2008 John F. Roatch

GLOBAL
LECTURE
S E R I E S
on Social Policy and Practice

2008

John F. Roatch Global Lecture Series on Social Policy and Practice

Financing Health Care in Europe:
Institutional arrangements between solidarity
and individual responsibility
Presented by
Dr. Wolfgang Schulz-Weidner, Brussels/Berlin/Freiburg i.Br.
February 29, 2008

With gratitude

The present
to Mary Roatch

The John and Mary Roatch Endowment was created by
gifts made to the university by John and Mary Roatch.
The endowment provides support for the Global Lecture
Series, which is organized through the office of the John
F. Roatch Distinguished Professor at University College.
John Roatch was born in Ellsworth, Wisconsin, on
May 3, 1921 and died in Phoenix, Arizona, on July 2,
1997. Mary was born to missionary parents in Darjeeling, India, and resides in
Phoenix. The Roatches have four children: Virginia, Thomas, David, and Joseph.
Mary and John met at and graduated from Hamline University in St. Paul,
Minnesota. As Phoenix residents, they were also committed to furthering the ability
of its citizens to receive timely information on topics in the public interest.
With the 2008 Global Lecture, we wanted to expand our donors’ commitment to
broaden knowledge for public decision-making. What could be better than adding
a presentation about the various European health care systems to our store of
global lectures.
Health care management and reform are the topics of the day in this election year,
and the U.S. Presidential candidates are offering many varied solutions to the
“health care problem.” The citizenry demands change, but it is hard for the average
layperson or professional to understand the complexities of the issue. Our lecture
series joins the conversation by offering an instructive international perspective.
Dr. Schulz-Weidner is in a strategic position to describe types of European systems
and Drs. Kirkman-Liff and Lockhart have the background and experience to
comment and make sense of this knowledge. Those who attend the lecture will
leave, I am sure, enriched by a greater understanding of options that could be used
in the U.S. and Arizona.
Once again, we publicly thank the generosity and support of Mary Roatch, her son
David, and all the members of her family for helping us keep the tradition of the
John F. Roatch lectures. The listing on the back cover illustrates the wide range of
topics, the opportune times at which they were discussed, and the result of John F.
Roatch’s goal of providing a public forum for timely topics.
Emilia E. Martinez-Brawley
John F. Roatch Distinguished Professor and
Professor of Social Work

Celebrating
John F. Roatch’s
Legacy

The memory

“The evaluation of
health care systems in the
twenty-seven member
states of the European
Union cannot be
restricted to examining
their financial resources,
but has to include a
scrutiny of their basic
benefit performances.”

5

“H

o w much solidarity, how much redistribution should be

incorporated in a health care scheme? Who is expected to compromise
for the sake of solidarity—and in favor of whom? Is the guiding
solidarity principle motivated by the idea of an inclusive residual
welfare state, avoiding poverty, and helping the most vulnerable or
should everybody have the chance to maintain the former living
standard, independent of health status and associated cost?”

Wolfgang Schulz-Weidner
German Delegation of the German Social Insurance System to the
European Union, Brussels

DR. WOLFGANG SCHULZ-WEIDNER is a member of the permanent
delegation of the German Social Insurance System (“Deutsche
Sozialversicherung Europavertretung”) to the European Union (EU) in
Brussels, representing the Statutory Pension Scheme, now “Deutsche
Rentenversicherung Bund.” He is an expert in the fields of early and
old-age retirement provision, including invalidity pensions and rehabilitation, the design of reform processes, and
comparative studies.
Within the European Union, no longer are the member states alone responsible for the definition of their
policies, but big parts of their sovereignty have been shifted to the Union. One of Dr. Schulz-Weidner’s delegation
tasks is the preparation and coordination of positions among German stakeholders in the areas of health and
sickness pay; old-age, invalidity, and survivor’s pensions; accident insurance; and unemployment benefits. He is
also responsible for communicating these positions to relevant European institutions. His personal interest lies in
public pensions, including their relationship to private products.
Dr. Schulz-Weidner participates in the activities of the European Social Insurance Platform. In this
Commission, public social security authorities from many European member states work together in order
to improve understanding and develop common positions in an environment that is often defined in purely
economic terms. Obviously the main challenges in this respect are a diplomatic approach and a deep understanding
of the principles of social security schemes and their execution in various countries.
He was born in Frankfurt am Main, Germany, where he completed his undergraduate and graduate education.
He studied at the Johann-Wolfgang von Goethe University, graduating in 1979. His “first degree” specialisation
was labour law. There followed, according to the German system, compulsory training for admission to the bar.
In 1986, he completed this training at the Court ‘Frankfurter Oberlandesgericht’, with a specialisation in public
law, and he continued doctoral studies in law. His thesis, “Implications of genetic analysis for the legal system and
its application to insurance systems,” deals primarily with the consequences of genetic and pre-symptomatic
diagnosis for public and private health insurance design.
Dr. Schulz-Weidner is in a perfect position to explain to our audience the current bases of economic security
and health benefits, not only in the German Republic but also in some representative countries in the EU.

