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Let's Go Dutch

8:00 AM, Aug 18, 2009 • By STANLEY GOLDFARB
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A surprising European approach to health-care reform.

The Netherlands is a liberal country. It has legalized drugs and euthanasia is an accepted social policy. Yet, to solve its health care dilemma of rising costs and inefficiency, it has turned to a health care system that sounds much more like something to come out of the American Enterprise Institute than from a nation in which the Socialist party made the largest gains in the last election. It is opting for private health insurance and competition.

We have heard many arguments that the American health-care system should adopt a typical European style, centrally controlled, single-payer system. The argument is made that such a system would provide a fairness that is now missing in our system. While the European systems were generally begun with the premise that all citizens should have health-care coverage, the problem of rapidly rising costs has plagued every European nation. Unlike what has transpired in the Netherlands, these rising costs have typically led to restraints on the demand for care (co-payments, deductibles, other incremental payments) or on the supply of services (global budgets that limit purchase of equipment by hospitals, gatekeepers to control referrals to specialists, etc.).

In response to these limits, private health insurance and non-governmental hospitals and facilities have become available in nearly every country in Europe. Why? Because of the demand for services beyond those offered by government regulated plans. Europeans who can overcome the explicit or implicit rationing of health care will do so, if they can afford it.

We tend to assume rationing means the denial of care. It is not like that. It is not an outright obstacle to care, it is much more subtle. One way for a government to ration care is to simply delay it. You probably will get the care eventually but a long wait time means that there are fewer resources, facilities, and equipment needed in a health care system.

There are many problems with the U.S. health-care system, but access to resources and this form of rationing is not one of them. For example, survey data, as reported in a study published by the OECD (Organization for Economic Cooperation and Development), suggest that there are very short waiting times for elective surgery in the United States. Robert Blendon of the Commonwealth Fund reported the percentage of respondents to a phone survey in 2001 who had experienced elective surgery in the previous two years and who said they had waited longer than four months for elective surgery: 5% of patients had been waiting for at least 4 months in the United States, as opposed to 23% in Australia, 26% in New Zealand, 27% in Canada, and 38% in the United Kingdom. Tulane University cardiac surgeon Robert Carroll, in another study, found that the percentage of the respondents in need of elective coronary bypass surgery who had been waiting for more than three months was 0% in U.S., 18.2% in Sweden, 46.7% in Canada, and 88.9% in the United Kingdom.

For those who want to avoid these waits, supplemental private insurance and access to a discrete private system is one solution. While some countries have expanded access in the public system because wait times became intolerable, this has led to costs rising at rates that have themselves become a major issue.

Another approach to rationing is to limit availability of technology. For example, there are 26 MRI scanners per 100,000 people in the United States versus 5 per 100,000 in Canada. If there is no MRI scanner in your local hospital, you probably will not have an MRI in the near future. If you are one of those Canadians that has never needed an MRI, this is not a problem; if you do need one and have to wait 4 to 6 months, you probably are not that happy with your system. That is why anecdotes and surveys that show most people are happy with their health care systems in most countries are potentially misleading. People who regularly need and use health care must be the ones questioned.

Rationing may also take the form of limits on payments for medications. An example of the latter occurred in Germany and was reported in the British journal, Lancet: The German government under terms of the Bonus Penalty Ruling embedded in their health care system set daily rates for drugs used to treat high blood pressure, depression, migraines, prostate illnesses, and osteoporosis. This was viewed as reforming a component of the German system. Only 37 cents per day were allowed for drugs used to treat depression, migraines, and hypertension. The plan inevitably led to a big problem as the Lancet article went on to explain: Ambulatory care doctors in Germany were allowed to prescribe only a set daily dosage at a set daily rate. Incredibly, doctors prescribing over 10% above the set rate, were penalized and fined. A physician explained, "What is really wrong is that even doctors who are being very, very economical with their budget are being affected".

Having said all this, perhaps the most surprising development in European healthcare reforms is the Dutch plan that is the diametric opposite of HR 3200 and the Obama hoped-for single payer plan. In the Netherlands, the buzz words are "overcome the limitations of centrally run healthcare systems" and "managed competition". The approach is not greater and greater limits on care, it is to provide a competitive environment where incentives to achieve better and more efficient care can flourish. The history of this, as described on an official Dutch government website, is quite fascinating given our country's debate:

In the 1980s, it became clear that the Dutch health care system lacked incentives. On the supply side, the government was heavily involved in determining the price and volume of delivered health care services. This made the health care system both inflexible and fragmented. Diverse and separate funding systems prevented substitution of cheaper outpatient care for expensive institutional care. The government set spending ceilings for each part of the health care sector. Service capacity and prices were regulated centrally.

In the early 1990s, the government promoted efficiency through the introduction of market forces. In its role of orchestrator, the government reduced direct controls and increasingly left the running of the health care sector to sickness funds, private and public sector health insurers and care providers, opting for a system of managed competition. This competition applied primarily to the sickness funds that bought health care services on behalf of their members ('demand control').

Under the Health Insurance Act of 2006, the sickness insurance funds were abolished and Dutch citizens were required to purchase their health insurance from profit-making private health insurers, which prior to 2006 insured only the wealthiest third of the population. Private health insurers negotiate on behalf of their members with care providers such as hospitals, general practitioners and pharmacies the scale, quality and price of services charged their members. Consequently, the health insurers play a pivotal role in implementing the Health Insurance Act. Insured persons can now 'vote with their feet'. They may change their health insurer once a year if the premium is too high, or the quality of care, bought on their behalf, is too low. This incentivizes both health care providers and health insurers to be efficient in the delivery (providers) and purchase (insurers) of health care.

Therefore, the Dutch health care system has converted from a centrally controlled, inefficient, and increasingly expensive government run system to a decentralized, private insurance based, competitive system.

The president has been quoted as first supporting a single payer system before he was against it. The truth is that whatever system is put in place is only the first step if the experience of nearly continuous health care reform in Europe is a guide. Those who fear change because it may lead to circumstances they abhor should not have their fears dismissed based on what is in HR 3200 or any other bill put forward now. Whatever is put forth now will change in the future.

The OECD has polled Europeans who regularly utilize health care about their satisfaction with their healthcare system. In 2003, 45.2% of the respondents in 15 nations in the European Union expressed dissatisfaction. While similar numbers of patients express dissatisfaction with the United States system, are we willing to embark on an experiment with a potential outcome to create a system that not only leaves us pretty much at a similar degree of satisfaction but one that has angered and polarized our entire nation? Can't we wait to see how the Massachussetts plan turns out before we commit the whole nation to a similar approach? Can't we learn from countries like the Netherlands where competition, incentives, and privatization are seen as the means to efficiency and high patient satisfaction?

Stanley Goldfarb MD is associate dean of clinical education at the University of Pennsylvania School of Medicine and a nephrologist.