Room for increasing competition among health insurers

Are health insurers sufficiently setting themselves apart so that consumers have an actual choice? Is market entry made unnecessarily difficult for new health insurers? Are the insurance products of health insurers too complicated for consumers to make an informed decision? These three questions have been raised following the interim report on competition between health insurers carried out by the Netherlands Authority for Consumers and Markets (ACM). They will form the starting point for the final report. ACM will be taking a closer look at health insurers this year.

Chris Fonteijn, Chairman of the Board of ACM, explains: “Having excellent and affordable health care is of vital importance to all consumers. Competition between health insurers will lead to consumers having actually something to choose from. We believe that there is still plenty of room for improvement in that respect. We will be looking into that in greater detail together with the Dutch Healthcare Authority.”

Health insurers play a leading role in the health care market

Health insurers have a key role in making sure the Dutch health care system remains accessible, affordable, and of high quality. Consumers choose the health insurer that best meets their health care needs. In order to keep health insurers sharp, it is crucial that the market stays sufficiently dynamic. One way to ensure such dynamism is by stimulating consumers to switch. Another way is to promote new or growing health insurers that introduce new products in the market. Having products that are clear and easy-to-understand is helpful in sustaining that dynamism. It intensifies the competitive pressure on health insurers. It also stimulates them to negotiate, in the interest of the insured, with health care providers such as GPs, visiting nurses or hospitals for high-quality health care at a competitive price.

Room for differentiation

The Dutch health care system is based on solidarity between the healthy and the sick. That is why the basic health insurance package is mandatory and the same for all Dutch citizens. Health care laws and regulations safeguard the principle of solidarity, but at the same time also limits the ability of health insurers to separate themselves. Moreover, health insurers also seem to respond to political and public pressure not to make any distinction between individuals. Yet in spite of all these restrictions, there is still enough room for health insurers to separate themselves. They can do so with their product ranges, but also with the service they provide to their customers. It seems as if health insurers do not take full advantage of these opportunities. As a result thereof, variation among health insurance policies is rather small.

No new health insurers, few switchers

New entrants may be able to keep the incumbent health insurers on their toes. Since 2006, no new health insurers have entered the market. One of the possible reasons thereof is high barriers to entry. In addition, almost 70 percent of all insured have never switched. This could be explained by the large variety in policies where it is not always easy to tell the differences between them. That in turn makes it difficult for consumers to make the best choice, thereby making it harder to stimulate competition among health insurers. ACM will study what barriers to entry can be eliminated, and will look for options to make the offerings of health insurers clearer.