Spelling and formatting have been retained from the author’s original text.

Scenes from the Lecture

7

Financing Health
Care in Europe:
Institutional arrangements
between solidarity and
individual responsibility

INTRODUCTION

February 29, 2008

escribing financing of health care systems in Europe with its now 27 member states
is a challenge that requires the stating of criteria against which the different systems
might be evaluated. The evaluation cannot be restricted to examining financial resources,
but has to include at least the basic benefit performances of health schemes (plans).

D

The main countries to be examined here are France, Germany, the Netherlands, Sweden,
and—despite the fact that it is not an EU member—Switzerland. These countries
represent different types of health systems, but are “relatively” close to each other
regarding the level and the quality of care. Occasionally, Spain, Italy, the UK, and some
other Scandinavian countries are referred to. In general terms, the UK, Spain, Italy,
and the Scandinavian countries can be described as National Health System (NHS)-style
schemes with more or less regional characteristics, while the Netherlands, France,
Germany, and Switzerland are social security-oriented, with different levels of
participation of private insurance.
The following aspects of health care plans will be used to obtain a picture of their
financial structures and performances. They are key to any decision on the parameters
of health care reforms and should be open to scrutiny.
Generosity and quality of the health care packages
Procedural rationing: capacities, budgets, and prioritisation
Waiting times
Gatekeeper systems
Structure of public and statutory financing
Structured co-payments—statutory user charges
Other out-of-pocket payments
Risk structure adjustments
Choice
Voluntary private health insurance
Scale and generosity of protection for older people
Pooled risk at the employer level
Regional disparities
Competition between insurers for clients

It was tempting to use “universality” as a criterion. However, it turned out to be a
rather weak indicator, since all European health schemes are de facto “universal”
because they no longer distinguish between different groups in society, such as
workers, the self-employed, housewives, the industrial sectors, retirees, etc. Therefore,
the real challenge is no longer the degree of formal universality or inclusiveness but
the financial and social ability to cope with the shortcomings of allegedly “universal”
systems that call for additional financing by the patients (out-of-pocket payments, etc).
So the question of conceptual “universality” is closely linked with the topic of practical
“accessibility”—indeed, one of the most urgent objectives of the official European
health strategy. But accessibility turns out to be a very complex phenomenon, since it is
determined by many prevailing conditions such as regional and local availability,
co-payments, waiting times, etc. These kinds of questions and answers should not be
tackled under the vague criterion of “universality” or “accessibility” but in the context
of the respective features of a system and its details.
Despite its ever growing influence on national health policy decision making, this
presentation will not expound on economic EU law and EU health policy, since it would
by far exceed what is feasible in this context.

