Consumers in the Netherlands are obligated to buy basic health insurance every year. This is a costly product and the policy can not be cancelled mid-term. It goes without saying that it should be clear to consumers which different health insurance and other policies are on the market and how they differ from each other. Health insurers are therefore required to set out their policy offerings clearly and in good time. There is no shortage of health insurance policies: the Netherlands currently has ten health insurers (groups) controlling one or more labels, insurers or proxies. Out of all consumers in the Netherlands who have health insurance in 2023, 84% are insured with one of the four major health insurers (Zilveren Kruis (Achmea), CZ, VGZ and Menzis). At the same time, as many as 59 basic health insurance policies can be taken out from 20 health insurers (from 10 groups) in the Netherlands in 2023. Consumers can select numerous options and supplements for each of these basic health insurance policies.
Too much choice can have a negative impact – all the more so in the case of a sham choice. A sham choice makes it difficult to choose a health insurance policy, making it less likely that consumers will switch to another health insurance policy. As a result, consumers do not always get the healthcare or healthcare policy that fits them, according to the Dutch Healthcare Authority (NZa). Moreover, according to the Dutch Consumers’ Association, sham choice has a negative impact on competition between health insurers: in a soundly functioning, transparent and competitive market, the health insurer with the best offer is rewarded. In the case of a sham choice, the best offer may get overshadowed. The fact that health insurers experience less or suboptimal competitive pressure also makes them less inclined to set a competitive premium and develop better policies, according to the Netherlands Authority for Consumers and Markets (ACM).
As far back as 2015, the Dutch Consumers’ Association already reported that consumers could choose between more than 1,400 (mostly identical) healthcare policy combinations. These healthcare policy offerings are growing continuously, without increasing consumers’ effective choice. Indeed, many health insurers’ policies are (very) similar and some policies are even virtually identical. This forest of policies and the associated sham choice has been known as the ‘policy jungle’ for many years. The NZa, ACM and the Dutch Consumers’ Association have been noting for many years that the policy jungle is problematic (see our earlier blogs here, here, here, here, here, here and here). At the same time, neither the NZa nor ACM has been able to eradicate that policy jungle. Indeed, the policy jungle is even growing, according to the NZa.
In this blog, we address the new NZa rules meant to curb the policy jungle. We also explain why those rules are foreseeably inadequate. We then put the NZa’s and ACM’s approach to the policy jungle – or rather the lack thereof – in context. We demonstrate why this fits a pattern of the past 15 years, in which the NZa and ACM have handled health insurers with kid gloves and have granted them an ongoing ‘regulatory holiday’.
Much attention for the policy jungle, but lack of enforcement
Dutch Consumers’ Association
According to the Dutch Consumers’ Association, consumers can no longer see the wood for the trees when choosing a healthcare policy. It therefore launched the Polis Jungle Campaign, calling attention to this problem. Over the years, the Consumers’ Association has frequently reported that the policy jungle is still unresolved: see here, here, here, here, here, here, here and here. In 2017, it came up with the term ‘clone policies’: healthcare policies that are almost identical to each other and therefore confusing for consumers. According to the Consumers’ Association, these policies should be abolished. Its call to address this problem was heard by ACM and the NZa.
ACM
ACM reported in 2018: “Some 9.8 million premium payers have a basic policy for which a cheaper, (almost) identical alternative exists. This is because it is difficult for consumers to compare basic policies and it takes a lot of effort to make a choice.” ACM furthermore reported in 2018 that it is difficult for consumers to make comparisons between policies because the range is very large and there are sham differences (‘clone policies’). ACM believes that health insurers and policymakers should make this easier. But ACM has nevertheless failed to arrange for a concrete solution, since the policy jungle has continued to grow as ever. It is certainly remarkable that ACM allowed this to continue for years – all the more so because, outside healthcare, ACM invariably takes decisive action against misleading or false choices for consumers. One example is its supervision of misleading sustainability claims and sustainability labels (see also here). Moreover, ACM has been imposing (high) fines for years for violations of the rules that apply when selling non-compulsory products or services to consumers, such as energy contracts, rental mediation, bicycles, mobile phone contracts, kitchens and spam. Precisely in the case of basic health insurance, which is an annually compulsory and expensive product that cannot be cancelled mid-term, adequate action by ACM should be expected. Not least because the healthcare premium increases every year and will continue to increase in the future. This makes the (financial) importance of effective supervision and prevention of sham choice all the greater.
