Dutch people often pay too much for their health insurance

New research by the Dutch Authority for Consumers and Markets (ACM) and the Dutch Healthcare Authority (NZa) reveals that many residents in the Netherlands are overpaying for their health insurance. The report revealed that in 2023, 61% of consumers could have saved an average of €103 on their insurance costs. The overpayments stem from the multitude of complex insurance policies available, in which tiny conditional differences increase prices but offer effectively no extra coverage.

Barring certain limited exceptions, all residents of the Netherlands are legally required to purchase health insurance. All standard health insurance packages cover things like GP appointments, certain prescriptions and hospital care and dental care for under-18s. The fine for not having insurance is currently €496,74. The Dutch healthcare market is dominated by four major companies – Achmea (Zilveren Kruis), VGZ, CZ and Menzis – which control 90% of the market. Last year, consumers had a choice of 60 basic policies offered by 20 different healthcare providers.

The research by ACM and NZa uncovered that there are a vast number of health insurance policies that are nearly identical. However, given their large number and complex presentation, consumers struggle to understand that price differences between them are based on very small changes to the provisions provided. One policy might offer an extra 5% reimbursement for non-contracted care, but the price increase compared to another identical policy without this extra condition is such that it actually becomes more expensive. In fact, premium differentiation, where a company offers the same policy for different prices, is illegal in the Netherlands. Yet insurance companies use loopholes to ask higher fees by offering policies with very small benefits at higher prices, without a clear explanation that the differences are essentially trivial. These surface-level differences have created an insurance market in which a majority of Dutch people are missing out on cheaper alternatives and adding to their financial burden to an already difficult economic period.

The ACM and NZa have recommended several measures to policymakers, the Dutch legislature and health insurers to address these issues. They advocate for expanding the ban on premium differentiation to prevent the oversupply of similar health insurance packages. Reducing the number of nearly identical policies per insurer is another key recommendation to simplify the decision-making process for consumers. They also suggest that simplifying the choice process and ensuring that all supplementary health insurance plans are accessible regardless of the chosen basic policy would help consumers make better-informed decisions. Ultimately, while the decision to switch insurance providers remains with consumers, they should not face unnecessary obstacles in making that choice.

The findings by the ACM and NZa follow on from a report published last year by the Council for Health and Society (RVS), an advisory body that advocated for reform to the Dutch healthcare system. Its central proposal is for health insurance costs to be means-tested and correlated to the individual’s income, as well as capping deductibles for those with chronic illnesses.

While the new Dutch cabinet has been formed, there has as yet been no detailed information about containing upcoming legislation. Geert Wilders promised during the election campaign to halve the current mandatory deductible of €385 included in all insurance policies by 2027. A policy such as this would cost the government an extra €3 billion per year, which Wilders would aim to pay out of his proposal to reduce spending on other matters, such as limiting unemployment benefits to 18 months and cutting foreign aid by €2.4 billion. Of course, given the Dutch political system is centred around compromise, it is not a certainty that such reforms will take place.

Written by James Turrell