8

GENEROSITY AND QUALITY OF THE
HEALTH CARE PACKAGES
Transparency in the degree of generosity and quality of the
health care package is often hampered by the fact that
this package is not always clearly defined. In principle, social
insurance schemes define, in relatively concrete terms and in
advance, the rights and claims of patients in given situations.
So, in France, the Netherlands, and Switzerland, the range of
covered services is regulated by law or by-law. In Germany, it is
defined in a cooperative framework between service providers
and sickness funds. In contrast, in NHS-style schemes such as
in Sweden and the UK, budgets and prioritisation will decide
on the final volume of services and access in individual cases.
Especially in the UK, the health administration is charged with
the authority to set priorities within a given budget. So, with a
view to individual access, state health care systems are often
replacing material rights by a fair procedure. In Sweden,
there is no officially defined basic health care package. Only
three guiding principles are steering coverage decisions:
human rights, needs and solidarity, and cost-effectiveness. In
fact, equity is also a very important issue.1 Dental treatments
must largely be paid by the patient, while the financial
participation of the state in financing dentures is more
generous.2 Off the record, the practice of NHS-style health
schemes to not clearly define the package in advance and to
accept long waiting lists comes more and more under threat
by European Law, since it is regarded as an obstacle in citizens’
freedom to obtain services across borders. And, again off the
record, this is the reason the British NHS has recently installed
permanent representation in Brussels.
In addition, the degree of generosity and quality alone is not
sufficiently convincing as long as accessibility is not granted:
High scores in quality and generosity can be associated with
bad scores in accessibility and waiting times. This is particularly
the case for Sweden.3 In addition to waiting times, the density
of supply is regionally very different. In remote areas, it can be
very difficult to find a specialist.4 Budget and prioritisation
procedures make the judgement even more difficult.
An older Organization for European Community Development
(OECD) statistic about health expenditure in relation to Gross
Domestic Product has shown that tax-funded systems in
Europe spend less than the European average.5 It is, however,
unclear if this goes hand in hand with a lower generosity of
NHS systems or with more efficiency.

PROCEDURAL RATIONING: CAPACITIES, BUDGETS,
AND PRIORITISATION
Rationing of medical resources has drastic implications for the
generosity and access of a health care system. Typically,
countries with national systems may claim to maintain, in
theory, a high quality of medical services with universal access,
but at the same time they tend to restrict capacity and so they
present, in practice, very poor performance in accessibility. This
creates bad scores regarding waiting times. This is true for all
Nordic countries as well as the UK, Spain, and Italy.6 In countries
with insurance-based schemes, in contrast, medical service
density is relatively high, such as in Belgium, France,
Switzerland, Germany, and the Netherlands. Insurance

schemes tend to increase insurance premiums rather than cut
or rationalize benefits—a phenomenon easily observable in
countries as different as Germany, Switzerland, and the USA.
This not only results in good scores for waiting times in those
countries, but also in access to in-house care and elective
surgery. The U.S. and Germany are reported to provide the
most rapid access.7
Rationing can be executed directly and explicitly, for instance,
by utility assessment. Most common at the international level
is the use of cost per Quality Adjusted Life Year (QUALY). So,
as a rule of thumb, in the UK for example, cost per QUALY
below £20K is accepted by the NHS, but when the cost rises
above £30K, treatment is rejected.8 Rationing can also be an
indirect consequence of setting and running budgets, either
global or sectoral budgets; per capita payments and even
diagnostic related per case payments can have similar rationing
effects. All this is typical for NHS-type systems, but can also be
found in social insurance schemes such as in the Netherlands
and, to a lesser extent, also in Germany. In Germany, former
sectoral budgets will be replaced by single service compensation,
but modified by deductions when exceeding certain quantity
limits; in addition, case-oriented lumps will be introduced.
Details are regulated between sickness funds and service
provider organisations.
Running budgets often means somewhat opaque prioritisation
procedures. But the principles of prioritisation should be clear.
In the UK, for instance, priority is given to gains in overall
health, cost, and efficiency; fairness and public acceptance are
also considered. The principles are executed in a softwaresupported framework called “program budgeting and
marginal analysis”, which steers access in individual cases.9 But
even this kind of principle-based prioritisation does not show
in advance which kind of treatment will be paid for whom.
Exceeding the budgets will often result in unplanned cuts in
benefits that otherwise would have to be covered. In the UK,
the East Suffolk Health Trust, for instance, after having
exceeded its annual budget by several million pounds, decided
in the framework of its prioritisation regime to no longer pay
for synthetic hip joint or knee joint replacements for
overweight patients. Their argument was that, in many cases,
the implants would not work. The decision has prompted hard
public criticism.10 In 1997, Sweden passed a priority list. Grade 1
is treatment for people with acute life-threatening conditions;
grade 2 is prevention, rehabilitation, and aids for people with
restricted faculty of listening or sight; grade 3 is treatment of
less important chronic and acute diseases.
The visible outcomes of indirect rationing through budgets are
waiting lists. The UK is a good example to study. Here, we
can find lengthy waiting lists not only dependent on medical
discipline and diagnosis, but also on regional disparities.11
Open and transparent procedures of rationing and
prioritisation are made up by less transparent decisions, often
in individual cases at the clinical level, resulting in waiting
times. Even some social security-type health schemes with
allegedly no rationing (for example, Germany), have priorities
set at the level of the single doctor or hospital. This kind of
rationing will be encouraged by lump sum payments to service
providers instead of per service fees. In Sweden, for instance, a

