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What is the 'eigen risico' and why does it exist? An election issue explained

Datum:13 maart 2017
Auteur:Viola Angelini
Viola Angelini, associate professor at the Faculty of Economics and Business, teaches health insurance as part of her lecture series on public economics and social policy.
Viola Angelini, associate professor at the Faculty of Economics and Business, teaches health insurance as part of her lecture series on public economics and social policy.

A dominant issue in the Dutch election campaign has been healthcare: specifically, the rising cost of the so-called 'eigen risico'. But what does this term mean, and what is the rationale for it? Viola Angelini, an associate professor at the Faculty of Economics and Business of the University of Groningen explains.

The optimal health insurance policy is thought to be one in which individuals bear a share of the medical costs within some affordable range, but are fully insured when costs become unaffordable.

More generally, the optimal design of social insurance schemes always involves a trade-off between protection and distortion.

In health insurance, individuals need to be protected against medical expenditure risk – it is important that people are able to afford necessary health treatments. However, if individuals are fully insured, they might decrease health prevention – by smoking, being sedentary or overeating - or overuse medical care as they do not have to bear the costs.

Economists refer to this distortion in behaviour as moral hazard. Because of moral hazard, it might not be optimal to provide full insurance and often individuals have to pay for part of the costs of their actual utilization.

In the Netherlands, from the age of 18 there is a compulsory deductible (‘eigen risico’): a person faces the full costs of medical care up to some limit, and the health insurance pays for costs after that. The compulsory deductible does not apply to all types of medical care: for example, appointments with the GP, maternity and obstetric care are exempted.

This deductible has been increasing substantially over time: it was €170 in 2011, €220 in 2012, €350 in 2013, €360 in 2014, €375 in 2015 and €385 in 2016 and 2017.

Again, the aim of the deductible is to encourage health prevention and reduce unnecessary medical visits and treatments by making individuals responsible for a share of the healthcare costs. However, it is important to make sure that the deductible does not undermine the affordability of health care.Viola Angelini teaches health insurance as part of her lecture course on public economics and social policy. For more about her work see here. Sample research: