Comparing Models of Health Care
June is here. School is out. The weather is fine, and the Supreme Court is expected to decide on universal health care's future in the United States. After months of speculation on which Justice will lean in which direction, we must focus on what happens next. If the Supreme Court declares parts of the Patient Protection Affordable Care Act (PPACA) unconstitutional, what will be the effect on health care policy in Minnesota?
Already, Minnesota’s health care policy has generally proven to be fairly effective. In 2011, Minnesota ranked 6th overall in state health rankings, and Minnesota is the only state to mandate not-for-profit health insurance. In spite of this high ranking, in 2011 9.1% of Minnesotans were uninsured (almost 490,000 people) and the number of uninsured is growing. But even if the Supreme Court strikes down all or part of the PPACA, Minnesota’s legislators can continue to work on improving our state's health care coverage.
Since 2005, the University of Minnesota's Center for German and European Studies has assembled health care policy experts from Minnesota and Germany in a series of bi-annual conferences to discuss how we can learn from one another and improve overall healthcare in our respective borders. Many health care models used in other parts of the world, including Germany, are interesting and useful for creating progressive health policy in Minnesota. The state has been sending delegations to study Germany's system for the past few years.
Germany established the first national health care system in the world in 1883 under the first German chancellor, Otto von Bismarck. Elements of this Bismarck model can be found in industrialized countries all over the world, including: Japan, France, Switzerland, and even the United States.
The German system comprises both public and private insurance choices, and the entire population is covered by one of these two options. The public insurance is regulated by the German government to create competition between the insurers, similar to market conditions. Every individual covered by public insurance (about 90% of the population) must join a krankenkasse (sick fund), which compete for members and are granted a fixed amount of money from the government based on the number of members they serve. Employers and employees pay roughly 7% and 8% of their gross wages into a fund that finances the krankenkasse.
Individuals can choose from over 200 different krankenkassen, and the government intervenes only to help regulate the krankenkassen and create greater competition among them and private insurers.
Private insurance covers the remaining 10% of the population who are typically wealthy, self-employed, or civil servants. While Germany has a much larger population than Minnesota, age demographics are similar. Germany’s policies have successfully supported an increasingly aging population while still providing affordable universal health care. This is a model that Minnesota should closely examine.
The Bismarck model is not the only option for a universal health care system. The second most popular model is exemplified by Britain’s National Health Service (NHS), a national tax-based plan that offers health coverage to all as a public good rather than as an individual right (as it is in Germany). Under the NHS, health professionals are all civil servants. General practitioners who attend to more demanding patients are paid more by the government and there is a great focus on preventative and primary care, especially in impoverished areas.
Although the cost of the NHS has been increasing, many maintain that the system is “well designed but under provisioned.” From the British perspective, the American system is “richly funded, but maximizes waste, inefficiency, and inequity.”
American society leans toward perpetuating the rights of the individual rather than embracing the common good. This ideal combines with our political system to create great obstacles to achieving national universal health care. However, we can ensure that healthcare is available to everyone in the Minnesota. By adopting some regulatory measures from Germany to control insurance costs and create more competition between private and public insurance plans, we can lower healthcare costs and make it more affordable for everyone.
The state should expand eligibility for programs like Medicaid and Minnesota Care. A state health economics report claims that each year there is over $250 million worth of uncompensated care (mostly from uninsured patients) at hospitals around the state and the government needs to subsidize hospitals more to make up for the costs of uninsured patient visits.
Extending funding of MinnesotaCare by $663 million, this report states that every individual in Minnesota can be covered by quality health insurance. We can increase focus on primary and preventative care, and work to reduce unnecessary tests and drugs.
Universal health care models in other countries show the cost benefits as well. In 2010, the average insured American spent 14.3% of his total income on health care (this includes co-pays, out-of-pocket spending, deductibles and tax subsidies for employer-based health insurance.) On average, countries using the UK’s model of nationalized health care spend 8.1% of their income on health care, and those using the German model spend 9.6% of their income on these costs.
Reports from the Minnesota Department of Health say universal health care in Minnesota will most likely not be cost-effective without an individual mandate. Even if the Supreme Court declares an individual mandate unconstitutional, Minnesota can still follow Massachusetts’s example and issue an individual mandate of our own. By learning from models like the UK and Germany, Minnesota can continue to lead the nation in innovative health care policy, and hopefully, we can make quality affordable healthcare available to everyone.