Page 106 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Chapter 5
We assess Dutch healthcare sectors in between two major reforms in 2006 and 2015. Table 5.1 highlights significant differences in the incentives for active purchasing. For hospital care, currently nine insurers compete for market share on the insurance market. Four insurance companies (the ‘big four’) possess about 90 percent of the market. In order to be competitive, insurers aim to set low premiums. As the theory of managed competition postulates, active purchasing allow insurers to save costs and reduce premiums. The percentage of consumers that switch between insurers varies around 7 percent each year (NZa, 2017a). Financial risk of insurers has substantially increased in the research period as a consequence of the government’s policy to restrict ex-post equalization (van Kleef et al., 2014). Our hypothesis is that this institutional structure contains sufficient incentives for active purchasing (+).
5.2 A framework for active purchasing
By contrast, incentives for active purchasing are (largely) absent in long-term care. In 32 regions, a regional care office acts as single payer, leaving clients no choice of payer. Each regional office receives a block grant for contracting providers, and offices may not overspend. Regional offices do not bear any financial risk (with the exception of administrative costs), but underspending may result in regional budgetary reallocation. They are not allowed to build reserves. This ‘threat’ incentivises each regional office to spend its full budget (Mot and Aouragh, 2010). Our hypothesis is that the combination of the single payer system and the absence of financial risk make active purchasing unlikely (-).
The introduction of the Social Support Act in 2007 delegated social care procurement from the long-term care system to municipalities. As the introduction went along with a significant budgetary cut, municipalities are expected to have strong incentives for active purchasing (Putters et al., 2010). Furthermore, municipalities are financially at risk. If they spend more than the annual state grant, they need to implement budgetary cuts elsewhere, as the room of municipalities for raising extra resources is quite limited in the Netherlands (Maarse and Jeurissen, 2016). At the same time, they can build reserves or increase public spending in other sectors if they manage to save money in social support. Our hypothesis is that the Social Support Act contains strong incentives for active purchasing (++).
Patients that meet requirements for receiving in-kind long-term care have the option to apply for a personal budget of about 70%-80% of in-kind LTC tariffs. The personal budget system is a somewhat exceptional case in table 5.1 because of the absence of a third-party payer (insurer, care office, municipality). Instead, the user acts as the payer. Due to the nature of the opt-out system, personal budget holders are likely to critically assess the quality of providers. Furthermore, personal budget holders have a financial motive to be
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