despite that and other obvious weaknesses in Obamacare, millions of Americans are very thankful Obama’s plan is alive and doing well.

The Dutch Basic Healthcare Plan for ALL, a ‘radical reform’ that took place with passage of the 2006 Health Insurance Act, has following key policy principles:

• Access to quality, affordable Basic healthcare has no preconditions.

• Standardization of a Basic coverage package is government set and required for All for comprehensive short-term medical services, hospital care and prescribed medications - vastly improving efficiency, quality and lowering system administrative costs.

• Focuses healthcare policy on managed competition given the inherently imperfectly competitive nature of healthcare markets

• The Health Insurance Act entitles all residents to a comprehensive Basic standard health insurance package at a standard premium/deductible cost – implemented by private, competitive health insurers and healthcare providers where quality, price, coverage are government oversight-controlled.

• Insurance firms offering the Basic plan are not-for-profit cooperatives; profits made on the standard Basic plan are allocated to the reserves or they are returned in the form of stable, if not lower, premiums. Hospitals are also generally non-profit entities.

The Dutch hospital market has gotten increasingly concentrated through mergers the past few decades. Competition can lead to much-improved efficiencies, quality and accessibility if adequate alternatives are available to consumers and/or insurers. But studies have shown that on-going, unstoppable hospital consolidation enhances hospitals’ market power. That can undermine the objective of introducing more competition into the market. That’s why Dutch government policy focuses on regulating the hospital market and insurers, while also simultaneously introducing incentives for competition between providers and insurers.

In conclusion, I don’t see why a practical scale variation of the Dutch (or Canadian) universal public-private healthcare models cannot be achieved in our country by MEDICARE BASIC HEALTHCARE OPTION. If structured well, over time such a plan could potentially vastly improve our comparatively exceptionally inefficient, costly, poor coverage, non-standard healthcare system.

This Medicare Basic Healthcare Option (MBHO) would encompass following key policies:

• A Basic standard optional insurance plan for All with no preconditions. The standard coverage package would be defined and set by Medicare.

• Upgrades ‘not covered by the Basic Option would be the primary responsibility of insurers with oversight control by Medicare.

• A standard national premium structure would be set for the Basic Option that is adjusted on a regional basis up or down by an average income and/or cost-of-living index.

• The standard premium for low income people would be subsidized by Medicare.

• Medicare would be the chief purchasing agent and awarder of regional contracts to providers/insurers who meet MBHO provisions on access, price, quality, medical services, hospital care, prescribed medications available to All who choose the Basic Option.

It’s incredible how talented and advanced our nation is in its medical research, in our precision-reaching of a planet millions of miles away, in our landing of a missile within one meter of the target thousands of miles away.

BUT, here we are … unable to come together on a quality, cost-effective, affordable Basic healthcare system for all our citizens! The Netherlands’ standard Basic Plan system for All is simple, with good coverage at a reasonable annual premium cost for every individual age 18 and above of $1,630 (euro 1,440) and the deductible is $435 (euro 385). This compares to a much higher U.S. average individual insurance cost … and for less coverage. Also there are no co-pays in the Netherlands on the Basic plan while they are considerable in the US.

I think Sanders’ single-payer Medicare Plan without insurers is the right thing given our deeply sick, complex, for-profit healthcare system. Unfortunately, this ideal solution appears to be politically impossible. Apparently it’s too big a step; there’s simply much resistance by many people who do not want their healthcare insurance plan changed. If the U.S. healthcare insurers and hospitals were mainly non-profit entities as is the case in the Netherlands, this resistance might disappear. Perhaps in this situation, Biden’s solution to seriously repair Obamacare is a credible first step - providing substantive changes are indeed made along lines, for example, of incorporating some of the best parts of Holland’s radically reformed 2006 standard Basic healthcare system.

Potentially considerable cost and quality improvements from a Medicare Basic Healthcare Option that standardizes quality, coverage and affordable prices for All. This would encourage more and more people of all income levels to eventually go for the Medicare Basic Healthcare Option. This in turn will expand opportunities to further improve provider purchase costs, coverage and quality. It’s important to note that Holland’s universal Basic Healthcare plan package covers at least 80% of all possible short-term medical services and prescription drugs needed for people of all income levels and health conditions. Upgrades like physical therapy or cosmetic surgery can be purchased direct from insurers at an adjusted premium.

The U.S. battle is between Sanders’ universal single-payer solution without the high profit-making insurers and Biden’s serious repair solution to Obamacare working in cooperation with insurers and local communities in establishing a national standard Medicare Basic Healthcare Option. Even Canada’s so-called single-payer system works well with insurers who come up with market prices for good coverages that don’t vary wildly among provinces at a very competitive premium-deductible cost per individual or family that’s one-half the cost of a typical U.S. insurer.

We are buried in a brutally polarized political system – that’s demonstrating an outright deplorable incompetence in creating and playing politics with an insanely costly, poor standard coverage, super complex national healthcare system. The system is shamefully the most costly for less coverage compared to European systems and systems of economically advanced nations like Japan and Australia.

We could learn a lot from the quality, comprehensive medical coverage and affordability of the Netherlands’ standard Basic healthcare insurance package required for ALL … and generally approved by all citizens. I would say the same about Germany’s or UK’s, or Canada’s healthcare systems or any of the Scandinavian country systems. We Americans think we know it all … but we don’t, especially when it comes to the development and management of humanly fundamental social protection legislation for all Americans. 

ADDENDUM II

ATTENTION : KAMALA HARRIS

I applaud your attempt to put forward a Medicare Option Plan that includes the insurers. Joe Biden is doing the same thing when he says significantly improve the Affordable Healthcare Plan, called Obamacare.

BUT, as I note in detail in describing the Dutch universal non-optional Basic Plan that an variation to that plan, like your and Biden’s options WILL NOT WORK unless following conditions are met.

• The much needed scale of standardization in our complex national healthcare system will not be achieved without Medicare first defining one standard embracive coverage package that applies to all applicants and insurers. A transparent standard benefits package that insures comprehensive coverage - and profoundly simplifies the system. Insurers must accept that coverage package. They and providers (e.g., hospitals) deal with a single set of rules and billing procedures. A big plus with such a system in the Netherlands is that insurers and hospitals act largely as non-profit entities. This will be difficult in the states where healthcare for maximum corporate insurer profits is deeply imbedded. Even non-profit insurer firms in the U.S. have exorbitant salaries.

• The individual monthly insurance premium and annual deductible costs should also be standard nationwide (or at least regionally). In the Netherlands, the premium and deductible costs for an individual 18 or older under the Basic Universal Plan are at reasonably affordable levels of $136 monthly and $435 annually, respectfully. And that’s for excellent coverage with no co-pays or playing the profit maximizing games of setting limits or exclusions under the standard Basic Plan for all.

• The government should subsidize the premium cost up to, say, 70% (as does the Netherlands) depending on gross income levels below $35,000 per year. This could be funded by a small federal tax of +- 0.015% on everyone’s annually reported adjusted gross income.

• Medicare should NOT accept insurers whose executive salaries are sky high – a perversely greedy condition that pervades every inch of our healthcare system (but NOT in Europe).

• Insurers cannot retroactively revoke insurance based on errors in applying for the Medicare Option plan. Obama’s Affordable Care Act had an individual mandate - as does the Netherlands’ Basic Plan - that no-one can be rejected for plan coverage in any way, including a history of prior sickness. Not surprisingly, Trump’s administration has established numerous loopholes that undermine the insurance protections of Obamacare.

• Our U.S. current private healthcare insurance system is primarily employment based and covers two-thirds of the population. Many people are happy with this but it comes with limits and exclusions regarding coverage and co-pays. And, most importantly, there is no standardization. So the premium and deductible out-of pocket costs still end up being extremely high vs. European plans. This problem and the insurer/provider being in business for maximum profit must be resolved in a clever way if a quality, affordable U.S. Medicare Option plan is ever to work successfully.

The potential purchasing and administrative cost economies where insurance firms play a role with central government oversight and control of a standard quality, pricing, coverage package are enormous – as proven by the Dutch, Swiss, and German systems. And unlike our Medicare Advantage health plans – where private insurers overbill Medicare in the hundreds of millions annually for sick patients who are not so sick or have reported medical conditions that cannot be proven - the profoundly simple, transparent EU healthcare systems don’t have such problems.

Perhaps you and Joe Biden could merge the best of each other’s ideas and the brains of experts to significantly reform an Obamacare Option. This would include re-installing the provisions Trump’s Administration has taken away. Actions that constrain access to Obamacare and make it more expensive.

For a Medicare Option alternative, we should adopt in a constructive way the standard plan conditions and operating rules noted above that work so well in providing better coverage at a much lower cost in Canada and European countries with populations of 10 million to 70 million. Greatly reducing plan complexity, increasing plan standardization, scale purchasing of drugs and medicines, and equipment will deliver massive cost efficiencies and better healthcare coverage.

If we can’t take this first step as a precursor for a much, much broader public acceptance of a universal basic plan centrally controlled by Medicare, then we will likely remain a 3^rd world country when it comes to comprehensive, quality basic healthcare at an affordable cost for the average American.