9

family doctor receives a per annum/per capita yearly fee,
only adjusted by the age of the patient. Co-payments for visits,
however, ease the yearly fee effect to a certain extent.

WAITING TIMES
Long waiting lists and waiting times are typically the result of
scarcity in planned resources or budgets. They are often—but
not exclusively—associated with state-run NHS systems.
Three-quarters of investigated national health systems make
many patients wait more than three weeks for cancer
treatment.12 In particular, the UK suffers extremely high
waiting times, even after undergoing improvements, reporting
waits of more than one year for non-elective surgery for 8%
of people surveyed and more than 6 months for 15%.13
Finland reports relatively good outcome and generosity, but
has waiting list problems.14 In Norway, long waiting times
have been reduced substantially in the last few years. In 2002,
there were more than 250.000 cases.15
Sweden is one more example of having long waiting times,16
particularly in cases of specialist and hospital treatments; even
refusals are occurring. Long waiting lists in hospitals, especially
for surgery are of concern. Waits depend on diagnosis and
specialist involvement. But waiting lists exist in ambulatory
specialist treatment in hospitals. In local health centres, capacities
are scarce. Only half the patients get an appointment for the
same day, and more than 20% wait more than one week. It is
also difficult to reach the local health centre by phone.
Consequently, people make a continuous run on hospital
emergency rooms, causing long waiting times and even refusals
in emergency wards, sometimes with injurious consequences.17
After local health centers refer patients to a specialist or to a
hospital, one-third of the patients have to wait for more than
three months to get an appointment. Following the
prioritisation rules, waiting times for heart treatments are the
shortest, while less urgent operations such as cataract, knee or
hip surgeries have to wait longest.18 Even out-patient
treatments can be associated with waiting times up to one
week for the first contact. On average, more than 50.000
people (out of 9 million) wait for treatment for more than one
year.19 Due to scarce medical resources, sometimes patients
with urgent need are sent for treatment abroad. Confronted
with these shortcomings, the Swedish government formulated
some guiding principles for waiting times. In an ideal case, first
contact should be granted the same day, an appointment with
a general practitioner should be granted within one month,
and the first contact with a specialist within three months.
In contrast, the higher density of medical resources in
insurance-based countries results in good scores for waiting
times, as is the case of Austria, Belgium, France,20 Germany,
and Switzerland. An exception is the Netherlands.21 Long
waiting lists are common in the “compulsory national healthy
insurance” scheme (AWBZ). The same applies to the “universal
compulsory health insurance” scheme (ZWV): There are long
waiting times, depending on the diagnosis and kind of
treatment. Waiting times for an ophthalmologist or knee
surgery are particularly problematic. The lengthy waiting
periods can sometimes be dangerous for the patient.22 For a
long time, such waiting times were not transparent, until
norms were introduced to define maximum acceptable waiting

times. In addition, insured people were given access to crossborder treatment, particularly between Belgium and Germany.
Many Dutch people have undergone heart surgery in Germany,
but with costs approximately 50% higher than they would
have been in the Netherlands (2001/2002).
Often, bypass-strategies such as co-payments or supplemental
insurance are used in order to avoid waiting times. This raises,
however, the question of “equality and fairness” of health care
systems. Private provisions to avoid waiting lists will be dealt
with later, in “Voluntary Private Health Insurance.”

