Switching gains and health plan price elasticities: 20 years of managed competition reforms in The Netherlands

Abstract

In this paper we estimate health plan price elasticities and financial switching gains for consumers over a 20-year period in which managed competition was introduced in the Dutch health insurance market. The period is characterized by a major health insurance reform in 2006 to provide health insurers with more incentives and tools to compete, and to provide consumers with a more differentiated choice of products. Prior to the reform, in the period 1995–2005, we find a low number of switchers, between 2 and 4% a year, modest average total switching gains of 2 million euros per year and short-term health plan price elasticities ranging from −0.1 to −0.4. The major reform in 2006 resulted in an all-time high switching rate of 18%, total switching gains of 130 million euros, and a high short-term price elasticity of −5.7. During 2007–2015 switching rates returned to lower levels, between 4 and 8% per year, with total switching gains in the order of 40 million euros per year on average. Total switching gains could have been 10 times higher if all consumers had switched to one of the cheapest plans. We find short-term price elasticities ranging between −0.9 and −2.2. Our estimations suggest substantial consumer inertia throughout the entire period, as we find degrees of choice persistence ranging from about 0.8 to 0.9.

Premium levels and demand response in health insurance: relative thinking and zero-price effects

“…25 Over the period 2007-2016 the share of the Dutch population switching health plans varied from 4-8 percent per year and health plan price elasticities were ranging from ̶ 0.9 to ̶ 2.2. As in many health insurance markets the degree of choice persistence is high and many consumers make suboptimal choices (Douven et al 2017). 26 In 2016 the unweighted average premium and the standard deviation were 100 and 8.5 euro per month, respectively.…”

Confronting power in low places: historical analysis of medical dominance and role-boundary negotiation between health professions in Nigeria

“…implemented from the 1990s as part of wider reforms to reorganise health services through such initiatives as New Public Management in healthcare in the UK and managed competition reforms in Australia and the Netherlands. [3][4][5] Such reforms had an impact on interprofessional relations within the healthcare sector, in some instances leading to the weakening of the corporatist power of some professions, the emergence or alliance of others, and, in other instances, hybrid configurations of health workforce governance. 4 6-12 In low-income and middle-income countries (LMICs), policy convergence on health workforce reforms centred around promoting workforce flexibility and task-shifting [13][14][15] as a major component of efforts to address workforce challenges for priority health issues like HIV, non-communicable diseases and essential surgery.…”

Does the chronically ill population in the Netherlands switch their health insurer as often as the general population? Empirical evidence from a nationwide survey study

“…However, a switching percentage of 1% among the young chronically ill is remarkably low, and suggests that this specific group, or at least a part of it, might face barriers which may refuse them to switch. In addition, there might be the risk that a switching percentage of 1% is not sufficient to put pressure on the health insurers to meet the preferences of the young chronically ill. Additionally, it is likely that some of them would financially be better off by switching [47]. Although we did not examine how complicated decisions are for the insured, it can be reasoned that the health insurance system is complex [7,47].…”

“…In addition, there might be the risk that a switching percentage of 1% is not sufficient to put pressure on the health insurers to meet the preferences of the young chronically ill. Additionally, it is likely that some of them would financially be better off by switching [47]. Although we did not examine how complicated decisions are for the insured, it can be reasoned that the health insurance system is complex [7,47]. In 2016, the insured could choose from more than 61 policies for the basic insurance offered by 25 health insurers [48].…”