The Netherlands and Switzerland both used government-regulated insurance marketplaces to achieve universal coverage. That got health policy experts Ewout van Ginneken and Katherine Swartz thinking: Maybe those countries have something to teach the United States about the marketplaces we’re about to start setting up, the health care exchanges.
Indeed they do. In a new piece for the New England Journal of Medicine, they outline some of the key lessons to take away from the European experience. First up is the importance of “risk adjustment.” That’s the term health wonks use to describe regulations that create some kind of financial reward for the health plans that take on the really sick – and really expensive – insurance subscribers. It’s pretty dull stuff, but van Ginneken and Swartz argue that it’s incredibly important.
The Dutch and Swiss experience indicates how critical a good risk-adjustment formula is. Until January, the Swiss risk-adjustment system had been relatively crude and ineffective: there were large premium differences both within and among cantons. Switzerland has just added prior hospitalization as an adjustment factor, and adjustments for patients’ medical conditions will follow. The Dutch have a more sophisticated formula based on 20 years’ experience, which thus far has discouraged insurers from engaging in risk selection.
The other key challenge is actually enforcing a requirement that all individuals purchase health coverage. “Both countries also struggled initially with increases in the proportions of uninsured people,” they write, “Due to problems with enforcing the requirement that everyone must obtain coverage, and additional government measures were required.”
That point could prove especially true here in the United States where, as my colleague Sandhya Somashekar pointed out last month, a lot of Americans are not exactly thrilled with the idea of an insurance mandate.