GATEKEEPER SYSTEMS
Gatekeeping can, in principle, have two functions. It can be
used to assign the patient to the appropriate service provider
and thus avoid unnecessary or repeated diagnosis and
treatment. But it can also serve as a tool to offer scarce
resources to those most “in need”. Unfortunately, both
functions are difficult to combine. Thus, gatekeeping
procedures are often associated with longer waiting times.23
Gatekeeping is not only to be found in NHS-style schemes, but
in social insurance schemes as well. Examples are the
Netherlands or, to a lesser extent, in Germany. In the Netherlands,
a general practioner acts as a gatekeeper to all other services.
In the UK, a family doctor, who is assigned according to the
patient’s domicile, refers the patient to a hospital or to
a specialist.24
Obviously, gatekeeping procedures, as well as other forms of
managed care, will diminish or even abolish personal choice. In
the UK, for instance, it was not until 2005 that the patient was
allowed to choose between four or five local hospitals.25 Sometimes,
the patient has the right to choose between providers. For
instance, in France, opting for a gatekeeper model instead of
free choice can improve access to so-called sector 2 doctors
(specialists), who are not contracted to the “Sécu” in such a
binding way as sector 1 doctors (general practitioners).
“Improved access” means that co-payments are moderated.
But, in exchange, the patient must accept the decision of the
gatekeeper and cannot choose freely between specialists.
In order to bypass reduced choice, one will find in many countries
private arrangements that again increase personal choice.

STRUCTURE OF PUBLIC AND STATUTORY
FINANCING
There are several kinds of public or statutory funding of health
care: taxes; social contributions and obligatory contributions to
private schemes in the form of payroll taxes with or without
upper ceilings; per capita contributions; and several sources of
private funding. In all EU member states, it is eventually a mix
of these sources which makes up the total expenditure, while
the composition of the single sources differs considerably.
Compared to financing through social contributions in wages,
tax funding can have a progressive redistribution effect and
thus result in more solidarity in sharing the burden of financing
public health. In addition, levying contributions on wages
increases the burden on “labour” and creates negative

10

employment effects. This might be the reason for OECD in
Germany recommending a shift to tax financing of public health
schemes.26 Another way to avoid an increase in the socalled “non-wage-labour costs” is to introduce a per capita fee.
For NHS-style schemes, tax financing for health care out of
the general budget is the norm. In Spain, the new financing
system adopted in 2001 included, according to Duran, Lara,
and van Waveren (2006), the management of the health
sector within the general financing model. There is also a new
tax-sharing scheme for all regions, which integrate all health
funds within a general financing scheme. Consequently, these
authors suggest, the co-responsibility between the central
state and the regions has increased.
Evidence shows, however, that the Bismarck style in EU
member states is starting to readjust the public financial
sources of health care. A cautious trend toward tax funding
and per capita funding, and away from payroll tax/social
contributions, can be observed. It is obvious in Switzerland.
In Germany, after the latest reform, only a part—by far the
biggest one, however—will be paid in the form of a payroll
tax, as a percentage of the wages, while another part comes
directly from general taxes. In addition, if both sources are not
sufficient for the operation of a sickness fund, it can ask its
members for an additional payment in the form of a per capita
lump sum. It is worth looking at how it is now as well as how
it would be in the future. Both big political parties in Germany
want to change the current finance mechanism, but in
opposite directions. The conservatives are in favour of a
general per capita premium. The Social Democrats, in contrast,
want to enlarge the personal basis for assessment of
contributions. Not only wages should be considered, but the
whole individual income, including return from capital or
income from rents. This would cause health care contributions
to become a sort of general income tax. Since Christian
democrats and social democrats are running the federal
government together, no substantial change is to be expected
for the next two years. In the Netherlands, a compromise has
been found. Half of the health care expenditures by sickness
funds is paid by wage-related contributions and the other half
by per capita premiums. In Switzerland, the whole contribution
to sickness funds is a per capita premium.
It goes without saying that per capita funding indirectly
increases the need for tax funding through state subsidies to
those who are not able to pay the full contribution. In
Switzerland, this results in a respectable amount of
contribution subsidies, indirectly paving the way into tax
financing of health care. Only two-thirds of premium revenue
comes from households; one-third results from general taxes.
In addition, investment in hospitals and half of their current
expenditures is paid by the federal state or the cantons. This is
one of the reasons even Swiss experts are warning against an
adoption of the Swiss per capita premium model in other
countries.27
In France, the contribution rate is about 14% of the salary.
There is a bottom limit (560€), but not an upper limit for the
basis of assessment. In Germany, the contribution rate on
wages—in the future, to be fixed at the federal level—is about
15%, with an upper ceiling of the assessed wages of 3.600€

