The liberalisation of healthcare in the Netherlands appears to be successful. In an attempt to reduce the cost of healthcare the government has allowed the existing sickness funds to compete as of 1 January. Within two months one quarter of Dutch families have switched to different health insurers. There is no sign of the chaos which the leftist parties predicted.

Prime Minister Jan-Peter Balkenende’s centre-right government made the liberalisation of healthcare a priority from the start. They identified healthcare as “one of the last stalinist strongholds” in the Dutch welfare system. It was run by the government, which set down detailed targets for hospitals, including how many operations they were allowed to perform. Patients who needed hip operations were on waiting lists for months. In spite of rationing and restrictions, however, the cost of medical care in the Netherlands continued to rise inordinately.

Though Balkenende’s government cracked down on pharmaceutical companies by promoting generic medicines at the expense of innovative drugs, elsewhere the government hoped to check the rising costs by introducing market principles, obliging sickness funds to compete for their clients by reducing their monthly premiums. This would also force them to purchase medical care at more competitive rates from hospitals, general practitioners and dispensing chemists.

The leftist parties predicted that the experiment would end in disaster, with few people willing to leave their sickness funds and chaos in the administration. Two months on, however, there is no sign of chaos, and a significant number of Dutch families have switched to cheaper health insurance. They were given until 1 March to switch and one quarter of the insured have done so. The average yearly rate of health insurance has dropped 10% lower than expected.

One of the victims of the two months of competitive health insurance is AGIS, an insurance company that lost half a million policies to cheaper funds, with an ensuing loss of several hundred jobs. AGIS is accusing the other funds of cheating at the game by dumping their prices for the start of the liberalisation programme, in order to attract new clients, but with the intention of raising prices significantly next year.