Selective contracting a key element of the dutch health care reforms
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Selective contracting: a key element of the Dutch health care reforms. Vertragsfreiheit: ein sinnvoller weg fur das Schweizer Gesundheitswesen? Zurich, 13jan05 Wynand P.M.M. van de Ven Professor of Health Insurance Department of Health Policy and Management Erasmus University Rotterdam.

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Selective contracting: a key element of the Dutch health care reforms

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Selective contracting a key element of the dutch health care reforms

Selective contracting: a key element of the Dutch health care reforms

Vertragsfreiheit: ein sinnvoller weg fur das Schweizer Gesundheitswesen?

Zurich, 13jan05

Wynand P.M.M. van de Ven

Professor of Health Insurance

Department of Health Policy and Management

Erasmus University Rotterdam


Dutch health care system

Dutch health care system

  • health care costs 2004: 10% GNP;

  • much private initiative and private enterprise;

  • much (detailed) government regulation;

  • GP-gatekeeper;

  • seperation of finance and delivery of health care;

  • nearly the whole population has health insurance.


Role of government

Role of government

1865: Act on Medical Licenses

1941: Sickness Fund Act

1968: Exceptonal Medical Expenditures Act

1971: Hospital Facilities Act

1982: Health Care Tariffs Act

1985: Health Care Facilities Act

1986: Act on Access to private health insurance

1988: “Dekker Reforms”

1998: New Competition Act


Dutch health insurance system 2004

Dutch Health Insurance System 2004

Supplementary Insurance

4%

Sickness Fund

Insurance

(mandatory)

Private Health

Insurance

(voluntary)

52%

National Health Insurance for Catastrophic Risks (AWBZ)

46%


Why dekker reforms

Why Dekker reforms?

  • uncoordinated financing structure;

  • lack of incentives for efficiency;

  • detailed government regulation: unworkable;

  • problems with Dutch health insurance system.


Dekker reform proposal 1987

Dekker-reform proposal (1987)

  • compulsory health insurance for everyone;

  • regulated competition:

    - among insurers;

    - among providers of care.


Insurer as purchaser of care

Insurer as purchaser of care

Insurer

Insurance

policy

contract

Provider of care

Consumer


The dutch mandatory sickness fund insurance

The Dutch mandatory sickness fund insurance

Central

Fund

risk adjusted premium subsidy

income-related contribution

Consumer

Sickness Fund

premium contribution


Selective contracting a key element of the dutch health care reforms

Dutch system:

Central fund

contribution

subsidy

consumer

insurer

premium

Central fund

Swiss system:

subsidy

contribution

consumer

insurer

premium +contribution


Rationale

Rationale

The rationale is to stimulate the sickness funds to improve efficiency in health care production and to respond to consumers’ preferences.


Explicit choice

Explicit choice

Who is the third-party purchaser of care:

  • Government, or a cartel of sickness funds;

  • Individual risk-bearing sickness funds.

    In the first option it is hard to think of any rational argument for giving consumers a periodic choice among risk-bearing sickness funds.


Towards regulated competition

Towards regulated competition

According to the declaration of policy of the

Dutch government (May 2003):

“The central planning by government has failed and will be replaced by regulated competition as soon as justifiable”.

With these last 4 words, government on the one hand stresses the urgent need for reform and on the other hand indicates that not all preconditions for regulated competition are yet fulfilled.


Proposed changes from 01jan06

Proposed changes from 01jan06

  • In sep04 Government submitted a Health Care Insurance Bill to Parliament proposing a mandatory health care insurance for the whole population from 01jan06;

  • No distinction between SF (10 mln.) and private health insurance (6 mln.).


Preconditions managed competition

Preconditions Managed Competition

  • Selective contracting;

  • Sufficient freedom in contracting (price, quality);

  • Prices must reflect costs;

  • Adequate competition policy;

  • Good risk adjustment (or risk equalization);

  • Consumer information (price, quality).


What has been realised

What has been realised?

  • Selective contracting with individual providers (1992);

  • Maximum rather than fixed fees (1992);

  • Consumer choice among risk-bearing sickness funds (1992);

  • Risk-adjusted premium subsidies (1992);

  • Competition Act (1998).


Managed care

Managed Care

  • From 2002 sickness funds and hospitals are allowed to set up new pharmacies. Some sickness funds and some hospitals do it (sometimes together).

  • From 2003 sickness funds have some flexibility in purchasing (on average at most for about 60 euro per insured per year) health care outside the defined benefits package and not subject to the national price-regulation.


Managed care 2

Managed Care (2)

  • From 2003 sickness fund are allowed to set up outpatient primary care centres. Some sickness funds do it.

  • From 2005 prices for physiotherapy will be free;

  • From 2005 hospitals will be paid on the basis of so-called Diagnostic-Treatment-Combinations (DTCs);

  • From 2005 for 10% of these DTCs sickness funds and hospitals are allowed to freely negotiate prices and to selectively contract. Contingent on the results this percentage may further increase.


Competition policy

Competition policy

  • Since 2000 we see a more active role of the Competition Authority in health care, both on the insurance market and the provider market.

  • In the period 2000-2003 the Competition Authority focussed its attention primarily on outpatient care.

  • Recently the Competition Authority also focusses on (mergers of) hospitals.

  • The health care sector is a priority on the 2004-agenda of the Competition Authority.


Dutch health care authority 2006

Dutch Health Care Authority ( > 2006)

  • Responsible for managing the competition among health care providers / insurers;

  • Supervises (sub)markets in health care (costs, prices, contract conditions);

  • Supervises the heath care insurance market;

  • Close cooperation (and in the long run a potential merger) with the Dutch Competition Authority.


Selective contracting a key element of the dutch health care reforms

Dutch system:

Central fund

contribution

subsidy

consumer

insurer

premium

Central fund

Swiss system:

subsidy

contribution

consumer

insurer

premium +contribution


Are age and gender sufficient

Are age and gender sufficient?

If the premium subsidies are based on only age and gender, then an insurer will, roughly speaking, make:

  • a predictable loss of about 100% for the 10% of the population with the worst health status;

  • a predictable profit of about 25 to 40% for the healthiest half of the population.


Selection activities

selective contracting;

limited provider plans (HMOs/PPOs);

other managed care techniques;

design of benefits package;

supplementary health insurance;

selective advertising;

virtual (internet) sickness fund;

employer-related (group) sickness fund.

Selection activities


Adverse effects of selection

Adverse effects of selection

Selection may threaten

  • Good quality care for the chronically ill;

  • Solidarity;

  • Efficiency.


Risk adjusters in the netherlands

Risk adjusters in the Netherlands


Additional annual premium subsidy

Additional annual premium subsidy


A dditional annual premium subsidy

Additional annual premium subsidy


Conclusions

Conclusions

  • Dutch health care : towards regulated competition;

  • Selective contracting : a key component of regulated competition;

  • Essential preconditions for regulated competition:

    • Adequate competition policy;

    • Good risk adjustment / risk equalization.


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