Workable competition in health care: prospects for the Dutch design

Since 1989 a gradual restructuring of the Dutch health care system is taking place to realize a multiple choice social health insurance system with workable competition among insurers and among health care providers. This paper investigates whether the structural change will induce the intended competition. An examination of the characteristics of the market for health insurance, physician services and hospital services in the Netherlands points out that the scope for competition is limited. If competition is to work, rather extensive government regulation to monitor the conduct of both providers and insurers is needed. Without an effective antitrust policy a high degree of concentration and collusion is likely.