In several countries major health care reforms have been implemented in the last decades. Most of these reforms focused on a shift from supply-side regulation to a more demand-side oriented system. Managed competition can be seen as a blue print for the reforms in several European countries including the Netherlands, Germany and Switzerland (Enthoven and van de Ven 2007, van de Ven 1996). With the introduction of managed competition, the structure of the health care market shifted to a more market oriented system in which third-party payers are responsible for the purchase of care. In most countries, health insurers function as third-party payers. Health insurers are given incentives and tools to act as prudent buyers of care on behalf of their enrollees. Enrollees are given incentives to encourage insurers to act as prudent buyers of care since they have to buy a health insurance plan on a competitive health insurance market. In this thesis we focus on the Dutch health care system. The introduction of the new Health Insurance Act (HIA) in 2006 has been a major step in the transition towards managed competition. Under the HIA all persons who legally live or work in the Netherlands are obliged to buy a basic benefit package from a private health insurer on a competitive health insurance market. Health insurers are obliged to accept all applicants against a community rated premium. Via a risk equalization fund health insurers are compensated for high risk enrollees. Consumers can receive subsidies that make insurance affordable for everyone (Van de Ven and Schut 2009). With the introduction of the HIA price competition on the health insurance market increased substantially. Moreover, insurers are given different tools to act as prudent buyers of care. Insurers can selectively contract with health care providers and offer different health plans to their enrollees including e.g. preferred provider plans and traditional fee-for-service plans.