Free choice of sickness funds in regulated competition: evidence from Germany and The Netherlands

Sickness funds became the focal point of health insurance reforms in the 1990s. Policy makers expected funds to become more consumer-oriented and more active in managing the provision of health care. This is especially true for two countries in the heart of Europe that, on first view, have many similar institutional characteristics. Both Germany and The Netherlands have introduced competition between sickness funds in the last decade. We present extensive quantitative, as well qualitative, data with regard to the behaviour of consumers after the introduction of free choice between sickness funds. National data was used with regard to contribution rates and member flows and survey data was used to investigate personal motives for actual change and perception of differences between sickness funds. In Germany, contribution rates between sickness funds differ significantly. Accordingly, these differences are the main reason for consumers to switch funds, which occurs on a considerable scale. However, survey data show that other reasons may be important too. In The Netherlands, premium differences are much lower. The same is true for the degree of change. Survey data show that consumers perceive very small differences between sickness funds and do not see much reason for change. Our findings support the claim that the degree of actual changing depends strongly on economic incentives, especially with regard to the extent of financial risk sickness funds have to bear and to the extent premiums or contribution rates can differ. However, the higher the financial risk of individual sickness funds actually is, the higher the incentives for risk selection.     

Price elasticities in the German Statutory Health Insurance market before and after the health care reform of 2009

This paper investigates the change in price elasticity of health insurance choice in Germany after a reform of health insurance contributions. Using a comprehensive data set of all sickness funds between 2004 and 2013, price elasticities are calculated both before and after the reform for the entire market. The general price elasticity is found to be increased more than 4-fold from −0.81 prior to the reform to −3.53 after the reform. By introducing a new kind of health insurance contribution the reform seemingly increased the price elasticity of insured individuals to a more appropriate level under the given market parameters. However, further unintended consequences of the new contribution scheme were massive losses of market share for the more expensive sickness funds and therefore an undivided focus on pricing as the primary competitive element to the detriment of quality.     

Risk adjustment and risk selection on the sickness fund insurance market in five European countries

From the mid-1990s citizens in Belgium, Germany, Israel, the Netherlands and Switzerland have a guaranteed periodic choice among risk-bearing sickness funds, who are responsible for purchasing their care or providing them with medical care. The rationale of this arrangement is to stimulate the sickness funds to improve efficiency in health care production and to respond to consumers' preferences. To achieve solidarity, all five countries have implemented a system of risk-adjusted premium subsidies (or risk equalization across risk groups), along with strict regulation of the consumers' direct premium contribution to their sickness fund. In this article we present a conceptual framework for understanding risk adjustment and comparing the systems in the five countries. We conclude that in the case of imperfect risk adjustment-as is the case in all five countries in the year 2001-the sickness funds have financial incentives for risk selection, which may threaten solidarity, efficiency, quality of care and consumer satisfaction. We expect that without substantial improvements in the risk adjustment formulae, risk selection will increase in all five countries. The issue is particularly serious in Germany and Switzerland. We strongly recommend therefore that policy makers in the five countries give top priority to the improvement of the system of risk adjustment. That would enhance solidarity, cost-control, efficiency and client satisfaction in a system of competing, risk-bearing sickness funds.     

Differences in price elasticities of demand for health insurance: a systematic review

Many health insurance systems apply managed competition principles to control costs and quality of health care. Besides other factors, managed competition relies on a sufficient price-elastic demand. This paper presents a systematic review of empirical studies on price elasticity of demand for health insurance. The objective was to identify the differing international ranges of price elasticity and to find socio-economic as well as setting-oriented factors that influence price elasticity. Relevant literature for the topic was identified through a two-step identification process including a systematic search in appropriate databases and further searches within the references of the results. A total of 45 studies from countries such as the USA, Germany, the Netherlands, and Switzerland were found. Clear differences in price elasticity by countries were identified. While empirical studies showed a range between ?0.2 and ?1.0 for optional primary health insurance in the US, higher price elasticities between ?0.6 and ?4.2 for Germany and around ?2 for Switzerland were calculated for mandatory primary health insurance. Dutch studies found price elasticities below ?0.5. In consideration of all relevant studies, age and poorer health status were identified to decrease price elasticity. Other socio-economic factors had an unclear impact or too limited evidence. Premium level, range of premiums, homogeneity of benefits/coverage and degree of forced decision were found to have a major influence on price elasticity in their settings. Further influence was found from supplementary insurance and premium-dependent employer contribution.     

