Going Dutch — Managed-Competition Health Insurance in the Netherlands

On January 1, 2006, the Dutch government enacted the Health Insurance Act, under which every person who legally lives or works in the Netherlands is obliged to buy, from a private insurance company, individual health insurance whose benefits are specified by law. Alain Enthoven and Wynand van de Ven write that this kind of model would be well suited to the United States. Twenty-five years ago, the health care system of the Netherlands was operating under top-down cost-containment policies, such as regulation of doctors' fees and hospital budgets, that were widely criticized for lacking incentives for efficiency and innovation. In 1986, the Dekker Committee, an independent group appointed by the Dutch government to seek a solution, recommended market-oriented reform within the context of a national health insurance system. But before the concept could be implemented, a host of adequate systems had to be developed — systems of risk equalization, of product classification and medical pricing to give providers appropriate incentives for efficiency, of . . .