The price of getting older Health insurance for the elderly in the Netherlands, 1956-1986 R.A.A. Vonk

The price of getting older

Health insurance for the elderly in the Netherlands, 1956-1986

R.A.A. Vonk

Centre for the history of health insurance, dept. Medical Humanities

Centre for the history of health insurance, funded by:

Ministry of Health, Welfare and Sports Zorgverzekeraars Nederland Innovatiefonds Zorgverzekeraars

Main objectives: research to the history of health insurance, social

security and the welfare state in the Netherlands and elsewhere

collect and preserve relevant historical archives (sickness funds, private health insurers, sector organizations, etc.)


Recent and upcoming publications: Tussen volksverzekering en vrije markt (2008) Two centuries of solidarity (2009) The insured as stakeholder in the health

insurance market (2009) Insurance of catastrophic medical risks. An

international comparison (2010) Private health insurance and civil society in the

Netherlands, 1900-2006 (2013)


Bejaardenverzekering 1956-1986 Its place in the broader system of social health

insurance schemes in the Netherlands Development of the scheme from 1956 onwards The effects of risk spreading and solidarity Past experiences and future prospects?


Health insurance for the elderly during the 19th century Sickness funds (mostly commercial or philantropical in nature) employed age-limits for new applicants Sickness funds usually cancelled the insurance when the insured reached the age of 60

Government enforces the Poor Law (1854) to provide for coverage of medical expenses of people with no income at all (municipal authorities, church).


Health insurance for the elderly, 1900-1941 Sickness funds (mostly ‘association funds’ and mutual workers funds) still employed age-limits for new applicants Cancellation of the insurance when reaching the age of 60 no longer customary Sickness fund premiums too high for most elderly Poor Relief remained primary source for the coverage of medical expenses for the elderly


A.S. Talma, Minister of Labour (1908-1912) Sickness Benefits Act General Disability and Elderly Benefits Act


General Disability and Elderly Benefits Act

Cash and service benefits Small pensions for elderly and disabled

workmen Service benefits primarily aimed at the disabled

Poor Relief remained important


Sickness funds Decree, 1941 German authorities imposed a tripartite system:

compulsory social health insurance for wage earners and their dependants

voluntary social health insurance for non-wage earners

private health insurance

Social health insurance schemes and private health insurance seperated by an income limit


The compulsory social health insurance scheme


- income related premiums

- employer pays half of the premium

- retrospective reimbursement through General Fund

- government determined package of service benefits

- compulsory enrolment

- obligatory acceptance of all eligible applicants and their dependents (children, spouses)

Voluntary social health insurance scheme


- community rated premiums

- no retrospective reimbursement

- open enrolment

- obligatory acceptance of all eligible applicants

- government determined package of service benefits

Health insurance for the elderly 1945-1956 1941: elderly made eligible for the voluntary social health insurance scheme

1947: enforcement of the Provisional law on Elderly Benefits

1947: elderly made eligible for the compulsory social health insurance scheme


W. Drees, Minister of Social Affairs (1945-1948)

Provisional law on Elderly Benefits‘Father of social security’


Social health insurance for the elderly, 1957 1957: enforcement of the AOW (General Elderly Pensions Act), a national insurance scheme providing for retirement pensions for all people aged 65 or older living in the Netherlands

1957: creation of the elderly social health insurance scheme


J.G. Suurhoff, Minister of Social Affairs, 1952-

1958 Enforcement of the AOW and the elderly social health insurance scheme


Elderly social health insurance scheme, 1957 Open enrolment Age-limit: 65 or older Income-limit linked with the height of the AOW pensions (1957: fl. 3410,-) Premiums would cover only ¼ and ½ of the estimated expenses per insured person per year. Premium shortfall replenished by government and General Fund Dependents (children, spouses) insured free of charge


Elderly social health insurance scheme

General fund compulsory scheme

Government contributions



Elderly social health insurance scheme Elderly health insurance meant as a safety-net insurance scheme for low-income elderly

Government tried to keep the membership base at a minimum to satisfy employers

632.500 (+/- 63% of all) elderly applied for elderly health insurance in 1957


Elderly and voluntary social health insurance, 1969-1970 High inflation-rate causes problems in the elderly health insurance scheme

First signs of a fatal premium spiral in the voluntary health insurance scheme

Government asks the SER (Socio-Economic Council) for advice


SER-advice of 1969 Try to transfer elderly from the voluntary scheme to the elderly social health insurance scheme, by:

increasing the income-limit to 70% of the income-limit of the compulsory scheme

creating additional bandwidths (premiums covering ⅝ and ⅞ of the estimated expenses per insured person per year)

reducing the premiums for middle income elderly


Elderly and voluntary social health insurance, 1969-1970

The reform fo the elderly and voluntary social health insurance schemes fails

Only 140.000 of the expected 250.000 elderly opt for insurance under the elderly scheme

single people didn’t benefit bad reputation?

Employers refused to increase contributions to fund premium reduction



Elderly and voluntary social health insurance, 1970-1980 A worsening economic crisis forces the Den Uyl (1973-1977) government to invest heavily in premium reduction schemes for the elderly

The height of AOW pensions didn’t keep up with the inflation-rate

Cumulating tax and premium surcharges affect middle-income elderly (AOW-plus-problem)

1980: government contributions to the elderly health insurance scheme have risen to 1.5 billion guilders


J.P. van der Reijden, State Secretary of Health

WTZ (Health Insurance Access Act) MOOZ (Act on the Co-funding Over-representation Elderly Sickness fund Insured)


The WTZ and reform of the elderly social health insurance scheme, 1982-1986 Spreading of risk in the elderly social health insurance scheme had worsened (more elderly and older elderly)

Voluntary social health insurance scheme failed due to an increasingly weakening financial basis

percentage of elderly insured under the scheme rose from 10% to 20% of the total vol. ins. pop. during the seventies.

Both social health insurance schemes to be reformed at the same time


The WTZ and reform of the elderly social health insurance scheme, 1982-1986 Both elderly and voluntary social health

insurance were dissolved

The membership base of the elderly social health insurance scheme was transferred to the compulsory social health insurance scheme

Regulating the private health insurance sector Standard coverage package policy Obligation to accept everyone for this policy

Act on the Co-funding Over-representation Elderly Sickness Fund Insured (cross-subsidization)


Conclusions Bejaardenverzekering as a hybrid health insurance scheme with traits from both the compulsory and the voluntary scheme

Elderly health insurance started as a safety-net insurance scheme, but developed into a broad health insurance scheme for roughly 75% of all Dutch elderly

Increasing need for large external contributions


Conclusions

Influx of more elderly into the elderly health insurance scheme resulted in a worsening risk equation

Loosening bonds of solidarity between retiree, employee and employer

1986: government enforces solidarity and creates a system of cross-subsidization


Future prospects?

The Dutch elderly social health insurance not unique Medicare (USA) Health Service System for the Elderly (Japan)

Some sort of solidarity between wage-earners and retirees is necessary to keep premiums affordable for elderly

External contributions (government, cross-subsidization, etc.)


Thank you for your attention !


Documents

The price of getting older Health insurance for the elderly in the Netherlands, 1956-1986 R.A.A. Vonk