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Shifting the starting point of the deductible in healthcare insurance reduces healthcare costs

Published: 01st July 2021 Last updated: 01st July 2021

Under the Dutch Healthcare Insurance Act (Zorgverzekeringswet), everyone faces a mandatory deductible: people have to pay the first € 385 (in 2020) of their healthcare costs out of their own pocket. The purpose of the deductible is to make insured individuals aware of the costs of healthcare by having them pay some of these costs themselves. However, this deductible has a number of drawbacks. Having studied these as part of her PhD research, Minke Remmerswaal shows that other forms of cost-sharing schemes, such as shifted deductibles and co-insurance rates, are more effective. On July 2, she will defend her PhD thesis at Tilburg University.

One disadvantage of the mandatory deductible is that people who are chronically ill or who require medical care every year as a rule end up having to pay the full mandatory deductible of € 385 every year. Healthy people usually have little or no out-of-pocket healthcare expenses, because they need no or very little care. Healthy individuals will therefore opt to increase the deductible, bringing down the premium they have to pay. This creates a certain trade-off between the effects of a mandatory deductible: a higher deductible may lower the health insurance premium to be paid, but, as a result, people who are chronically ill and people who need care every year with high healthcare costs face higher out-of-pocket healthcare expenses, because they pay the full deductible every year. Remmerswaal’s research shows that other forms of out-of-pocket payment, namely shifted deductibles and co-insurance rates, improve the trade-off. These forms of out-of-pocket payment have the same (or a stronger) dampening effect on healthcare expenditure, plus people have to pay fewer costs themselves.

Shifted deductible and co-insurance rate are more effective

Remmerswaal developed a structural microsimulation model that can predict how Dutch healthcare expenditure and the out-of-pocket amount that people need to pay change as a result of adapting the form and/or amount of out-of-pocket payments in healthcare insurance. A shifted deductible moves the starting point of the deductible from € 0 to € 400. Remmerswaal’s research shows that for the study sample the average decrease in healthcare expenditure was 4% and that out-of-pocket payments dropped by 47% as compared with a regular deductible of € 300. Co-insurance rates, requiring insured individuals to pay a percentage of the healthcare costs from their own means, are more efficient than a standard deductible, too. The simulation model shows that these alternative forms of out-of-pocket payment are more effective than a regular deductible in curbing healthcare consumption and healthcare costs. One reason for this higher degree of effectiveness is that under the deductible currently in place one or just a few treatments suffice to use up the entire deductible; for additional treatment people no longer face out-of-pocket expenses and this obviates the need for people to consider whether additional treatment is necessary. Shifted deductibles and co-insurance rates do not have this effect and as a result insured individuals do not use up their deductible as quickly. This in turn decelerates their healthcare consumption over a longer period. In addition, insured individuals face lower out-of-pocket expenses, because they only have to pay a percentage of the healthcare costs (under a co-insurance rate) or have no deductible for the first € 400 in healthcare costs (under a deductible whose starting point has been shifted to € 400).

Voluntary deductible as good as ineffectual

Remmerswaal also studied the voluntary deductible. What this type of deductible entails is that insured individuals choose to raise their mandatory deductible by € 100, € 200, € 300, € 400, or € 500, and in return are given a discount on their health insurance premium. Her research shows that a voluntary deductible makes but a tiny dent in healthcare consumption, and this implies that people that do not have a voluntary deductible effectively contribute to the premium discount for people who do have a voluntary deductible.

Financial incentives impact on provider and patient behavior

Remmerswaal’s PhD thesis consists of five essays that shed light on how financial incentives in the Dutch healthcare system affect the behavior of healthcare providers and insured individuals. For politicians and policymakers, this is an important question, because healthcare expenditure takes up a large part of the national budget. One example of provider behavior became apparent when Remmerswaal examined the payment system for providers of mental healthcare (GGZ) introduced in 2008. In this system, reimbursement rises in stages at fixed treatment duration thresholds. Her research shows that this system did not significantly increase provider efficiency. In fact, providers treated their patients just long enough to reach a higher reimbursement threshold, but extended treatment did not translate into better health outcomes for patients.

Minke Remmerswaal (1989) obtained a Bachelor’s in Public Health and Society at Wageningen University in 2011 and a Master’s in Health Economics, Policy and Law at Erasmus University Rotterdam in 2014. She then worked as a health economist at the CPB Netherlands Bureau for Economic Policy Analysis in The Hague. In 2015 she started a PhD project at the Department of Economics at the Tilburg School of Economics and Management, besides her job at the CPB.


Note to editors

Minke Remmerswaal will defend her PhD thesis on Friday, July 2, 2021, at 13:30 hrs., at Tilburg University. The livestream of the defense can be watched here. Title of the PhD thesis: Essays on Financial Incentives in the Dutch Healthcare System. Supervisor: Professor J. Boone. Co-supervisor: Dr. R.C.M.H. Douven. A review copy of the PhD thesis can be requested via Minke Remmerswaal can be reached at