Big Dutch insurers are gearing up for a range of price increases in the nominal paid by insurants. CZ, a major player with a strong cash position, says it wants a raise of at least €80 in the nominal premium, the payment made by the employee directly to the insurer. Observers say it may be hoping that others will come in at €100-120, upon which it will be able to raise its own demand somewhat.

This range of price increases is unlikely to lead to a rise in political opposition to the privatisation of the Dutch insurance industry which took place three years ago and is generally perceived as a success, says Pim van de Werd, a consultant to the industry.
The industry has consolidated fast into four players – Achmea/Agis, CZ, Uvit (Univé-VGZ-IZA-Trias) and Menzis - who together control 85% of the market. All are nursing large losses from the first two years of the new regime when they were competing hard for new business by cutting prices and launching marketing programmes.

Van de Werd says that the insurers now want a 1%-2% annual margin on their core business and 5%-6% margin on the additional premiums of between €120 and €300 taken out by around 90% of all Dutch citizens to cover things such as orthodontistry. Even these rates will mean that it will take five years to wipe out the losses incurred in the first two.

Insurers say that assessing real levels of profitability is extremely difficult. It is believed that the insurers generally broke even over the last year, but, as it can take two years to work out the real costs incurred, it is very hard to get an accurate picture.

Meanwhile, the Dutch system, policed by insurers and the Ministry of Health, is looking to bear down on certain costs. A major target is likely to be specialist doctors who get a lump sum per diagnosis under the new system. Mysteriously, those conditions which carried the largest premiums have risen sharply. Insiders say specialists have made many millions of extra euros as a result and that the system is likely to change.
Pharmacists are likely to see a cut in the discounts they get.

One way of cutting costs is for insurers to strike deals with preferred providers which they are now free to do in the B part of the market, which covers non-acute areas such as elective surgery. Such deals already make up 30% of all hospital costs and this is likely to rise to 50% over the next few years.
 
In general, the big Dutch insurers have much more freedom of movement than the large german Krankenkassen. The latter, for instance, can not contract with private providers outside of their home market. Big Dutch insurers, on the other hand, have started striking deals with large German hospital chains.

The overall verdict remains that the switch from state funded insurance to a mandatory system where private and mutual insurers compete for business has proved a success. These premium rises are unlikely to raise a political firestorm. Within the next five years it now looks likely that costs of the care system will also be privatised.

Whether hospitals will follow on a mass scale remains unclear, but several have already moved into private hands and others are likely to follow. MCI has taken over a hospital in Rotterdam. But the best example is perhaps Slotervaart Ziekenhuis taken over in 2006 by Meromi Holding, a company run by the flamboyant, female entrepreneur, Aysel Erbudak.