Introduction
The concept of social health insurance (SHI) is deeply ingrained in the fabric of
health care systems in western Europe. It provides the organizing principle and
a preponderance of the funding in seven countries – Austria, Belgium, France,
Germany, Luxembourg, the Netherlands and Switzerland. Since 1995, it has also
become the legal basis for organizing health services in Israel. Previously, SHI
models played an important role in a number of other countries that subsequently
changed to predominantly tax-funded arrangements in the second
half of the twentieth century – Denmark (1973), Italy (1978), Portugal (1979),
Greece (1983) and Spain (1986). Moreover, there are segments of SHI-based
health care funding arrangements still operating in predominantly tax-funded
countries like Finland, Sweden and the United Kingdom, as well as in Greece
and Portugal. In addition, a substantial number of central and eastern European
(CEE) countries have introduced adapted SHI models since they regained control
over national policy-making – among them Hungary (1989), Lithuania
(1991), Czech Republic (1992), Estonia (1992), Latvia (1994), Slovakia (1994)
and Poland (1999).
Despite this pivotal role in European health care, the organization and operation
of SHI systems has received notably less attention from academics and
researchers than have tax-funded systems. Neither the core system characteristics
that define the SHI model, nor the performance of various SHI models in
comparison with that of various tax-funded systems, have received the type of
systematic assessment they deserve. This is the case not only in the English
language literature. Those comparative studies available in Dutch, French or
German language (the seven western European SHI countries) tend to be limited
to neighbouring (border) countries, and often focus on narrow technical rather
than broader conceptual issues. Wide structural and organizational differences
between western European SHI countries (as well as with Israel) further complicate
efforts to delineate common patterns and problems.
The availability of widely accessible, comparative knowledge about SHI systems
could be helpful for health policy-making both outside and inside Western
European SHI systems. Outside, policy-makers in central and eastern Europe
(CEE), but also in other potentially interested areas such as south-east Asia,
South America and the United States, would benefit from being able to obtain a
clear picture of how western European SHI systems are organized and how well
they perform. Among other advantages, this might reduce political tendencies
within some former Soviet Bloc countries to focus on only the official form of
SHI systems without considering the equally important societal characteristics
necessary to make those systems work successfully. Inside SHI systems, a clearer
comparative picture could assist policy-makers as they grapple with increasing
challenges to the economic, political and social sustainability of the traditional
SHI framework (see below).
One of the most striking observations about contemporary SHI systems is the
contrast between this knowledge gap about what they are and how well they
function, on the one hand, and the strength of the emotional attachment of the
citizens within these countries to their particular SHI system, on the other hand.
How can one account for such a powerful popular attachment to a health care
arrangement that is so hard to describe and about the performance of which
information is so limited? This observation suggests that, before detailing the
dilemmas that contemporary SHI systems confront, it may be useful to consider
how SHI systems look in the eyes of those who support them.
An insider’s perspective
The attraction of the SHI approach for both citizens and policy-makers appears,
on initial viewing, to be based on three structural characteristics. First, SHI systems
are seemingly private in both the funding and delivery of health services.1
Second, as seemingly private, SHI systems appear to be self-regulating, managed
by the participants themselves (e.g. sickness funds, physicians and, to a lesser
degree, patients). Third, as perhaps the most important consequence of being
seemingly private and self-regulatory, SHI systems are perceived as stable in
organizational and especially financial terms. This stability often appears to be
the most highly prized of all the outcomes associated with SHI systems. Indeed,
when one considers the political turmoil that the twentieth century brought to
western Europe, and the number of new governmental systems adopted or
imposed on France (four), and Germany (three), as well as on Austria, Belgium,
Luxembourg and the Netherlands, one cannot help but being impressed with
the extraordinary stability and longevity of SHI within these countries.
Beyond these three perceived characteristics of private, self-regulating, and
stable, however, lies a deeper, less discussed essence that is implicitly understood
by both citizens and policy-makers alike as separating off SHI systems sharply
4 Social Health Insurance Systems
from other arrangements for funding and providing health care services. This
perspective can be summarized by the observation – made persistently by
policy-makers from SHI countries – that SHI is not simply an insurance
arrangement but rather a ‘way of life’. In this view, SHI is a key part of a broader
structure of social security and income support that sits at the heart of civil
society. As such, SHI helps define how ‘social order is established in society’ (De
Roo 2003). It is part of the ‘fabric of society’ (Zöllner 2001), supported by a
‘social consensus’ that is deeply rooted in the ‘balance of society as a whole’
(Le Pen 2001). A central (if not entirely correct) presumption is that both
funders (sick funds) and providers (hospitals and physicians) are in the private
sector. Thus, crucially, the state is not seen to be the owner of these social
security structures, but rather their guardian and administrator – their steward
(Saltman and Ferroussier-Davis 2000). In consequence, there is a firm belief that
these health care systems are not artificial bureaucratic structures but rather ‘living
entities’. To operate successfully, they require major commitments of energy
and time by many parties involved, often on a voluntary basis. They also require
a high level of trust among many actors (see Chapter 6), leading to a conclusion
that ‘certain non-written rules are essential’ (Pfaff 2001). In Germany, for
example, ‘traditions and unwritten rules’ play a critical part in managing its SHI
system (Normand and Busse 2002).
A central dimension of this deeper understanding of SHI systems is that, in
structure, they are intentionally very different from standard commercial insurance.
Instead, SHI systems are constructed first and foremost as part of a social
incomes policy, to be redistributive in nature (Glaser 1991). They are thus consciously
designed to achieve a series of societal objectives through a set of financial
cross-subsidies – not just from healthy to ill but also from well-off to less
well-off, from young to old and from individuals to families. It is this redistributive
focus that distinguishes SHI from what is normally understood as ‘insurance’
– the latter being an actuarially precise device by which each individual
seeks to protect his or her own interests (Glaser 1991; Stone 1993). Thus SHI is
understood inside SHI countries as not being ‘insurance’ at all, but rather
exactly the opposite. Instead of enabling each individual to focus on his or her
own perceived personal interests, SHI requires individuals to contribute toward
the best interest of the population generally through its structure of financial
redistribution. It is this understanding of SHI that leads the citizenry in SHI
countries to link it to the notion of solidarity (see Chapter 2).
The deeply-rooted popular view of SHI systems as a ‘way of life’, grounded in
the core of civil society in an organic manner, and structured on solidarity
rather than on actuarial principles, highlights an additional core characteristic
of how these social health systems are viewed. It is that they are not, in the mind
of either citizens or policy-makers, intended to be primarily economic arrangements.
They are, rather, sociological and psychological structures, in which the
economic dimension is distinctly secondary (De Roo 2003). Indeed, taking
an exclusively economic and/or financial view of SHI systems is typically viewed
by policy-makers in these countries to be inappropriately reductionist. In
practice, one can readily see the imprint of SHI’s sociological or civil society role
in the pattern of health system reforms over the 1990s in SHI countries, as
policy-makers sought to accommodate growing financial pressures while still
Social health insurance in perspective 5
maintaining the core social arrangements and purpose of the SHI project
(see Chapter 3).
Looked at in this way, SHI systems can be understood as more than just a set
of institutions, and the decisions made about the reform of those institutions to
be based on considerably more than the currently pre-eminent political science
notion of ‘path dependency’ (Wilsford 1994; Peters 1999; Saltman and Bergman
2004 forthcoming). These institutions themselves serve rather as intermediaries,
as the administrative embodiment of a set of values deeply rooted in the
society as a whole, which underscore and reinforce this particular set of institutional
arrangements. In the case of western European countries with health
systems based on social insurance, these values are tied to national culture and
grounded in the historically generated principles of collective responsibility and
social solidarity. As the literature on cultural anthropology suggests, if new
institutions were to be introduced, the strength of this national culture and its
associated social values is such that ‘the persistent influence of a majority value
system patiently smoothes the new institutions until their structure and
functioning is again adapted to the societal norms’ (Hofstede 1980: 26).
In short, the historical experience of SHI systems supports the thesis that it is
the national culture and its associated social values that are broadly stable, and
that the stability of particular SHI institutions is a consequence of that social
continuity, rather than an independent event (Saltman and Bergman 2004
forthcoming).
From this cultural anthropological perspective, it is unsurprising that SHI
institutions are perceived inside SHI countries as being as much sociological as
economic in character (e.g. as a ‘way of life’). Much like the broader configuration
of social security arrangements within which SHI systems sit, SHI reflects
core values that are ‘socially embedded’ in the very heart of how these societies
understand themselves (Granovetter 1985; Saltman 1997). This organic view of
SHI is an important part of the explanation for why policy-making in SHI systems
appears to be cautious and incremental, why institutions – once established
– are rarely uprooted, and, consequently, why the overall pattern in SHI
systems continues to be one of stability and resilience.
A structural description
When one moves from this inside view to a more detached, outsider’s perspective,
SHI systems can be described in more structural terms. This structural
understanding incorporates seven core components that exist across all eight
studied countries, and that can be considered to comprise the organizational
kernel of an SHI system.2
Risk-independent and transparent contributions
The raising of funds is tied to the income of members, typically in the form of a
percentage of the member’s wages (sometimes up to a designated ceiling). This
has two equally important characteristics. First, contributions or premiums are
6 Social Health Insurance Systems
not linked to the health status of the member. If a member has a spouse and/or
children, they are automatically covered for the same income-related premium
and under the same risk-independent conditions. Second, contributions or
premiums are collected separately from state general revenues. Health sector
funding is transparent and thus insulated from the political battles inherent in
public budgeting.
