MscBA Master Thesis
A Sustainable Health Care System
in the Netherlands
-‘The Influence of Individualism and Power Distance
on the Policy Process’
By
Bas Dijkstra
University of Groningen (RuG)
Faculty of Management and Organization
MscBA Strategy & Innovation
Summary
Index
Introduction ... 4
Chapter 1: Theoretical framework ... 8
1.1. Health care policy... 8
1.1.1. The policy network... 8
1.1.2. Legitimacy... 10
1.1.3. Stages in the policy process... 10
1.2. Policy characteristics... 13 1.2.1. System dimensions ... 13 1.2.2. Process dimensions... 14 1.2.3. Speed of decision-making ... 15 1.3. Cultural characteristics ... 16 1.3.1. National culture ... 16 1.3.2. Political culture... 16 1.3.3. Cultural dimensions... 17 1.4. Conceptual model ... 19
Chapter 2: The policy process ... 20
2.1. The Dutch health care system ... 20
2.1.1. The old system: 1941 - 1986 ... 20
2.1.2. The old system: 1986 - 2006 ... 24
2.1.3. The new system in 2006 ... 29
2.2. Health care systems in other nations ... 33
2.2.1. France ... 33
2.2.2. Germany ... 34
2.2.3. The United Kingdom ... 36
2.2.4. New Zealand... 38 2.3. Comparison of nations ... 42 2.3.1. Privatization ... 42 2.3.2. Marketization... 43 2.3.3. Decentralization... 45 2.3.4. Financial foundation... 46 2.3.5. Institutional setting ... 46 2.3.6. Intensity of reform... 47 2.3.7. Decision-system ... 49
2.3.8. Relative health care expenses ... 50
2.3.9. Comparison framework ... 51
Chapter 3: Culture's consequences ... 52
3.1. Individualism and the Health care system ... 53
3.1.1. Statistical results and relations... 53
3.2. Power distance and the policy process ... 56
3.2.1. Statistical results and relations... 56
3.3. Conclusion ... 59
3.3.1. Individualism... 59
3.3.2. Power distance... 60
Discussion and Critical Pointers ... 62
Recommended literature ... 64
Appendix I: Interview questions ...Error! Bookmark not defined.
Introduction
The subject of this paper is a particular area of government policy in the Netherlands, namely the policy on health care. On the first of January 2006, a new health care system was introduced in the Netherlands. A health care system can be seen as the organization by which health care is provided. The new system is an example of an innovation in government policy. Although the Dutch government has a constitutional obligation to secure health care for every citizen, various responsibilities are shared with the providers of health care and the health care insurers.
A classic definition of innovation is “the process of making improvements by introducing something new” (Wikipedia ‘certified’, 2006). The goal of the policy process is the improvement of conditions for various societal groups. The introduction of new laws which regulate the health care system can be seen as the introduction of something new. Innovation is an integral part of this paper. The intensity and the scope of reforms in the health care system capture how innovation is incorporated in the health care on a high aggregation level.
An additional definition of the concept of innovation is introduced by Peter Drucker (1985). He defines innovation as “change that creates a new dimension of performance” (Drucker, 1985, pp. 19). The new health care system was designed to do precisely that. Market competition is promoted in all market systems in the health care sector. As an effect freedom of choice grows considerably. The old system, with all its changes over time, could not ensure the performance of the health care sector necessary to prevent from overheating or system-collapse. The prominent elements of the new system are expected to create a new level of performance through regulated market mechanisms. In addition, a basic insurance for every citizen is introduced to give clarity in prices and to accelerate competition between insurers.
The terms health care provider and health care insurance are frequently used in this paper. A short clarification is therefore given. A health care provider is anyone who provides health care to others as a profession. Health care providers include physicians, nurses, physician assistants, nurse practitioners, homeopaths, and the like. Hospitals as institution are also considered to be health care providers in this paper. Health insurance is a prepayment plan providing direct services or compensation for medical care. It is provided by voluntary plans, either commercial or nonprofit, or by compulsory national insurance plans. Several possibilities are mentioned in the remainder of this paper.
The Dekker committee proposed a mixture of two models in the health care system. Firstly, a public model in which the government dominates health care policy making. Secondly, a model of market competition which favors decentralized decision making (Kickert et al., 1995). The report initiated the start of a process of policy formulation and implementation that took twenty years to conclude. During these years some incremental changes in policy were gradually implemented, but the innovation of the new system took two decades to be conceived and finalized.
There are many contextual forces that could have influenced the stakeholders in the policy process leading to a new health care system. One of the most basic forces that could have influenced the policy process comes from culture. “Culture consists of systems of values, attitudes, beliefs and behavioral meanings that are shared by members of a social group (society), and that are learned from previous generations” (Thomas, 2002, pp. 30). I contend that specific aspects of the cultural state in the Netherlands have influenced the policy process and its stakeholders. This contention has led to the following research objective.
Research objective
“Analyzing the influence of Dutch culture on the choice for –and the implementation of the new Dutch health care system”
care policy. These two cultural dimensions are individualism and power distance, and together they form the context of policy process in this paper. The main research question follows from this.
Main research question
“What is the influence of individualism and power distance on the policy process concerning the Dutch health care system?”
In the remainder of this paper this research goal is pursued through the analysis of the process that has led to the introduction of the Dutch health care system in 2006. For the analysis of health care policy two types of policy dimensions are used, namely process dimensions and system
dimensions. These dimensions are also introduced in the first chapter.
Comparison with other national cultures and policy processes are made to strengthen this research. This means that the policy dimensions of five nations are related to the two cultural dimensions individualism and power distance in these nations. Process dimensions are linked to power distance, while system dimensions are linked to individualism. A statistical analysis is integrated in the results to test possible general relations.
In the first chapter a theoretical framework is built from which two hypotheses are detracted. In the second and third chapter an empirical study is introduced, which has the function of testing the hypotheses. The second chapter includes an analysis of the health care policy process in the Netherlands, France, Germany, the United Kingdom, and New Zealand. In the third chapter the relation between the policy dimensions and the cultural dimensions is analyzed. The third chapter ends with a conclusion. Some critical pointers and recommendations for future research are also mentioned.