Risk adjustment and risk selection in Europe: 6 years later

In this paper we analyse the developments concerning risk adjustment and risk selection in Belgium, Germany, Israel, the Netherlands and Switzerland in the period 2000-2006. Since 2000 two major trends can be observed. On the one hand the risk adjustment systems have been improved, for example, by adding relevant health-based risk adjusters. On the other hand in all five countries there is evidence of increasing risk selection, which increasingly becomes a problem, in particular in Germany and Switzerland. Some potential explanations are given for these seemingly contradictory observations. Since the mid-1990s citizens in these countries can regularly switch sickness fund, which should stimulate the sickness funds to improve efficiency in health care production and to respond to consumers' preferences. When looking at managed care there are some weak signals of increasing managed care activities by individual sickness funds in all countries (except Belgium). However, with imperfect risk adjustment, such as in Israel and Switzerland, insurers will integrate their managed care activities with their selection activities, which may have adverse effects for society, even if all insurers are equally successful in selection. The conclusion is that good risk adjustment is an essential pre-condition for reaping the benefits of a competitive health insurance market. Without good risk adjustment the disadvantages of a competitive insurance market may outweigh its advantages.     

Free choice of health plan combined with risk‐adjusted capitation payments: are switchers and new enrolees good risks?

It is well established in the literature that the young and healthy are more inclined to switch health plan, given the opportunity. In countries where risk-adjusted capitation payments are used to create a level playing field for the competing health plans, as is the case in The Netherlands, it is important to determine whether plans could exploit such selective switching to gain unfair advantage. This study analyses whether various risk-adjustment models are capable of compensating adequately for selective switching in the Dutch sickness fund sector. Data concern information on health care expenditures, demographics and indicators of chronic diseases for 10 million members from 21 funds. Results indicate that switchers in 2000-2001 had expenditures that were around 40% below average in 1994-2002, confirming that movers are 'good' risks in absolute terms. However, after taking into account that these people are younger and healthier, the risk-adjusted payments for them nearly equalled actual expenditures. This holds for both people who in fact switched from one fund to another, and for those who were forced by regulation to leave the private insurance sector and who had to choose a sickness fund. Importantly, models using only demographics could not achieve this.     

Evaluations of health interventions in social insurance-based countries: Germany,the Netherlands,and Austria

Health Technology Assessment (HTA) in social insurance-based, or so-called 'Bismarck' health care systems (Germany, Austria, and the Netherlands) has taken a different course than in either taxed-based (Sweden, Norway, United Kingdom, and Spain) or private health care systems (such as the United States). The culture of informed decisions supported by transparent and evidence-based evaluations of health interventions was hindered by the strong professional autonomy and sectoral interests in Germany and Austria for a long time. On the other hand, HTA has a long-standing tradition in the Netherlands. In all three countries sickness funds play an important role in implementing evaluations-as a policy tool-by linking reimbursement to explicit proof of effectiveness in both new and established interventions. This article focuses on the obstacles and opportunities for HTA in Germany, Austria and the Netherlands as countries with insurance-based health care systems.     

Consumer mobility in social health insurance markets

During the 1990s, the social health insurance schemes of Germany, the Netherlands, Switzerland, Belgium and Israel were significantly reformed by the introduction of freedom of choice (open enrolment) of health insurer. This was introduced alongside a system of risk adjustment to compensate health insurers for enrolees with predictable high medical expenses. Despite the similarity in the health insurance reforms in these countries, we find that both the rationale behind these reforms and their impact on consumer choice vary widely.In this article we seek to explain the observed variation in switching rates by cross-country comparison of the potential determinants of health insurer choice. We conclude that differences in choice setting, and in the net benefits of switching, offer a plausible explanation for the large differences in consumer mobility.Finally, we discuss the policy implications of our cross-country comparison. We argue that the optimal switching rate crucially depends on the goals of the reforms and the quality of the risk-adjustment system. In view of this, we conclude that switching rates are currently too low in the Netherlands, and an active government policy to encourage consumer mobility seems warranted. In Germany and Switzerland, high switching rates call for an improvement of the rather poor risk-adjustment systems. Given low switching rates in Israel and Belgium, improving risk adjustment is less urgent, but still required in the long run.     

