The price of getting older Health insurance for the elderly in the Netherlands, 1956-1986 R.A.A. Vonk

1. Centre for the history of health insurance, dept. Medical Humanities The price of getting olderHealth insurance for the elderly in the Netherlands, 1956-1986R.A.A. Vonk

2. Centre for the history of health insurance, dept. Medical Humanities • Centre for the history of health insurance, funded by: • Ministry of Health, Welfare and Sports • Zorgverzekeraars Nederland • Innovatiefonds Zorgverzekeraars • Main objectives: • research to the history of health insurance, social security and the welfare state in the Netherlands and elsewhere • collect and preserve relevant historical archives (sickness funds, private health insurers, sector organizations, etc.)

3. Centre for the history of health insurance, dept. Medical Humanities • Recent and upcoming publications: • Tussen volksverzekering en vrije markt (2008) • Two centuries of solidarity (2009) • The insured as stakeholder in the health insurance market (2009) • Insurance of catastrophic medical risks. An international comparison (2010) • Private health insurance and civil society in the Netherlands, 1900-2006 (2013)

4. Centre for the history of health insurance, dept. Medical Humanities Bejaardenverzekering 1956-1986 • Its place in the broader system of social health insurance schemes in the Netherlands • Development of the scheme from 1956 onwards • The effects of risk spreading and solidarity • Past experiences and future prospects?

5. Centre for the history of health insurance, dept. Medical Humanities Health insurance for the elderly during the 19th century • Sickness funds (mostly commercial or philantropical in nature) employed age-limits for new applicants • Sickness funds usually cancelled the insurance when the insured reached the age of 60 • Government enforces the Poor Law (1854) to provide for coverage of medical expenses of people with no income at all (municipal authorities, church).

6. Centre for the history of health insurance, dept. Medical Humanities Health insurance for the elderly, 1900-1941 • Sickness funds (mostly ‘association funds’ and mutual workers funds) still employed age-limits for new applicants • Cancellation of the insurance when reaching the age of 60 no longer customary • Sickness fund premiums too high for most elderly • Poor Relief remained primary source for the coverage of medical expenses for the elderly

7. Centre for the history of health insurance, dept. Medical Humanities A.S. Talma, Minister of Labour (1908-1912) Sickness Benefits Act General Disability and Elderly Benefits Act

8. Centre for the history of health insurance, dept. Medical Humanities General Disability and Elderly Benefits Act • Cash and service benefits • Small pensions for elderly and disabled workmen • Service benefits primarily aimed at the disabled • Poor Relief remained important

9. Centre for the history of health insurance, dept. Medical Humanities Sickness funds Decree, 1941 • German authorities imposed a tripartite system: • compulsory social health insurance for wage earners and their dependants • voluntary social health insurance for non-wage earners • private health insurance • Social health insurance schemes and private health insurance seperated by an income limit

10. Centre for the history of health insurance, dept. Medical Humanities The compulsory social health insurance scheme • income related premiums • employer pays half of the premium • retrospective reimbursement through General Fund • government determined package of service benefits • compulsory enrolment • obligatory acceptance of all eligible applicants and their dependents (children, spouses)

11. Centre for the history of health insurance, dept. Medical Humanities Voluntary social health insurance scheme - community rated premiums • no retrospective reimbursement • open enrolment - obligatory acceptance of all eligible applicants - government determined package of service benefits

12. Centre for the history of health insurance, dept. Medical Humanities Health insurance for the elderly 1945-1956 • 1941: elderly made eligible for the voluntary social health insurance scheme • 1947: enforcement of the Provisional law on Elderly Benefits • 1947: elderly made eligible for the compulsory social health insurance scheme

13. Centre for the history of health insurance, dept. Medical Humanities W. Drees, Minister of Social Affairs (1945-1948) Provisional law on Elderly Benefits ‘Father of social security’

14. Centre for the history of health insurance, dept. Medical Humanities Social health insurance for the elderly, 1957 • 1957: enforcement of the AOW (General Elderly Pensions Act), a national insurance scheme providing for retirement pensions for all people aged 65 or older living in the Netherlands • 1957: creation of the elderly social health insurance scheme

15. Centre for the history of health insurance, dept. Medical Humanities J.G. Suurhoff, Minister of Social Affairs, 1952-1958 Enforcement of the AOW and the elderly social health insurance scheme