Methods
In the light of this research a case study is the most appropriate method that can be used. The main research goal and the two hypotheses that are put forward in the second chapter require a research method that enables an analysis of a phenomenon that is not clearly separated from the (societal) context (Yin, 2003). To be able to analyze the influence of the two cultural dimensions on the policy process and the health care system, it is very important to use multiple sources of evidence, with data needing to converge in a triangulating fashion (Yin, 2003).
The subject of this research holds a prominent place in society. The government in any country has a responsibility with regard to health care. That is why the different aspects of the system as well as the policy process have been thoroughly documented by several (independent) expert committees and independent scientists. The two cultural dimensions which form the context of the research subject have also been given a considerable amount of attention by scientists. In this paper this documentation functions as one of the sources of information. Another source of information is gathered from archival records on culture and health care systems.
The third case study method is the semi-structured interview. Because of the complexity of the research subject and the concepts that are present in its context, it is important that interviews are conducted with various experts and stakeholders. The information gathered in well constructed interviews should prohibit the researcher to come to biased conclusions by mere use of documentation and archival records. Using these sources exclusively could lead the researcher to misinterpret the information.
The use of semi-constructed interviews leaves sufficient freedom for interviewees to add valuable comments on the matter. The interviewer should continuously keep in mind that the interviewee should be influenced by the interviewer as little as possible. This qualitative method of interviewing is ideally suited for the kind of research where the contextual influences on the subject seem unclear. This source of evidence enables the interviewer to focus directly on the research topic.
Chapter 1: Theoretical framework
In this chapter a theoretical framework is built. Several theories are combined into one model in which the proposed influence of culture on the policy process is shown. Various dimensions are used to systemize the relations. Two hypotheses are constructed in this chapter.
1.1. Health care policy
In the next paragraphs the prominent stakeholders in the health care policy process and the health care system are analyzed. The required legitimacy and the different stages in the policy process are also mentioned.
1.1.1. The policy network
Health care policy formulation and implementation are complex processes with many stakeholders. At the government level, the health care policy process is seldom the exclusive domain of the Ministry of Health (Kickert et al., 1995). Policy networks are often formed to deal with the complexity of the policy process in a way in which the different interests of stakeholders can be integrated. A policy network is a “complex of organizations connected to each other by resource dependencies and distinguished from other complexes by breaks in the structure of resource dependencies” (Hill, 1997, pp. 78). The term ‘resource dependencies’ is added in this definition to emphasize that it is not merely the case that interest groups or other stakeholders outside the government are lobbying for specific goals. Instead, the relation is one of mutual dependency.
Stakeholders in the network
In the next section the stakeholders in the Dutch health care sector are used as an example. Some differences exist between nations with regard to the stakeholders in the health care sector. This will become clear in the analysis of health care systems in other nations in chapter 2. For now, the most common stakeholders are mentioned.
In the process of policy formulation advice was provided by the Council for Public Health and Care (Raad voor de Volkgezondheid en Zorg) and the Health Council (Gezondheidsraad), as well as an interdepartmental committee for market regulation and the Socio-economic Council (Sociaal Economische Raad / SER). The SER consists of representatives of employer –and employee organizations as well as representatives of the government.
Health care insurers are represented by the health care insurer association (Zorgverzekeraars Nederland), as are the former sickness funds. The national hospital association, the NVZ (Vereniging voor Ziekenhuizen), is the representative body of the hospitals. Medical personnel are represented by trade unions and associations of medical specialists.
Perhaps the most important stakeholder in the health care sector is the consumer of health care. United consumers have entered the health care policy arena through consumer organizations (Consumentenbond) and various patient associations. Table 1.1 gives a summary of the various stakeholders.
Table 1.1 Prominent stakeholders in the policy network
Origin Stakeholder
Political actors Ministries (combined in authority group) Political parties
European authorities
Health insurance National health insurer association: -Health insurance companies -Sickness funds
Health care providers National hospital association Trade unions of medical personnel Associations of medical specialists Consumers Consumer organizations
Patient associations Advisory bodies Health care councils
SER
1.1.2. Legitimacy
In order to push a proposal for any kind of policy innovation through, legitimacy is needed by the actors who are in charge of the policy process. Legitimacy is a concept that has gained importance over the years as a factor that influences various kinds of innovations. Aldrich and Fiol (1994) distinguish between two types of legitimacy. The first one is cognitive legitimacy, which refers to the spread of knowledge about a new venture. In the case of a policy innovation, the highest form of cognitive legitimacy is achieved when the new system is taken for granted (Aldrich et al., 1994). This relates to the ‘outcome’ of the process. Both the outcome of the process and cognitive legitimacy fall outside the scope of this research.
The second type of legitimacy is sociopolitical legitimacy, “which refers to the process by which key stakeholders, the general public, key opinion leaders, or government officials accept a venture as appropriate and right, given existing norms and laws” (Aldrich et al., 1994, pp. 648). This type of legitimacy relates to the formulation and implementation of policy, and with that the ‘output’ of the process. The stakeholders that are mentioned in the paragraph 1.1.1 have to give their approval to a new health care system. Consensus within the policy network about what is appropriate will then strengthen the sociopolitical legitimacy of the proposed system. In the model that is introduced in paragraph 1.1.3, four barriers are introduced within the ‘political system’. With the passing of each of the various barriers, the degree of sociopolitical legitimacy increases.
1.1.3. Stages in the policy process
The next section gives the various stages in the policy process. Although the precise policy process differs across cases, generic frameworks do exist. The extent to which the stakeholders are actively involved in the various stages has significant influence on the output of the process: the health care system. The system consists of laws that codify all the agreements.
The proposed model of the policy process is shown in figure 1.1. In the next section this model is discussed. Although the outcome is part of this model, it is not part of the empirical analysis in this paper.
Figure 1.1 : The policy process
Sources : Based on Van Deth and Vis (1999) and Jenkins (1978)
Inputs – There exist three generic inputs in the policy process. These inputs vary from the input
of opinions and demands to support, information, and various material resources (Van Deth and Vis, 1999).
The first input is the demands and wishes of society consisting of the individual demands and wishes of the citizens. In the case of health care policy a system is demanded in which the equity of quality and accessibility of health care for every citizen is guarantied. In addition, there exists a wish for freedom of choice among citizens with regard to the choice for health care insurers and providers of health care. Together, these demands have been the starting point of the problem analysis of the system.
