Elsevier

Health Policy

Volume 109, Issue 3, March 2013, Pages 226-245
Health Policy

Review
Preconditions for efficiency and affordability in competitive healthcare markets: Are they fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland?

https://doi.org/10.1016/j.healthpol.2013.01.002Get rights and content

Abstract

Context

From the mid-1990s several countries have introduced elements of regulated competition in healthcare. The aim of this paper is to identify the most important preconditions for achieving efficiency and affordability under regulated competition in healthcare, and to indicate to what extent these preconditions are fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. These experiences can be worthwhile for other countries (considering) implementing regulated competition (e.g. Australia, Czech Republic, Ireland, Russia, Slovakia, US).

Methods

We identify and discuss ten preconditions derived from the theoretical model of regulated competition and assess the extent to which each of these preconditions is fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland.

Findings

After more than a decade of healthcare reforms in none of these countries all preconditions are completely fulfilled. The following preconditions are least fulfilled: consumer information and transparency, contestable markets, freedom to contract and integrate, and competition regulation. The extent to which the preconditions are fulfilled differs substantially across the five countries. Despite substantial progress in the last years in improving the risk equalization systems, insurers are still confronted with substantial incentives for risk selection, in particular in Israel and Switzerland. Imperfect risk adjustment implies that governments are faced with a complex tradeoff between efficiency, affordability and selection.

Conclusions

Implementing regulated competition in healthcare is complex, given the preconditions that have to be fulfilled. Moreover, since not all preconditions can be fulfilled simultaneously, tradeoffs have to be made with implications for the levels of efficiency and affordability that can be achieved. Therefore the optimal set of preconditions is not only an empirical question but ultimately also a matter of societal preferences.

Introduction

In the mid-1990s five countries with a social health insurance system – Belgium, Germany, Israel, the Netherlands and Switzerland – have introduced elements of regulated competition in healthcare by giving people a guaranteed periodic choice among risk-bearing health insurers (sometimes called sickness funds). The rationale of this arrangement is to stimulate the insurers to improve efficiency in healthcare production and to respond to consumer's preferences [1]. Although not in all five countries the aim of the 1990-reforms was to (also) have competition among healthcare providers, in the last decade in all five countries competition among healthcare providers has either been stimulated or seriously been discussed and proposed. Given that market failure is inherent to healthcare markets [2] and given the general perception in many societies that basic healthcare ought to be affordable for everyone, competition in healthcare has to be regulated to achieve society's goals of efficiency and affordability. Therefore it is interesting to know to what extent in these countries the necessary preconditions are fulfilled for the market to produce efficient and affordable care.

The efficiency goal relates to technical and allocative efficiency of the provision of care covered by the basic package as well as to its dynamic efficiency (for these concepts see e.g. [3], [4]) and to the efficiency of the provision of basic insurance. With affordability we mean that everyone has access to affordable health insurance covering a basic care package of services of acceptable quality within reasonable travel time and without undue waiting time. So our definition of affordability includes accessibility. The specific interpretation and definition of efficiency and affordability depend on society's norms and values.

The aim of this paper is to identify the most important preconditions for achieving efficiency and affordability under regulated competition in healthcare, and to indicate to what extent these preconditions are fulfilled in the above mentioned five countries. In this paper competition refers to both competition in the health insurance market and the healthcare provision market. Our results may be worthwhile for other countries (considering) implementing regulated competition in healthcare (e.g. Australia, Czech Republic, Ireland, Russia, Slovakia, US).

Section snippets

Ten preconditions

The theory behind the model of regulated (or managed) competition was developed and elaborated by Enthoven [5], [6], [7], [8]. This theory relates to so-called integrated delivery systems, i.e. vertically integrated organizations who are both insurer and provider of care, as well as to competing insurers and competing providers of care who contract with each other. So this theory relates to both insurer competition and provider competition. From his theoretical model we derive the following ten

Are the preconditions fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland?

In this section we will indicate the extent to which each of the ten preconditions is fulfilled in each of the five countries in 2012. For Germany we only concentrate on the mandatory social health insurance segment (about 90% of the population).

The findings are summarized in Table 1, Table 2, Table 3, Table 4, Table 5, Table 6, Table 7, Table 8, in which for each country is summarized which aspects of each precondition have been implemented and in what way. In addition we provide a subjective

Conclusion and discussion

In this paper we have evaluated to what extent the preconditions for achieving efficiency and affordability derived from the theoretical model of regulated competition [5], [6], [7], [8] are fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. In this paper competition refers to both competition in the health insurance market and the healthcare provision market. These preconditions relate to the regulatory regime and institutional/structural aspects of the healthcare system

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