POLICY/INTERNATIONAL: The Dutch–Better than the US at football, drug-laws and health care organization

The Netherlands is a small nation of only 16 million, and yet they have a record in International soccer that’s better than many three times their size. laws about drugs and prostitution that reduce crime, violence and embody toleration, and now they probably have 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. So "choice" here in health care financing means, as the WSJ put it:

In the U.S., competition among insurers often means competition to find
the healthiest customers, especially in the individual market.

But of course if you don’t allow individuals to make the choice of what they spend collectively on a monthly basis to be the point of decision on how much is spent on health care (and put those intermediaries in the middle in the position of benefiting from lowering that amount in the "right" way), then the only other rational allocation is to have the government do it via the tax system.

CODA: I wrote extensively earlier this year on my comparison between the two and how different they both are from typical American notions of competition.

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4 replies »

  1. Is that the Holland from which native Dutch are emigrating at a rate not seen since the 19th century. The Holland about which Bruce Bower wrote in his last book, the rapidly Islamifying land where Mr. Van Gogh was decapitated on the street, where the leading politician Pim Fortyn was gunned down in broad daylight, and from which Ayaan Hirsi Ali was first threatened with death and then unceremoniously sent packing? The Holland where gays can no longer safely walk the streets?
    I think they have more to worry about than healthcare.

  2. These articles (especially in the WSJ) are good because they counteract the argument that anything other than a “free market” healthcare system (i.e. anything European) results in unhappy beneficiaries, long wait times, lack of innovation, etc.
    There are a lot of different models…each with their strengths and weaknesses.

  3. It’s good for us to keep track of the many variations of European healthcare payment mechanisms. Although the explicit attention to risk and behavior is something I like about this (since so many health outcomes and health costs are driven by behavioral decisions), I am skeptical of the basic principle that insurer competition will drive healthcare costs down and health outcomes up. I also think it is very problematic to extrapolate the successes of any small homogenous population to the USA.

  4. It will be interesting to see how the new Dutch system works out over time as it is now only about a year and a half old. The choice of insurers enjoyed now by citizens will probably dwindle as companies consolidate to reduce competition and drive up profits. I have doubts that the system of using insurers to drive down other providers costs will work for the benefit of all people in the system; I think at least here it will just serve the insurers. I do like individuals being directly connected to the cost of their health & healthcare even if they don’t pay directly, but I don’t see Americans getting off Big Macs anytime soon and start going to the gym. The other aspect in the U.S. is the influence of Wall Street. If this system were implemented here where would all that healthcare investment money go until the system shook itself out and clear winners inspired the return of investment confidence?

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