The second input is the societal support for a new system. This support has strong relations with the sociopolitical legitimacy. It is probable that it takes some time to find enough support within society for a complete system change. The reason for the lack of sufficient support can be the resistance to change among citizens.
Demands Support Resources Decision systems Policy network B 2 B 1 B 3 B 4 Evaluation government Evaluation society
The political system
The third input of the policy system consists of the resources that are needed to complete the policy process. These resources are man-power, money, and information that are needed to make decisions.
The political system – The core of the political system is formed by the policy network discussed
in paragraph 1.1.1 and its decision systems. These decision systems are the way in which decisions are made in the policy network. Van Deth and Vis (1999) distinguish between four ‘barriers’ that exist in the policy system. These barriers are shown as B1 to B4 in the model. The first barrier (B1) is the need for acknowledgement of the political character of the problem or demand of society. After this initial acknowledgement the societal wishes have to be transformed into political wishes. Politicians and members of interest groups are from then on trying to get their demands onto the political agenda. This quest for a place on the political agenda leads to the second barrier (B2) in the policy process, determining whether the matter has enough weight to be on the political agenda. The third barrier (B3) is characterized by the difficulty of constructing an official resolution with regard to a proposed system. The final and fourth barrier (B4) is formed by the need for actual implementation of the previously discussed resolution.
Output – The output of the policy process is a number of laws that codify the regulations and
agreements made by the stakeholders concerned with the formulation of health care policy. The health care system is the final output of the policy process.
Outcome – The outcome of the policy process is for the stakeholders to decide. The value
appreciation of the health care system is only relevant after a certain amount of time, in which the stakeholders evaluate how well the system works. The government and the other members of the policy network evaluate the system in order to make adjustments to prevent negative outcomes in the future. This evaluation is shown by the two feedback loops in figure 1.1.
1.2. Policy characteristics
In this section seven dimensions are introduced that are important to systematically analyze health care policy. Several generic dimensions are described in New Public Management (NPM) literature (Kickert 2004; Pollitt and Summa 1997; Yesilkagit and De Vries 2004). This literature is focused on public management in general, but some of these generic concepts can be used in health care policy innovation. The content of the dimensions has accordingly been altered in some instances to be specifically suited to health care policy.
A distinction is made between two types of dimensions. Firstly, system dimensions, which enable systematic analysis of the content of the health care system. These dimensions are linked to the
individualism dimension. Secondly, process dimensions, which allow systematic analysis of the
health care policy process. These dimensions are later on linked to the power distance dimension.
1.2.1. System dimensions
Four dimensions of a comparison framework by Pollitt and Summa (1997) are used to analyze the content of the health care system.
Privatization
The first is the privatization dimension, referring to the degree of transfer of state assets into private hands (Pollitt et al., 1997). This dimension shows how many of the professionals in the health care system are private as opposed to public (e.g. providers of health care and insurers).
Marketization
The second is the marketization dimension, showing the extent to which market mechanisms and competition are introduced within the public sector (Pollitt et al., 1997). In this paper this dimension is measured by the existence of market mechanisms in the health care sector.
Decentralization
Financial foundation
The way in which health care is funded is an important characteristic of health care systems. This characteristic is captured in the financial foundation dimension. This foundation can either be tax-based or insurance-tax-based. Mixed forms do exist but one of these foundations is generally dominant (OECD, 2002).
1.2.2. Process dimensions
Three dimensions are used to analyze the policy process: the institutional setting (Yesilkagit et al., 2004), the intensity of reform (Pollit et al., 1997), and the decision-system (Woerdman, 1999).
Institutional setting
The institutional setting forms the context in which the political actors make decisions about the content of a public system (Yesilkagit et al., 2004). Yesilkagit and De Vries (2004) refer to the distinction between institutional settings as being either Majoritarian democracies or consensus democracies. This institutional setting dimension is determined by national culture. Nevertheless it is closely related to the policy process. Therefore it is categorized as being a process dimension.
The Majoritarian system offers the ability to produce single-party governments. The possibility exists for the winner of the elections to receive a disproportionate amount of power in the Majoritarian setting. “Coalitions are less likely under this kind of electoral system and it can be argued that the governments formed as a result have a freer hand in enacting the policies on which they campaigned” (O’neal, 1993).
The second institutional setting is characterized by proportional representation systems which are specifically designed to allocate seats in proportion to votes. In general this leads to coalition governments, which reflect the preferences of the electorate more accurately (O’neal, 1993). Yesilkagit and De Vries (2004) have called this setting the consensus democracy.
Intensity of reform
Pollitt and Summa (1997) describe a second dimension: the intensity of reform, referring to the speed of the process, the scope of the innovation as well as the degree of radicalism of the innovation or reform. These characteristics together give an indication of the innovation intensity with regard to health care systems.
Decision-system
The third dimension is the decision-system, which ranges from elitism to pluralism. Elitism favors power being among a certain elite group which is supposed to be more capable of making the right decisions with regard to public policy (Woerdman, 1999). In contrast, pluralism favors the distribution of power between a large number of groups (Woerdman, 1999) holding stakes in the policy matter. A concept relating to pluralism is corporatism, which is the idea that a few select interest groups, who represent the demands of their grass roots, are actually involved in the policy process, to the exclusion of other interest groups (Wikipedia, 2006).
1.2.3. Speed of decision-making
The speed of decision-making was already mentioned in the previous paragraph. This speed is influenced by the institutional setting, together with the importance or weight of the output of the policy process. Health care policy is a subject that has a considerable amount of weight within society, and ideas can therefore be expected to be thoroughly scrutinized before they are acknowledged.
1.3. Cultural characteristics
This paragraph discusses culture, which forms the context of the research subject. Two cultural dimensions are discussed. These dimensions are individualism and power distance.
1.3.1. National culture
Culture is widely regarded as something that influences societies at a fundamental level. Interactions between individuals and between groups shape future values and assumptions by which these people and groups interact. Through time, these values and their underlying assumptions determine the way in which particular groups of people, like for example nations, view their environment and interact with it (Thomas, 2002). In the remainder of this paper culture is used synonymously with national culture.
