Panel Paper: Mapping the Road Not Traveled: A Synthetic Control Evaluation of Healthcare Reform in the Netherlands

Friday, April 7, 2017 : 11:45 AM
Founders Hall Room 470 (George Mason University Schar School of Policy)

*Names in bold indicate Presenter

Michael O'Grady, American University

Over the last several decades, government health care spending has taken an increasingly larger share of GDP throughout OECD nations. As costs grow higher and trends more difficult to predict, there is a real worry that health care spending will crowd out funding for other important public programs. Policy makers face a dilemma how to rein in costs without sacrificing health care quality or health outcomes. Industrialized nations that guarantee universal access to health care for its citizens use one of three systems: single-payer, two-tiered public options, or a private insurance mandate. While the advantages and disadvantages within each system have, been identified and debated, comparative research between these systems in lacking.

In 2006, The Netherlands restructured its health care delivery by moving from a public option to a private insurance mandate. The goal of the reform was to improve efficiency in health care management. Numerous studies indicate the program achieved this goal as cost-controls and competition led to a decrease in wasteful spending. Currently, The Netherlands is ranked among the highest in the OECD bloc for both cost-effectiveness and patient satisfaction. However, the impact the reforms had on health outcomes has never been formally evaluated; leaving open the question of whether health quality was sacrificed for cost savings.

This paper uses the synthetic control method to estimate the effects the law had on both short-term (potential years of life lost) and long-term (life expectancy at birth) health indicators. The results of the synthetic control were then validated using a random effects difference-in-differences estimator. Both models showed a statistically significant improvement in macro-level Dutch health outcomes as a result of the reform. 

The results suggest by switching to managed competition in health care delivery, The Netherlands improved both patient outcomes and system efficiency. The implication is that it is not only possible to avoid a trade-off between health quality and efficiency, but regulated market forces can help lead to an improvement in both areas simultaneously.

Key Words: Synthetic Control, Insurance Mandate, Healthcare Reform, Comparative Health Care Systems.