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Harnessing Health Care Markets for the Public Interest: Insights for U.S. Health Reform from the German and Dutch Multipayer Systems

Both Germany and the Netherlands provide universal coverage within health systems that rely on competing insurance plans and largely private delivery systems. Each has been moving toward more competitive markets, with incentives and information to promote more effective and efficient care. To ensure that markets and competition work in the public interest of access, quality, and sustainable costs, the two countries have developed "rules of the game," responsibility for which lies with quasi-governmental authorities with relative independence from their respective health ministries. Operating within broad legislative frameworks and accountable to elected officials, these authorities are designed to enable flexible, timely, and politically sheltered decision-making within a transparent and participatory setting.

While the evolution of the specific German and Dutch governance arrangements is tied closely to the unique history and culture in each country, the strategies seek to address similar issues and concerns. Efforts have focused on three key areas: ensuring access and fair competition in insurance markets; adopting payment and pricing policies to drive efficiency and stimulate system reforms; and instituting quality information systems to support innovation and value, including comparative effectiveness.

Both countries’ health systems provide insights for U.S. health reform by offering examples of key insurance, payment, and information strategies and ways to blend government oversight, stakeholder input, transparency, and markets to achieve public goals. Strategic policies implemented in both Germany and the Netherlands include: insurance exchanges; multipayer policies and group purchasing in the public interest; information systems to improve value and inform pricing; and public reporting with benchmarks and incentives for quality (Exhibit ES-1).

ES-1. Key German and Dutch Policies for a Multipayer
System, with Insights for U.S. National Reforms

  • Insurance Markets
    • Insurance exchanges with insurance market rules/reforms –Prohibition on health risk rating; community rating
    • Value-based insurance benefit design and pricing
    • Risk equalization
  • Payment coordination and use of group purchasing power in public interest
  • Comparative effectiveness to inform value and prices
  • Public reporting, benchmarks, and incentives for quality

To ensure access and encourage fair competition, both countries operate insurance exchanges with market rules that focus competition on quality and total costs, and have processes that make it easy to choose, enroll, and stay covered in a plan. Both countries have developed a transparent process for defining the minimum benefit package and scope of coverage offered in the insurance exchange with an emphasis on access, value, and financial protection. Both countries also operate risk-adjustment schemes to provide incentives for plans to compete on quality, rather than enrollee selection.

To focus payment policies on quality and costs, both countries seek to coordinate payment policies in their multipayer systems rather than leave these to each insurer acting alone. This coordination ensures coherent price signals and policies for providers and enables group purchasing power in the public interest. In Germany, payment is largely determined by all-payer negotiations each year, while in the Netherlands cohesion is achieved through a set of shared payment policies with negotiations at the margins.

Finally, the countries have publicly supported information systems that focus on value and improvement. These include public reporting and feedback systems and comparative effectiveness research. These information systems seek to inform and drive quality improvement and support robust, well-functioning markets.

A central question in the current U.S. health reform debate is how to harness markets to produce results in line with the public interests of access, quality, and affordable costs. Assuming the U.S. insurance system will retain some form of a multipayer approach, success in addressing these goals will likely hinge on the design of mechanisms that foster and support more efficient and effective markets with coherent payment and information systems. Germany and the Netherlands offer important insights for how to structure and oversee the implementation of health reform in the United States.

Elements of the German and Dutch systems offer rich examples of approaches that, if tailored to U.S. institutions, could work in the United States. These include: insurance boards and exchanges to handle risk, set standards, and facilitate meaningful choice; all-payer payment mechanisms that ensure coherence and prevent undue use of market power; and information systems that inform payment and provide benchmarks to improve overall system performance. Just as the German and Dutch governance approaches have evolved within unique historical and cultural contexts, progress in the U.S. will also need to reflect our own unique starting point and key concerns. Yet, these core elements are likely central to harnessing U.S. markets for the public interest in an accessible, high-quality, affordable, and dynamic U.S. health system.

Publication Details



C. Schoen, D. Helms, and A. Folsom, Harnessing Health Care Markets for the Public Interest: Insights for U.S. Health Reform from the German and Dutch Multipayer Systems, The Commonwealth Fund and AcademyHealth, December 2009.