AHIP Coverage (Jan/February 2008)
A Universal Lesson From Europe
At an AHIP/Kaiser Foundation Health Plan forum highlighting the private sector’s role in Europe, representatives from the Dutch and Swiss systems outlined what makes their models work and the elements that contribute to high consumer satisfaction.
By Aileen Kantor
The Netherlands and Switzerland are two countries that have successfully leveraged the private sector to achieve universal coverage, something that has, until recently, gone virtually unnoticed in the United States. Over the years, U.S. policy experts and consumers have studied other countries, focusing on Canada and England—two largely government-run systems—to try to get a better understanding of their approaches to universal coverage. Yet, with these systems experiencing key challenges and with their applicability to the United States in question, health policy experts and presidential hopefuls are now taking a closer look at the experiences of other countries that have developed alternative models of reaching universal coverage.
Switzerland’s and The Netherlands’ achievements were explored at a forum in Washington, D.C., last October sponsored by America’s Health Insurance Plans and Kaiser Permanente, “European Systems of Universal Health Care: A Discussion of the Role of the Private Sector in Europe.” The forum gave attendees a look at countries that offer universal health coverage through systems in which the private sector plays a central role in making care better and more affordable. As the U.S. presidential election approaches and leaders struggle with the issue of covering 47 million uninsured individuals, the Dutch and Swiss systems are worth studying.
“Our community is committed to working to achieve coverage for all Americans,” said AHIP President and CEO Karen Ignagni at the event, reaffirming AHIP’s long-term commitment to improve access to and quality of affordable health care. She noted that “there is confusion in our public debate between the idea of ‘universal coverage’ and the term ‘government run.’”
George Halvorson, chairman and CEO, Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and chairman of AHIP’s Board of Directors, opened the meeting by dispelling some common myths.
“Because our past debates have targeted Canada for analysis or the British National Health Service for comparison, many Americans still believe there are only three types of health care systems—the United States, Britain, and Canada—and that beyond these, nothing else,” he said. “Many U.S. policymakers and some in the media have come to believe that all European countries that have achieved universal coverage have Canadian-like systems, when in fact, this is not true,” continued Halvorson, indicating that successful systems have used the exact opposite approach, including blending mixed models. “Even though each country is different, every European country has managed to achieve universal health care coverage for its citizens. Our own health care debate can be better informed by a better understanding of how a variety of these models work.”
European countries are financing their systems using social or private insurance models rather than the government-operated system, some of which are supported by general taxes. Many countries continue to actively experiment with risk-adjusted schemes to compensate for different risks among populations and are trying various benefit and cost-sharing designs to respond to personal preferences as part of a competitive insurance approach.
Halvorson noted that there are multiple paths to reach universal health care in Europe beyond the United Kingdom’s government-run system. Models range from “basic government-issued coverage with private insurance wrap around to competing sickness funds paid by the equivalent of vouchers to private insurance for 100 percent of the population. Financing methods vary considerably and include income, payroll, sales, and general fund taxes, as well as member contributions to support premium costs. Employer involvement ranges from none at all to significant roles in financing and choice of health plan.”
He suggested that Americans can learn several things from these European examples, including the fact that multiple models are possible, mixed models do work, and models with more choices have better access to specialty care, especially when primary care is the critical foundation. European countries cover primary care whereas the U.S. health care system too often does not emphasize or in some cases adequately cover primary care, he said.
Going Dutch
Willem Van Duin, a member of the executive board of Eureko BV, the parent organization of The Netherlands’ largest insurer, Achmea Health, described for attendees the impetus for and anatomy of the new Dutch health care system, which was implemented in 2006.
“Many driving factors, including a cost explosion, with the health care component of the GDP quickly increasing from 10.6 percent of the GDP to 11.9 percent in 2002 to a projected high of 14 percent in 2006, a greater need for competition between health care providers, and administrative hassles between private and public insurers forced us to re-evaluate our health care structure,” he noted. Prior to the new system, two-thirds of the population had public compulsory social insurance coverage, which was based on income status, while a third of the population had private insurance coverage.
A market-driven system founded on accessibility, affordability, and high quality was the goal when the Dutch unveiled the Health Insurance Act of 2006. (See sidebar for details.) This system, whereby 100 percent of the population is covered by regulated private health insurance, was developed with the involvement of all stakeholders and aims to give consumers more freedom and more responsibility.