16. Centre for the history of health insurance, dept. Medical Humanities Elderly social health insurance scheme, 1957 • Open enrolment • Age-limit: 65 or older • Income-limit linked with the height of the AOW pensions (1957: fl. 3410,-) • Premiums would cover only ¼ and ½ of the estimated expenses per insured person per year. Premium shortfall replenished by government and General Fund • Dependents (children, spouses) insured free of charge

17. Centre for the history of health insurance, dept. Medical Humanities Elderly social health insurance scheme Governmentcontributions General fundcompulsoryscheme

18. Centre for the history of health insurance, dept. Medical Humanities

19. Centre for the history of health insurance, dept. Medical Humanities Elderly social health insurance scheme • Elderly health insurance meant as a safety-net insurance scheme for low-income elderly • Government tried to keep the membership base at a minimum to satisfy employers • 632.500 (+/- 63% of all) elderly applied for elderly health insurance in 1957

20. Centre for the history of health insurance, dept. Medical Humanities Elderly and voluntary social health insurance, 1969-1970 • High inflation-rate causes problems in the elderly health insurance scheme • First signs of a fatal premium spiral in the voluntary health insurance scheme • Government asks the SER (Socio-Economic Council) for advice

21. Centre for the history of health insurance, dept. Medical Humanities SER-advice of 1969 • Try to transfer elderly from the voluntary scheme to the elderly social health insurance scheme, by: • increasing the income-limit to 70% of the income-limit of the compulsory scheme • creating additional bandwidths (premiums covering ⅝ and ⅞ of the estimated expenses per insured person per year) • reducing the premiums for middle income elderly

22. Centre for the history of health insurance, dept. Medical Humanities Elderly and voluntary social health insurance, 1969-1970 • The reform fo the elderly and voluntary social health insurance schemes fails • Only 140.000 of the expected 250.000 elderly opt for insurance under the elderly scheme • single people didn’t benefit • bad reputation? • Employers refused to increase contributions to fund premium reduction

23. Centre for the history of health insurance, dept. Medical Humanities

24. Centre for the history of health insurance, dept. Medical Humanities Elderly and voluntary social health insurance, 1970-1980 • A worsening economic crisis forces the Den Uyl (1973-1977) government to invest heavily in premium reduction schemes for the elderly • The height of AOW pensions didn’t keep up with the inflation-rate • Cumulating tax and premium surcharges affect middle-income elderly (AOW-plus-problem) • 1980: government contributions to the elderly health insurance scheme have risen to 1.5 billion guilders

25. Centre for the history of health insurance, dept. Medical Humanities J.P. van der Reijden, State Secretary of Health WTZ (Health Insurance Access Act) MOOZ (Act on the Co-funding Over-representation Elderly Sickness fund Insured)

26. Centre for the history of health insurance, dept. Medical Humanities The WTZ and reform of the elderly social health insurance scheme, 1982-1986 • Spreading of risk in the elderly social health insurance scheme had worsened (more elderly and older elderly) • Voluntary social health insurance scheme failed due to an increasingly weakening financial basis • percentage of elderly insured under the scheme rose from 10% to 20% of the total vol. ins. pop. during the seventies. • Both social health insurance schemes to be reformed at the same time

27. Centre for the history of health insurance, dept. Medical Humanities The WTZ and reform of the elderly social health insurance scheme, 1982-1986 • Both elderly and voluntary social health insurance were dissolved • The membership base of the elderly social health insurance scheme was transferred to the compulsory social health insurance scheme • Regulating the private health insurance sector • Standard coverage package policy • Obligation to accept everyone for this policy • Act on the Co-funding Over-representation Elderly Sickness Fund Insured (cross-subsidization)

28. Centre for the history of health insurance, dept. Medical Humanities Conclusions • Bejaardenverzekering as a hybrid health insurance scheme with traits from both the compulsory and the voluntary scheme • Elderly health insurance started as a safety-net insurance scheme, but developed into a broad health insurance scheme for roughly 75% of all Dutch elderly • Increasing need for large external contributions

29. Centre for the history of health insurance, dept. Medical Humanities Conclusions • Influx of more elderly into the elderly health insurance scheme resulted in a worsening risk equation • Loosening bonds of solidarity between retiree, employee and employer • 1986: government enforces solidarity and creates a system of cross-subsidization

30. Centre for the history of health insurance, dept. Medical Humanities Future prospects? • The Dutch elderly social health insurance not unique • Medicare (USA) • Health Service System for the Elderly (Japan) • Some sort of solidarity between wage-earners and retirees is necessary to keep premiums affordable for elderly • External contributions (government, cross-subsidization, etc.)

31. Centre for the history of health insurance, dept. Medical Humanities Thank you for your attention !