Big Dutch insurer Menzis says the new Dutch insurance scheme based on private insurers is working well.

Insurers’ margins are improving, and insurers are already negotiating prices and quality on 44% of all treatments, says Menzis’ director Bas Leerink.

There is even talk of the possibility of insurers eventually buying providers.

Two years ago, the Dutch government pulled out of healthcare insurance, handing the market to private insurers; today, five majors, all mutuals, own the market.

Product innovation is also starting to happen.

Menzis has negotiated special levels of care for its client,s who have the main chronic illnesses. The new service, Topzorg or Topcare, should actually cut bills, as it enables patients to better manage their conditions.

The five mutuals lost €81m in 2008 but Leerink says that this reflects investment losses and reckons it should be possible to turn a profit: "There could be opportunity, not just for mutuals, but also for private insurers and it should be possible to make a reasonable return of 6-9%."

Our Analysis: It remains the case that few insurers are really interested in, or capable of, producing radical new products or seriously questioning service providers.

Projects such as as Topzorg are rare - most big insurers in the Netherlands and Germany just pay the bills. And many Dutch insurers have cut their costs dramatically, following the reforms.

The head of another Dutch insurer said:"We cut out staff by 50% and cut out operating costs, which were running at 6-7%, by two percentage points."

The really radical thing in the new Dutch system is the mechanism whereby the government readjusts payments to take into account the health status of the different client bases of the Dutch insurers.

This model could be exported to Germany, where several of the big mandatory insurers, or Krankenkasse, are bedevilled by the costs of insuring ageing population cohorts.