Managed competition in the Dutch Health Care System: Preconditions and experiences so far

In the early 1990's the Dutch government started to replace supply-side regulation in health care by managed competition. The idea of managed competition is that insurers and providers of care compete on price and quality while the government establishes certain rules to guarantee public objectives. The ultimate goal of the reforms is to achieve a health care system in which incentives for efficiency are combined with universal access to good-quality care. For successful application of managed competition, however, some important preconditions need to be fulfilled. This paper describes these preconditions and discusses how and to what extent they are fulfilled in the Netherlands. Special attention will be paid to the corner stone of managed competition: risk equalization. An important lesson from the Netherlands is that fulfilling these preconditions is a long process. The experiences so far reveal some positive effects as well as some serious issues that need to be solved.