In the Netherlands, much debate surrounds the mandatory deductible in health insurance. The minimum deductible is currently set at ¤385 per year, meaning individuals must cover this amount out-of-pocket before their insurer begins to reimburse costs.
The deductible has its critics. Some argue that paying for healthcare when ill is unfair, while others worry that it discourages people from seeking necessary care. There are also concerns about affordability for low-income individuals. Recently, a majority in the Dutch Parliament approved a proposal to reduce the deductible, which is also a commitment in the new coalition agreement.
A clearer picture
Martin Salm aims to clarify how people respond to economic incentives in healthcare. ’My colleagues and I have studied the deductible and other cost-sharing methods using large datasets from insurers to analyze how patients react to financial incentives.’Avoiding care due to the deductible
The rationale behind the deductible is simple: if patients pay part of their medical costs, they are incentivized to avoid unnecessary care. However, reality is more nuanced. ’The economic justification for the deductible is based on ’moral hazard’ theory’, Salm explains. ’This theory suggests that when fully insured, people tend to overuse healthcare because they don’t bear the costs. By introducing a deductible, the idea is that patients are less likely to consume unnecessary services.’Cost-sharing has downsides, too. ’Research shows that people often struggle to distinguish high-value care from low-value care’, Salm notes. ’This can lead them to avoid medically necessary treatment. Our research in the Netherlands found that patients reduce care use across both non-urgent and urgent situations. This indicates that the deductible may lead people to delay or forgo essential care’
Alternatives to the deductible
Salm also examines various alternatives for cost-sharing in Dutch healthcare. The government is considering lowering the deductible from ¤385 to ¤165. Other proposals include co-payments per treatment or co-insurance. However, research indicates that a lower deductible encourages healthy individuals to seek more care, ultimately increasing premiums and taxes for everyone.Another alternative is no-claim refunds, where individuals receive a refund if they incur few medical expenses. While appealing, Salm points out that the savings tend to be smaller than with a deductible. Finally, incentivizing doctors to cut costs is an option. Studies suggest that general practitioners can achieve savings, particularly in non-urgent care, though these are typically less substantial than those achieved through patient contributions.
A complex trade-off
Each alternative to the deductible has its pros and cons, and their impact on healthcare costs must be carefully considered. ’However, one point is clear. Reducing the deductible will substantially increase demand for healthcare and put even more pressure on the healthcare system, says Salm.About Martin Salm
Professor of Health Economics and Applied MicroeconomicsMartin Salm graduated as an economist from the University of Mannheim in 2001 and earned his Ph.D. in economics from Duke University in 2006. He joined the Department of Econometrics and Operations Research at Tilburg University in 2008 as an assistant professor and became an associate professor in 2011. As of November 1, 2023, he has been appointed professor. His research has been published in leading journals such as The Journal of the European Economic Association, The Economic Journal, Journal of Public Economics, and Journal of Health Economics.