Local health systems in 21st century: who cares?-An exploratory study on health system governance in Amsterdam

BACKGROUND: There is a growing awareness that there should be a public health perspective to health system governance. Its intrinsic population health orientation provides the ultimate ground for determining the health needs and governing collaborative care arrangements within which these needs can be met. Notwithstanding differences across countries, population health concerns are not central to European health reforms. Governments currently withdraw leaving governance roles to care providers and/or financiers. Thereby, incentives that trigger the uptake of a public health perspective are often ignored. METHODS: In this study we addressed this issue in the city of Amsterdam. Using a qualitative study design, we explored whether there is a public health perspective to the governance practices of the municipality and the major sickness fund in Amsterdam. And if so, what the scope of this perspective is. And if not, why not. RESULTS: Findings indicate that the municipality has a public health perspective to local health system governance, but its scope is limited. The municipality facilitates rather than governs health care provision in Amsterdam. Furthermore, the sickness fund runs major financial risks when adapting a public health perspective. It covers an insured population that partly overlaps the Amsterdam population. Returns on investments in population health are therefore uncertain, as competitors would also profit from the sickness fund's investments. CONCLUSION: The local health system in Amsterdam is not consistently aligned to the health needs of the Amsterdam population. The Amsterdam case is not unique and general consequences for local health system governance are discussed.     

How comprehensive are the basic packages of health services? An international comparison of six health insurance systems

OBJECTIVES: Interest in the composition of the health care menu has grown. Its outwardly comprehensive nature is as rhetorical as the slogans of universal access and affordability. This paper summarizes the international part of a report to the Swiss government, in which we explored the basic package of services covered by social health insurance in France, Germany, Israel, Luxembourg, The Netherlands and Switzerland. The aim of the initial report was to check the appropriateness of the Swiss catalogue, with special attention to the risk of unequal access to health care by rationing of effective services. In this paper, we highlight the major differences in service coverage between the countries and address the possible factors explaining those differences. METHODS: The contents of the basic packages of the six countries were compared using data from government ministries and sickness funds. RESULTS: Coverage is most comprehensive in Germany and Switzerland; these are also the countries with the greatest total health expenditure. Three countries separated nursing care from other types of health care by creating an independent insurance scheme. Some health care benefits are also covered under the heading of social care. High out-of-pocket payments are increasingly used as hidden rationing instruments. CONCLUSIONS: The present comparison highlights the multi-factorial character of the choices made in six countries in order to keep their health care menu within the possibilities offered by available resources.     

Going Formal or Informal,Who Cares? The Influence of Public Long‐Term Care Insurance

International differences in long‐term care (LTC) use are well documented, but not well understood. Using comparable data from two countries with universal public LTC insurance, the Netherlands and Germany, we examine how institutional differences relate to differences in the choice for informal and formal LTC. Although the overall LTC utilization rate is similar in both countries, use of formal care is more prevalent in the Netherlands and informal care use in Germany. Decomposition of the between‐country differences in formal and informal LTC use reveals that these differences are not chiefly the result of differences in population characteristics but mainly derive from differences in the effects of these characteristics that are associated with between‐country institutional differences. These findings demonstrate that system features such as eligibility rules and coverage generosity and, indirectly, social preferences can influence the choice between formal and informal care. Less comprehensive coverage also has equity implications: for the poor, access to formal LTC is more difficult in Germany than in the Netherlands. Copyright © 2014 John Wiley & Sons, Ltd.     

Switching sickness funds and risk compensation mechanisms in the statutory health insurance system in Germany--empirical results from the cooperative health research in the region of Augsburg (KORA)

Since 1996, all citizens of the Federal Republic of Germany who are insured in the statutory health insurance system are entitled to switch their sickness fund. The rationale of this regulation was to strengthen elements of competition in this system in order to stimulate the sickness funds to improve the efficiency of health care and to respond to consumers' preferences. Simultaneously, to avoid the implicit incentives for sickness funds to engage in risk selection, a risk compensation mechanism was introduced, including as morbidity-related risk adjusters age, sex and incapacity to work. Based on the KORA survey S4 (1999/2001) we take the case of switching behaviour in the region of Augsburg, and analyse whether this risk adjustment scheme was working effectively. The results show that persons changing their sickness fund were characterised by a comparatively smaller burden of chronic diseases and by a less frequent utilization of inpatient health care. Under these conditions, differences in the contribution rates do not accurately reflect differences in the performance and efficiency of sickness funds. Moreover, the migration of good risk to sickness funds with favourable contribution rates threatens the principle of financial solidarity. Therefore, the system of risk equalisation has to be developed towards measuring the risk volume borne by the sickness funds more precisely than hitherto.     