For health insurers in The Netherlands, the new system means competition on customer service; premium; product design beyond the comprehensive core benefits package; provider network structures; and quality of services as health care providers are increasingly competing on price and quality. It also means community rating, risk equalization (risk adjustment between private plans administered by a government regulator), private insurance products, and public (state) safeguards and constraints. The system ensures that every citizen has health insurance (mandatory enrollment), and consumers are free to choose and change insurance companies on an annual basis without question.
So far, the results have been favorable, reported Van Duin. When the reforms were implemented there was an initial large shift among the insured, with 2.7 million Dutch (18 percent of the population) choosing to change insurers and 3 percent changing in 2007 in the second year of the reforms. Group contracts, where employers are the locus of the insurance, grew to a market share of 44 percent in 2006 and 56 percent in 2007, with both winners and losers in the insurance market. He noted that even where an employer offers a group contract, individual employees can opt out and get coverage from another insurer.
Above all, said Van Duin, there was a general feeling that the reform was implemented successfully. Still, there is more work to be done. “While we have created a dynamic insurance market, we hope the changing political climate will continue to support this system. In the meantime we are working to figure out how to introduce more market incentives for providers, how to add more value and lead our clients through the health care market, and ultimately how to implement a managed care experience similar to the United States,” he said.
Among its many goals, Eureko would like to encourage quality and award health care providers with a “quality proof mark,” contract with providers and negotiate on price and quality, and increase the role of primary health care centers. Van Duin noted that the Dutch people continue to think positively about the private health insurance market and realize that for-profit health insurers play a vital role.
The Swiss Model
Daniel H. Schmutz, CFO of Helsana, which represents 18 percent of the total marketplace in Switzerland and holds the No. 1 spot in the insurance market, explained how the system operates. (See sidebar for details.) Like its Dutch neighbors, the Swiss mandate coverage for all residents, provided through private insurance. The system is founded on the belief that market incentives in health care can and do work. The Swiss system, which does not include a role for employers, provides coverage to all residents through private health insurance plans, with care provided at public and private hospitals and by private doctors with virtually no wait times for health care services reported. There is a comprehensive standard benefit package, but individuals choose from different coverage plans in which premiums, deductibles, and provider networks vary. Individuals contribute a significant amount to the monthly premiums, and the government subsidizes premiums for low-income individuals; general taxation and pension funds cover the remaining costs.
The state plays a key role and enforces the rules in many ways, including requiring all citizens to enroll in a communal register. The state also helps to define health care resources capacity, set prices for providers, and give subsidies for lower-income groups, currently representing less than 30 percent of all Swiss households. Beyond this involvement, consumers have freedom to choose among health plans (up to 90 different options). This helps promote healthy competition among private insurers as well as cost savings for those who are willing to shop.
According to Schmutz, the system is characterized as high input, high output, and high cost. But there are almost no uninsured people in Switzerland, which means this combination private market and government regulation continues to work. In repeat polls from 1990 to 2007, at least 72 percent of those surveyed favor the use of the “market” (private insurers) over a system run by the state. A nationwide survey from 2003 to 2007 also indicates support for a more market-based system, with 69 percent of respondents favoring the market over the state.
Leaders in The Netherlands and Switzerland believe that innovation and choice have been the hallmarks of systems that rely on the private sector to achieve universal coverage, resulting in a high level of consumer satisfaction.
Aileen Kantor is the founder of PR Healthcare, Bethesda, Maryland.
[Sidebar]
At a Glance: The Netherlands and Switzerland
The Dutch Health Care System
Universal private health insurance coverage through an individual mandate
Features:
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Fixed basic comprehensive benefits but variations in design (benefits in kind, possibility PPO, or indemnity)
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Composition premium
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employer contribution (50 percent)
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individual premium (50 percent)
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health allowance (tax benefits for premiums for individuals)
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A range of deductibles (the insured chooses—minimum 150 Euros)
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Discounts for group contracts (maximum of 10 percent)
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For-profit and not-for-profit companies allowed to compete
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Annual open enrollment for individuals and for families, open choices
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Health insurers cannot cancel
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Risk equalization (risk adjustment) fund
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Competition on premium, coverage, service, and supplementary insurance
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Each individual is required to have coverage; subsidies for low-income individuals
The Swiss Health Care System
Universal private insurance coverage through an individual mandate
Features:
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System funded by individual premiums and tax revenue
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Subsidies for lower-income brackets
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Consumers can select from approximately 90 insurance plans (each with different levels of deductibles and managed care options)
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Competition on premium, coverage, service, and supplementary insurance
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Insurers are required to accept everyone in the compulsory coverage
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Community-rated plans with a risk equalization (risk adjustment) schedule
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Care is delivered through public and private hospitals and private physicians
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Supplemental insurance for additional options