Culture is something that crosses national borders and multiple subcultures can exist within one nation. Therefore the notion of national culture can not be taken for granted without further explanation. Geert Hofstede (Thomas, 2002) makes a powerful argument in favour of national culture. “He argues that because nations are political entities, they vary in their institutions, forms of government, legal systems, educational systems, labour, and employment relations systems (…) These factors influence the way in which people interact with their environment and each other and thereby condition the way they think” (Thomas, 2002, pp. 35.). Apart from this, Hofstede suggests that a nationality can have a symbolic value to citizens that influences the way in which they perceive themselves (Thomas, 2002). In addition, the distinction between culture and subculture is often made. Culture is usually reserved for societies or nations, and subcultures refer to other collectivities like families, professions, and organizations (Hofstede, 1980).
1.3.2. Political culture
Political culture is a concept that is an important part of national culture. Political culture is supposed to take shape ‘on the street’ (Berezin, 1997), and stems from general (national) culture.
Political culture can be defined as “the property of a collectivity, which encompasses patterns of
Political culture has an impact on the determination of various policy priorities, the policy process as well as the scope and content of government activity (Koff, 1980). Health care policy is strongly related to political values like ideology (Koff, 1980). This puts health care policy high on the political agenda.
In summary, the characteristics of national culture directly influence the political culture. In turn, the political culture in a nation has a fundamental influence on health care policy through the influence on political actors.
1.3.3. Cultural dimensions
Geert Hofstede (2001) has described five cultural dimensions to systematically analyze culture. These dimensions have proven to be applicable throughout the world. They are not arbitrary but instead need to be viewed as tools that enable scientist to analyze cultural topics that are work-related as well as work-related to pure social life. Two of these dimensions and the values found by Hofstede (1980) are used to analyze the influence of national culture on the health care policy process.
Individualism
The first dimension is individualism, which is measured on a bi-polar scale that ranges from ‘individualistic’ to ‘collectivistic’. Individualistic societies can be seen as “societies in which the ties between individuals are loose” (Hofstede, 2001. pp. 225). In these societies people are expected to look after themselves and their immediate family only. On the other side of the spectrum is collectivism, which can be seen in “societies, in which people from birth onwards are integrated in strong, cohesive in-groups, which throughout people’s lifetimes continue to protect them in exchange for unquestioning loyalty” (Hofstede, 2001. pp. 225). Hence, widespread solidarity is a characteristic of collectivistic nations.
I therefore contend that the level of individualism influences the content of a health care system. This has led to the following hypothesis.
Hypothesis 1: The content of the Dutch health care system in its current form is influenced by the level of individualism in the Netherlands
Power distance
The cultural dimension power distance shows strong parallels with the process dimension
decision system. The main difference can be found in the scope of the dimensions. The decision
system dimension is specifically focused the number of relative powerful groups, where the power distance dimension focuses on the distance between powerful and less powerful.
Power distance depicts the degree of inequality of power between certain individuals or groups. Power distance is defined as the difference between the extent to which actor A can determine the behaviour of actor B and the extent to which B can determine the behaviour of A (Hofstede, 1980). This bipolar dimension can range from monolithism to pluralism. At the monolithic pole, culture is characterized by the fact that power is held by few dominant actors. At the pluralistic pole competition between actors is encouraged, which as a consequence means that power distance can be expected to be small, because actors can freely acquire information from independent sources and actors can, for instance, join several organizations (Hofstede, 1980). As a consequence power is distributed more evenly between the powerful and less powerful.
The level of power distance is average in the Netherlands. It is conceivable that this level power distance makes decision systems relatively democratic. The equality in power causes intense negotiation between relative equals which slows down the policy process. This results in a system that favors the wishes and interests of all stakeholders, which influences the speed of the process. This proposed relation leads to the following hypothesis.
1.4. Conceptual model
In figure 1.2 the conceptual model is shown. The single arrows show the influence of culture on the stakeholders and through them the policy process. The grey ovals show the stakeholders that are involved in the policy process. Double arrows between them show that there exist mutual dependencies between all the stakeholders. The policy process is analyzed in chapter two. The hypotheses in this chapter are tested in the third chapter.
Figure 1.2 : Conceptual model The policy process
It should be stressed that the framework by Hofstede functions as a tool to achieve insight in the influence that the two cultural dimensions may have had on the policy process that has led to the introduction of the new Dutch health care system. The analysis of the Dutch culture is by no means a goal by itself. Rather, the proposed dynamics and the current state of the Dutch culture are supposed to enable scientists to compare the influence of the two dimensions on health care policy. The cultural dimensions and policy dimensions are used to give an indication of the relation between culture and the health care policy process. This research paper is only meant to be an exploration. The sheer size and complexity of an analysis of the Dutch national culture alone already falls beyond the boundaries of this research.
Political system
Political actors
Advisory bodies Consumers
Political culture
DUTCH NATIONAL CULTURE
Care providers Health insurers
Health care system
Chapter 2: The policy process
The theoretical foundation of this paper was introduced in chapter 1. A generic model of the phases of the policy process was given. So were various dimensions that allow systematic analysis.
An empirical analysis is made in chapter 2 in order to give insight in the policy process and the influences to which the process is subject. The Dutch health care system and the process that has led to the current system are analyzed in section 2.1. The starting point of the analysis is the period after the Second World War (WW II). During that period the health care system as we know it was initially structured. Some of the roots of this old system can however be traced back to the beginning of twentieth century.
The health care systems of four other nations are analyzed in section 2.2. In section 2.3 the Dutch health care system and policy process are compared to those in other nations with use of the dimensions that were introduced in chapter 1. The similarities and differences between the systems are used in chapter 3 to compare to the level of individualism and power distance of the nations. In this way relationships between the policy dimensions and the cultural dimensions become apparent.
2.1. The Dutch health care system
The Dutch health care system of private initiative, insurances, and government regulation originates in the second half of the twentieth century (Boot et al, 2005). This system had many resemblances with the system at the beginning of this century. In the following text the policy process together with the development of the health care system is shown. This text is structured in sections that show the development of health care policy during specific periods.
2.1.1. The old system: 1941 - 1986
Private initiative
In the system preceding WWII the central Dutch government was confronted with lack of State supervision. Municipalities were incapable of supplying health care. Private initiative was developing at a much faster pace than the initiative by municipalities (Boot et al., 2005). Citizens formed collectivities to address the problems of health care themselves, seemingly not able to wait on initiatives by the government. The municipality law obligated the municipalities to construct regulation in health care supply (Boot et al., 2005), but the committees that were responsible were unable to produce solid regulations.
