Containing or shifting? Health expenditure decomposition for the aging Dutch population after a major reform.

Aging populations add to pressure on health budgets, notably in long-term care (LTC). This development is particularly significant in the Netherlands, because of its relatively large, publicly financed LTC sector. The recent LTC reform aimed to substitute institutional care with aging-in-place, and thus reduce LTC expenditure. We investigate whether the reform actually went beyond shifting institutional care expenditure to other healthcare domains. We use individual health insurance and social care claims for the entire Dutch population aged 65 years and above over the period 2012-2016 to gain an insight into total healthcare utilization by individuals. Based on this information, individuals are allocated into subgroups - care steps - according to their dependence on assistance and nursing care. We analyze the changes within and between these steps over time in order to demonstrate the substitution of care provision after the reform was implemented. The results show that as the population share in institutional care decreased, the average health expenditure on the individuals receiving this care increased. By contrast, the average expenditure in the district nursing care steps fell, partly due to reallocation of individuals between care steps. Due to the reallocation from the institutional care to aging-in-place, the reform has contributed to a slowdown in the growth of total health expenditure on those aged 65 years and over, at least in the short term.

Price effects of a hospital merger: Heterogeneity across health insurers, hospital products, and hospital locations.

In most studies on hospital merger effects, the unit of observation is the merged hospital, whereas the observed price is the weighted average across hospital products and across payers. However, little is known about whether price effects vary between hospital locations, products, and payers. We expand existing bargaining models to allow for heterogeneous price effects and use a difference-in-differences model in which price changes at the merging hospitals are compared with price changes at comparison hospitals. We find evidence of heterogeneous price effects across health insurers, hospital products and hospital locations. These findings have implications for ex ante merger scrutiny.

Switching gains and health plan price elasticities: 20 years of managed competition reforms in The Netherlands.

In this paper we estimate health plan price elasticities and financial switching gains for consumers over a 20-year period in which managed competition was introduced in the Dutch health insurance market. The period is characterized by a major health insurance reform in 2006 to provide health insurers with more incentives and tools to compete, and to provide consumers with a more differentiated choice of products. Prior to the reform, in the period 1995-2005, we find a low number of switchers, between 2 and 4% a year, modest average total switching gains of 2 million euros per year and short-term health plan price elasticities ranging from -0.1 to -0.4. The major reform in 2006 resulted in an all-time high switching rate of 18%, total switching gains of 130 million euros, and a high short-term price elasticity of -5.7. During 2007-2015 switching rates returned to lower levels, between 4 and 8% per year, with total switching gains in the order of 40 million euros per year on average. Total switching gains could have been 10 times higher if all consumers had switched to one of the cheapest plans. We find short-term price elasticities ranging between -0.9 and -2.2. Our estimations suggest substantial consumer inertia throughout the entire period, as we find degrees of choice persistence ranging from about 0.8 to 0.9.