Sickness funds as payers/purchasers
Premiums are either collected directly by sickness funds (Austria, France,
Germany, Switzerland) or distributed from a central state-run fund (Israel,
Luxembourg, the Netherlands) to a number of sickness funds (Belgium employs
both methods). These funds are private not-for-profit organizations, steered
by a board at least partly elected by the membership (except France and
Switzerland), and usually with statutory recognition and responsibilities (Israel
is an exception). The rules under which these sickness funds operate typically
are either directly established by national legislation (Austria, France, Germany,
Luxembourg, the Netherlands, Switzerland) and/or tightly controlled through a
state regulatory process (Israel) (Belgium is an exception). The sickness funds use
the revenues from members’ premiums (health tax in Israel) to fund collective
contracts with providers (private not-for-profit, private for-profit, and publicly
operated) for health services to members.
Solidarity in population coverage, funding, and
benefits package
Depending on the country, 63 per cent (the Netherlands) to 100 per cent
(France, Israel, Switzerland) of the population are covered by the statutory sickness
fund system. In countries with less than 100 per cent mandatory participation,
typically it is the highest-income individuals who are allowed (Germany)
or required (the Netherlands) to leave the statutory system to seek commercial
health insurance on their own (small exceptions exist for illegal immigrants, for
people with objections by principle and for civil servants). Funding for all
members is equalized either within national state-run pools (Israel, the Netherlands);
within regional government (Austria) or foundation-based (Switzerland)
pools; through mandatory risk-adjustment mechanisms (Belgium, Germany,
Israel, the Netherlands); or through state subsidies (Belgium, France). In all eight
SHI systems, the state requires the same comprehensive benefits package for all
subscribers.
Pluralism in actors/organizational structure
SHI systems incorporate a broad range of organizational structures. Both within
as well as between SHI countries, the number and provenance of sickness funds
may vary widely, based on professional, geographic, religious/political and/or
Social health insurance in perspective 7
non-partisan criteria. Nearly all hospitals, regardless of ownership, and nearly
all physicians, regardless of how they are organized (solo practice, group practice
etc.) have contracts with the sickness funds and are part of the SHI system.
Professional medical associations, municipal, regional and national governments,
and also suppliers such as pharmaceutical companies are all seen as part
of the SHI system framework.
Corporatist model of negotiations
Negotiations typically occur at regional and/or national level among ‘peak
organizations’ representing each health sub-sector involved. This corporatist
framework enables the self-regulation and contract processes to proceed more
smoothly, with substantially more uniformity of outcome and substantially
lower transaction costs. A corporatist approach among a group of ‘social partners’
(sick funds, health professionals, provider groupings and supplier groupings)
is also consistent with policy-making arrangements in other parts of the
social sector in the seven studied European countries (less so in Israel).
Participation in shared governance arrangements
As befits the pluralist configuration described just above, SHI systems typically
incorporate participation in governance decisions by a wide range of different
actors. The most visible manifestation is the traditional process of selfregulation
by which sickness funds and providers negotiate directly with each
other over payment schedules, quality of care, patient volumes and other contract
matters. Medical associations, hospital associations and other professional
groups frequently have some decision-making responsibilities as well.
Individual choice of providers and (partly) sickness funds
Members of sickness funds can usually seek care from nearly all physicians and
hospitals. In six of the eight studied systems, a referral to see a specialist is not
required (Israel and the Netherlands are exceptions). Increasingly, members can
also choose to change their sickness fund (Austria, France and Luxembourg are
exceptions).
These seven characteristics – risk-independent contributions, sickness funds as
payers, solidarity, pluralism, corporatism, participation and choice – comprise
what is described in many writings about SHI systems as the ‘core structural
arrangements’ (Glaser 1991; Hoffmeyer and McCarthy 1994; Normand and
Busse 2002). Combined, they can be taken as the institutional mechanics of how
an SHI system is organized.
8 Social Health Insurance Systems
Policy questions and challenges
The picture of SHI systems presented thus far describes the beliefs that drive the
SHI model and its core structural elements. The complex character of these
systems, however, leads to several questions about their overall behaviour and
performance. It also suggests a series of important concerns about the policy
challenges that SHI policy-makers currently confront.
Turning first to the analytic questions, the seeming stability and resilience of
SHI systems – the ability to tie health insurance and delivery structures into civil
society so tightly that they consistently survive major changes in the configuration
of political power in society – raises a host of practical comparative issues.
One question is why the SHI systems in these six countries (Israel and Switzerland
only introduced SHI models during the 1990s) have grown and prospered, particularly
through the efforts of left-of-centre parties when they held national
power, whereas similar, if incomplete, SHI systems in Greece, Italy, Portugal and
Spain (INSALUD) became associated with rightist regimes and, when left-ofcentre
parties took power, were largely dismantled (in practice if not name),
respectively in 1983, 1978, 1979 and 1986 in favour of predominantly taxfunded
arrangements. A second question is whether SHI systems are in actual
fact more stable than tax-funded systems – for example, the NHS in the UK
(established in 1948) or Swedish tax-funded services (publicly-funded hospital
services began in 1864) – or whether ‘stability’ is being assessed in terms of some
other baseline, such as not-for-profit foundations or for-profit commercial companies,
or perhaps in terms of other, less stable public institutions within SHI
countries. Similarly, are SHI systems in fact more solidaristic than tax-funded
systems? Despite extensive discussion about solidarity in the Dutch or the
German SHI systems, is social solidarity in fact actually greater than in, say,
Denmark or Sweden?
A further question concerns the apparent contradiction between the overall
technical performance of SHI systems as against the strong defence of SHI
arrangements from national policy-makers in SHI countries. Among other
dilemmas, SHI countries tend to expend relatively high levels of GDP on their
health sector (OECD 2003); yet in aggregate SHI countries have populations
which have at best similar and, on some indices, poorer outcomes than do their
tax-funded brethren (see Chapter 12). SHI systems have particular difficulty in
marshalling resources for prevention and public health purposes, which suggests
difficulties in restraining future costs in an ageing society. Several SHI
systems (Belgium, Germany) have also been criticized for a lack of coordination
between office-based and hospital-based care, for consequently high levels of
duplication in expensive diagnostic testing (Schwartz and Busse 1996) and
for an absence of systematic supervision and enforcement of quality of care
(Berwick 1990). More recently, private corporations and also health economists
have criticized the SHI system in Germany as inefficient and an obstacle to
higher rates of economic growth (Henke 2002; Simonian 2002). How is it, then,
one might ask, that a health care system which apparently performs at best at
only an average level on such critical variables as cost, prevention, and continuity
of care, continues to maintain such high levels of commitment from
stakeholders as well as from experienced national policy-makers?
Social health insurance in perspective 9
Beyond these specific analytic questions, there are major policy challenges
regarding the future of western European SHI systems which need to be
addressed. Many commentators have noted that, in contrast to these systems’
track record of evolution and stability, the current economic, political and
social period is one characterized by rapid economic, technological and political
change, accompanied by substantial social dislocation. How well, and for how
long, can a stable system survive in such a dynamic environment? How sustainable
– economically, politically, socially – will these SHI systems be over the
next period of 10 to 20 years?
Economically sustainable?
Although their proponents may not see SHI systems as first and foremost economic
systems, economic challenges to existing SHI arrangements appear at
each level of institutional abstraction: at national, at supra-national/EU and at
global levels (Figure 1.1). In each case, the uncertainty is relatively wellmanaged
at present, however, it increases the further one peers out into the
future. The central question is how to reduce the seemingly inherent structural
tension between the socially embedded character of SHI systems, on the one
hand, and the specific practical requirements of efficient economics, on the
other.
National level
At the national level, several major challenges exist. Financial sustainability is at
or near the top of most lists of future concerns. This financial pressure is seen to
be compounded by the rapid ageing of the population and the consequent
reduction in the ratio of the number of active workers to the number of elderly
retired in these countries (Israel is an exception). Germany, for example, has
National level
• sufficient financial resources
• sufficient operational efficiency
• impact of competition
• between not-for-profit sickness funds
• between not-for-profit sickness funds and for-profit companies
EU (supra-national) level
• competition between different SHI benefit packages inside EU
• pressure from EU single market
• undermining mixed public-private character of SHI
• dismantling pharmaceutical regulation
• aggressive for-profit commercial insurers
Global level
• pressure from globalized companies and markets on wage levels and benefits
Figure 1.1 Challenges to economic sustainability of SHI systems
10 Social Health Insurance Systems
responded by linking the growth in overall SHI revenues to the rate of increase
in salaries on which contributions must be paid. The Netherlands, pursuing
the same policy objectives, has sought to restrain the rate of increase in
national premiums by creating an additional, out-of-pocket payment for subscribers,
subsumed under the notion of a ‘nominal premium’ (Hermans et al.