Mental health problems and disability pensions: trends and measures in a cross-national perspective

The article reports on a cross-border investigation into disability pension receipt due to mental health problems. The quantitative part comprised an analysis in how far disability benefit receipt due to mental health problems is similar with regard to size, trends, diagnostic patterns and risk groups across six countries (Belgium, Canada, Germany, the Netherlands, Sweden and Switzerland). The second part included a cross-border inventory of measures aiming at prevention, rehabilitation and “return to work measures” (RTW), focusing on sickness absence and disability due to mental health problems. Despite the generally rising trend in all countries (as to disability pension receipt due to mental health problems), there are considerable differences in the scope of the phenomenon. But in most countries the need is felt to act. The inventory of (new) policies that aim to affect this trend showed three categories of policies: early identification of vulnerable groups, work resumption measures and specific tools for social insurance administrators. For each category some examples of instruments developed or under consideration are given. It is concluded that good practices for dealing with work incapacity due to mental health problems are in the stage of development, whereas in some countries new work resumption approaches have been implemented, some giving greater responsibility to the employer and employee instead of medical authorities.     

Follow-up regimes for sick-listed employees: A comparison of nine north-western European countries

The Covid-19 pandemic has revealed the importance of social protection systems, including income security, when health problems arise. The aims of this study are to compare the follow-up regimes for sick-listed employees across nine European countries, and to conduct a qualitative assessment of the differences with respect to burden and responsibility sharing between the social protection system, employers and employees. The tendency highlighted is that countries with shorter employer periods of sick-pay typically have stricter follow-up responsibility for employers because, in practice, they become gatekeepers of the public sickness benefit scheme. In Germany and the UK, employers have few requirements for follow-up compared with the Nordic countries because they bear most of the costs of sickness absence themselves. The same applies in Iceland, where employers carry most of the costs and have no obligation to follow up sick-listed employees. The situation in the Netherlands is paradoxical: employers have strict obligations in the follow-up regime even though they cover all the costs of the sick-leave themselves. During the pandemic, the majority of countries have adjusted their sick-pay system and increased coverage to reduce the risk of spreading Covid-19 because employees are going to work sick or when they should self-quarantine, except for the Netherlands and Belgium, which considered that the current schemes were already sufficient to reduce that risk.     

Preferences for health insurance and health status: does it matter whether you are Dutch or German?

This contribution seeks to measure preferences for health insurance of individuals with and without chronic conditions in two countries, Germany and the Netherlands. The objective is to test the presumption that preferences between these two subpopulations differ and to see whether having a chronic condition has a different influence on preferences depending on the country. The evidence comes from two Discrete Choice Experiments performed in 2005 (Germany) and 2006 (the Netherlands, right after a major health reform). Results point to an even more marked resistance against restrictions of physician choice among individuals with chronic conditions in both countries. Thus, the alleged beneficiaries of Disease Management Programs would have to be highly compensated for accepting the restrictions that go with them.     

Comparison of the effects of low childhood socioeconomic position and low adulthood socioeconomic position on self rated health in four European studies

BACKGROUND: Socioeconomic inequalities in health are a persistent feature throughout Europe. Researchers and policy makers are increasingly using a lifecourse perspective to explain these inequalities and direct policy. However, there are few, if any, cross national lifecourse comparisons in this area. METHODS: Associations between socioeconomic position (SEP) in childhood and in adulthood and poor self rated health among men and women at midlife were tested in four European studies from England (n = 3615), France (n = 11 595), Germany (n = 4183), and the Netherlands (n = 3801). RESULTS: For women, mutually adjusted analyses showed significant associations between poor self rated health and low SEP in both childhood and adulthood in England and the Netherlands, only low childhood SEP in Germany and neither childhood nor adulthood SEP in France. For men, mutually adjusted analyses showed significant associations between poor self rated health and low SEP in both childhood and adulthood in France and the Netherlands, only with adult SEP in England and only with childhood SEP in Germany. CONCLUSION: In most countries adult SEP showed stronger associations with self rated health than childhood SEP. There are both gender and national differences in the associations between childhood and adulthood SEP. Policies designed to reduce inequalities in health need to incorporate a lifecourse perspective that is sensitive to different national and gender issues. Ultimately, more cross national studies are required to better understand these processes.     

