How Much Healthcare?

During the first 8 to 10 days after childbirth in the Netherlands, women can have a professional maternity expert come to their home. Lasting as long as 7 or 8 hours each day, the visits include grocery shopping, cleaning the loo and of course, newborn care. They even look after the infant’s siblings, do the laundry and make some dinner.

Where are we going? To healthcare margins.

Going Dutch

In addition to the maternity service, residents of the Netherlands access traditional healthcare through a government system. The list of their services includes medical visits to GPs, specialists, and dental care up to age 18. They also get medications, hospitalization and long term care.

Although government oversees the system, it is market-based. Shown below, there are health insurance, healthcare purchasing and healthcare provision markets:

From: “Health Systems in Transition: The Netherlands Health System Review 2016”

Three Healthcare Systems

Two-Tiered

Described as two-tiered, the Dutch healthcare system is a public-private combination. Varying from country to country, the public-private combination varies in its public-private balance. Quite difference from the Dutch, Israel has core coverage that most people supplement privately.

Single Payer

The one characteristic that all single-payer systems share is government dominance. What they pay for, though, differs. Canadian coverage excludes vision and dental care. To get the unpaid care, people do purchase insurance policies. But those policies are sometimes prohibited from paying for anything the government covers. Somewhat different, in Denmark private insurance is available but not really necessary. From birth to death with deadlines for wait time, Denmark’s system is close to all inclusive.

The provider side of single-payers systems also differ. Like New Zealand, Norway, Sweden and the U.K., Denmark “owns” the providers.  But Canada does not. It contracts with the private sector.

Insurance Mandate

Universal coverage can be achieved through a mandate. Because everyone has to buy health insurance, sick individuals cannot be rejected by insurance providers. Germany has a mandate as does the Affordable Care Act in the U.S.

Our Bottom Line: The Margin

Taking us to the margin, every healthcare system has to decide “how much extra.” New moms in the Netherlands get 8-10 days of home care. Denmark’s system covers fertility treatments through the third try. In the U.K., the National Institute for Health Care Excellence (NICE) says no to a drug if its cost doesn’t create enough QALYs (Quality Adjusted Life Years).

In his Great Courses lecture on 19th century economist Alfred Marshall, Timothy Taylor explains how the margin influences our decisions. He suggests we think of a lot where people park regularly. Paying a monthly fee, they will use it more frequently than if they paid per visit–even if the cost was identical. The difference relates to the incentives at the margin. Because the extra parking involves no current payment, the monthly results in more use.

Like that parking lot, all healthcare coverage involves the cost and design at the margin.

My sources and more: The story of Dutch healthcare can be personal or academic. It can also take us to other systems, single payer facts, and these up-to-date details. Finally, for more on Alfred Marshall, econlib is always a handy destination.