1996; Fluit 1999). France has sought to restrain health care spending by removing
expensive non-essential drugs from the publicly reimbursed package
(Le Journal Permanent de Nouvel Observateur 2002), while Belgium increased
co-payments and co-insurance rates in 1993 and in 1995 sought to give the
mutualities more direct financial responsibility (Kerr 2000). Belgium also added
an index that limited expenditure growth which was subsequently reviewed
and increased.
In this concern with sustainable funding, western European countries with
SHI systems appear to differ little in terms of core causes (ageing, new technology,
patient pressures) from tax-funded systems. Hospitals in SHI systems, as in
their tax-funded counterparts, will need to invest sufficient funds in new clinical
and electronic data-handling technologies to stay close to the international
standard (De Roo 1995). The implications of increased SHI premiums also have
an impact on the competitiveness of national businesses, in that premium
increases directly raise hourly wage costs and thus the cost of finished goods in
the international marketplace. The central drivers, however, are similar across
both types of funding system, and – as will be considered below in the section
on political sustainability – the importance of the state in intervening to
provide a remedy for these funding problems does not vary greatly either.
A second national-level economic challenge for the future of SHI systems
concerns the ability to operate more efficiently. It appears inevitable that the
same spotlight highlighting what Herbert Simon (1947) famously termed
‘organizational slack’ which fell on tax-funded health systems in the 1990s will
be trained on SHI systems in the first decade of the twenty-first century. The
early 2003 furore over proposals to improve operating efficiency within the
German health care system (Steinmeier Proposals) is likely to be the opening
round of this broad debate.
The third national-level challenge concerns the degree of competitive forces
to be incorporated within SHI systems, and, specifically, on the funding side
between different insurers. This has become a major issue in all eight SHI
systems, with differing perspectives steeped as much in disciplinary and ideological
belief systems as in hard facts (see Chapter 7). To what extent can
market-style funding mechanisms be incorporated into SHI before they begin to
jeopardize the basic self-governing principles of a solidaristic system (see
Altenstetter 1999)? Can specific competitive incentives be utilized to produce
greater operating efficiency without shifting greater risks to vulnerable groups?
What types of enhanced regulatory and risk adjustment arrangements will be
required to prevent the type of ‘de-solidarization’ that has begun to creep in
around the edges of the German SHI system, where savvy entrepreneurs within
some sickness funds have exploited the time lag in the risk adjustment process
to target younger and healthier subscribers (Pfaff 2001), and that has begun to
damage the ability of not-for-profit sickness funds to operate normally in Belgium
(Hermesse 2001)? Is it possible to ever have equal ground rules between
Social health insurance in perspective 11
statutory and commercial competitors in a solidaristic health insurance
system? How much stability, transparency and democracy should be traded off
for increases in (narrowly defined) economic efficiency? In short, what is
required to make competition and solidarity compatible rather than antithetical
operating models for funding health care?
EU (supra-national) level
Economic challenges to the future of SHI systems also arise at the crossnational
and/or supra-national level, reflecting in particular conflicts created
by the continued evolution of the EU’s single market initiative. Perhaps the
most difficult dilemma concerns the EU’s apparent insistence on categorizing
all economic activity as either wholly public (e.g. command and control) or
wholly private (subject to all open market requirements). This ‘black-white’
approach has created serious difficulties for both tax-funded and SHI health
systems alike (Hermans et al. 1996). In the early days of this EU initiative,
policy-makers in tax-funded systems worried that they could be interpreted as
unfairly excluding private for-profit bidders (EHMA 2000), and there was
speculation that rigorous enforcement of existing EU regulations would force
these systems to abandon their internal contracting programmes as the only
way to preserve public control over the delivery of health services. In SHI
systems, similarly, there are growing fears of an EU legal squeeze in which the
complex privately-managed-but-statutory-public character of SHI systems
would have to be designated either fully private or fully public for legal purposes.
In Belgium, for example, three for-profit commercial insurers sued to
abolish legal advantages that mutualities have in selling complimentary policies
to their subscribers (Hermesse 2001). While the case was dismissed by the Belgian
court in September 2002, the commercial insurers are expected to file a
European-level appeal. A parallel issue concerns whether the regulation of forprofit
commercial insurers should be an EU regional level or a national level
member state responsibility. Legal pressures regarding this and similar issues
(e.g. pharmaceutical regulations) can be expected to grow under current interpretations
of single market requirements.
A second, interrelated supra-national issue concerns the intervention of the
European Court in Luxembourg (Court of Justice of the European Communities)
on the permeability of national SHI boundaries. Through its judgements
in the Kohll/Decker (1998), Smits/Peerbooms (2001), and other related
cases, the Court has built up a body of single market decisions that on balance
appear to favour the rights of individual subscribers to pursue (appropriate)
medical care in adjoining countries (Mossialos and McKee 2002). This case law
can be expected to expand over the coming years (Wismar 2001), widening
these rights for patients in both SHI and tax-funded systems alike. It thus
becomes possible in the foreseeable future that western European SHI systems
may find themselves to some degree in competition with each other to induce
their own subscribers to receive treatment at home, as well as to attract patients
from adjacent countries (Hermans et al. 1996). This type of cross-country competition
could generate strong pressure on national policy-makers to harmonize
benefit packages so as not to find patient flows running against them. This, in
12 Social Health Insurance Systems
turn, could reinforce nascent political efforts to develop a common substantive
EU health policy (Wismar and Busse 2002).
Global level
Economic pressures on SHI systems at the global level reflect the need for
exports from these countries to remain competitive in international markets.
This leads to concerns that wage and benefit levels need to be tightly constrained,
with limits on employers’ (typically) 50 per cent contribution to SHI
premiums (only two of eight countries deviate dramatically from this split: 96
per cent in France but 0 per cent in Israel) and also on additional social taxes
paid by employers to support state subsidies in some SHI countries. National
policy-makers in countries like Germany and Austria have worried since the
early 1990s about the potential impact of high health care premiums on the
competitiveness of domestic industry vis-à-vis lower wage rates in the transition
countries of central Europe (Collier 1995; Hinrichs 1995; Guger 1996).
Politically sustainable?
The long-term political stability of SHI systems can be attributed to their being
anchored in civil society not the state, to their calculated public-private mix and
to the preference of most stakeholders for continuing these relatively successful
arrangements. The central dilemma for SHI systems concerns their ability to
sustain this strong political legacy over the next generation of policy-making.
As alluded to earlier, the role of the state in governance and decision-making
for SHI systems appears to be changing. Traditionally, that role, while powerful,
was relatively indirect (see Chapter 3). Statutory legislation typically empowered
sickness funds and providers to work out the necessary budgeting and service
delivery arrangements themselves – an arrangement which can be described as
‘enforced self-regulation’ (Saltman and Busse 2002). The responsibility of the
state resembled that of a referee in a football match: the state would only step in
if agreed ground rules were broken, or in the case of a deadlock that threatened
public access to services.
A key change in SHI systems over the past ten years has been an increasing
willingness of the state to breach these traditional relationships, intervening on
a wide variety of new issues, and as a result seeming to render important aspects
of traditional self-regulatory arrangements obsolete. Examples of this new state
role include Belgium (sick fund/provider payment negotiations in 2001), France
(Plan Juppé in 1995), Germany (1998), Israel (1995) and the Netherlands (1995).
Increasing state pre-emption of traditional self-regulating mechanisms can
carry major implications for the social legitimacy of SHI institutions, and for the
willingness of SHI stakeholders to continue to commit substantial resources and
credibility to self-regulatory negotiations and other regular SHI processes. In
Belgium in 2001, as one example, the Physicians’ Association pulled out for a
time from the traditional negotiation with sickness funds, arguing that the state
planned to intervene to set the payment rates anyway (Hermesse 2001).
This shift toward a more state-based, decree-oriented governance structure
Social health insurance in perspective 13
raises questions about the survivability of the unique model of ‘democratic representation’
that SHI systems are considered to embody (Altenstetter 1999). As
the state takes a growing role, the self-regulatory channels of representation and
communication may be short-circuited, as key actors seek to influence state
decision-makers directly and, often, off the record.
A second set of political challenges to traditional SHI models concerns the
fraying around the edges of the EU practice of subsidiarity in the health sector,
as outlined in Article 152 of the Amsterdam Treaty. The dilemmas created by the
EU single market project for the formulation of health policy generally led to a
commitment in the December 2001 Laeken Declaration of EU Heads of State
and Government to begin consideration of developing an explicit EU health
policy. Subsequently, a so-called ‘high level process of reflection’ was undertaken
to consider the various policy options. This or some other similar
approach could potentially result in a changed balance between national
governments and the EU; however, it remains unclear when this might occur.
A further aspect of the political challenge to existing SHI systems concerns the
role of the European Court. Here the range of corrective or protective options
appears to be decidedly more circumscribed. Key aspects of recent case law made
by the Court have been based not on single-market related regulations, but
rather on more fundamental principles concerning the freedoms of individual
citizens (Mossialos and McKee 2002). These rulings, therefore, will likely reduce
the ability of national SHI systems to define the allowable package of covered
services and to steer patients to their own national providers and institutions.
While the impact of this erosion of control may initially affect only contiguous
border areas and certain disputed conditions and treatments, over time there
may well be a more general effect on the overall authority of national SHI
systems.
Socially sustainable?
