Katherine Swartz, Ewout van Ginneken, Ph.D.
E. van Ginneken and K. Swartz, "Implementing Insurance Exchanges—Lessons from Europe," New England Journal of Medicine, published online Aug. 23, 2012.
State-based health insurance exchanges are a key component of the health care reform law. The exchanges, which enable individuals and small employers to comparison-shop health plans, are expected to expand coverage and help contain costs through greater competition. Citing the experiences of the Netherlands and Switzerland—where exchanges have been part of the health care landscape for some time—the authors of this New England Journal of Medicine "Perspective" argue that additional measures will be needed to control costs and improve quality. Ewout van Ginneken, the lead author, is a Commonwealth Fund Harkness Fellow from the Netherlands.
The first insight the United States can gain from the Netherlands and Switzerland is that competitive insurance markets will not contain costs if health care purchasing reforms are not undertaken. Purchasing-market reforms in the two countries are a work in progress. Both have recognized that reforming the purchasing market is crucial, yet insurers lack the tools, expertise, and leverage to be competitive purchasers. In addition, purchasers need better data on performance and quality to assess value for money.
The second insight, say the authors, is the importance of a good risk-adjustment formula, which will be critical for limiting insurers’ incentives to attract healthier enrollees and avoid sick people. Until January, the Swiss risk-adjustment system was largely crude and ineffective; the country recently added adjustments for prior hospitalization and will make similar changes for patients’ medical conditions. The Dutch have a more sophisticated formula, which has thus far discouraged insurers from engaging in risk selection.
Insurance exchanges are just the beginning of the reforms that are needed to achieve greater efficiency and quality. Massachusetts, which established the first exchange in the U.S., recognized this and recently passed a law to monitor growth in costs and encourage the creation of accountable care organizations.