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Four Basic Kinds of Health Care Financing Around the World

The four basic methods of paying for health care are as follows.

--The Bismarck model
--The Beveridge model
--The Douglas model
--You're On Your Own, Baby! (YOYO)

The Bismarck model
    Created in 1880s by Otto von Bismarck in Germany
    Based on private, tightly regulated, insurance funds
    Mostly through employers
    Government pays for enrollment of the unemployed
    Germany, Switzerland, the Netherlands, France and Japan

The Beveridge model
    Britain's National Health Service created by William Beveridge in the 1940s
    Government owns and operates the entire health care system
    General taxes pay all costs. No bills to patients
    Some private care, privately paid for - about 3% of total health care costs
    Great Britain, Italy, Spain, Scandinavia, Hong Kong

The Douglas model
    Tommy Douglas, Premier of Saskatchewan, got this program established in 1947 and 1961
    Tax-funded government payments for health care
     Nearly all doctors and some hospitals are private
    Canada, Taiwan, South Korea

You're On Your Own, Baby! (YOYO)
    Third World model
    The vast majority of care paid for out-of-pocket (OOP)
    If you have money you get health care; if you don't have money you don't
    Rural regions of Africa, India, South Asia, China, South America

All other developed countries around the world focus on making one of the first three models provide the majority of health care.  One of the reasons that our current non-system is such a mess is that we have all four systems in operation at the same time instead of focusing on just one.  Our current employer-based insurance resembles the Bismarck model, except without the strong regulation of private insurance.  We have the Beveridge model for the military, the VA and Indian health services.  We have the Douglas model for people over 65 with Medicare.  And then there are the large numbers of people staying in animal shelters on state fairgrounds to get free care offered by organizations that mostly operate in Third World countries, not to mention the 45,000 a year who die because they can't pay for the care that would have saved them.

Currently, there are several versions of health care reform being considered by Congress originated by Democrats.  (All Republican proposals are essentially YOYO, even though to a person they would insist on adding another trillion to the national debt to obliterate any foreign power that killed 45,000 Americans a year.)  The Beveridge model is out except for those already served by it--no American progressive health care activists have ever proposed anything remotely resembling it.  

Single payer (HR 676/HR1200/S703, the Douglas model) has been pushed "off the table."  Howard Dean (Democracy for America) and radio host Thom Hartmann have proposed an incremental implementation of this model, opening Medicare to voluntary enrollment by anyone, though only Senator Rockefeller has written actual legislation with a more restricted version of the proposal, opening voluntary enrollment in Medicare to early retirees between the ages of 55 and 64.(1) This particular type of incremental proposal is the only kind which will benefit anyone at all before 2013.  (Actual current proposals will leave Democrats two full election cycles to explain to the public why their health care situations are continuing to go straight to hell.)

That leaves the Bismarck regulated private insurance model.  Would any of the current national legislative proposals(2) (the Senate HELP bill, the Senate Finance committee bill, or the House combined bill HR 3200) result in a true Bismarck model system?  Or could they at least be the start of an incremental approach to such a system?

The answer to the first question is clearly no.  Countries like France, the Netherlands and Germany spend around $3000 per capita in US dollars compared to our $6000 per capita expenditure(3), and current proposals recommend spending up to a trillion dollars more over a ten-year period.  They also recommend mandating the payment of an outrageous 10-12% of income for private insurance premiums alone, which would only cover 70% of actual health care costs to individuals and require co-pays as well.  That these premiums would be subsidized for some means only that our national debt would be increased to line the pockets of insurance company CEOs instead of to create green jobs or rebuild our infrastructure.

The French pay 8% of their income for health care, which takes care of everything, with no deductibles and minimal co-pays.   The Netherlands, which taxes employers to pay 50% of health care costs, requires mandated private insurance for the remainder costing 100 euros/month (~$140) per adult, with no co-pays or deductibles.  Everyone gets the same standard of care regardless of age or employment status, in contrast to the four tier system proposed by our Congress, which is based on the principle that some people deserve good health care and other people whose lives are worth less do not.   In addition, age discrimination is written in to all current legislation, with charging older people from two to five times as much as standard premiums allowed. (This is not to say that affluent people in countries using the Bismarck, Douglas or Beveridge health care models don't buy a lot of extras for themselves--they do.  But it's on their own dime, and costs for good standard comprehensive care for everyone are low enough that they have plenty of extra dimes to use for that if they so choose.)

The costs to individuals in these Bismarck systems are very similar to what single payer systems proposed here would charge.  HR 676 estimates $125/month/adult, and the Washington State single payer model originally proposed $75/month, more recently up to $100/month.(4)  These approximate cost levels should serve as a basic standard to determine whether any health care reform proposal is acceptable.  Clearly current proposals are not.

But could they become acceptable eventually if enacted?  The answer could be yes if Congress ever develops the will to impose cost controls on insurance companies.  France, Germany, the Netherlands, et al. impose cost controls which regulate what doctors, hospitals, pharmaceutical companies and insurers can charge for their services.  Currently, Congress refuses to do that, and without a considerable amount of public pressure they are not going to change.  And if Congress ever had the political will to really regulate insurance companies, it would also have the will to put single payer back on the table.  Enacting current legislation as is and hoping for good behavior from insurance companies is nothing but a recipe for an ongoing disaster.

Thanks to Dr. Sherry Weinberg, Vice-President of Health Care for All--WA, for her description of the four basic models for health care financing.  They were derived from the book The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care by T. R. Reid

Notes
(1)Rockefeller Amendment #C26 to Title I, Subtitle G (Role of Public Programs) to America's Healthy Future Act, p.260
(2)http://www.kff.org/healthreform/upload/healthreform_sbs_full.pdf
(3)http://www.infoplease.com/ipa/A0934556.html
(4)http://www.healthcareforallwa.org/health-security-trust/

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