NZa
In a 2017 report by ACM and NZa on the policy jungle, it was already noted that the NZa has not yet enforced existing rules with regard to healthcare policies and suggested that it could (more strictly) enforce existing rules (see pp. 41 et seq.). The NZa has failed to do so. However, the NZa has since then regularly reported an increase in the number of healthcare policies: see here and here. The NZa has also repeatedly acknowledged that sham choice in healthcare policies is undesirable for consumers, but has failed to take enforcement action. However, the NZa did make unsuccessful (non-committal) requests to health insurers for years to make their range of policies more transparent, to reduce the number of health policies with too few differences, and to introduce only policies that offer a substantive addition. Despite these requests, the number of policies increased again in 2022, according to the NZa. Requests to health insurers do not suffice to effectively combat the policy jungle. In April 2023, the NZa again reported that consumers were having difficulty making an informed choice of health insurance, partly due to policies that are very similar. In that report, the NZa also revealed that it expected health insurers to publish ‘clone policies’ all together in one overview next year.
NZa Regulation on the provision of information to health insurers: another missed opportunity
In June 2023, the NZa published a new version of the Regulation on the Provision of Health Insurance Information to Consumers (the ‘New Regulations’). In the New Regulations, which will enter into force on 1 November 2023, the rules on the provision of information on healthcare policies have been tightened. Health insurers are obligated to publish an overview of “identical’ or "similar” policies with their policy offerings. According to the NZa, policies are similar if there is a limited difference in the contracted supply or little difference in the level of reimbursement for non-contracted care. Health insurers must list these identical or similar policies all together in one single overview. The following conditions apply:
- The overview must be published on all relevant communication channels of the health insurer.
- The overview must be published in a directly visible place where the health insurers’ policy offerings and premiums can also be found.
However, the New Regulation make no mention of reducing, let alone banning, very similar policies, despite the fact that the NZa again acknowledged the problem in the New Regulation: “In practice, we see that policies sometimes differ very little from each other, while that is unclear to consumers. This gives rise to the risk of consumers choosing a policy on incorrect grounds, when a better choice is available to them from the same insurers or group.”
Why are the rules set by the NZa inadequate? We list some examples below:
- Publishing an overview of available (identical) policies does not in itself reduce the number of (clone or twin) healthcare policies. To ensure that consumers can easily make an informed choice (and health insurers compete more effectively), clone policies must be banned. This is also in line with the signal given by the Dutch Consumers’ Association. See, for instance, here, here and here. Putting up a “You’re in the jungle” sign does not solve the problem for consumers: the obligation therefore primarily combats symptoms, rather than sources.
- Moreover, the effectiveness of the New Regulations in combating the policy jungle is foreseeably limited, because a large number of consumers usually take out their health insurance with the help of price comparison tools, such as Independer, Zorgkiezer or Pricewise. A study by ACM has shown that in both 2022 and 2023 some 34% of consumers took out their health insurance by using a price comparison tool. Moreover, in 2023, some 58% of consumers used a price comparison tool when looking into on a new health insurance. The New Regulation does not apply to price comparison tools. Since the New Regulation does not ban clone or twin healthcare policies, the number of trees in the policy jungle will not decrease, also not on price comparison websites. In short, a large number of consumers will not benefit from the new NZa rules.
- The New Regulation furthermore gives rise to the question whether it is desirable to allow health insurers to assess themselves whether their policies are similar. Which makes them judge and jury. It was precisely these ‘judges’ that previously proved unwilling to respond to repeated calls by the NZa to stop offering clone or twin healthcare policies.
In light of the above, the New Regulations primarily seem to be a missed opportunity to finally combat the policy jungle effectively. Does this approach stand alone? We believe it does not.
Regulatory holiday for health insurers continues
The NZa’s and ACM’s failure to take any or adequate enforcement action against health insurers is not a new development. An objectively measurable pattern can be discerned (see our earlier blogs here and here). The NZa and ACM identified various problems in the health insurance market in the past but have failed to take adequate enforcement action. Instead of effectively supervising health insurers, the NZa and ACM set their sights on healthcare providers (see here and here). The following are some examples of this pattern:
- The NZa revised its 2019 Regulation on the Provision of Information by Health Insurers to Consumers (the 2019 Regulation). They were replaced by the NZa 2022 Regulation on the Provision of Information by Health Insurers to Consumers (the 2022 Regulation). The 2019 Regulation referred to the aim of ensuring that health insurers provide information on the characteristics of products and services offered in such a way “as to be usable and allow consumers to base their choice on it.” Instead of taking concrete steps based on the 2019 Regulation to combat the policy jungle or set more specific rules, the NZa took a different approach. On the introduction of the 2022 Regulation, the mandatory rules on the provision of information by health insurers were in fact made less specific, and the NZa opted for the use of open standards; see this blog. At the same time, the NZa (again) unsuccessfully asked health insurers to reduce the number of (clone or twin) healthcare policies.
