Competition in the Dutch Health Care Sector

Abstract

textabstractFor more than two decades, Dutch health policy has been marked by a search
\nfor a suitable market order in health care. Suitable in the sense of maintaining
\nuniversal access, containing the growth of health care expenditure and
\nimproving the technical and allocative efficiency of health care delivery. This
\nsearch was spurred by the seemingly uncontrollable escalation of health care
\nexpenditure during the early 1970s. The solution initially put forward to
\ncontrol health care cost inflation was that of comprehensive government
\nplanning. Although the envisioned sophisticated health planning largely failed,
\nthe government did manage to gain substantial control over total health care
\nexpenditure by unilaterally imposing restrictions on the capacity and operating
\nexpenses of inpatient care institutions. However, the adverse consequences of
\nsuch a top-down rationing strategy were the subject of growing criticism.
\nHealth care was thought to be too inefficient due to detailed government
\nregulations which impeded cost-effective substitution of care (technical efficiency),
\nprovision of 'tailor-made' care to consumers (allocative efficiency) and
\nquality-improving and cost-reducing innovations in the organization and
\ndelivery of care (dynamic efficiency). Since in many industries the market
\nmechanism is seen as the most successful device for enhancing efficiency it is
\nnot surprising that the search continued in the direction of a more marketoriented
\nhealth care system. Therefore, since the mid-1980s, competition has
\nbecome the new 'buzzword' in health policy. This change of direction was in
\naccordance with a much broader international reorientation of social policy
\nunder the banner of 'more market, less government' which is steadily undermining
\nthe Dutch corporatist welfare state. For a long time, however,
\ncompetition was widely regarded as an unsuitable mechanism for determining
\nresource allocation in health care. Competition was generally considered as
\nhaving adverse effects on not only access and equity but also on efficiency, due
\nto the presence of pervasive information problems. This raises the question of
\nwhy the expectations on the role of competition in health care have changed
\nand whether there is some reason behind this rhetoric.
\nIn this thesis the role and feasibility of competition in the Dutch market for
\nhealth insurance and medical care are investigated. Competition is an elusive
\nterm, one which is used to describe either a particular market structure or a certain type of conduct. In the latter case, competition may cover all aspects of
\na commodity but could also be restricted to specific aspects, non-price
\ncompetition for instance. In this thesis the term competition will be used to
\ndenote rivalry among sellers of a commodity for the patronage of potential
\nbuyers where rivalry concerns both price and non-price aspects of that
\ncommodity.