Healthcare: a look at the continent

Elliot Bidgood, 23 January 2013

The updated Civitas online briefings on health systems are available here.

Recently in British politics we’ve seen the rise on both sides of the political aisle of a phenomenon calling for a new society and political economy, first with Phillip Blond’s ‘Big Society’ influence on David Cameron and now with Ed Miliband’s ‘One Nation Labour’, inspired by Lord Maurice Glasman. While these visions differ in emphasis, and there’s perhaps a question as to what extent their influence will endure, they represent two sides of a similar coin. Both stress a society in which monopolies of neither the paternalist state nor the neoliberal market dominate, with both kept in check by empowerment, localism, corporatism and mutuality. This is essentially the German model of a social market, in which there has been much accompanying interest.

Both Glasman and Blond have highlighted the relevance of this new strain of thinking to public service reform, including healthcare. While the establishment of the NHS after the war was certainly a proud and ground-breaking achievement, and while its core principles of social solidarity and universal access to quality care need to be fiercely and continually defended, Glasman has offered a measured critique of wholesale nationalisation, observing that while it certainly “decommodified” healthcare, the original principles of the Labour movement stressed responsibility and diversity and that “moving to the state exclusively as the provider” was a mistake. In times gone by, these values were represented by friendly societies, voluntary hospitals and other community health and welfare organisations. Some have rightfully warned against viewing these previous arrangements in an overly nostalgic light, given the patchwork of backup provision that they so often represented, but the fact that their underlying principles of mutualism, engagement and diversity were lost altogether in the transition is nevertheless to be lamented. Similarly, Blond has argued from a Conservative standpoint that in the wake of the controversy over the on-going reorganisation of the NHS, the way forward is for health to be delivered by a “mixture of state and people who give a damn”, meaning greater mutualisation and community and group involvement. For example, he stressed the potential role of community treatment and “personalisation” in moving the NHS towards a better approach to social and chronic care and away from the standardised ‘sickness service’ model that continues to dominate, in which “everything is a version of breaking your leg”.

As in our political economy writ-large, the German experience perhaps offers some ideas as to how we can go about integrating some of these principles into our own healthcare. The German system essentially features universal social insurance coverage, provided through a network of 150 statutory organisations known as sickness funds. Some of these are funded by employers, who play a substantial role in the health system as guarantors of around half the cost of their employees’ healthcare, while others are run by trade guilds or religious community groups. Payroll contributions from individual workers make up the other half, though more recently some general taxation at the national level has been used to supplement the funds. Other funds protect the unemployed, providing a firm safety net. Therefore, the state and sectional and community interests work together to provide universal coverage, while retaining choice and diversity. Private health insurance separate from the mainstream statutory funds does exist and Germans can opt-out of the statutory system in order to purchase private insurance, but over 90% of the population chose the statutory funds, sometimes even when they can afford private coverage.

Recent reforms to the social insurance system have also involved the establishment of one central funding pot under the control of the federal government, with money distributed to the funds through a strong risk-equalisation mechanism (meaning all funds receive amounts proportional to the size of their membership, rather than the relative health of their members). This has stamped out in Germany some of the ‘postcode lottery’ problems common in our NHS. All of this is in stark contrast to our experiences in the UK, where we are in the main used to personal disengagement from our comparatively standardised system, although innovations such as Foundation Trust membership and Health and Wellbeing Boards have introduced some mutuality and stakeholdership into our system. Further, the fact that in Germany there are those who can afford private insurance but proactively choose to stay within the solidarity-based public system is a contrast to health as we know it in the UK, where private healthcare essentially functions as an escape-hatch from the waiting times of our mainstream system for the privileged few.

On the provision side, we also find more diversity and individual, community and private involvement than we are used to in the UK, but nevertheless find it is strongly correlated with quality and patient satisfaction. Most German hospital beds are in hospitals that are publicly-run, but 35% are in hospitals managed by private non-profit orders, usually religious charities or trade guilds, and both types of hospital enjoy strong reputations for quality care. In total, around 85% of capacity is in non-profit facilities, with the remainder in for-profit private hospitals, which tend to be smaller. Public sector hospitals also tend to be controlled at the municipal level, in line with the German doctrine of subsidiarity. While this is all very different from what we know today in the NHS, it is not entirely unknown in our history. Prior to Bevan’s nationalisation in 1948 UK hospitals were generally run on a voluntary or municipal basis, and at the time the regionalisation of health provision under the National Health Service Act was in fact one of its most controversial elements. In 1974, a subsequent reorganisation of the NHS along unitary lines centralised the service even further. It is also not unknown in other countries with systems more similar to our own. Sweden, for example, operates a system much like the NHS, but provision and financing of healthcare are handled at the county and municipal level.

Between universal coverage and diverse, localised non-profit provision, the German system has a strong reputation for providing equitable access to high-quality care, even for those on low incomes. The Germans have better access to doctors and technology than Britons, fewer preventable deaths and the lowest waiting times in the OECD. This demonstrates that while social solidarity and universality are essential, public sector standardisation is not entirely necessary if our goal is to have the absolute best care for all. It is this that explains why the German Social Democratic and Green parties are as supportive as the Christian Democrats of their country’s healthcare system, which goes back over a 100 years. Further, Belgium, Austria, France, Japan, Israel, the Netherlands and Switzerland all operate their own variations on Germany’s Bismarckian model, and tend to experience similarly equitable access to world-class care. Even the US health system, now finally undergoing reforms aimed at achieving similar outcomes after decades of dysfunction, appears to be following a broadly Bismarckian rather than Beveridgean roadmap towards these goals.

Britain is of course far from alone in our strong preference for a Beveridgean health system, with Canada, Australia, New Zealand, Scandinavia and Southern Europe taking variations on our approach. But especially outside of localist Scandinavia, these systems often rank near ours (i.e. slightly behind the Bismarckians) in key indicators of healthcare quality such as waiting times and mortality amenable to healthcare. At a panel discussion on health reform I attended recently at the British Academy, University of Bath Professor Rudolf Klein suggested that one of the major questions in comparative health policy continues to be why Bismarck systems often appear to outperform Beveridge systems. When looking at the different outcomes and levels of satisfaction we see, Klein’s question can be hard not to ask.

In that same discussion, several experts also stressed that at the same time we must avoid the temptation to boil comparative health policy down to simply wanting to transplant other national systems into our own country wholesale, a wise point we must take heed of given vast national differences. We are also already seeing right now in the NHS how big a shock to the system substantial organisational change can be, especially if it is pushed forward in difficult times or without broad consensus support, and over a decade of changes has also reduced the ability of both staff and patients in the NHS to stomach further fundamental change. However, given Professor Klein’s observation, it is well worth scouring the nations of the continent for incremental innovations we can make and new ethoses we can adopt, particularly as the One Nation Labour-Red Tory political axis of the moment creates a window for it in our politics. Moreover, the continental experience of healthcare shows that we must not attack all proposals for greater diversity in healthcare provision as ‘Americanisation’, especially at a time when even the Americans are abandoning their own chaotic system to imitate not our model of healthcare, but those of the continent.