- The enforcement of the NZa Regulation on Transparency of the Healthcare Procurement Process under the Health Insurance Act (the Healthcare Procurement Regulation) is another case in point. Practice has shown that, year after year, health insurers have failed to comply with this short and simple set of binding NZa healthcare procurement rules: see here, here and here. It is also noteworthy that the imposition of penalties on health insurers by the NZa is remarkably often delayed for a (very) long time. Even if a sanction is imposed for a breach established by the NZa, it starts by giving warnings for a long time. It warned, for instance, VGZ (several times), Menzis, DSW (again in 2021), Zorg en Zekerheid and EUCARE. Very occasionally, the NZa has also imposed low and substantially mitigated fines, for instance on VGZ (again in 2021) and De Friesland Zorgverzekeraar. More information on those fines can be found here and here. The low fines did not prevent health insurers from reoffending in 2022/23; see here. Inadequate enforcement leads to health insurers not adjusting their behaviour; see also here. Meanwhile, the NZa is refusing to pay attention to warnings it issued to Zilveren Kruis and Zorg en Zekerheid for violations of the Healthcare Procurement Regulation on www.nza.nl. This approach means that effective compliance with mandatory healthcare procurement rules by healthcare insurers has been absent for years and that violations continue to recur.
- The lack of NZa enforcement is also apparent in the duty of care/healthcare procurement duty of healthcare insurers. On 2 March 2023, the NZa reported that in its opinion fines were not a solution in its supervision of compliance with the duty of care. Earlier, the NZa had waved away our criticism about the lack of NZa enforcement of that duty. That criticism does not stand alone. Read more about it here and here. Moreover, the picture painted by the NZa is incorrect, since the NZa is authorised to act by issuing an instruction or an order subject to a penalty, or by taking administrative enforcement action. Moreover, a forfeited penalty payment has the same financial effect as a fine and is often effective. Be that as it may, the NZa has refrained for years from using its instruments to enforce the duty of care incumbent on all health insurers – despite the fact that the waiting lists in the mental health sector, among others, are increasing, with all the social consequences this entails; see also here. In August 2023, ESB reported that if the mental health waiting time could be reduced by one month, that would save more than three hundred million euros a year.
- The inadequate enforcement by the NZa and ACM is also apparent with regard to the significant market power (SMP) of healthcare procurement officers. SMP means that a care administration office or healthcare insurer may act to a significant degree independently of competitors and consumers’ wishes. The NZa has the authority to (urgently) impose certain obligations on a care administration office or health insurer with SMP, such as the obligation to be transparent in healthcare procurement or policy offerings. The fact that a care administration office has SMP should not come as a surprise. At the same time, health insurers have SMP in their core area of operation in relation to certain primary care providers. Although for years there have been regular complaints about abuse of market power by healthcare procurement officers, ACM points in such cases to the NZa, which does not use its SMP-instrument to do so. The NZa has so far imposed SMP-measures only on healthcare providers; see also here and here. Care administration offices and health insurers have so far had little to fear from the NZa’s SMP-instrument.
In short, the NZa and ACM are adopting a similar approach to the policy jungle as to the Healthcare Procurement Regulations the duty of care/healthcare procurement duty, and the supervision of abuse of (procurement) market power by healthcare procurement officers. No action is being taken against those healthcare procurement officers, or at best they are being handled with kid gloves. However, the NZa and ACM have had the right and ability (either individually or jointly) to eliminate the policy jungle in the short term for years; see here. This is not only a problem for consumers, who are overpaying (each year) for healthcare policies: it is also damaging the credibility of the NZa and ACM. Regulated competition in the healthcare sector stands or falls with regulators that are willing to act against market distortions. This applies in particular to the sham choice involved in the policy jungle. Effectively combating the policy jungle remains crucial to allow consumers to make informed choices and to increase effective competition among health insurers.
More information can be found at www.zorgcontractering.com.
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