A Leftwing Critique of Managed Competition
How well is it working in the Netherlands? This is Kieke Okma, Theodore R. Marmor and Jonathan Oberlander writing in the NEJM:
- Competition has not slowed health care spending: “the country spent 14.8% of its gross domestic product on health care and welfare (including long-term care and other social services).”
- An embarrassing number of Dutch are uninsured: “Defaulters [who haven’t paid their premiums for the past six months] together with the uninsured account for about 3% of the population.”
- Exercise of consumer choice is minimal: “only about 4% of the Dutch population, on average, has changed plans each year.”
- Regulation, not competition is controlling costs: “The government … sets fees for independent specialists and general practitioners and controls prices for most hospital services.”
Glad to see the left is coming to its senses.
This is not too surprising. Only about 5% of enrollees in the FEHBP change plans each year. If people can default (i.e. stop paying their premiums) and still be guaranteed the ability to enroll in the event they become sick, many will game the system.
Competition is not slowing health care spending because the premiuims are not real prices. So there isn’t real price competition.
The only way to curb viral expansion of medical costs is to government control of the fee system. A quote from the NEJM article.
“The Dutch Ministry of Health regularly engages in talks with the health insurance industry when there are complaints about rising premiums or copayments. Insurers must offer comprehensive coverage, and direct payments by patients amount to less than 10% of total medical care costs, among the lowest percentages in industrialized countries. The comprehensiveness of health insurance in the Netherlands provides a critical contrast to the Ryan Medicare plan, which would erode the U.S. government’s contribution to the point that 65-year-old beneficiaries would pay about two thirds of medical costs themselves.”
The good thing about the HCRA is that private insurance companies are required to spend at least 85% of the premiums on health care.
This article seems like a description of the Netherlands’ experience with the use of insurance companies in place of single payer as a method of providing universal health insurance. It is for the purpose of gaining experience in what to expect from the HCRA, and Paul Ryan’s proposed privatization of Medicare.
Could someone explain why the article is characterized as a “Left Wing Critique of Managed Competition”?