The Importance of Order and Complements: A New Way to Understand the Dutch and German Health Insurance Reforms

Abstract

This article adds to recent theorizing on gradual institutional change by focusing on how institutional displacement occurs through sequential patterns of change. It argues that under certain conditions, reformist political actors may achieve systemic reform through sequences of incremental reforms. We illustrate our argument through a comparative analysis of systemic health care reforms in two Bismarckian health insurance systems, the Netherlands and Germany. These reforms involved further universalization of health care insurance combined with regulated competition to enhance efficiency. The analyses show that reformist actors anticipated institutional drift and that they employed layering and conversion over time to pave the way for institutional displacement. In the Netherlands, successive sequences complemented each other so that over time the former bifurcated insurance system could be replaced by a universal system. In Germany, successive sequences did not complement each other, and bifurcation is still in place.