Sickness funds were an important form of private initiative. The central government was not able to implement a law that could replace the resolution and provide legal structure to the responsibilities and rights of these funds until 1945 (Boot et al., 2005). These formalizations were starting point of the cooperation between private actors and the government.
Legal foundation: Health law, Sickness fund law, and AWBZ
The situation after the war forced the central government to take action and to try to bring order and coordination to all activities with regard to health care (Boot et al., 2005). Committees with the task to structure a new health law were installed. The old health law dating back to 1901 could not be united with the development of private initiative in health care. A consultative council, called the ‘Centrale Raad voor Volksgezondheid’ (CRV, central council for the public health), was installed to facilitate dialogue between government and private actors. In addition, provincial councils were introduced that were responsible for the implementation of health care on a regional level. The new health law was to arrange “all regulations which affect the health of the citizens of the Netherlands” (Boot et al., 2005, pp. 202). The law was accepted in 1956.
In 1964 a sickness fund law replaced the sickness fund law of 1945. The sickness fund council that was originally introduced in 1949 was altered, now consisting of sickness funds and societal interest groups that are involved with sickness funds, as well as government experts and health industry representatives (Boot et al., 2005). Today, the council is known as the ‘College voor Zorgverzekeringen’ (CVZ, board for health care insurance).
implemented in 1968 and put a strong focus on solidarity. “The duty for everyone to pay premiums followed from the right on cure and care” (Boot et al., 2005), making this insurance a national insurance, hence the word ‘general’. The three laws are products of the period of rebuilding after the war. These laws regulated the most important aspects of health care in the Netherlands.
Cost containment
During the period after the war the government was particularly occupied with the need for cost containment. This need was translated into the various laws that had to give structure to a sustainable health care system. Apart from the three laws that were previously mentioned, the government installed a law on rebuilding in 1950, in which all the societal building initiatives had to be approved by the minister of Housing and Rebuilding (Boot et al., 2005). In 1971 the law on hospital facilities (WZV) replaced the rebuilding law for the health care sector. Following form this law a permit was mandatory for building and renovation of hospitals. The role of the ‘College voor Ziekenhuisvoorzieningen’ (CZV), which was initially responsible for the housing matters, was taken over by the Dutch provinces (Boot et al., 2005). This was a clear sign of decentralization of power.
General price regulations by the government were introduced to stabilize prices. The health care sector was subject to its own pricing law, the ‘Wet Tarieven Ziekenhuizen’ (WTZ, law on hospital tariffs). This law gave the insurers and the hospitals responsibility for tariffs. Both health care insurers and hospitals were represented by their national associations (see paragraph 1.1.1) in the ‘Centraal Orgaan Tarieven Gezondheidszorg’ (COTG, the authority on tariffs in the health care sector). In 1979 the WTZ was replaced by the ‘Wet Tarieven Gezondheidszorg’ (WTG, law on health care tariffs), now including the government on the board. Decentralization of power to the local governments was a crucial aspect of this law.
“The strong emphasis on costs essentially followed from the economic crisis in the 1970s and the early 1980s” (Interview Timmermans, 2006). The emphasis on costs was characteristic for many nations during that period. “Focus was put on hospital budgets and regulation of health care supply” (Interview Kasdorp, 2006). The introduction of ‘Financieel Overzicht Gezondheidszorg’ in 1977 (currently the FOZ) exemplifies this. Where a total inventory of the health care sector was made in 1966, in 1977 the costs were the only focus of attention (Boot et al., 2005, Interview Timmermans, 2006).
Characterizing for the 1980s was that costs could only be partly regulated with use of the legal instruments (Boot et al., 2005). In many instances the cooperation of private actors in the sector was necessary to reach consensus on costs. “The attitude towards the budgets among health care providers has always been mixed. The budgets gave financial certainty to the providers. At the same time health care providers were opposed to the regulations, because their freedom was restricted by the budgets” (Interview Kasdorp, 2006). This leaves no room for entrepreneurship (Interview Timmermans, 2006).
Health care white papers
“The health care sector had grown into a large and complicated pattern of facilities financed by various sources in the post-war period” (Boot et al., 2005, pp. 207). Reason for this was the lack of coordination of the various developments. No pro-active strategy was present during the first two decennia after the war.
In 1966 the state of the health care in the Netherlands was charted. In 1974 the government released the white paper ‘Structuurnota Gezondheidszorg’. “A white paper is a government report outlining policy” (Wikipedia, 2007). In this white paper the government claimed the responsibility for the structuring of the entire health care sector (Boot et al., 2005). “The government was no longer satisfied with the task to create conditions alone (…), but wished to interfere in the disordered, overlapping pattern of facilities, which had come to favor intramural care over time” (Boot et al., 2005, pp. 208).
(GGD) and ambulant mental health care (RIAGG) are introduced. Again, power was hereby shifted from central government to decentralized units.
2.1.2. The old system: 1986 - 2006
The beginning of this period was characterized by a clear shift from a focus on costs and financing back to health itself. Both the ‘Nota 2000’ (1986) and the Dekker report (1987) embodied the reorientation to content (health) and management (markets) (Boot et al., 2005). These two documents indicated the need for an urgent solution with respect to the health care system “and the inequity within the system” (Interview Timmermans, 2006). An overview of the development of the health policy process is now given with use of the barriers that were discussed in paragraph 1.1.4.
Figure 2.1: The policy process
’86 – Installation of the Dekker committee and the release of the Nota 2000 ’90 – Introduction of green paper ‘Werken aan vernieuwing’
’05 – Initial publication of the ‘Zorgverzekeringswet’ ’06 – Introduction of the health care system
The first Barrier (B1)
The first barrier (B1) in the model was formed by the need for acknowledgement of the political character of the problem. This barrier was passed through the introduction of both the ‘Nota 2000’ and the installation of the Dekker committee by the government in 1986, and the introduction of its advice in 1987. The documents clarified the need to significantly reform the
‘90 ‘05 ‘06 Demands Support Resources Decision systems Policy network B 2 B 1 B 3 B 4 Evaluation government Evaluation society
Input
Output
Outcome
‘86
silent recognition that the problem had a political character. This first barrier, however, was a very important one, because it specifically directed the attention of the political actors to where it was especially needed.
