Netherlands: #3 in the 2022 World Index of Healthcare Innovation (2024)

By Gregg Girvan and Avik Roy

Introduction

The Dutch healthcare system ranks 3rd in the 2022 World Index of Healthcare Innovation, with an overall score of 59.86, behind only Switzerland (1st, 66.49) and Ireland (2nd, 60.04). The Netherlands ranked 2nd in 2021, and 3rd in 2020.

The Netherlands scored well across the board, ranking no lower than 10th for any dimension (for Quality).

Holland’s best performance was in Choice (2nd, 65.91), where Dutch residents not only enjoy choice among dozens of health insurers, but also broad choice of providers and innovative drugs. However, the Netherlands noticeably slipped in Quality dropping from 4th in 2021 to 10th (60.02) in 2022.

Background

The Dutch healthcare system shares many common features with Germany’s, because during World War II, occupying Germans installed a private health insurance system identical to that of Germany’s for those with incomes below a certain threshold.

In 2006, in collaboration with Stanford economist Alain Enthoven, the Dutch government enacted a significant health reform package. “At the end of the 1990s,” recalled then-Dutch Health Minister Ab Klink, “the budgetary system for health services [didn’t] work anymore. It was far too regulatory because the government fixed all the prices. We became aware that it blocked innovation.”

The Dutch replaced the old system with one of “managed competition,” in which multiple private insurers compete for market share, on the basis of price and quality. Insurers must take all applicants and adhere to a basic benefit package, but can offer additional benefits on top of the required ones. Residents must buy coverage and pay premiums equal to 6.5 percent of their first €30,000 in annual income. The premiums are automatically deducted from workers’ paychecks by their employers.

Prescription drug formularies are managed by the insurers under this competitive system. Coverage of some drugs is mandated by the Ministry of Health, which is advised on coverage decisions by the Netherlands Healthcare Institute (Zorginstituut Nederland). While drug prices float based on insurer-manufacturer negotiations, and insurers can increase or decrease deductibles for drugs based on their value, the government protects against monopoly drug pricing by setting price ceilings. Like the United States, generic drugs enjoy a high market share in the Netherlands.

The largest innovative healthcare company in the Netherlands is Philips NV, which has a large medical equipment division. The Netherlands is also home to a large early-stage biotechnology industry. Organon, a mid-sized pharmaceuticals company, was sold to U.S.-based Schering-Plough in 2007, which was later acquired by Merck.

Quality

The Netherlands ranks 10th overall for Quality. While it has room for improvement on certain measures such as treating cancer, it has the highest marks in the Index on cardiovascular survival. However, the country resorted to a high lockdown stringency to contain COVID-19 earlier in the pandemic (16th for pandemic preparedness), and still lags much of continental Europe on vaccination rates.

Choice

The Netherlands is 2nd for Choice in this year’s rankings. One main reason is that despite its smaller population, the Netherlands has access to innovative drugs on par with other major economies in Europe, including Germany and the United Kingdom. In addition, the country values individual freedom to choose healthcare services (4th), including offering a wider variety of insurance plans and designs than all but three countries in the Index.

Science & Technology

The Dutch place a high value on advancements in Science and Technology as well, ranking 5th overall in the Index. Its ranking is driven primarily by universally adopted health digitization across all provider types. In addition, the Dutch rank highly for scientific discoveries (6th), having a significant body of oft-cited research in biochemistry, genetics, and molecular biology. Investments in medical research and development are low for a country as advanced as the Netherlands, but it makes up for it with a high number of healthcare patents, especially in the medical technology sector.

Fiscal Sustainability

The Netherlands excels in providing universal care, while still maintaining a strong Fiscal Sustainability ranking at 7th. With a debt-to-GDP ratio of 52.5 percent, the country’s national solvency (15th) is manageable. In addition, with a reliance on universal private insurance, the Dutch have kept public healthcare spending low (6th). In fact, The Netherlands has managed to keep its public healthcare spending as a percentage of GDP relatively flat over the last 10 years.