What the Dutch can teach us about private health insurance

The Dutch healthcare system has received international praise. This year the Netherlands are again topping the chart of the Euro Health Consumer Index. What makes the system so good? To get some answers, I caught up with old friends from the Netherlands.

Dutch philosophy

The country’s philosophy is to cut costs and stimulate quality by introducing regulated competition. The Dutch have attempted to create a system that ensures universal health care, offers transparency and choice for consumers, and avoids risk selection. GPs play a key role coordinating care and preventing unnecessary use of hospitals.

‎Dr Pieter van den Hombergh, GP trainer and a former senior policy adviser at the Dutch Association of General Practitioners (LHV), is full of praise:

“In 2006, the country switched to a regulated market-oriented healthcare system: Insurers got purchasing power and the Government withdrew from healthcare, but set strict regulations for insurers and providers.”

Dr Jettie Bont is a GP and former board member of the Dutch Association of General Practitioners. “The Dutch health system is accessible to anyone, rich or poor, old or young,” she says. “Patients don’t have to pay a co-payment or excess payment to see their GP and we’re making sure it stays this way.”

How does it work?

The 6 key elements of Dutch healthcare:

1. Health insurance funds are not allowed to deny coverage because of illness, age or gender. A risk-equalisation system compensates health funds for accepting high-risk individuals.

2. Healthcare covered by the compulsory basic health insurance package is the same for every insurance provider. Basic cover includes GPs, medical specialists, hospital care, basic dental care, most prescriptions, and ambulance. Additional insurance packages can be purchased.

3. All Dutch citizens and residents contribute via a flat-rate premium set by competing funds – in 2014 the average premium was €1120 ($1626) – and an income-dependent payroll tax contribution. The Government covers premiums up to the age of 18, and people who earn less than a specific amount are entitled to a tax credit.

4. People are free to choose their insurance fund and have the option to change once a year. People are free to choose their GP, but must be registered with a nominated family doctor.

5. Doctor’s fees are set, there is no co-payment or excess payment for GP-care (except for travel vaccinations). Dutch GPs are paid via an annual lump sum per patient (capitation) as well as fee-for-service payments.

6. To help consumers, the Dutch Government collects and publishes price, quality and consumer satisfaction records of insurers and providers.

What are the strengths?

According to the authors of the latest Euro Health Consumer Index report, the Netherlands has the best healthcare system in Europe. The authors feel one of its strengths is consumer participation: “The Netherlands probably has the best and most structured arrangement for patient organisation participation in healthcare decision and policymaking in Europe.”

Other positives mentioned in the report are the availability of 24/7 GP care, and the fact that ‘financing agencies and healthcare amateurs such as politicians and bureaucrats’ are not directly responsible for operative healthcare decisions. The Dutch national health budget is €71.3 billion, of which €63.8 billion is funded by insurance premiums. Various levels of Government contribute €7.5 billion.

Euro Health Consumer Index (EHCI) 2014
The Euro Health Consumer Index (EHCI) 2014 compares healthcare in 36 European countries and looks at the following domains: Patient rights and information, accessibility (waiting times), outcomes, range and reach of services, prevention, and pharmaceuticals. Image: EHCI 2014 report.

Van den Hombergh: “General Practice revenue has increased since 2006 and as a result GPs were able to invest in premises, staff and infrastructure, including ICT and communication equipment. Their personal income increased as well.”

“Along with the change to market-oriented financing the total budget for general practice rose from €1.92 billion in 2006 to €2.37 billion in 2010, an increase of 14%. In 2011 all insurers invested another 10%. Before 2006 the macro budget for general practice had been constant.”

“More group practices appeared; solo practices dropped between 2006 and 2012 from 46% to 39%. The availability of nurse practitioners for chronic disease management rose from a few percent to over 90%, managing diabetes, heart & lung disease and mental health. Diagnostic and therapeutic activities were incentivised: About €50 ($73) per service for minor surgery, spirometry, ECG, joint injections etc.”

