Elsevier

Health Policy

Volume 121, Issue 2, February 2017, Pages 134-140
Health Policy

Competition policy for health care provision in Norway

https://doi.org/10.1016/j.healthpol.2016.11.013Get rights and content

Highlights

  • Standard competition policy plays a limited role in the Norwegian NHS.

  • Competition policy is indirect through reforms introducing provider competition.

  • Examples include patient choice, activity-based funding, and private provider contracting.

  • Evidence for pro-competitive effects is weak and inconclusive.

  • Possible reasons are partial DRG-pricing, dual purchaser-provider role, and consolidation.

Abstract

Competition policy has played a very limited role for health care provision in Norway. The main reason is that Norway has a National Health Service (NHS) with extensive public provision and a wide set of sector-specific regulations that limit the scope for competition. However, the last two decades, several reforms have deregulated health care provision and opened up for provider competition along some dimensions. For specialised care, the government has introduced patient choice and (partly) activity (DRG) based funding, but also corporatised public hospitals and allowed for more private provision. For primary care, a reform changed the payment scheme to capitation and (a higher share of) fee-for-service, inducing almost all GPs on fixed salary contracts to become self-employed. While these reforms have the potential for generating competition in the Norwegian NHS, the empirical evidence is quite limited and the findings are mixed. We identify a set of possible caveats that may weaken the incentives for provider competition – such as the partial implementation of DRG pricing, the dual purchaser–provider role of regional health authorities, and the extensive consolidation of public hospitals – and argue that there is great scope for competition policy measures that could stimulate provider competition within the Norwegian NHS.

Introduction

Health expenditures in Norway are escalating at a faster rate than the GDP. According to Statistics Norway, the total health expenditures in 2015 amounted to NOK 311 (approx. £ 25) billions in total, NOK 60 000 (approx. £ 7200) per capita, and 10% of total GDP (12% of mainland GDP excluding oil production). Public health expenditures account for more than 85% of the total health expenditures. According to the OECD Health at a Glance 2015 report, Norway is third in the ranking – after the United States and Switzerland – in terms of total per capita spending on health (measured in US dollars and adjusted for purchasing power) and at the very top in terms of public per capita spending on health. Despite high health expenditures, waiting times for treatment are long. However, Norway scores well on a wide set of quality indicators compared to other OECD countries.

The Norwegian health care system is a National Health Service (NHS) based on mandatory social insurance financed mainly through general taxation. The role of competition in the Norwegian NHS has traditionally been very limited, as in most countries with an NHS, and is still quite restricted along many dimensions. Health insurance is nationalised and provided by the government, and thus not subject to competition. This was also the case for health care provision. However, in the last two decades several government reforms have deregulated the health care provision and increased the scope for provider competition within the NHS.

The purpose of this paper is to review competition policy for health care provision in Norway and to derive some key lessons from the Norwegian experience. As in most countries with an NHS, the scope for standard competition policy (e.g., merger control) is limited, implying that competition policy is mainly indirect related to deregulation of the public monopoly provision of health care. A key focus is therefore on the government reforms that have opened up for provider competition within the Norwegian NHS, and the effects of such competition on performance measures such as quality, waiting times, and cost efficiency. We focus particularly on reforms in the secondary care market introducing competition between hospitals, but consider also reforms in the primary care market opening for competition among general practitioners (GPs).

The rest of the paper is organised as follows. Section 2 describes the key policy reforms of the Norwegian NHS. Section 3 reviews the competition policies in the Norwegian NHS. Finally, Section 4 presents key lessons from the Norwegian experience and discusses possible implications for future design of competition policy for health care provision in Norway.

Section snippets

Institutional set-up

The national health insurance in Norway is comprehensive. It covers a wide set of medical treatments and offers high insurance coverage with limited demand-side cost sharing. Patient may top-up with private health insurance, but the market is small due to the comprehensive national health insurance. The out-of-pocket payments for health care within the NHS are low. For in-patient hospital care, patients are usually not charged any co-payments. For primary care and out-patient specialist care,

Review of competition policies

The reforms of the NHS have radically changed the provision of health care in Norway by transforming the scheme from public (local monopoly) provision to a scheme with incentives for competition and more private provision at both primary care and secondary care level.

Still, regular competition policy, as set out by the competition law and enforced by the competition authorities, play a minor role in the Norwegian NHS. There are very few competition law cases related to cartel behaviour, abuse

Key lessons and policy implications

What lessons can we draw from this review of competition policy in the Norwegian NHS? A first lesson is that standard competition policy related to cartel behaviour, dominance abuse, and merger control plays a limited role. There are two main reasons for this. First, industry-specific market regulation, including entry and price regulations, crowds out regular competition policy. Second, the state ownership of the public hospitals imply that any coordination of activities, including mergers, is

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This research is supported by the Health Foundation, an independent charity committed to bringing about better health and health care for people in the UK. The views expressed in this paper and in the case studies are those of the authors and do not necessarily reflect the views of the funders. The paper has benefited from comment by Martin Chalkley, Are Forbord, Hugh Gravelle, Tor Iversen, Sara Martin, Luigi Siciliani, Emma Spencelayh and an anonymous referee. The usual disclaimer applies.

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