Health economist Marco Varkevisser on the design of our healthcare system after corona

Health economist Marco Varkevisser: “It is inevitable that health care costs will rise after the corona crisis, but there are several ways in which we can continue to pay those costs together in the future.”

Erasmus University (ESHPM)

Coronadenktank

This is the eighth episode of the series ‘Coronadenktank’. We speak to experts from various scientific disciplines about the corona crisis. Each interview ends with a question to someone from a completely different discipline. These discussions are the first step for the multidisciplinary corona think tank that NEMO Kennislink is currently organizing.

In the Netherlands, healthcare works through a system of regulated market forces. There is some degree of government regulation, but hospitals and health insurers largely determine themselves where they spend their money or not. It is a continuous search for the optimal balance between government involvement and market forces.

This is the playing field of Marco Varkevisser, professor of market organization in health care at Erasmus University Rotterdam. “I am involved in the structure and financing of our healthcare system. This is an important topic, especially towards next year’s elections. What is going well and where can improvements still be made? Due to the corona outbreak, we will probably have higher healthcare costs than expected. As a result, the care system has been put in a different light. ”

However, Varkevisser does not want to fundamentally curb market forces and exchange them for regional cooperation, as Minister De Jonge would like to see. “In a crisis, it makes perfect sense to work together. Then everyone has the same interest in mind. It is then simply ‘all hands on deck’ to get the situation under control. We have seen that this is possible, even within the current regulated market system. But now you see again and again signs that parties, each with their own interests, will be confronted with each other. To what extent, for example, should health insurers compensate hospitals for non-delivered care? Of course I hope that we can keep as much as possible the sense of solidarity that arose during this crisis, but I am afraid that this is not structural. Not everyone will always agree on the right direction. Certainly not because almost all choices have financial consequences. So you can’t build a health care system on that. ”

If it is up to you, the market forces in healthcare will remain intact. Why actually? What are the advantages of market forces?

“Market forces provide an incentive for innovation and renewals and it brings dynamism to the care system. Health insurers are responsible for purchasing high-quality care, but must also pay attention to costs and make difficult choices on our behalf. Mutual competition plays an important role in this. If the government regulates everything, you get a very rigid system in which there is little room to look at how things could be done differently. ”

“That does not mean that market forces are a solution for everything. In the corona crisis, for example, we have seen that it is not wise to leave the scaling up of the IC capacity to market forces. I see an important role for the government in this. They could designate a number of hospitals, and provide additional funding and responsibility, to maintain the facilities needed to rapidly scale up IC capacity. You could also do the same for the availability of sufficient protective equipment. ”

Market forces are not a good strategy for scaling up IC capacity.

Additional healthcare costs were incurred as a result of the corona crisis, but much regular care has also been suspended for a few months. How will the balance soon turn out? Did we indeed incur more healthcare costs than expected due to corona?

“I think so. There is still a big uncertain factor in this. And that is how much care that is not provided will ultimately be paid by the health insurers. Health insurers and hospitals are now discussing this. My expectation is that the health insurers will partly compensate hospitals. And then there are the extra costs for corona care. ”

How should we pay for that?

“That is a question that was not asked at all at first, but that is increasingly being raised. And the answer is actually simple. Both the government and the health insurers incur additional costs and these will have to be paid by all of us. Only that can be done in different ways. ”

“All health insurers have reserves, which at the moment are fortunately often broad enough to deal with the crisis. However, those reserves are finite, you can only spend them once. And they should not be too low, because then insurers are vulnerable to unexpected financial setbacks. In recent years, various health insurers have already deployed part of their reserves to prevent a sharp increase in the health insurance premium. That is not there this year. In addition, health insurers will have to replenish their reserves once again. In short, an increase in premiums seems inevitable to me. ”

“To prevent a sharp increase in premiums, the government can choose to make an additional one-off contribution to the Health Insurance Fund. Insurers can use this extra contribution to cover part of their costs. Of course, in the end we all pay that contribution ourselves through taxes, but the advantage of this construction is that you can spread the costs over a longer period of time. ”

GroenLinks wants to arrange with an emergency law that health care premiums do not rise by not allowing the reduction of the profit tax for companies to continue. Is such a solution also a possibility?

“I think this is a good example of political opportunism and of course it also sounds great towards the elections. Where there is a will there is a way, so such a construction is certainly possible. But it doesn’t seem necessary to me at all. As mentioned, there is currently enough possible to prevent a sharp rise in the healthcare premium. Why would you make the health care system more complex by adding an extra arrangement to it? ”

And how are we doing in the long term? How will healthcare costs develop in the future and are the options you just mentioned still adequate?

“RIVM has previously calculated that healthcare costs will run until 2040 will go up considerably with unchanged government policy. This is partly due to the aging population and population growth. The corona crisis comes on top of that once more. Cost increases are then inevitable. I expect the discussion about sensible and nonsensical care to emerge even more prominently in the coming years. Many treatments are given out of habit or feeling, but is it all really necessary? ”

“In that respect, the corona outbreak has given us a unique opportunity to conduct an experiment that would otherwise have never been possible. Regular care has come to a standstill for a while and in the coming period we can see what its effects are. Does delay in care indeed lead to all kinds of problems or do some complaints eventually resolve themselves? ”

“I think repeat appointments are also a good example. For years, specialists in particular have indicated that they are against offering it less frequently or in any other way. Because of corona, consultations were forced to take place via video calling and it actually turned out to work quite well. You could do this more often in the future in order to save costs. ”

It seems inevitable that healthcare costs will rise in the coming years. The extent of that increase will depend on the measures taken by the government.

The last question comes from Esther-Mirjam Sent, professor of economic theory and economic policy at Radboud University. She asks: Can market organization in health care provide for the financing and distribution of a possible vaccine against covid-19? More specifically, through which mechanism could the vaccine be and should be financed and distributed fairly?

“I think that during the development of a vaccine, market forces are especially important. In mutual competition, several companies are busy being the first to come up with an effective and safe vaccine. But once there is a vaccine, a different situation arises from a social perspective. Then it could just be that a company ends up in a monopoly position and then you have to make sure that no wild west scenes arise. To prevent this, governments have an important role to play. It seems crucial to me that international cooperation, both within the European Union and worldwide, prevents the countries with the smartest buyers or the thickest wallets from coming to the front. It is evident that market forces should not be given free rein in this, but it is still unclear what the correct ordering model should look like. Fortunately, we still have some time to think it through. ”

The next interviewed for the Corona Think Tank is Martin Bootsma. He is a mathematician at Utrecht University. Marco Varkevisser asks him the following question: Research into the spread of the coronavirus in the Netherlands is of great importance to all of us. The complexity of this is beyond dispute, partly in view of the unfamiliarity with the virus and the influence of the specific Dutch circumstances. Are these conditions expected to work to our advantage or disadvantage compared to other countries? And which aspects play a role in determining the optimal exit strategy? In addition to the mathematical perspective, is the economic perspective of various exit strategies also taken into account, for example?