Incentives and penalties

Until 2006 GPs received capitation payments for their public patients (about two-thirds of their patients), and fees per consultation for their private patients (about one-third), but this two-tiered system is now history. 

“GPs are paid by insurers according to a mixed payment scheme: Partial capitation plus fee-for-service for basic care.

Van den Hombergh: “Regulated competition between healthcare providers and between health insurers was introduced for specialist care, but family medicine provided in general practices was exempted from this competition. GPs are now paid by insurers according to a mixed payment scheme: Partial capitation plus fee-for-service for basic care.”

“GPs receive ancillary payments, mainly on a fee-for-service basis, for additional or special services such as care for people with chronic diseases. They are compensated on an hourly basis for care during out-of-office-hours. The incentives were negotiated with the profession and were closely aligned to professional values, which limited the risk of perverse consequences.”

“In 2008, the Dutch Association of General Practitioners accepted new benchmarks on availability and accessibility. Insurers offered €4 ($5.81) for each patient when the KPIs were met. Practices should minimally be open six hours a day, five days a week and address emergency calls by a medically trained person within 30 seconds. The GP had to visit the emergency patients within 15 minutes. It was incentivised but also checked by the Dutch Health Care Inspection and failure to meet the standard was financially penalised: Practices with more than 2500 patients could miss out on over €10,000 ($14,514). In the end, only three practices did not meet the target.”

Bont: “A combination of capitation and fee-for-service in a 40/60 or 60/40 ratio incentivises effective and efficient care. A consultation should have a financial stimulus, but not too much, and at the same time the prerequisites should be there to deliver optimal care.”

“Mandatory patient registration works well and helps GPs to coordinate care. GPs are paid to do this via an annual registration fee per patient. We have our own quality assurance system and our own national general practice guidelines.”

What are the weaknesses?

Australian politicians claim that Australian health care is too costly (9.1% of GDP), but the Dutch system is even more expensive: 11.8% of GDP is spent on health (note that the US devote 16.9% to the health sector).

Dr Marith Rebel-Volp is a GP and Member of the Dutch House of Representatives. She says: “GP-care is cheap. The total health budget is €71.3 billion and General Practice costs only €2.67 billion. At the same time GPs are dealing with the majority of health problems and act as gate keepers to more expensive parts of the health system. However, long-term chronic care is expensive and one of the reasons the system is being criticised is its costs.”

“Insurers can set the benchmarks and, as collective bargaining by GPs is not allowed, this is a problem.

The Dutch Association of General Practitioners is concerned that health insurance funds are becoming too powerful, limiting choices of doctors and patients. A survey showed that most GPs are unable to negotiate or discuss their individual contracts with insurers.

Rebel-Volp shares this concern: “Although General Practice has a relative protected position within the healthcare system, there is friction between insurers and GPs. Insurers can set the benchmarks and, as collective bargaining by GPs is not allowed, this is a problem. GPs feel pressured to sign on the dotted line. Recently, a parliamentary motion was accepted which called for re-introducing collective bargaining – this is an interesting development.”

Bont: “Compared to many other countries Dutch GPs are in a strong position, but our workload has increased. Sometimes the expectations are unrealistic. For example, GPs will be required to manage people with serious mental health conditions like ADHD, and we have to hire mental health workers, but I don’t have the physical space to accommodate more staff in the practice.”

“Another result of the current system is the focus on KPIs. I often don’t have time to look at my patient during a consultation as we have to register so many details for the health funds.”

Private health funds require ongoing scrutiny by watchdogs. Last year the Dutch Healthcare Authority (NZa) had to intervene to make sure insurers offered the basic package to everyone without discrimination. The mission of the Healthcare Authority is to guard quality, efficiency, market transparency, freedom of choice, access to healthcare.

