The Dutch Health Care System

Introduction by six questions

Six questions
1. Who am I working for? 2. What do you need to know about the Dutch health
care system?

3. Why did we reform our system in 2006? 4. How did we reform our system in 2006? 5. What can be concluded in 2011? 6. Whats next?

QUESTION 1
Who am I?

QUESTION 1
Who am I working for?

Achmea structure (the Netherlands)

Leading position in Dutch Health Insurance Market

The small regionals With more risk and solvency issues Mid sized Largest health insurance company The big three of the Netherlands

Menzis CZ-Delta Lloyd Salland PNO Fortis Z&Z DSW ONVZ

UVIT

Achmea

13%

20%

26%

32%

5,2 million customers 32% market share Leader in group market

- Employer - Affinity

QUESTION 2
What do you need to know about the Dutch health care system?

Basic facts and figures

Small country 16.6 million inhabitants, high population density GDP: 635 billion, 40.000 per capita (2009). Flat country: 24% lies under sea level Tallest people in the world (1.85 cm) Life Expectancy: 78,0 years (man), 82 years (woman) Health quote: 10 %

Health facts and figures

89 general hospitals, 8 university hospitals 9,000 general practitioners 21 health insurance companies, market share top 3 is 78% Spend on health care: 67 billion ( 40 billion via insurance)
Hospitals: - 8 university hospitals - 89 hospitals - 16.000 Medical specialists - Several private clinics General Practitioner (GP): Medication: - Medicine - Auxiliary plea 20 billion 3 billion 12 billion 2 billion 0,5 billion 4 billion 7 billion 5,5 billion 1,5 billion

QUESTION 3
Why did we reform our system in 2006?

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Reforming the system in 2006: why?

Urgency of change: 1. Cost explosions
2000 = 7,7%, 2001= 10,6%, 2002 = 11,9%) Expected health expenditure in 2040 = 14% GDP (= bad news for the international competitors)

2.

Need for more competition among health insurance

(low mobility between carriers because of medical underwriting)

3.

Need of greater competition between health care providers Administrational hassle

(movements between public-private vv)

4.

QUESTION 4
How did we reform our system in 2006?

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Changing roles
active active

To health purchasing market

Purchaser of health services

Guide and organiser of right care

Claims administrator

Health adviser

passive

active

To health insurance market

Source: Nyenrode Business University

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Two parts of the reform

1. Introduction of a new insurance system for health care costs

Shows better the cost of healthcare Quality boost

2.

Introduction of market competition

Concentration of the healthcare insurance companies, merger and acquisitions War on prices of the insurance policy for basic healthcare

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Before and after 2006

Before health insurance act After health insurance act 2006 Eureko focus area

Private supplementary insurance

Supplementary insurance

Public insurance

Private insurance

Basic insurance

From public system (65% ) and private system (35%) to a public/private system (100%) for everyone!

Exceptional medical expense act (AWBZ)

Exceptional medical expense act (AWBZ)

Social support act (WMO)

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Components of the new health care system

Description of health care system components

Dental care Fysiotherapist Alternative medicine Vitality

Cure Care

Optional Supplementary Insurance Compulsory basic insurance Risk equalisation & mandatory enrolment

20% costs of insurance

Hospital care Pharmaceuticals Specialists and general practitioners

80% costs of insurance

Dutch health insurance is with 40 billion the largest private insurance market in Europe

Care

Long-term care Care for mentally and physically disabled Home care (nursing)

General act on exceptional Health Costs (AWBZ) Social support act (WMO)

The care market (25 billion) is currently still non insurance

Social care and support

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New Health Insurance Act

Solidarity principle; accessible and affordable health care for everyone Compulsory (basic) health insurance with a standard health coverage Supplementary insurance with flexible coverage Health business in the Netherlands is high volume and low risk with low margins Low capital requirements give potential for Return on capital Private insurance but with public safeguards and constraints:
Mandatory enrolment for basic health insurance, no risk selection allowed Risk equalisation system between insurance companies to avoid competition in attracting healthy customers Option to risk selection in supplementary health insurance