A health care system was decently structured for the first time with use of a model, “which showed the relations between various concepts and their separate importance” (Boot et al., 2005, pp. 215). Several determinants of health were used in this model to analyze different influences on the public health. With use of this model that was introduced in the ‘Nota 2000’ scenario
studies were made, which gave indications of possible changes in the health condition of the
public (Boot et al., 2005). The scenarios functioned as indicators of reasonable health targets. These health targets were introduced by the world health organization (WHO). The targets functioned as global guidelines which could help manage the health care sector. “State Secretary Simons discontinued the health care targets in 1990, because he resented the notion that he could later be held accountable for achieving the targets” (Interview Kasdorp, 2006).
The second barrier (B2)
The second barrier (B2) in the political system is formed by the need for a place on the political agenda. This second barrier was definitely crossed when state secretary Simons put forward the green paper ‘Werken aan Vernieuwing’ (Working on Renewal) in 1990 to alter the existing health care system. A green paper is a document published by the government for discussion by interest groups prior to formulating or changing policy (Wikipedia, 2007). An important characteristic of the new plan was a national insurance. A national insurance system is defined by a large basic insurance with predetermined coverage.
Another important characteristic was regulated market competition between the various stakeholders in the health care system. The development of the regulated market system is explained in the following text. In model 2.2 the three market groups are shown.
Figure 2.2 : Markets in the health care system
Source : Boot et al., 2005 pp. 220
Quality system
Insurance system
Agreement system
Health care insurers
This model shows the market relations between the three groups, following from the advice in the Dekker report. In the green paper ‘Verandering verzekerd’ (Change Ensured), the second Lubbers Cabinet responded to the advice by introducing a policy with regard to regulated competition in health care (Boot et al., 2005). The proposed policy gave the government the role of “regulating the relations between the stakeholders, guaranteeing accessibility and quality, and supervising the functioning of the system” (Boot et al., 2005, pp. 225). This policy supplied a model consisting of three systems for the plan by Simons.
The first market system is called the insurance system (between insurers and consumers). This system would fundamentally change the relation between these two parties through a market-based insurance system. The system should consist of a basic insurance and an additional insurance. All the different insurers (fund or private) were renamed health care insurers, which would function through a law on health insurance (Boot et al., 2005). The bottom line was that behaving in a competitive manner would attract consumers.
The second market system is called the agreement system (between insurers and providers). This agreement system would replace the WVZ and WTG tariff laws. Insurers and providers are supposed to reach agreement on the tariff matters within the boundaries the government supplies. Only large scale facilities would be governed by the stripped down versions of the WZV and WTG (Boot et al., 2005). Traditionally, “the former sickness fund insurers negotiate with hospitals about prices and provision of health care. The hospitals can set different prices per insurer. Natura insurers generally have large negotiation divisions which negotiate contracts with the providers. “Restitution insurers are more expensive” (Interview Elsen, 2006), “but ‘free-ride’ on the agreements of the natura insurers” (Interview Kasdorp, 2006).
The third market system is called the quality system (between providers and consumers). The term ‘quality’ has a meaning that is threefold. First, the quality of the provided health care should have a level that enables care providers to give health care that has a sufficient positive effect on the health of consumers. Secondly, health care should be kept on that quality level. Thirdly, quality of the provided care should be measured and assessed continuously (Boot et al., 2005). The proposed quality system strongly relies on transparency and measurability of the quality of provision health care. A large problem is that measuring this quality is difficult.
The quality system is also bounded by the fact that “real competition between providers of care is only possible in short-term routine operations and trans-mural provisions” (Interview Schrijvers, 2006). The latter is, however, restricted by geographical boundaries.
These three systems together with the proposed national insurance formed the core of Simons’ plan. However, “Resistance against Simons’ plan existed among all stakeholders, although they often disagreed with different aspects of the proposed system” (Interview Timmermans, 2006). “The private insurers, which are sometimes part of large conglomerates, were against the idea of a national insurance which would compromise their position” (Interview Kasdorp, 2006). The power of these conglomerates enables them to block proposed regulations. Influential stakeholders thus have the power to influence political actors. This can lead to alterations in point of view, like with the CDA view on the matter: from in favor to against the national insurance (Interview Kasdorp, 2006).
The third barrier (B3)
In the beginning of the 1990s the quality system was the only system of the three that was implemented. In the following period, Simons’ renewed plans that were presented in the note ‘Werken aan Zorgvernieuwing’ (WAZ, 1990) received growing political and societal resistance. Simons accentuated two changes in comparison with ‘Werken aan Vernieuwing’. Firstly, the note gave less importance to pure market competition. Focus was put on consensus decision-making by the stakeholders instead. Secondly, “the note favored the accentuation of the national character of the proposed basic insurance” (Boot et al., 2005, pp. 227).
Cabinet was installed where Simons was no longer part of. That Cabinet is known as the ‘Purple Cabinet’.
The first purple Cabinet put an end to the efforts to radically change the health care system. Previous changes in the composition of the AWBZ were reversed. Focus was given to three insurance compartments. The first compartment consisted of the AWBZ. The second was formed by private insurance and the sickness funds. The third compartment consisted of the additional insurances. In the first compartment the government continued to regulate the supply-side. In the second compartment the policy innovation of Dekker and Simons was continued (Van Der Grinten et al., 1999). Market competition was also proposed for the third compartment (Van Der Grinten et al., 1999).
The coalition proceeded with making incremental changes in policy and preparations for future change. They were clearly influenced by the failure of the efforts by Simons to introduce a ‘grand design’ of a new health care system by doing so. In the year 2000 a time schedule for further changes in the health care system was proposed. “The government considered it their responsibility to supply sufficient building blocks for political decision-making. No blueprints for a new system, but an analysis and description of possible solutions, which would enable the next coalition (…) to make decisions” (Boot et al., 2005, pp. 260). The Minister of Health, Els Borst, followed a policy in which no irreversible decisions were made.
With the massive waiting lists in health care as a negotiation tool, Borst received a substantial amount of financial resources. “The resources were used, however, without proper management” (Interview Kasdorp, 2006). In addition, “Minister Borst gave more support to consumers and strengthened the influence of consumer organizations” (Interview Kasdorp, 2006).