“The senate blocked proposed legislation changes which would have opened the door to risk-selection by insurers,” Rebel-Volp says. Although risk selection by insurers is not allowed by law for the basic health insurance package, this doesn’t apply to complementary packages. Insurers will try to push people to take out more expensive insurance products, for example by making it harder for certain patient groups to obtain the basic package online or directing people to the expensive packages on their websites.

Rebel-Volp: “Another issue is the level of the excess payment. This is high and many GPs feel patients are avoiding specialist care as a result. Currently the Health Minister has proposed a new plan in which a lower excess payment is an option if patients choose insurer-preferred, contracted specialist care.”

Vertical integration of care, where health insurers provide health services, is a topic of political debate in the Netherlands. Although it is cost-effective, risks are loss of quality, consumer choice and professional autonomy. Doctors and consumers often argue that insurers should not interfere in the patient-doctor relationship to avoid managed care situations as seen in the US. At the moment the Dutch Health Minister and the majority of the House of Representatives do not support vertical integration.


It is not surprising that the Netherlands is topping the international healthcare charts. Although their system is not perfect – and still a work in progress – the Dutch have solved some major issues such as access and equity. The Government has become the regulator and withdrew from the operational side of healthcare – this appears to have been very beneficial for the industry. On the flip side, the system is not cheap, private health funds need to be watched closely, and Dutch GPs have had to sacrifice at least some of their clinical autonomy.

15 thoughts on “What the Dutch can teach us about private health insurance

  • We would do well to imitate the Dutch by requiring patients to be registered with one practice at a time as their usual practice, in order to receive Medicare benefits, and by increasing the capitation component of GPs’ income to 40% instead of the tiny amount currently provided under the pseudo-capitation payments from the PIP scheme.


  • I am not so sure that I would like to work in this system Edwin. A system where the Insurer has that much power fills me with dread. I like to be the one in charge when I am in my business and dealing with my patient – the Dutch system certainly does not allow for that.

    A long time ago in a far far away land I worked with Capitation (South Africa mind 1990s) – it was terrible. Granted there are many forms of Capitation but I would be very careful about what we wish for.

    Especially in a small clinic like ours


    • I totally agree with Thinus. At the end of the day the patient and provider needs to be empowered to discuss quality issues and not remote third parties i.e. accountants who have no idea or even care about quality. Insurers are only interested in numbers.


      • The question is what is worse? The problem with our Beveridge system is that one day we get Labor’s super clinics and after the election we’re hit with the ‘price signals’ from the Libs, and so on.


      • Edwin, the question is more fundamental. Do we support a free market system that encourages freedom of choice by the consumer that is open and transparent? If you gave the money to the patients there would certainly be a more like-minded outcome. People are more empowered buying a tube of toothpaste than they are when it comes to making decisions about their own health. Both can make you very sick if you get it wrong.


      • David Dahm, I am interested in what you proposed: “If you gave the money to the patients there would certainly be a more like-minded outcome.” Questions that come to mind about this are:
        1. Who would provide the money? What would be its source? Would it be from a combination of the Commonwealth’s consolidated revenue and the Medicare levy as it is now?
        2. How much money would be given to different kinds or people, to use for their health care? Would the amount be weighted by age, gender and/or health status, maybe including known behaviour that affects health status, such as smoking?
        3. What restrictions if any would there be on where and how the person can use that money? How would we protect people who are either reckless, careless or unable to manage the health dollars that they are given?


      • Hi Oliver how are you? Some answers:
        1. Who would provide the money? What would be its source? Would it be from a combination of the Commonwealth’s consolidated revenue and the Medicare levy as it is now?

        DD>> The money would come from the same pool of funding, but there would be less reliance on increasing annual funding as unnecessary duplication of services and govt bureaucracies should reduce. Currently Aust. healthcare bill increases by $10 billion a year. It is currently a $160bn.

        How much money would be given to different kinds or people, to use for their health care? Would the amount be weighted by age, gender and/or health status, maybe including known behaviour that affects health status, such as smoking?

