Health Reform Without a Public Plan: The German Model - Economix Blog - NYTimes.com

Description

Health Reform Without a Public Plan: The German Model

Uwe E. Reinhardt is an economics professor at Princeton.

In the previous two posts , I sought to explain why the public health insurance plan that Barack Obama had firmly promised during the presidential campaign appears to have become a deal-breaker in President Obama’s quest to sign a genuinely bipartisan health reform bill later this year.

What if that plan were sacrificed on the altar of bipartisanship? Would it be the end of meaningful health reform?

Not necessarily, if the health systems of the Netherlands, Germany and Switzerland are any guide.

None of these countries uses a government-run, Medicare-like health insurance plan. They all rely on purely private, nonprofit or for-profit insurers that are goaded by tight regulation to work toward socially desired ends. And they do so at average per-capita health-care costs far below those of the United States — costs in Germany and the Netherlands are less than half of those here.

To see how this can work, think of the basic functions that any health system must perform. To wit:

1. the financing of health care , that is, the extraction of the required funds from individuals and households who ultimately pay for 100 percent of all health care

2. the pooling of individual risks with the aim of protecting individuals and households from the high costs of medical care in case of illness

3. the purchasing of health care from its providers (doctors, hospitals, drug companies, etc.)

4. the production of health care goods and services

5. the regulation of the entire system so that it operates towards socially desired ends.

Who should perform these functions is powerfully driven by the distributive social ethic that nations wish to impose upon their health systems.

In Europe, as in ...

Original URL

http://economix.blogs.nytimes.com/2009/04/17/health-reform-without-a-public-plan-the-german-model/

http://economix.blogs.nytimes.com/2009/04/17/health-reform-without-a-public-plan-the-german-model/