As discussed above, SHI systems are premised first and foremost on a set of
strongly held social values and beliefs, and the ‘non-economic benefits’ of an
SHI approach are understood by both citizens and policy-makers as equally if
not more important than the strictly economic benefits of such systems. To
date, this relationship between social as against economic advantages has survived
in more or less reasonable balance (see De Roo 1995; Altenstetter 1999). A
central question for the future, however, concerns the degree to which the economic
challenges detailed above threaten to erode the strength and scope of
these core social values, and in turn substantially reduce the ‘non-economic
benefits’ of the SHI model. One can speculate that such an imbalance could put
the long-term survival of the entire model at risk.
Sustaining the historical and social base
This review of the economic, political, and social challenges facing SHI systems
underscores the critical character of the present period for the future of SHI
14 Social Health Insurance Systems
systems. The fundamental dilemma for national policy-makers involves more
than devising an appropriate new mechanism to restrain expenditure growth in
some new surgical procedure or on some newly patented pharmaceutical compound.
It involves more than finding mechanisms to improve coordination
between outpatient and inpatient care, or to increase preventive approaches to
long-term population-based threats, or even to deal more cohesively with the
delivery of health care services to immigrants and refugees. Rather, the preeminent
issue is one of shoring up the conceptual ‘pillars’ – a word with important
historical connotations in some of these countries (Lijphart 1969) – upon
which the entire SHI edifice has been built. The core of SHI policy-making
should be focused on reinventing these systems, on transforming a socially
successful but historically based model for a new, volatile and uncertain
economic era.
A conceptual framework
Efforts to assess the performance of funding and delivery systems in the eight
studied SHI countries confront a series of analytic complications. As earlier sections
indicate, SHI systems comprise not just the ‘nuts and bolts’ of administrative
institutions, but also extend to important aspects of the broader social
security and private sector/civil society contexts that staff and sustain
them. Precisely because these systems have social as well as economic dimensions,
their activities cannot be evaluated solely with the tools of micro- and
macro-economics. A second dilemma, noted above, is the broad diversity of
institutions and arrangements incorporated within the eight studied systems.
Reflecting a national set of culturally tied, historically developed institutions,
this diversity poses difficulties for efforts to describe and evaluate commonalities
across the eight countries.
Efforts to evaluate the SHI approach also run up against an ongoing dialogue
within the health policy community about the appropriateness of relying solely
upon the preponderant source of funding as a suitable discriminator between
different types of health care system. Some commentators believe that the
impact of the reform process over the last 15 years has now reduced – even in
some cases eliminated – certain traditional financial distinctions between SHI
and tax-funded health care systems.
For example, in France, the broad CSR tax implemented in 2002 helps supplement
funds for its SHI system with a mandatory state-imposed wealth tax. In
Israel, premiums paid to the four sick funds were replaced in 1995 with a mandatory
health tax levied on all but very low income taxpayers. There is also, at
the extreme of this debate, the observation that both Greece (since 1983 a predominantly
tax-funded system) and Belgium (a long-standing SHI system) each
generate nearly the same amount of revenue from taxes as from SHI premiums
(Mossialos et al. 2002).
Despite these and similar concerns about traditional, funding-based analytic
categories, and despite the importance of additional non-economic factors in
assessing the character and logic of SHI systems, no consensus has formed on a
new nomenclature that could replace SHI versus tax-funded as an appropriate
Social health insurance in perspective 15
framework through which to classify health care systems. A nascent effort by
some UK-influenced academics to categorize all tax-funded systems as ‘NHS
systems’, with NHS standing for National Health Service, compounds the problem
they seek to resolve, not only by conflating a funding-based (SHI) with a
production-based (NHS) label, but by selecting a concept to describe tax-funded
systems which does not fit Nordic countries like Finland, Sweden and Denmark,
where the production side of the system (as well as most of the funding side) is
the responsibility not of national but of regional (Denmark, Sweden) or municipal
(Finland) governments. There are also increasing questions about the
appropriateness of applying the NHS label to southern European countries like
Spain and Italy, which in 2003 were in the process of decentralizing operating
responsibility for health services to elected regional bodies (the 17 Autonomous
Communities in Spain and the twenty Regional Governments3 in Italy). Given
these analytic dilemmas, this study has opted to retain the standard ‘SHI versus
tax-funded’ framework of health system analysis.
One additional question concerns the conceptual framework that should be
appropriately employed both to assess the behaviour and performance of SHI
health systems, and to contrast them with equivalent outcomes observed in taxfunded
health systems. In the World Health Report 2000, WHO put forward a
three-part framework primarily designed for evaluating all health care systems in
the world regardless of income level or stage of development. This framework
took a high-concept approach by assessing health systems in terms of
fairness, responsiveness and stewardship. While these three normative characteristics
can also certainly be applied to western European SHI systems, the
limitations of this framework in capturing the complexities of specifically SHI
systems suggests that this WHO framework ought to be supplemented with a
simultaneously broader as well as a more nuanced approach.
The rough outline of an appropriate conceptual framework for both describing
and assessing the complexities of SHI systems needs to incorporate the various
central elements already discussed. The framework should reflect the main
structure of the formal financing and delivery institutions, capturing their character
as – simultaneously – mandatory, self-regulatory, pluralist, participatory
and corporatist. In addition, the framework should also capture the core nature
of SHI as, respectively, a central element in the broader social security system of
income protection (what in tax-funded systems is directly termed ‘welfare state
responsibilities’); as grounded in civil society although administered under the
auspices of the state; as based on collective solidarity rather than actuarial insurance
principles; and as a culturally and historically defined set of social values –
a ‘way of life’.
These multiple imperatives are captured in the SHI pyramid presented in Figure
1.2. In this conceptual approach, the lowest level serves as the essential
foundation from which higher levels draw their character and legitimacy, and
upon which these higher levels are thus integrally dependent. As Figure 1.2
suggests, the base of the four-part SHI pyramid incorporates the national culture
and historically-tied values found in the broad society. The second level –
dependent on society but functioning independently – is the nation state, which
constructs the legislative, regulatory and judicial arrangements for SHI systems.
Built on these two lower levels are, at the third level of the pyramid, the actual
16 Social Health Insurance Systems
organizational and administrative arrangements of each studied country’s SHI
system. Lastly – and therefore most contingent upon and least independent of
the lower three levels of the pyramid – one finds issues of funding. Thus, discussions
and analyses that focus exclusively on the funding level alone implicitly
assume the existing configuration and activities of the three lower levels.
The next two chapters are constructed upon this pyramid framework. Chapter
2 explores key components of the national culture and social values that help
compose the base level, ‘society’. It begins with a brief review of the history of
SHI in western Europe, followed by a critical assessment of the central
value that underpins both popular support and the policy-making process in
the eight studied SHI countries, namely solidarity. Chapter 3 examines the three
upper levels of the pyramid. It describes the core organizational characteristics
of SHI systems along with the financial mechanisms that are built upon them. It
then briefly reviews the regulatory and stewardship roles of the national government
in setting the rules and serving as the referee for decisions made within
these two upper levels of the SHI pyramid. Recent patterns of health sector
reform in all three upper levels of the pyramid are also briefly considered.
With Chapter 4, the study draws together the available quantitive evidence
about how well SHI systems have performed in comparison with tax-funded
Figure 1.2 Pyramid model of SHI systems
Social health insurance in perspective 17
systems in northern Europe (which have similar levels of income to the eight
SHI countries) and also with all tax-funded systems in western Europe. This
assessment focuses on health status, satisfaction/responsiveness, equity, and
efficiency, exploring different methodological approaches within each of these
general categories. This exercise is necessarily limited by the type of statistical
data available and the inevitable inadequacies of the statistical methods used to
collect that data. Despite these limitations, however, this chapter provides a
useful overview of how well the eight studied SHI systems actually meet a number
of their key policy objectives, and the degree to which these systems do or do
not perform – on these limited statistical criteria – ‘better’ or ‘worse’ than do
western European tax-funded health systems.
Chapter 5 concludes Part One by seeking to draw policy lessons for future
consideration within the eight studies SHI countries and, where appropriate,
more widely. These observations incorporate material from the previous chapters
in Part One, but also reflect Part Two. This second part of the volume,
comprising Chapters Six through Thirteen, provides in-depth source material
for the broader strategic assessments conducted in Chapters One through Five.
Broken out into three subsections – the challenge to solidarity, key organizational
issues, and beyond acute care – the Part Two chapters enable readers to
probe further into core components of SHI structure and behavior. These deeper
perspectives, coupled with the historical, organizational and empirical reviews
in Part One, then serve as the background to Chapter Five’s consideration of
potential responses to future issues raised earlier in this chapter, as well as highlighting
potential policy options that decision-makers in these studied and
other countries might want to take into consideration.
Notes
1 This characteristic – and the two that follow – are in reality only partly correct. For
example, as noted in Chapter 3, partial exceptions here are Israel, which in 1995
switched all health funding to a nationally collected health tax; France, which in 2000
shifted a portion of its health funding to a broadly-based wealth tax; and Germany,
where Länder funds pay for capital improvements in the hospital sector.
2 Aspects of these components are developed in considerably more detail in Chapter 3.
3 One of Italy’s twenty regions is divided into two highly autonomous provinces.
https://jafo4jesus.blogspot.com/2018/05/introduction-concept-of-social-health.html
The concept of social health insurance (SHI) is deeply ingrained in the fabric of
health care systems in western Europe. It provides the organizing principle and
a preponderance of the funding in seven countries – Austria, Belgium, France,
Germany, Luxembourg, the Netherlands and Switzerland. Since 1995, it has also
become the legal basis for organizing health services in Israel. Previously, SHI
models played an important role in a number of other countries that subsequently
changed to predominantly tax-funded arrangements in the second
half of the twentieth century – Denmark (1973), Italy (1978), Portugal (1979),
Greece (1983) and Spain (1986). Moreover, there are segments of SHI-based
health care funding arrangements still operating in predominantly tax-funded
countries like Finland, Sweden and the United Kingdom, as well as in Greece
and Portugal. In addition, a substantial number of central and eastern European
(CEE) countries have introduced adapted SHI models since they regained control
over national policy-making – among them Hungary (1989), Lithuania
(1991), Czech Republic (1992), Estonia (1992), Latvia (1994), Slovakia (1994)
and Poland (1999).
Despite this pivotal role in European health care, the organization and operation
of SHI systems has received notably less attention from academics and
researchers than have tax-funded systems. Neither the core system characteristics
that define the SHI model, nor the performance of various SHI models in
comparison with that of various tax-funded systems, have received the type of
systematic assessment they deserve. This is the case not only in the English
language literature. Those comparative studies available in Dutch, French or
German language (the seven western European SHI countries) tend to be limited
to neighbouring (border) countries, and often focus on narrow technical rather
than broader conceptual issues. Wide structural and organizational differences
between western European SHI countries (as well as with Israel) further complicate
efforts to delineate common patterns and problems.
The availability of widely accessible, comparative knowledge about SHI systems
could be helpful for health policy-making both outside and inside Western
European SHI systems. Outside, policy-makers in central and eastern Europe
(CEE), but also in other potentially interested areas such as south-east Asia,
South America and the United States, would benefit from being able to obtain a
clear picture of how western European SHI systems are organized and how well
they perform. Among other advantages, this might reduce political tendencies
within some former Soviet Bloc countries to focus on only the official form of
SHI systems without considering the equally important societal characteristics
necessary to make those systems work successfully. Inside SHI systems, a clearer
comparative picture could assist policy-makers as they grapple with increasing
challenges to the economic, political and social sustainability of the traditional
SHI framework (see below).
One of the most striking observations about contemporary SHI systems is the
contrast between this knowledge gap about what they are and how well they
function, on the one hand, and the strength of the emotional attachment of the
citizens within these countries to their particular SHI system, on the other hand.
How can one account for such a powerful popular attachment to a health care
arrangement that is so hard to describe and about the performance of which
information is so limited? This observation suggests that, before detailing the
dilemmas that contemporary SHI systems confront, it may be useful to consider
how SHI systems look in the eyes of those who support them.
An insider’s perspective
The attraction of the SHI approach for both citizens and policy-makers appears,
on initial viewing, to be based on three structural characteristics. First, SHI systems
are seemingly private in both the funding and delivery of health services.1
Second, as seemingly private, SHI systems appear to be self-regulating, managed
by the participants themselves (e.g. sickness funds, physicians and, to a lesser
degree, patients). Third, as perhaps the most important consequence of being
seemingly private and self-regulatory, SHI systems are perceived as stable in
organizational and especially financial terms. This stability often appears to be
the most highly prized of all the outcomes associated with SHI systems. Indeed,
when one considers the political turmoil that the twentieth century brought to
western Europe, and the number of new governmental systems adopted or
imposed on France (four), and Germany (three), as well as on Austria, Belgium,
Luxembourg and the Netherlands, one cannot help but being impressed with
the extraordinary stability and longevity of SHI within these countries.
Beyond these three perceived characteristics of private, self-regulating, and
stable, however, lies a deeper, less discussed essence that is implicitly understood
by both citizens and policy-makers alike as separating off SHI systems sharply
4 Social Health Insurance Systems
from other arrangements for funding and providing health care services. This
perspective can be summarized by the observation – made persistently by
policy-makers from SHI countries – that SHI is not simply an insurance
arrangement but rather a ‘way of life’. In this view, SHI is a key part of a broader
structure of social security and income support that sits at the heart of civil
society. As such, SHI helps define how ‘social order is established in society’ (De
Roo 2003). It is part of the ‘fabric of society’ (Zöllner 2001), supported by a
‘social consensus’ that is deeply rooted in the ‘balance of society as a whole’
(Le Pen 2001). A central (if not entirely correct) presumption is that both
funders (sick funds) and providers (hospitals and physicians) are in the private
sector. Thus, crucially, the state is not seen to be the owner of these social
security structures, but rather their guardian and administrator – their steward
(Saltman and Ferroussier-Davis 2000). In consequence, there is a firm belief that
these health care systems are not artificial bureaucratic structures but rather ‘living
entities’. To operate successfully, they require major commitments of energy
and time by many parties involved, often on a voluntary basis. They also require
a high level of trust among many actors (see Chapter 6), leading to a conclusion
that ‘certain non-written rules are essential’ (Pfaff 2001). In Germany, for
example, ‘traditions and unwritten rules’ play a critical part in managing its SHI
system (Normand and Busse 2002).
A central dimension of this deeper understanding of SHI systems is that, in
structure, they are intentionally very different from standard commercial insurance.
Instead, SHI systems are constructed first and foremost as part of a social
incomes policy, to be redistributive in nature (Glaser 1991). They are thus consciously
designed to achieve a series of societal objectives through a set of financial
cross-subsidies – not just from healthy to ill but also from well-off to less
well-off, from young to old and from individuals to families. It is this redistributive
focus that distinguishes SHI from what is normally understood as ‘insurance’
– the latter being an actuarially precise device by which each individual
seeks to protect his or her own interests (Glaser 1991; Stone 1993). Thus SHI is
understood inside SHI countries as not being ‘insurance’ at all, but rather
exactly the opposite. Instead of enabling each individual to focus on his or her
own perceived personal interests, SHI requires individuals to contribute toward
the best interest of the population generally through its structure of financial
redistribution. It is this understanding of SHI that leads the citizenry in SHI
countries to link it to the notion of solidarity (see Chapter 2).
The deeply-rooted popular view of SHI systems as a ‘way of life’, grounded in
the core of civil society in an organic manner, and structured on solidarity
rather than on actuarial principles, highlights an additional core characteristic
of how these social health systems are viewed. It is that they are not, in the mind
of either citizens or policy-makers, intended to be primarily economic arrangements.
They are, rather, sociological and psychological structures, in which the
economic dimension is distinctly secondary (De Roo 2003). Indeed, taking
an exclusively economic and/or financial view of SHI systems is typically viewed
by policy-makers in these countries to be inappropriately reductionist. In
practice, one can readily see the imprint of SHI’s sociological or civil society role
in the pattern of health system reforms over the 1990s in SHI countries, as
policy-makers sought to accommodate growing financial pressures while still
Social health insurance in perspective 5
maintaining the core social arrangements and purpose of the SHI project
(see Chapter 3).
Looked at in this way, SHI systems can be understood as more than just a set
of institutions, and the decisions made about the reform of those institutions to
be based on considerably more than the currently pre-eminent political science
notion of ‘path dependency’ (Wilsford 1994; Peters 1999; Saltman and Bergman
2004 forthcoming). These institutions themselves serve rather as intermediaries,
as the administrative embodiment of a set of values deeply rooted in the
society as a whole, which underscore and reinforce this particular set of institutional
arrangements. In the case of western European countries with health
systems based on social insurance, these values are tied to national culture and
grounded in the historically generated principles of collective responsibility and
social solidarity. As the literature on cultural anthropology suggests, if new
institutions were to be introduced, the strength of this national culture and its
associated social values is such that ‘the persistent influence of a majority value
system patiently smoothes the new institutions until their structure and
functioning is again adapted to the societal norms’ (Hofstede 1980: 26).
In short, the historical experience of SHI systems supports the thesis that it is
the national culture and its associated social values that are broadly stable, and
that the stability of particular SHI institutions is a consequence of that social
continuity, rather than an independent event (Saltman and Bergman 2004
forthcoming).
From this cultural anthropological perspective, it is unsurprising that SHI
institutions are perceived inside SHI countries as being as much sociological as
economic in character (e.g. as a ‘way of life’). Much like the broader configuration
of social security arrangements within which SHI systems sit, SHI reflects
core values that are ‘socially embedded’ in the very heart of how these societies
understand themselves (Granovetter 1985; Saltman 1997). This organic view of
SHI is an important part of the explanation for why policy-making in SHI systems
appears to be cautious and incremental, why institutions – once established
– are rarely uprooted, and, consequently, why the overall pattern in SHI
systems continues to be one of stability and resilience.
A structural description
When one moves from this inside view to a more detached, outsider’s perspective,
SHI systems can be described in more structural terms. This structural
understanding incorporates seven core components that exist across all eight
studied countries, and that can be considered to comprise the organizational
kernel of an SHI system.2
Risk-independent and transparent contributions
The raising of funds is tied to the income of members, typically in the form of a
percentage of the member’s wages (sometimes up to a designated ceiling). This
has two equally important characteristics. First, contributions or premiums are
6 Social Health Insurance Systems
not linked to the health status of the member. If a member has a spouse and/or
children, they are automatically covered for the same income-related premium
and under the same risk-independent conditions. Second, contributions or
premiums are collected separately from state general revenues. Health sector
funding is transparent and thus insulated from the political battles inherent in
public budgeting.
Sickness funds as payers/purchasers
Premiums are either collected directly by sickness funds (Austria, France,
Germany, Switzerland) or distributed from a central state-run fund (Israel,
Luxembourg, the Netherlands) to a number of sickness funds (Belgium employs
both methods). These funds are private not-for-profit organizations, steered
by a board at least partly elected by the membership (except France and
Switzerland), and usually with statutory recognition and responsibilities (Israel
is an exception). The rules under which these sickness funds operate typically
are either directly established by national legislation (Austria, France, Germany,
Luxembourg, the Netherlands, Switzerland) and/or tightly controlled through a
state regulatory process (Israel) (Belgium is an exception). The sickness funds use
the revenues from members’ premiums (health tax in Israel) to fund collective
contracts with providers (private not-for-profit, private for-profit, and publicly
operated) for health services to members.
Solidarity in population coverage, funding, and
benefits package
Depending on the country, 63 per cent (the Netherlands) to 100 per cent
(France, Israel, Switzerland) of the population are covered by the statutory sickness
fund system. In countries with less than 100 per cent mandatory participation,
typically it is the highest-income individuals who are allowed (Germany)
or required (the Netherlands) to leave the statutory system to seek commercial
health insurance on their own (small exceptions exist for illegal immigrants, for
people with objections by principle and for civil servants). Funding for all
members is equalized either within national state-run pools (Israel, the Netherlands);
within regional government (Austria) or foundation-based (Switzerland)
pools; through mandatory risk-adjustment mechanisms (Belgium, Germany,
Israel, the Netherlands); or through state subsidies (Belgium, France). In all eight
SHI systems, the state requires the same comprehensive benefits package for all
subscribers.
Pluralism in actors/organizational structure
SHI systems incorporate a broad range of organizational structures. Both within
as well as between SHI countries, the number and provenance of sickness funds
may vary widely, based on professional, geographic, religious/political and/or
Social health insurance in perspective 7
non-partisan criteria. Nearly all hospitals, regardless of ownership, and nearly
all physicians, regardless of how they are organized (solo practice, group practice
etc.) have contracts with the sickness funds and are part of the SHI system.
Professional medical associations, municipal, regional and national governments,
and also suppliers such as pharmaceutical companies are all seen as part
of the SHI system framework.
Corporatist model of negotiations
Negotiations typically occur at regional and/or national level among ‘peak
organizations’ representing each health sub-sector involved. This corporatist
framework enables the self-regulation and contract processes to proceed more
smoothly, with substantially more uniformity of outcome and substantially
lower transaction costs. A corporatist approach among a group of ‘social partners’
(sick funds, health professionals, provider groupings and supplier groupings)
is also consistent with policy-making arrangements in other parts of the
social sector in the seven studied European countries (less so in Israel).
Participation in shared governance arrangements
As befits the pluralist configuration described just above, SHI systems typically
incorporate participation in governance decisions by a wide range of different
actors. The most visible manifestation is the traditional process of selfregulation
by which sickness funds and providers negotiate directly with each
other over payment schedules, quality of care, patient volumes and other contract
matters. Medical associations, hospital associations and other professional
groups frequently have some decision-making responsibilities as well.
Individual choice of providers and (partly) sickness funds
Members of sickness funds can usually seek care from nearly all physicians and
hospitals. In six of the eight studied systems, a referral to see a specialist is not
required (Israel and the Netherlands are exceptions). Increasingly, members can
also choose to change their sickness fund (Austria, France and Luxembourg are
exceptions).
These seven characteristics – risk-independent contributions, sickness funds as
payers, solidarity, pluralism, corporatism, participation and choice – comprise
what is described in many writings about SHI systems as the ‘core structural
arrangements’ (Glaser 1991; Hoffmeyer and McCarthy 1994; Normand and
Busse 2002). Combined, they can be taken as the institutional mechanics of how
an SHI system is organized.
8 Social Health Insurance Systems
Policy questions and challenges
The picture of SHI systems presented thus far describes the beliefs that drive the
SHI model and its core structural elements. The complex character of these
systems, however, leads to several questions about their overall behaviour and
performance. It also suggests a series of important concerns about the policy
challenges that SHI policy-makers currently confront.
Turning first to the analytic questions, the seeming stability and resilience of
SHI systems – the ability to tie health insurance and delivery structures into civil
society so tightly that they consistently survive major changes in the configuration
of political power in society – raises a host of practical comparative issues.
One question is why the SHI systems in these six countries (Israel and Switzerland
only introduced SHI models during the 1990s) have grown and prospered, particularly
through the efforts of left-of-centre parties when they held national
power, whereas similar, if incomplete, SHI systems in Greece, Italy, Portugal and
Spain (INSALUD) became associated with rightist regimes and, when left-ofcentre
parties took power, were largely dismantled (in practice if not name),
respectively in 1983, 1978, 1979 and 1986 in favour of predominantly taxfunded
arrangements. A second question is whether SHI systems are in actual
fact more stable than tax-funded systems – for example, the NHS in the UK
(established in 1948) or Swedish tax-funded services (publicly-funded hospital
services began in 1864) – or whether ‘stability’ is being assessed in terms of some
other baseline, such as not-for-profit foundations or for-profit commercial companies,
or perhaps in terms of other, less stable public institutions within SHI
countries. Similarly, are SHI systems in fact more solidaristic than tax-funded
systems? Despite extensive discussion about solidarity in the Dutch or the
German SHI systems, is social solidarity in fact actually greater than in, say,
Denmark or Sweden?
A further question concerns the apparent contradiction between the overall
technical performance of SHI systems as against the strong defence of SHI
arrangements from national policy-makers in SHI countries. Among other
dilemmas, SHI countries tend to expend relatively high levels of GDP on their
health sector (OECD 2003); yet in aggregate SHI countries have populations
which have at best similar and, on some indices, poorer outcomes than do their
tax-funded brethren (see Chapter 12). SHI systems have particular difficulty in
marshalling resources for prevention and public health purposes, which suggests
difficulties in restraining future costs in an ageing society. Several SHI
systems (Belgium, Germany) have also been criticized for a lack of coordination
between office-based and hospital-based care, for consequently high levels of
duplication in expensive diagnostic testing (Schwartz and Busse 1996) and
for an absence of systematic supervision and enforcement of quality of care
(Berwick 1990). More recently, private corporations and also health economists
have criticized the SHI system in Germany as inefficient and an obstacle to
higher rates of economic growth (Henke 2002; Simonian 2002). How is it, then,
one might ask, that a health care system which apparently performs at best at
only an average level on such critical variables as cost, prevention, and continuity
of care, continues to maintain such high levels of commitment from
stakeholders as well as from experienced national policy-makers?
Social health insurance in perspective 9
Beyond these specific analytic questions, there are major policy challenges
regarding the future of western European SHI systems which need to be
addressed. Many commentators have noted that, in contrast to these systems’
track record of evolution and stability, the current economic, political and
social period is one characterized by rapid economic, technological and political
change, accompanied by substantial social dislocation. How well, and for how
long, can a stable system survive in such a dynamic environment? How sustainable
– economically, politically, socially – will these SHI systems be over the
next period of 10 to 20 years?
Economically sustainable?
Although their proponents may not see SHI systems as first and foremost economic
systems, economic challenges to existing SHI arrangements appear at
each level of institutional abstraction: at national, at supra-national/EU and at
global levels (Figure 1.1). In each case, the uncertainty is relatively wellmanaged
at present, however, it increases the further one peers out into the
future. The central question is how to reduce the seemingly inherent structural
tension between the socially embedded character of SHI systems, on the one
hand, and the specific practical requirements of efficient economics, on the
other.
National level
At the national level, several major challenges exist. Financial sustainability is at
or near the top of most lists of future concerns. This financial pressure is seen to
be compounded by the rapid ageing of the population and the consequent
reduction in the ratio of the number of active workers to the number of elderly
retired in these countries (Israel is an exception). Germany, for example, has
National level
• sufficient financial resources
• sufficient operational efficiency
• impact of competition
• between not-for-profit sickness funds
• between not-for-profit sickness funds and for-profit companies
EU (supra-national) level
• competition between different SHI benefit packages inside EU
• pressure from EU single market
• undermining mixed public-private character of SHI
• dismantling pharmaceutical regulation
• aggressive for-profit commercial insurers
Global level
• pressure from globalized companies and markets on wage levels and benefits
Figure 1.1 Challenges to economic sustainability of SHI systems
10 Social Health Insurance Systems
responded by linking the growth in overall SHI revenues to the rate of increase
in salaries on which contributions must be paid. The Netherlands, pursuing
the same policy objectives, has sought to restrain the rate of increase in
national premiums by creating an additional, out-of-pocket payment for subscribers,
subsumed under the notion of a ‘nominal premium’ (Hermans et al.
1996; Fluit 1999). France has sought to restrain health care spending by removing
expensive non-essential drugs from the publicly reimbursed package
(Le Journal Permanent de Nouvel Observateur 2002), while Belgium increased
co-payments and co-insurance rates in 1993 and in 1995 sought to give the
mutualities more direct financial responsibility (Kerr 2000). Belgium also added
an index that limited expenditure growth which was subsequently reviewed
and increased.
In this concern with sustainable funding, western European countries with
SHI systems appear to differ little in terms of core causes (ageing, new technology,
patient pressures) from tax-funded systems. Hospitals in SHI systems, as in
their tax-funded counterparts, will need to invest sufficient funds in new clinical
and electronic data-handling technologies to stay close to the international
standard (De Roo 1995). The implications of increased SHI premiums also have
an impact on the competitiveness of national businesses, in that premium
increases directly raise hourly wage costs and thus the cost of finished goods in
the international marketplace. The central drivers, however, are similar across
both types of funding system, and – as will be considered below in the section
on political sustainability – the importance of the state in intervening to
provide a remedy for these funding problems does not vary greatly either.
A second national-level economic challenge for the future of SHI systems
concerns the ability to operate more efficiently. It appears inevitable that the
same spotlight highlighting what Herbert Simon (1947) famously termed
‘organizational slack’ which fell on tax-funded health systems in the 1990s will
be trained on SHI systems in the first decade of the twenty-first century. The
early 2003 furore over proposals to improve operating efficiency within the
German health care system (Steinmeier Proposals) is likely to be the opening
round of this broad debate.
The third national-level challenge concerns the degree of competitive forces
to be incorporated within SHI systems, and, specifically, on the funding side
between different insurers. This has become a major issue in all eight SHI
systems, with differing perspectives steeped as much in disciplinary and ideological
belief systems as in hard facts (see Chapter 7). To what extent can
market-style funding mechanisms be incorporated into SHI before they begin to
jeopardize the basic self-governing principles of a solidaristic system (see
Altenstetter 1999)? Can specific competitive incentives be utilized to produce
greater operating efficiency without shifting greater risks to vulnerable groups?
What types of enhanced regulatory and risk adjustment arrangements will be
required to prevent the type of ‘de-solidarization’ that has begun to creep in
around the edges of the German SHI system, where savvy entrepreneurs within
some sickness funds have exploited the time lag in the risk adjustment process
to target younger and healthier subscribers (Pfaff 2001), and that has begun to
damage the ability of not-for-profit sickness funds to operate normally in Belgium
(Hermesse 2001)? Is it possible to ever have equal ground rules between
Social health insurance in perspective 11
statutory and commercial competitors in a solidaristic health insurance
system? How much stability, transparency and democracy should be traded off
for increases in (narrowly defined) economic efficiency? In short, what is
required to make competition and solidarity compatible rather than antithetical
operating models for funding health care?
EU (supra-national) level
Economic challenges to the future of SHI systems also arise at the crossnational
and/or supra-national level, reflecting in particular conflicts created
by the continued evolution of the EU’s single market initiative. Perhaps the
most difficult dilemma concerns the EU’s apparent insistence on categorizing
all economic activity as either wholly public (e.g. command and control) or
wholly private (subject to all open market requirements). This ‘black-white’
approach has created serious difficulties for both tax-funded and SHI health
systems alike (Hermans et al. 1996). In the early days of this EU initiative,
policy-makers in tax-funded systems worried that they could be interpreted as
unfairly excluding private for-profit bidders (EHMA 2000), and there was
speculation that rigorous enforcement of existing EU regulations would force
these systems to abandon their internal contracting programmes as the only
way to preserve public control over the delivery of health services. In SHI
systems, similarly, there are growing fears of an EU legal squeeze in which the
complex privately-managed-but-statutory-public character of SHI systems
would have to be designated either fully private or fully public for legal purposes.
In Belgium, for example, three for-profit commercial insurers sued to
abolish legal advantages that mutualities have in selling complimentary policies
to their subscribers (Hermesse 2001). While the case was dismissed by the Belgian
court in September 2002, the commercial insurers are expected to file a
European-level appeal. A parallel issue concerns whether the regulation of forprofit
commercial insurers should be an EU regional level or a national level
member state responsibility. Legal pressures regarding this and similar issues
(e.g. pharmaceutical regulations) can be expected to grow under current interpretations
of single market requirements.
A second, interrelated supra-national issue concerns the intervention of the
European Court in Luxembourg (Court of Justice of the European Communities)
on the permeability of national SHI boundaries. Through its judgements
in the Kohll/Decker (1998), Smits/Peerbooms (2001), and other related
cases, the Court has built up a body of single market decisions that on balance
appear to favour the rights of individual subscribers to pursue (appropriate)
medical care in adjoining countries (Mossialos and McKee 2002). This case law
can be expected to expand over the coming years (Wismar 2001), widening
these rights for patients in both SHI and tax-funded systems alike. It thus
becomes possible in the foreseeable future that western European SHI systems
may find themselves to some degree in competition with each other to induce
their own subscribers to receive treatment at home, as well as to attract patients
from adjacent countries (Hermans et al. 1996). This type of cross-country competition
could generate strong pressure on national policy-makers to harmonize
benefit packages so as not to find patient flows running against them. This, in
12 Social Health Insurance Systems
turn, could reinforce nascent political efforts to develop a common substantive
EU health policy (Wismar and Busse 2002).
Global level
Economic pressures on SHI systems at the global level reflect the need for
exports from these countries to remain competitive in international markets.
This leads to concerns that wage and benefit levels need to be tightly constrained,
with limits on employers’ (typically) 50 per cent contribution to SHI
premiums (only two of eight countries deviate dramatically from this split: 96
per cent in France but 0 per cent in Israel) and also on additional social taxes
paid by employers to support state subsidies in some SHI countries. National
policy-makers in countries like Germany and Austria have worried since the
early 1990s about the potential impact of high health care premiums on the
competitiveness of domestic industry vis-à-vis lower wage rates in the transition
countries of central Europe (Collier 1995; Hinrichs 1995; Guger 1996).
Politically sustainable?
The long-term political stability of SHI systems can be attributed to their being
anchored in civil society not the state, to their calculated public-private mix and
to the preference of most stakeholders for continuing these relatively successful
arrangements. The central dilemma for SHI systems concerns their ability to
sustain this strong political legacy over the next generation of policy-making.
As alluded to earlier, the role of the state in governance and decision-making
for SHI systems appears to be changing. Traditionally, that role, while powerful,
was relatively indirect (see Chapter 3). Statutory legislation typically empowered
sickness funds and providers to work out the necessary budgeting and service
delivery arrangements themselves – an arrangement which can be described as
‘enforced self-regulation’ (Saltman and Busse 2002). The responsibility of the
state resembled that of a referee in a football match: the state would only step in
if agreed ground rules were broken, or in the case of a deadlock that threatened
public access to services.
A key change in SHI systems over the past ten years has been an increasing
willingness of the state to breach these traditional relationships, intervening on
a wide variety of new issues, and as a result seeming to render important aspects
of traditional self-regulatory arrangements obsolete. Examples of this new state
role include Belgium (sick fund/provider payment negotiations in 2001), France
(Plan Juppé in 1995), Germany (1998), Israel (1995) and the Netherlands (1995).
Increasing state pre-emption of traditional self-regulating mechanisms can
carry major implications for the social legitimacy of SHI institutions, and for the
willingness of SHI stakeholders to continue to commit substantial resources and
credibility to self-regulatory negotiations and other regular SHI processes. In
Belgium in 2001, as one example, the Physicians’ Association pulled out for a
time from the traditional negotiation with sickness funds, arguing that the state
planned to intervene to set the payment rates anyway (Hermesse 2001).
This shift toward a more state-based, decree-oriented governance structure
Social health insurance in perspective 13
raises questions about the survivability of the unique model of ‘democratic representation’
that SHI systems are considered to embody (Altenstetter 1999). As
the state takes a growing role, the self-regulatory channels of representation and
communication may be short-circuited, as key actors seek to influence state
decision-makers directly and, often, off the record.
A second set of political challenges to traditional SHI models concerns the
fraying around the edges of the EU practice of subsidiarity in the health sector,
as outlined in Article 152 of the Amsterdam Treaty. The dilemmas created by the
EU single market project for the formulation of health policy generally led to a
commitment in the December 2001 Laeken Declaration of EU Heads of State
and Government to begin consideration of developing an explicit EU health
policy. Subsequently, a so-called ‘high level process of reflection’ was undertaken
to consider the various policy options. This or some other similar
approach could potentially result in a changed balance between national
governments and the EU; however, it remains unclear when this might occur.
A further aspect of the political challenge to existing SHI systems concerns the
role of the European Court. Here the range of corrective or protective options
appears to be decidedly more circumscribed. Key aspects of recent case law made
by the Court have been based not on single-market related regulations, but
rather on more fundamental principles concerning the freedoms of individual
citizens (Mossialos and McKee 2002). These rulings, therefore, will likely reduce
the ability of national SHI systems to define the allowable package of covered
services and to steer patients to their own national providers and institutions.
While the impact of this erosion of control may initially affect only contiguous
border areas and certain disputed conditions and treatments, over time there
may well be a more general effect on the overall authority of national SHI
systems.
Socially sustainable?
As discussed above, SHI systems are premised first and foremost on a set of
strongly held social values and beliefs, and the ‘non-economic benefits’ of an
SHI approach are understood by both citizens and policy-makers as equally if
not more important than the strictly economic benefits of such systems. To
date, this relationship between social as against economic advantages has survived
in more or less reasonable balance (see De Roo 1995; Altenstetter 1999). A
central question for the future, however, concerns the degree to which the economic
challenges detailed above threaten to erode the strength and scope of
these core social values, and in turn substantially reduce the ‘non-economic
benefits’ of the SHI model. One can speculate that such an imbalance could put
the long-term survival of the entire model at risk.
Sustaining the historical and social base
This review of the economic, political, and social challenges facing SHI systems
underscores the critical character of the present period for the future of SHI
14 Social Health Insurance Systems
systems. The fundamental dilemma for national policy-makers involves more
than devising an appropriate new mechanism to restrain expenditure growth in
some new surgical procedure or on some newly patented pharmaceutical compound.
It involves more than finding mechanisms to improve coordination
between outpatient and inpatient care, or to increase preventive approaches to
long-term population-based threats, or even to deal more cohesively with the
delivery of health care services to immigrants and refugees. Rather, the preeminent
issue is one of shoring up the conceptual ‘pillars’ – a word with important
historical connotations in some of these countries (Lijphart 1969) – upon
which the entire SHI edifice has been built. The core of SHI policy-making
should be focused on reinventing these systems, on transforming a socially
successful but historically based model for a new, volatile and uncertain
economic era.
A conceptual framework
Efforts to assess the performance of funding and delivery systems in the eight
studied SHI countries confront a series of analytic complications. As earlier sections
indicate, SHI systems comprise not just the ‘nuts and bolts’ of administrative
institutions, but also extend to important aspects of the broader social
security and private sector/civil society contexts that staff and sustain
them. Precisely because these systems have social as well as economic dimensions,
their activities cannot be evaluated solely with the tools of micro- and
macro-economics. A second dilemma, noted above, is the broad diversity of
institutions and arrangements incorporated within the eight studied systems.
Reflecting a national set of culturally tied, historically developed institutions,
this diversity poses difficulties for efforts to describe and evaluate commonalities
across the eight countries.
Efforts to evaluate the SHI approach also run up against an ongoing dialogue
within the health policy community about the appropriateness of relying solely
upon the preponderant source of funding as a suitable discriminator between
different types of health care system. Some commentators believe that the
impact of the reform process over the last 15 years has now reduced – even in
some cases eliminated – certain traditional financial distinctions between SHI
and tax-funded health care systems.
For example, in France, the broad CSR tax implemented in 2002 helps supplement
funds for its SHI system with a mandatory state-imposed wealth tax. In
Israel, premiums paid to the four sick funds were replaced in 1995 with a mandatory
health tax levied on all but very low income taxpayers. There is also, at
the extreme of this debate, the observation that both Greece (since 1983 a predominantly
tax-funded system) and Belgium (a long-standing SHI system) each
generate nearly the same amount of revenue from taxes as from SHI premiums
(Mossialos et al. 2002).
Despite these and similar concerns about traditional, funding-based analytic
categories, and despite the importance of additional non-economic factors in
assessing the character and logic of SHI systems, no consensus has formed on a
new nomenclature that could replace SHI versus tax-funded as an appropriate
Social health insurance in perspective 15
framework through which to classify health care systems. A nascent effort by
some UK-influenced academics to categorize all tax-funded systems as ‘NHS
systems’, with NHS standing for National Health Service, compounds the problem
they seek to resolve, not only by conflating a funding-based (SHI) with a
production-based (NHS) label, but by selecting a concept to describe tax-funded
systems which does not fit Nordic countries like Finland, Sweden and Denmark,
where the production side of the system (as well as most of the funding side) is
the responsibility not of national but of regional (Denmark, Sweden) or municipal
(Finland) governments. There are also increasing questions about the
appropriateness of applying the NHS label to southern European countries like
Spain and Italy, which in 2003 were in the process of decentralizing operating
responsibility for health services to elected regional bodies (the 17 Autonomous
Communities in Spain and the twenty Regional Governments3 in Italy). Given
these analytic dilemmas, this study has opted to retain the standard ‘SHI versus
tax-funded’ framework of health system analysis.
One additional question concerns the conceptual framework that should be
appropriately employed both to assess the behaviour and performance of SHI
health systems, and to contrast them with equivalent outcomes observed in taxfunded
health systems. In the World Health Report 2000, WHO put forward a
three-part framework primarily designed for evaluating all health care systems in
the world regardless of income level or stage of development. This framework
took a high-concept approach by assessing health systems in terms of
fairness, responsiveness and stewardship. While these three normative characteristics
can also certainly be applied to western European SHI systems, the
limitations of this framework in capturing the complexities of specifically SHI
systems suggests that this WHO framework ought to be supplemented with a
simultaneously broader as well as a more nuanced approach.
The rough outline of an appropriate conceptual framework for both describing
and assessing the complexities of SHI systems needs to incorporate the various
central elements already discussed. The framework should reflect the main
structure of the formal financing and delivery institutions, capturing their character
as – simultaneously – mandatory, self-regulatory, pluralist, participatory
and corporatist. In addition, the framework should also capture the core nature
of SHI as, respectively, a central element in the broader social security system of
income protection (what in tax-funded systems is directly termed ‘welfare state
responsibilities’); as grounded in civil society although administered under the
auspices of the state; as based on collective solidarity rather than actuarial insurance
principles; and as a culturally and historically defined set of social values –
a ‘way of life’.
These multiple imperatives are captured in the SHI pyramid presented in Figure
1.2. In this conceptual approach, the lowest level serves as the essential
foundation from which higher levels draw their character and legitimacy, and
upon which these higher levels are thus integrally dependent. As Figure 1.2
suggests, the base of the four-part SHI pyramid incorporates the national culture
and historically-tied values found in the broad society. The second level –
dependent on society but functioning independently – is the nation state, which
constructs the legislative, regulatory and judicial arrangements for SHI systems.
Built on these two lower levels are, at the third level of the pyramid, the actual
16 Social Health Insurance Systems
organizational and administrative arrangements of each studied country’s SHI
system. Lastly – and therefore most contingent upon and least independent of
the lower three levels of the pyramid – one finds issues of funding. Thus, discussions
and analyses that focus exclusively on the funding level alone implicitly
assume the existing configuration and activities of the three lower levels.
The next two chapters are constructed upon this pyramid framework. Chapter
2 explores key components of the national culture and social values that help
compose the base level, ‘society’. It begins with a brief review of the history of
SHI in western Europe, followed by a critical assessment of the central
value that underpins both popular support and the policy-making process in
the eight studied SHI countries, namely solidarity. Chapter 3 examines the three
upper levels of the pyramid. It describes the core organizational characteristics
of SHI systems along with the financial mechanisms that are built upon them. It
then briefly reviews the regulatory and stewardship roles of the national government
in setting the rules and serving as the referee for decisions made within
these two upper levels of the SHI pyramid. Recent patterns of health sector
reform in all three upper levels of the pyramid are also briefly considered.
With Chapter 4, the study draws together the available quantitive evidence
about how well SHI systems have performed in comparison with tax-funded
Figure 1.2 Pyramid model of SHI systems
Social health insurance in perspective 17
systems in northern Europe (which have similar levels of income to the eight
SHI countries) and also with all tax-funded systems in western Europe. This
assessment focuses on health status, satisfaction/responsiveness, equity, and
efficiency, exploring different methodological approaches within each of these
general categories. This exercise is necessarily limited by the type of statistical
data available and the inevitable inadequacies of the statistical methods used to
collect that data. Despite these limitations, however, this chapter provides a
useful overview of how well the eight studied SHI systems actually meet a number
of their key policy objectives, and the degree to which these systems do or do
not perform – on these limited statistical criteria – ‘better’ or ‘worse’ than do
western European tax-funded health systems.
Chapter 5 concludes Part One by seeking to draw policy lessons for future
consideration within the eight studies SHI countries and, where appropriate,
more widely. These observations incorporate material from the previous chapters
in Part One, but also reflect Part Two. This second part of the volume,
comprising Chapters Six through Thirteen, provides in-depth source material
for the broader strategic assessments conducted in Chapters One through Five.
Broken out into three subsections – the challenge to solidarity, key organizational
issues, and beyond acute care – the Part Two chapters enable readers to
probe further into core components of SHI structure and behavior. These deeper
perspectives, coupled with the historical, organizational and empirical reviews
in Part One, then serve as the background to Chapter Five’s consideration of
potential responses to future issues raised earlier in this chapter, as well as highlighting
potential policy options that decision-makers in these studied and
other countries might want to take into consideration.
Notes
1 This characteristic – and the two that follow – are in reality only partly correct. For
example, as noted in Chapter 3, partial exceptions here are Israel, which in 1995
switched all health funding to a nationally collected health tax; France, which in 2000
shifted a portion of its health funding to a broadly-based wealth tax; and Germany,
where Länder funds pay for capital improvements in the hospital sector.
2 Aspects of these components are developed in considerably more detail in Chapter 3.
3 One of Italy’s twenty regions is divided into two highly autonomous provinces.
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