Choices in health care: the European experience

This paper examines some policies to increase or restrict consumer choice in western European health systems as regards four decisions: choice between public and private insurance; choice of public insurance fund; choice of first contact care provider and choice of hospital. Choice between public and private insurance is limited and arose for historical reasons in Germany. Owing to significant constraints, few people choose the private option. Choice of public insurance fund tends to be exercised by younger and healthier people, the decision to change fund is mainly associated with price and, despite complex risk adjustment mechanisms, it has led to risk selection by funds. Choice of first contact care provider is widespread in Europe. In countries where choice has traditionally been restricted, reforms aim to make services more accessible and convenient to patients. Reforms to restrict direct access to specialists aim to reduce unnecessary and inappropriate care but have been unpopular with the public and professionals. Patients' take up of choice of hospital has been surprisingly low, given their stated willingness to travel. Only where choice is actively supported in the context of long waiting times is take up higher. The objectives, implementation and impact of policies about choice have varied across western Europe. Culture and embedded norms may be significant in determining the extent to which patients exercise choice.     

Supervision in social health insurance: a four country study

This article presents the results of an international comparative study of a widely neglected element in social health insurance: supervision upon the sickness funds as implementing agents of social health insurance. The following countries were included: Belgium, Germany, Switzerland and the Netherlands. A comparative analysis of the institutional structure of supervision revealed many differences. The goals of supervision are more or less the same in each country: preserving the lawfulness of implementation; ensuring trust and stability; preserving efficiency and supporting policymaking. The analysis of the supervision process focused upon three sub-processes: the collection of information; the assessment of the performance of the sickness funds and interventions to correct deviant behaviour. Finally, the analysis deals with changes in supervision, in particularly the impact of market competition in social health insurance upon supervision. It is argued that market competition will substantially alter the role of supervisory agents in social health insurance.     

Consumer price sensitivity in Dutch health insurance

Aim To estimate the price sensitivity of consumer choice of health insurance firm. Method Using paneldata of the flows of insured between pairs of Dutch sickness funds during the period 1993–2002, we estimate the sensitivity of these flows to differences in insurance premium. Results The price elasticity of residual demand for health insurance was low during the period 1993–2002, confirming earlier findings based on annual changes in market share. We find small but significant elasticities for basic insurance but insignificant elasticities for supplementary insurance. Young enrollees are more price sensitive than older enrollees. Conclusion Competition was weak in the market for health insurance during the period under study. For the market-based reforms that are currently under way, this implies that measures to promote competition in the health insurance industry may be needed.      

Risk and resilience: health inequalities,working conditions and sickness benefit arrangements: an analysis of the 2010 European Working Conditions survey

In this article we ask whether the level of sickness benefit provision protects the health of employees, particularly those who are most exposed to hazardous working conditions or who have a little education. The study uses the European Working Condition Survey that includes information on 20,626 individuals from 28 countries. Health was measured by self‐reported mental wellbeing and self‐rated general health. Country‐level sickness benefit provision was constructed using spending data from Eurostat. Group‐specific associations were fitted using cross‐level interaction terms between sickness benefit provision and physical and psychosocial working conditions respectively, as well as those with little education. The mental wellbeing of employees exposed to psychosocial job strain and physical hazards, or who had little education, was better in countries that offer more generous sickness benefit. These results were found in both men and women and were robust to the inclusion of GDP and country fixed effects. In the analyses of self‐reported general health, few group‐specific associations were found. This article concludes that generous sickness benefit provision may strengthen employee's resilience against mental health risks at work and risks associated with little education. Consequently, in countries with a generous provision of sickness benefit, social inequalities in mental health are smaller.