Expenditure management in the healthcare sector

Our main conclusion is that the Minister of VWS has little insight into the development of healthcare expenditure and does not have sufficient instruments to manage it on a timely basis. Furthermore, she does not make optimal use of the instruments that are available to her. In consequence, she cannot adequately fulfil her responsibility to keep healthcare affordable.
The main shortcomings in expenditure management are:

1. There is a mismatch between income and expenditure. Healthcare expenditure systematically exceeds the budget. Overexpenditure is not fully offset within the sector. The rising deficit incurred under the Exceptional Medical Expenses Act is covered by means of loans from the treasury.
2. The instruments available to manage expenditure are not fully effective and are sometimes inconsistent with the management philosophy. The Minister of VWS works with two estimates at the same time and the reconciliation of estimated and actual expenditure is accordingly not transparent.
3. The effectiveness of compensatory measures is unknown. In practice, the response to setbacks is slow and interventions take little account of the underlying causes. There is little insight into the effectiveness of compensatory measures. 
4. The information provided is often out of date and unclear, making it difficult to take timely measures. Final figures on healthcare expenditure are not published. There are shortcomings regarding the relevance, timeliness, clarity and transparency of the information submitted to the House of Representatives.

Regarding the management of expenditure in the healthcare sector, we make the following recommendations to the Minister of VWS:

• Propose to the House of Representatives that the annual deficit arising under the Exceptional Medical Expenses Act be met from the general budget.
• Explain why healthcare expenditure is estimated in two ways and provide an insight into the differences. We recommend that the minister explain how the estimate made by the Netherlands Bureau for Economic Policy Analysis (CPB) is used to plan expenditure.
• Ensure the information on windfalls and setbacks is up to date and timely. In particular, determine what the underlying causes are as quickly as possible so that timely and appropriate compensatory measures can be taken.
• Systematically evaluate the effectiveness of compensatory measures taken to manage expenditure.
• Ensure that information on healthcare expenditure is timely, up to date, complete and transparent so that timely corrective measures can be taken and the information position of the House of Representatives can be strengthened.
• Render account for the final actual figures on healthcare expenditure.

The Minister of VWS shares our conclusions regarding the weaknesses in the information provided. However, she doe not share our other conclusions. She sees no need to fund the deficit arising under the Exceptional Medical Expenses Act from the general budget. According to the minister, this would not lead to a fundamental change in exceptional medical expenditure. Regarding the effectiveness of management instruments, the minister states that the healthcare sector is in a transitional phase and the incentives are not yet optimal. She also thinks the transparency of the use of the CPB's estimate in her own estimates is a negotiation risk. The result, moreover, can be seen in the budget. Finally, the minister states that compensatory measures are effective and their effectiveness has been investigated. 

The minister did not respond to our recommendation that she render account for the final figures on healthcare expenditure and investigate the causes of setbacks so that appropriate measures can be taken.