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Characteristics of new Health Insurance Act

Citizens can change insurer every year Insurers compete for the business of the insured Insureds & insurers stimulate suppliers to provide better quality Fixed basic comprehensive benefits but variations in design (benefits in kind, possibility PPO, or indemnity) Composition premium:
Employer contribution (50%) Individual premium (50%) Health allowance (Tax benefits for premiums for individuals)

Range of deductibles (insured chooses) (170-670 Euro) Compensation for people on low incomes

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Risk equalisation principles

Unique system in the world; implies compensation for less healthy clients and contribution for more healthy clients via government fund

Creates a level playing field between insurers independent of the health of customers Enables solidarity in a competitive health insurance market, no competition to attract most healthy clients Differences in nominal premium insurers should reflect how they manage their administration and health purchase

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Risk equalisation for insurance companies

Nominal Premium (about 1.200 per year)
Calculation premium about 1.075 per year, defined by the politics Additional premium about 125 per year, defined by the insurer.

Equalisation Fund
Filled with the calculation premium per citizen Filled with contribution from the public (employer contribution, employee contribution, tax)

Budgetpayment per insured citizen (Characterics))

Age Gender Residence Chronicle disease History of disease

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Managed competition on three markets

Government/tax authority Consumer Patient market Insurance market Employee/ Self employed

Health care provider

Providers market

Insurance company

Insured are basically free in their choice of insurer and Health Care provider Insurance companies compete on premium, quality and service level Health care providers compete for contracts with insurers on price & quality of care

QUESTION 5
What can be concluded in 2011?

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Making up the balance

Entrance new providers Liberalisation hospital contracting (free pricing 34% of costs) Interesting developments in farmacy market Transparency in performance and quality of care There are more and better choices for consumers Overall increase in costs has fallen: from 4-5% in 2006 to 3% in 2007 There is a strong competition in the market triangle

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Quality impulse
Arise of quality will reduce the cost of the society! Avoiding unnecessary cost, doing the right things just once Working citizens are producing more Retired people are able to consume Working together is a must (for the continuity of care)
COPD/asthma Diabetes Cardiovascular Dementia

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Pros of the new system

Lowering the grow of the cost of all lines of healthcare
Before 2006: + 5 8% From 2006: + 2 3% Not including AWBZ (exceptional healthcare): costs are exploding.

Tariff negotiations
Physiotherapist Elective healthcare in the hospitals (B-segment) Dentist (next year)

Arising quality
Can be discussed now New visions on the organisation of the healthcare - concentration of difficult treatments - more possibilities for private clinics

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Cons of the new system

Citizens are talking about rights Equalisation fund
Still to many imperfections (declining now) It takes to long for a final settlement (about four years)

Calculated behaviour on supplementary insurance Insurance companies

High pressure on lowering the prices Few differences

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What can healthcare participants do better?

Work together with other disciplines
Treatment without help from other participants is almost impossible Search for contacts, be part of the treatment network

Use of data in the continuity of care

Structured data from hospitals, pharmacists, insurers, etc Business intelligence

Changing their business model!

Not only go for own profit

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Concluding remarks
Dutch Health care system is an accessible and affordable system for everyone Risk in Health business for insurers will increase due to further liberalisation Health market is an attractive market with good returns and offers good diversification benefits with our other segments Upward potential specially if interest rates increase Size matters in this market and we are very well positioned for the upcoming market changes

QUESTION 6
Whats next?

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Upcoming?
More healthcare innovation Horizontal Integration Vertical integration Horizontal and vertical integration Introduction of Health information Technology everywhere More emphasis on quality measurement Strong patients organisations Growth of healthcare costs is a problem Strong patients organisations

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To Do
Further improvement quality transparancy in health care

Ending black box in terms of financial results

Create more room for preventive health care

Stop free rider behaviour (uninsured, defaulters)