When it comes to health insurance, lets go Dutch

IT is good for consumers of private health insurance to have competition in the market, but the mechanism of achieving price competition is important for a fair and equitable market to evolve.

Indeed, there are various regulations in place within the market that attempt to prevent companies making profits based on an individuals health risk.

Risk equalisation is just one of those, but the current law in this regard has now been found inadequate.

Professor Alain Enthoven of Stanford University, California, one of the worlds most respected health economists and supporter of competition in healthcare, indicated in his 1993 paper on managed competition that risk equalisation was one of the key cornerstone regulations of competition in a health system financed through health insurance.

In January 2006, the Netherlands was the first country in the world to introduce a managed competition system. Dutch law dictates that health insurance companies now have a duty to ensure delivery of efficient, quality healthcare to their members and are not just insuring against health care cost.

Individual and group purchasers of insurance are expected to move to companies that achieve such goals.

Indeed, the Dutch government is planning a market where it will in fact be beneficial for insurance companies to seek older individuals with chronic conditions.

This is being achieved through the risk equalisation scheme, where a proportion of each individual’s insurance premium is deposited in a central fund that then allocates risk-adjusted payments to insurance companies, compensating them for high-risk individuals.

A company with lower risk individuals does not directly compensate a competitor with higher risk membership as the scheme here proposed.

The Dutch risk equalisation system is a far fairer system for competing companies.

In Ireland, because selection of lower risk individuals is prohibited, the companies advertise health and other products that attract younger consumers, a form of risk selection known as market segmentation that has assisted Quinn and Hibernian to have a younger membership than VHI.

All proponents of managed competition strongly recommend combating such activities, and in the Netherlands this is achieved through regulations, including risk equalisation.

It would make a difference to see health insurance companies advertising products for those members of society most often in need of health care, older individuals who have contributed and continue to contribute to society in so many ways.

I believe we should follow the principles of the universal Dutch health insurance system. Lets at least consider going Dutch.

Dr John Barton

Beechlawn

Ballinasloe

Co Galway