An official resolution on the renewed health care system has taken the shape of laws that regulate the system. The third barrier was passed in 2005 when the framework law, the ‘Zorgverzekeringswet’ (Health insurance law) was first made public in full. This law is given substance by additional laws that are mentioned in the paragraph 2.1.3.
2006 insurers, providers and consumers had to be updated about the full content of the health care system. Preceding the introduction the government launched information campaigns which informed the different stakeholders.
2.1.3. The new system in 2006
The next section gives a summary of the most important characteristics of the health care system in the Netherlands in 2006.
1. The health insurance system consists of three segments a. long-term health care (care / AWBZ)
b. care focused on recovery (cure) c. additional insurance
2. The supply of care is predominantly private
3. The health care insurance system is a civil law insurance system with strong public security
DBCs
A very important aspect of the curative segment (the b. segment) of the health care system is found in the existence of ‘Diagnose Behandel Combinaties’ (DBCs). These combinations are the calculative foundation of health care in the Netherlands. “Around twenty-thousand combinations exist in the Netherlands” (Interview Kasdorp, 2006). The combination describes and codifies four aspects of care: care type, care demand, diagnosis, and treatment, which enable providers to standardize prices of care. 10% of the DBCs are negotiable between provider and insurer, the other 90% is still regulated by governmental health authorities.
Risk adjusted premiums
European legitimacy
The core of the system is formed by the ‘Zorgverzekeringswet’, the health insurance law. In this law the division between private insurance and sickness fund insurance has been discontinued. This integration of the two forms was not without complications, because of the European regulations on health care insurance. These regulations prohibit legal regulations of private insurance with regard to acceptance of the insured, coverage of the insurance and the determination of the premiums, which characterize the Dutch system. An exemption was needed to legally approve the law. The exemption provision states that the regulations do not apply to insurances that replace social insurances (or sickness fund insurance).
Additional laws
Together with the health insurance law the ‘Wet op de Zorgtoeslag’ or law on health care allowance is installed. This law determines that citizens below a certain income level are given a monetary health care allowance. This law has been very important with respect to the sociopolitical legitimacy of the system.
The regulated market aspect of the health care system is governed by a separate law. This law is called the ‘Wet Marktordening Gezondheidszorg’. The law determines the authority of the NZa (Nederlandse Zorgautoriteit), which is mentioned in the next section.
In the year 2007 the Wet maatschappelijke ondersteuning is introduced. This law regulates the responsibilities of the municipalities with regard to health care.
Management and supervision
In the health care system authority is divided between six supervisors:
1. CVZ (College voor Zorgverzekeringen): Responsible for the execution of the health care insurance. This board is mainly responsible for informing the insurers and providers, to ensure clarity of the insurances, and coordination between the actors. In addition, several financial responsibilities are held by CVZ (with regard to subsidies, risk adjustment, fund control)
Reporting on the feasibility, effectiveness and efficiency of proposed policy. Executing research on health care insurers, when requested by CVZ.
Devising rules with regard to supervision on health care insurers, and the content of accounting reports.
3. DNB (De Nederlandsche Bank): Responsible for the supervision of the health care insurers.
4. AFM (Autoriteit Financiële Markten): Responsible for the supervision of health care insurers with regard the financial services that they provide.
5. NZa: Responsible for the erosion of barriers that prohibit market competition. Another responsibility is the reparation of markets where these do not function. In addition, strengthening the position of the insured by creation of transparency is part of the responsibilities of the NZa.
6. NMa (Nederlandse Mededingingsautoriteit): This institution is responsible for the general supervision with regard to competition regulation (Mededingingswetgeving).
Have significant changes taken place?
Although the new system seems significantly changed, many aspects of the old system still exist. With regard to the DBCs and the agreement system, “only 10% of the hospitals have been relieved of the budgeting systems” (Interview Kasdorp, 2006). “This percentage will change in the future to 70%, giving market mechanisms in the agreement system a more dominant position” (Interview Kasdorp, 2006).
“The policy now both includes market systems and budgets, making the policy ambiguous” (Interview Kasdorp, 2006). One of the reasons for this is that “the Ministry of VWS seems to lack trust in the new system” (Interview Kasdorp, 2006). In short, the new system is not ‘new’ at all. Instead, “the regime of market systems and a planned regime have existed parallel next to each other for almost two decades. Historically, there has been a planned system, which increasingly includes market characteristics. Now there is a market system with strong regulation characteristics” (Interview Kasdorp, 2006). In this sense, the innovation has an incremental character and consists of a large number of small alterations in a transition period between systems.
2.2. Health care systems in other nations
In this section an analysis is made of the main characteristics of foreign policy processes and foreign health care systems. The nations that are chosen for this analysis either show resemblances with the Netherlands in certain aspects or have distinctive differences. These resemblances and differences are used in the next chapter to analyze the relations between policy and individualism and power distance. The selection of nations will consist of four Western nations. The nations that are analyzed are: France, Germany, the United Kingdom and New Zealand.
2.2.1. France
Overall characteristics
The health care system in France is based on a national social insurance system complemented by elements of tax-based financing and complementary voluntary health insurance. The health system is regulated by the state (parliament, the government and ministries) and the statutory health insurance funds. The state sets the ceiling for health insurance spending, approves a report on health and social security trends and amends benefits and regulations (WHO, 2006).
Health care is purchased and paid for by health insurance funds and the government, and provided by private (self-employed) practitioners and public and private (non-profit and for-profit) hospitals (OECD, 2002). Most general practitioners and specialists in the ambulatory sector are paid on a fee-for-service basis to agreed fee schedules, while staff working in public hospitals is salaried (OECD, 2002). French consumers have free choice of doctor and hospital.
A National Health Conference takes place once a year to propose priorities and suggest policy directions to the government and parliament. Since the year 2002, the conference is also responsible for monitoring with respect to patients’ rights. The conference is made up of representatives from organizations of professionals and health care institutions. In future, patient organizations will also be represented in the conference. It is remarkable to see that this group is still not represented at such a conference.
