Netherlands: #3 in the 2020 World Index of Healthcare Innovation
Holland’s universal private health insurance system performs strongly across all dimensions.
By Gregg Girvan and Avik Roy
Introduction
The Dutch health care system ranks #3 in the World Index of Healthcare Innovation, with an overall score of 59.14, only slightly behind first-ranked Switzerland (59.56) and second-ranked Germany (59.28). Most impressively, the Netherlands scored well across the board, ranking no lower than 6th (for Fiscal Sustainability).
Holland’s best performance was in Choice (#2, 50.42), where Dutch residents not only enjoy choice among dozens of health insurers, but also broad choice of doctors and providers. The Netherlands also performed strongly in Science & Technology (#3, 49.97).
Background
The Dutch health care system shares many common features with Germany’s, because during World War II, occupying Germans installed in the Netherlands a private health insurance system identical to that of Germany’s for those with incomes below a certain threshold.
In 2006, in collaboration with Stanford economist Alain Enthoven, the Dutch government enacted a significant health reform package. “At the end of the 1990s,” recalled then-Dutch Health Minister Ab Klink, “the budgetary system for health services [didn’t] work anymore. It was far too regulatory, because the government fixed all the prices. We became aware that it blocked innovation.”
The Dutch replaced the old system with one of “managed competition,” in which multiple private insurers compete for market share, on the basis of price and quality. Insurers are required to take all applicants and must adhere to a basic benefit package, but can offer additional benefits on top of the required ones. Residents are required to buy coverage, and pay premiums equivalent to 6.5% of their first €30,000 in annual income. The premiums are automatically deducted from workers’ paychecks by their employers.
Prescription drug formularies are managed by the insurers under this competitive system. Coverage of some drugs is mandated by the Ministry of Health, which is advised on coverage decisions by the Netherlands Healthcare Institute (Zorginstituut Nederland). While drug prices float based on insurer-manufacturer negotiations, and insurers can increase or decrease deductibles for drugs based on their value, the government protects against monopoly drug pricing by setting price ceilings. Like the U.S., generic drugs enjoy high market share in the Netherlands.
The largest innovative health care company in the Netherlands is Philips NV, which has a large medical equipment division. The Netherlands is also home to a large early-stage biotechnology industry. Organon, a mid-sized pharmaceuticals company, was sold to U.S.-based Schering-Plough in 2007 (later acquired by Merck).
Quality
The Netherlands ranks # 5 overall for Quality. It provides the best patient-centered customer service of any country in the Index. However, it struggles more on measures of preventable disease, with below-average cancer survival rates and struggles with COVID-19. Despite the pandemic, the Netherlands has too much hospital capacity, impacting what would otherwise be a strong ranking on infrastructure (#14).
Choice
At #2, The Netherlands performs better on Choice than any country except for the United States. One main reason is that despite its smaller population, the Netherlands has access to innovative drugs on par with other major economies in Europe, including Germany and the United Kingdom. In addition, the country values individual freedom to choose health care providers. And its Bismarkian health insurance system offers a wider variety of insurance plans and designs than all but two countries in the Index.
Science & Technology
The Dutch value advancements in Science and Technology as well, ranking #3 overall in the Index. Its ranking is driven primarily by universally adopted health digitization across all provider types. In addition, the Dutch rank highly for scientific discoveries (#6), having a significant body of oft-cited research in biochemistry, genetics, and molecular biology. Investments in pharmaceutical research and development are low for a country as advanced as the Netherlands, but it makes up for it with a high number of health care patents, especially in the medical technology sector.
Fiscal Sustainability
The Netherlands excels in providing universal care, while still maintaining a strong Fiscal Sustainability ranking at #6. With a debt-to-GDP ratio of 57%, the country’s national solvency (#17) is manageable. In addition, with a reliance on universal private insurance, the Dutch have kept public health spending low (#6). In fact, The Netherlands has managed to reduce its public health spending as a percentage of GDP over the last 10 years.
