‘Live free or die’

August 5, 2014

I was recently in New Hampshire, a small state on the east coast of the United States. Besides the magnificent scenery, the state is characterized by a collective sense of independence. Which stems from the struggle for independence against the British in the 18th century. The proud motto ’live free or die’ is shown on every license plate of cars from that state. A motto that reveals itself in an attitude of loathing any form of patronizing on the part of a central government. The Affordable Care Act (Obama care), health insurance available to everyone, therefore meets with little support in this state.

Live free or die. It crossed my mind during the discussion on ‘free choice of doctor’ and the adaptation of the medical insurance act. The total health care costs can be controlled through competitive contracts with care providers that have been selected by the health insurer. This also expresses itself in a lower monthly premium for the insured for a nice complete basic health package. We Dutch appreciate that. As it is, we do not like to take risks. We prefer to cover as many risks as possible and are also willing to pay for this accordingly. It is not our habit to be uninsured and moreover, it is prohibited by law.

The live free or die principle therefore meets with little support where it concerns our health. And we are actually quite satisfied with our health care sector and we prefer to stay in a hospital nearby. Even if it means paying more per month and even if the care is strictly regulated by the government.

Opponents to this proposal point out a new restriction in one's options. The health insurer, not the most popular player in the health field to begin with, might just ‘send a resident of one city to some other city because it is cheaper there’. Is this a realistic fear? That is yet to be seen. The potential of the system is the fact that health costs are, to be sure, more easily controlled thanks to the additional stimulus to competitively negotiate the price and the performance. A good plan so far, in my opinion.

But take actual practice. As it is, the relation between individual price and performance is extremely limited. It proves to be unfeasible to annually agree on a price per hospital for all of the health care treatments based on a fully objective review. And what should you include in the cost price? How do you take the quality into account in the price? Who will verify this? Is the data correct? Which is why many health insurers negotiate with the hospital on a total package or a contract sum. This means that there is much mutual price differences between the hospitals per individual treatment, but that it comes down to the total amount in most cases. As a consequence, a hospital will increase or lower its budget accordingly based on rates in the past that, unfortunately, cannot be verified with sufficient objectivity. Many institutions are not able to calculate what an operation costs. An ‘educated guess’.  Both parties know this and so they therefore agree on a package price of sorts and spread the risk in this way. And so the extreme case in which I can have my knee operated on in hospital A, but not my hip, is not going to happen. The total package price will probably be reduced somewhat. Goal achieved! But whether this means that the contract care policy will be considerably cheaper remains to be seen. The contract care policy is a good idea. What is left, are the details.

This blog was previously published on Skipr.

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