In the year 1996 the health care system was reformed. This reform, also known as the Juppé reform (WHO, 2004), has changed the institutional equilibrium of the health care, shifting power from the health insurance funds to the state and from the national to the regional level (OECD, 2002). Every year since 1996, the parliament passes an Act on Social Security funding based on the reports of the Accounts Commission (Cour des Comptes) and the national health conference. This act sets targets on health care spending, approves reports on trends on policy, and contains new provisions concerning benefits and regulations (WHO, 2004).
Summary
The French health care system is characterized by few large reforms. Smaller alterations occur on a yearly basis following from the Act. In the French system the government has more power than in the Netherlands. Shifts of power from the central government to regions have occurred in both nations, however. The French have installed various independent agencies, which have limited authority and give advice to the government. Consumer organizations still have a marginal role in the process.
2.2.2. Germany
Overall characteristics
The responsibilities for health care are shared between the federal government, the Länder (regions) and representative bodies of the providers and the insurers (OECD, 2002). The health care system is predominantly funded through social health insurance contributions, like in the Netherlands and France.
democratic legitimization. In joint committees of payers (associations of sickness funds) and providers (physicians’ or dentists’ associations or hospitals) stakeholders have the duty and right to define benefits, prices and standards (federal level) and to negotiate horizontal contracts, to control and sanction their members (regional level).
At the national level, the Federal Assembly, the Federal Council and the Federal Ministry of Health and Social Security are the key government stakeholders. The Ministry of Health is advised by ad-hoc committees and the Advisory Council for Evaluating the Development in Health Care (WHO, 2004).
At the regional level, the governments of the Länder are responsible for health care. There exist numerous voluntary organizations in the German health care sector. These organizations represent different interest groups and are mainly concerned with lobbying to serve the interest of the group they represent.
During the last twenty years the federal government has made various interventions in health care policy. The focus of the health care policy since the year 1988 was mainly on cost containment (WHO, 2004). Viewing the most prominent reforms, some important changes can be seen. The political continuum is thereby used to clarify contrast. Left-wing politicians are traditionally characterized by
radical,
reforming, and progressive attitudes towards social change and towards the political order (Woerdman, 1999). The right-wing is traditionally characterized by those who are conservative in their view. Today the right wing is considered to also include those forms of liberalism that emphasize the free market (Woerdman, 1999).Summary
Germany faces some of the same problems the Dutch system has. The structure of the political system prohibits radical changes in the health care system. A combination of legal structure and the characteristics of the national culture with regard to involvement of stakeholders in the policy process is the main reason for this. Incremental changes have characterized the process in Germany. In the year 2006 the German government proposed a law involving a new health fund (paid for by employers and employees). This has put stress on the relations within the coalition, as well as relations between key stakeholders.
2.2.3. The United Kingdom
Overall characteristics
The United Kingdom (UK) has a health care system that is significantly different from the ones previously mentioned. The policy process is also different because of the fact that the government generally is headed by one leading party per term. This can have strong influence on decision-making. The most distinctive characteristics of the UK system in comparison with the other systems are that it is tax-based and governed by the National Health Service (NHS).
There exist several authorities with regard to health care in the UK. The department of Health, under direction of the Secretary of State for Health, is responsible for the health and personal social services in England (OECD, 1999). The responsibility of the Secretary is shared by five other Secretaries, because of the importance that the government places on coordination of policy across Ministries. Separate responsibilities are held by the Secretaries of State in Scotland, Wales and Northern Ireland. The NHS Executive (NHSE) reports directly to the Secretary of State (OECD, 1999). The NHSE is responsible for leadership and a range of central management functions in relation to the NHS.
The NHS trusts are within the NHS and run by a board of directors. The board consists of executive and non-executive members. The board has replaced short-term contractual arrangements between trusts and health care providers with long-term contracts. There is a tendency to focus more on collaborative working between the trusts and the health care providers instead of market competition (OECD, 1999).
In comparison with the Netherlands this is an interesting aspect of the British health care system. Both systems favor regulated market mechanisms, although the British seem to have now become allergic to the term market-based after the failure of the system. Pure market competition is not ideal and “can lead to fragmentation, inequality, increased bureaucracy and lack of accountability” (OECD, 1999, pp. 19). The Brits have now changed the system to become more strategically planned and regulated.
Primary health care is mainly provided by general practitioners and multi-professional teams in health centers (OECD, 2002). Hospitals are mainly public with independent trust status. Private hospitals mostly provide services to privately insured patient or those who are willing to pay directly (OECD, 2002). The British Medical Association represents medical specialists and is also an independent trade union protecting the professional and personal interests of its members.
The former Regional Health Authorities are now regional offices of the NHS Executive. That is why the District Health Authorities are now simply referred to as Health Authorities (HA) (OECD, 2002). In the past the purchasing and contracting of care was part of the responsibilities of these Health Authorities. Over time, these responsibilities were passed on to Primary Care Trusts (PCT) or comparable entities within the UK. The function of the Health Authorities shifts more towards strategic planning. PCTs are directly responsible for primary care and community health services and for commissioning of services from hospital trusts and secondary or tertiary care providers (OECD, 2002).
The period from 1989 – 1999 had been one of numerous changes for the NHS. First, there were the radical market-based reforms by the right-wing government. Second, with the election of the left-wing government in 1997 a new course away from market-based systems was taken. In addition, system-wide restructuring of responsibilities of the various authorities have taken place. During the following period, the left-wing government has continuously made alterations in health care policy.
Characteristic for the British policy process is the speed with which some decisions and resolutions can be pushed through, almost totally neglecting the influence of key stakeholders. The Majoritarian system seems to be ideal for fast decision-making and implementation, at least at the beginning of a term. When the elections come up, the government tends involve more stakeholders in the policy process.
Summary
The new Dutch health care system shows some resemblances to the NHS in the United Kingdom. The NHS trusts operate via a similar regulated market as the in the Dutch agreement system, although the trust are more regulated. Apart from that, both systems have faced a long transition period. The reforms in the NHS are in fact still in progress. Further comparison of the systems shows that the role of the stakeholders differs between systems. The supply of independent advice is more diverse in the Netherlands, although key advice councils and stakeholder representatives are also present in the NHS. The influence of consumers as stakeholders is currently being reformed in the NHS.
2.2.4. New Zealand
Overall characteristics
The roots of the New Zealand health care system can be traced back to England and the ‘Westminster system’. The British settlers introduced a system they were familiar with. From then on the New Zealand system has undergone a number of far-reaching changes.
