Saturday, September 15, 2007

U.S. Health Car System - Should the U.S. Health System “Go Dutch?”

To “Go Dutch” means paying one’s own expenses. Two reasons the new Dutch health system these days is attracting so much attention are 1) It obligates Dutch individuals to buy or pay health care premiums. 2) It resembles the universal coverage plans now underway in Massachusetts and California.

Besides, this tiny densely populated country of 16.6 million, which rescued itself from the sea though a massive national engineering project and is home of three of world’s largest companies – Royal Dutch Shell/Shell Group, Royal Phillips Electronics, and Unilever, has shown itself capable of organizing and administering huge social and business enterprises. Why not health care too?

System Comparisons

Here’s how the three plans – Dutch, Massachusetts, and California compare.


Netherlands, 16.6 million, Massachusetts. 6.5 million, California, 36.5 million

Date Started

Netherlands, Jan. 1, 2006, Massachusetts, Last year, California, proposed but stalled in legislature.

Individual Citizens

In all three plans, each individual citizen must buy or pay premiums.


Netherlands, must offer coverage to all, in Massachusetts, may limit coverage for pre-existing illness, In California, must offer coverage to all.


Netherlands, don’t need to offer coverage, Massachusetts. must offer coverage, California, must offer coverage or pay penalty

Idea Behind Dutch Plan

The idea behind the Dutch plan is to offer private coverage for all, but to put a lid on costs. Last year, under the plan, health costs dropped from 4.5% to 3.0% versus the drop from 8.0% to 6.1% in the U.S. In the Netherlands, all adults must buy, and all insurers must offer premiums, no matter what the pre-existing illness, though premiums for high risk individuals are adjusted for “risk equalization.” Insurers are expected to compete on premiums, consumers will be told real costs, and hospitals will be pushed to lower costs.

More Detail

Here’s more detail on Dutch plan, which took 4 years to develop.

The new system has the following characteristics:

• All individuals must be insured.

• All individuals purchase health insurance on the private market.

• Individuals can choose to get their health insurance through their employer–if the option is available–but the employer doesn’t have to offer health insurance. If the employer does not offer health insurance or if an individual is unemployed, then they must purchase insurance on the private market.

• Health insurers are free to charge each individual any price they please for health insurance. Of course, market forces limit the price that the insurers can charge the consumers before they switch to another plan.

• The cost of health is more transparent to consumers since they see the price they are charged for health care.

• The state subsidize health insurance. “Insurers get risk-equalization payments for patients with about 30 major diseases.” Thus, people who are sicker receive a larger state subsidy than healthy individuals.

How the Dutch View Their System

You might be interested in how the Dutch look at their new system. Here is how a report from the University of Leiden on how the Dutch see themselves.
Overall, the health care system the Netherlands is of a good quality. It is a mix of public and private, whereby the government closely monitors private activity.

Waiting lists

Unfortunately, we have a shortage of doctors and specialists. This means patients may have to wait a long time for treatment.

On top of this, there is also a shortage of general practitioners (GP's). Generally, you can only see a GP by appointment (unless there is a an emergency, of course!).

Where to find a GP/dentist

In the Netherlands, it’s normal to have your own GP and dentist. General practitioners can be found in every town and city. Dentists are to be found in almost all cities.

Every big town has at least one hospital. Specialists are usually employed by hospitals.

Please note that you should first contact your GP before going to the hospital.


In general, Dutch doctors are reticent about prescribing medications. The theory is that, if the patient is a healthy person, the body will fight the disease itself.
So, do not be surprised that they will not prescribe penicillin if you have a cold.


Dutch health care is very expensive. Therefore, it is essential to have a good medical insurance. In fact, medical insurance is required by law. Make sure you read all the rules that would be applicable for you, especially if you are considering to take a part-time job.

Will the Dutch System Work in The U.S?

Matthew Holt, a well-known health analyst who worked closely with Alain Enthoven, the mastermind of “managed competition, “ the Clinton plan that bombed in 1994, thinks so.

Here are a few things he has to say in his September 7 blog, which followed a favorable WSJ report entitled , “In Holland, Some See a Model for U.S. Health Care System, Private Insurers Compete, But All Get Coverage.”

The Netherlands is probably has the most advanced health care financing system in the world.

How so? It's essentially Enthoven's original managed competition idea in action (circa 1987). Even the Wall Street Journal thinks good things. The key is you need to ban underwriting, and implement risk adjustment (not that it's easy but it is doable) between plans. Then you have to give the insurer and the insured incentives to realize that the way that population health is managed has ramifications for both the population's health and its wealth. Then you get rational trade-offs made at a population level.

Can it happen here? I think so, unless you think that Americans cannot handle rational choice. Of course the people who claim to value choice in health care here can't abide by the concept of the rational structure that the Dutch have put in place which allows choice to be made about the right things.

My Opinion

What do I think? Not in its entirety, not everywhere in the U.S., and not soon. We’re much more heterogeneous than the Dutch. We’re have nearly 20 times more people. Managed competition has already failed once, having crashed in 1994. Besides, under the Dutch plan health plans control physicians and consumers. Dutch doctors, by the way, vigorously opposed the current plan. It may be a market in terms of health plans, but it’s not a true market for doctors and consumers.
Still I find the Dutch plan interesting in that it may conceptually gets America conservatives over the hump that all single payer plans are run by faceless bureaucrats in a centralized, all- powerful centralized command-and-control centers without any sense of markets.

The Dutch plan contains some solutions. It offers choices of hospitals and doctors. Consumers now know what things cost. Private health plans compete. The U.S, has to get over the ideological notion that all universal coverage plans represent “socialized medicine,” conducted in gray government buildings, without third parties, without choice, without access to the latest technologies, and in process leveling rather than elevating care.

Maybe, in the end, we’ll find the right formula for ensuring access, maximizing access to the best, and moderating costs. Maybe, as Winston Churchill noted, “You can always trust the Americans. In the end, they will do the right thing, after they have exhausted all the other possibilities.” I hope so.


On Jan. 1, 2006, after 4 years in the making, the Netherlands, a nation with a population of 16.6 million, implemented a new health system requiring all individuals to buy or pay health premiums, private insurers to offer coverage regardless of pre-existing illness, premiums to be adjusted for risk, consumers to be made aware of costs, and not requiring employers to offer coverage. Since the plan’s inception, health inflation has ebbed from 4.5% to 3.0%, compared to a drop in the U.S. from 8.0% to 6.1% over the same period.

Will America “Go Dutch”? Not soon, in my opinion, because of the U.S.’s diversity, our regional differences, our partisanship, our size (land mass and population), our distrust of private health plans, and our preference for consumer and physician market competition. But the Dutch plan shows European governments can be innovative and aren’t averse to private competition.


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