        DD>> Every patient would be profiled based on complexity and funding would travel with the patient. Less funding may be available for preventable illnesses. This could be used as an incentive. The Govt has billing profiling by provider, they also have this information by patient.

        What restrictions if any would there be on where and how the person can use that money?

        DD it is a pool of funding that if you do not manage it you can run out of funding for being reckless.

        How would we protect people who are either reckless, careless or unable to manage the health dollars that they are given?

        DD the mentally ill would get special provision. Guardians could be appointed to manage their funding. Like a parent is responsible for a child’s care. The rest who are in the minority will bear the consequences of being gross negligent e.g. injuries suffered from a drunken brawl started by the patient.

        The Medicare funding can be used for people to buy disability or catastrophe insurance.

        One final point the National Disability Scheme operates with this framework. This is a first I think in the world and has a lot of common sense merit. This should be adopted in healthcare. At the end of the day people value things more that they pay for. It is about creating ownership.


  • The ideal payment system has yet to be invented. But Thinus reaction is a reaction out of fear. The dutch GPs are only paid 50% capitation. And they are independant and can refuse to contract the insurer. Presently 100dreds of GPs do so. But true, theinsurers are powerful. Resisting them is costly. But there is no reason to copy the Dutch system. One only should look for clues in the system that could give direction for change. And preserve what is good in the Australian system.


  • I particularly like the idea of more fully matching healthcare costs to income. Our current Medicare Levy is woefully inadequate, and services not funded by medicare at all (eg dental, lots of mental health care) are major health issues. I understand the fears about insurance companies (a good friend is an escapee from the USA system where her family practice was based in a hospital and the drugs she could prescribe were dictated by the insurer, plus many people could not afford insurance…), but if we could properly outline their role, it could work here. But not state by state – I think it would have to be federal, and there lies a big barrier….


    • In the earlier days of Medicare (1983 onwards), I believe that the Medicare levy raised only about 1/9th of the actual spending on Medicare, with the other 8/9th coming from consolidated revenue. I am interested to see in this report from the Australian Parliament that with increases to and the surcharge on the Medicare levy, the proportion of spending that is raised by the levy has increased:


      “In 2011–12, the levy raised around $9 billion in revenue, only partially offsetting the cost of Medicare services, which totalled around $17.6 billion.”


  • Pieter my vriend – you assume wrongly. I have a problem with the change in the ethical dynamics. The original model was that a patient came and saw you, you figured out their medical needs and how to deal with it. Decisions are therefore based on the medical need during the visit and the punter paid you. Sure the punter might be insured but that is between them and their insurer – really nothing to do with me.

    The new arrangement has an insurer, who is in it for the money and nothing else, dictating every step of the interaction. A situation where a consultation is taken up by filling in insurance forms in order to reach KPIs, to the point where the actual medical reason for the visit is rushed through as an afterthough sounds like terrible medicine to me. I clearly remember years back in South Africa where I had to call a Nurse at the insurer to ask for permission for a simple procedure such as funding for a PAP smear – she would make me wait while she went through her paint by numbers checklist and if she did not give me the magic approval number the punter was out of pocket. Off course then we had to get ICD10 codes on everything and CPD4 billing codes on every visit not to mention annual limits on consult, investigations, acute meds, chronic meds, etc

    This was and still is the case with private medicine in South Africa – the Australian Government is not known for wise decision regarding these type of matters – you give them the pinkie they will grab the whole upper body and medicine will never be the same again.

    We are already seeing these issues here with EPC items and incentive payments – most of these do not in the end translate into any improved clinical care and all it does is enslave us to the Insurer’s whims.

    Our local private insurers have also go a proven trackrecord that makes me very pessimistic – we have Medibank Private encouraging their patients to second guess the doctor with overseas organisations such as Best Doctors and we have frequent episodes where they bully a patient into handing his entire medical file over to the insurer prior to agreeing to fund surgeries.

    I can only say be very careful what you wish for – Australia is not the Netherlands


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