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Going Dutch: What Holland can teach America about the Individual Mandate
August 2, 2010
In Holland, everyone is required to purchase health insurance. This “individual mandate” was designed to control rising health care costs by increasing competition and equalizing prices among insurers – the very same idea Democrats have used to defend ObamaCare’s requirement for universal coverage.
This Dutch model, instituted in 2006, gives Americans a glimpse into the future of health care, according to the Heritage Foundation. Former Health Policy Graduate Fellow at the Heritage Foundation, Ryan Lynch, and Eline Altenburg-van den Broek, an independent health policy analyst from the Netherlands, have authored a study on the drawbacks of the Dutch health care system. They report Holland’s recent health care policies have had the opposite effect on markets than indented: “Dutch reforms have not caused individual consumers to seek value, and the ‘managed competition’ has led to a less competitive market.”
By using “managed competition” to control costs, “the government will not only enforce a common set of market rules, including rating rules, but the government must also standardize health insurance benefits, limiting variation in health benefits or benefit offerings. Competition among health plans will thus be confined to competition based on quality and price.” In Holland, this has given way to an oligopoly, with just four insurers controlling almost 88% of the market.
It has also given way to strict controls, with the government determining what a basic Dutch health plan must include. This enables lawmakers, rather than doctors, to define “essential health care,” and enables the government to decide what care is worth funding based on its “proven effectiveness”.
Lynch and Broek warn, “[T]he widespread establishment of a managed competition model could easily result in the expansion of government influence through the multiplication of ever prescriptive regulations, particularly over health benefits. Such a development would undermine consumer choiceand prevent patients from getting the specific kinds of care options that they want, which is the major point of consumer choice in the first place.” (Emphasis added.)
The Dutch model takes decisions about care out of the hands of patients and doctors and places them in the hands of the government and insurance companies. “…[T]he Dutch health reforms have entailed the adoption of significant government controls over health care and delivery,” and this is the model after which Obama and the Democrats have crafted ObamaCare.
The paper cautions of a declivity to a government-run program:
“With the expansion of government control over health care dollars, it is unlikely that an insurance system based on managed competition would serve as a workable compromise between the public-private third-party payment system that Americans have today, and a single-payer system. More likely, such a compromise would accelerate the trend toward a government-run system in which a lack of competition precludes consumer choice and enables ever greater government spending.”
It is clear that the Dutch reforms have had unintended effects on the health care system in Holland, and America will be on the same track if ObamaCare’s individual mandate is allowed to stand. Twenty one states have already recognized the dangers of this universal coverage requirement and have filed suit against the Obama Administration.
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