per month. In addition, general taxes are used to finance a
statutory health insurance. The rationale for the tax
contribution is to avoid financing “non-insurance-based
components,” such as free coverage for children, exclusively by
means of charges on wages. In the future, one more source is
likely to be tapped: per capita premiums. Those sickness funds
that are not able to cope with transfers from public resources
are allowed to ask for additional premiums by their members
in the form of per capita lump sums. Here will be the place for
competition between the sickness funds.
In the Netherlands, tracking the financial resources of health
care is tricky. It has to be mentioned, first, that the health
scheme is divided into two tiers:
1. AWBZ is a compulsory universal insurance for exceptional
health expenditures such as mental care, hospital care
exceeding one year, different kinds of long term care, and care
for chronic diseases, covering the whole population living in
the Netherlands. In practice, it represents 45% of all public
(statutory) health expenditures.28
2. For other health expenditures, the ZWV universal
compulsory health insurance scheme is run by private providers
and strictly regulated. It is partly financed by the so-called
health care fund. This fund is primarily funded through
income-related contributions (all individual income taken into
consideration) paid by employers (on salary) and employees
(on everything but salary). The contribution rate is fixed by the
central government at 6,5%, at the moment, with an upper
ceiling for the contribution base of about 30.000€ per year. In
addition, the fund is financed by state contributions for people
younger than 18 years old. But the money from the fund
covers only approximately 50% of the costs. The other 50% is
financed through nominal premiums paid by insured
individuals. It is a flat rate per capita premium which can be
set by the insurance company itself. People who cannot afford
the full flat rate contribution are eligible for a state subsidy.
People younger than 18 do not have to pay premiums.
Summing up: Half of the overall contributions is income
related; the other half comes from a lump sum. For each
individual, of course, the composition is different.
An overall look at the composition of public finances going
into health care shows that, even in social insurance countries,
much is financed through general taxes, for several reasons.
So in France, only half of public expenses for health treatment
stems from contributions; the other half is generated by a
diversity of taxes. In the Netherlands, 25% of total health
expenditures are said to stem from the general state budget,
not the least as a consequence of premium subsidies for those
who cannot afford the per capita premium. In some countries,
dualistic financing of hospital (investment by state budget,
current medical expenditure by sickness funds) can contribute
to a higher share of tax financing, such as in Germany. French
hospitals however are paid exclusively by health insurance.

STRUCTURED CO-PAYMENTS—STATUTORY
USER CHARGES
In many cases—and independently of the type of the scheme
—public health plans do not pay the full cost of treatment, but

11

oblige the patient to pay for a certain amount or percentage.
The installation of co-payments can result in out-of-pocket
payments and in obtaining complementary private insurance.
There are two independent reasons for the arrangement of
co-payments: The first one is simply the aim to directly reduce
costs by requesting that the patient pay fees (shift financial
burden from public budget to the sick person). The second
one would be to motivate the patient to be more careful with
public resources and to ask only for indispensable treatment.
In this case, the aim is to avoid unnecessary health care.
Co-payments range from small lump sums to high payments,
often as a percentage of total cost, as in most countries
patients pay high fees for dentures, medicines, or physiotherapy.
In state NHS-type schemes, out-of-pocket co-payments are
often relatively low; such is the case in UK and Sweden,30
where co-payments make up only about 2% of overall health
cost.31 In Sweden, however, there are some very interesting
situations when one takes a closer look at the cost structure of
co-payments.32 Family doctors receive a fee by the patient
between 11€ and 16€ for each personal contact. For the
specialist, it is between 16 and 33€. For socially disadvantaged
people, the co-payments are restricted to 100€ per year. For
hospital care, patients have to pay a fee of 9€ each day, the
retired and elderly only two-thirds of that. High co-payments
have to be paid for dental treatment, increasing from 39% in
1993 up to 61% in 2002. In the case of dentures, however,
the co-payment is restricted to 650€ per year; elderly people
don’t have to pay more than 78€. 33 In addition, the cost for
medicines, up to 100€ per year, have to be paid out of
pocket; above this threshold, payments are subsidized, and
from 200€ upward, the costs are paid by the NHS. There are
restrictions on the number of visits people can make without
co-payment; only 2,6 medical visits each year, on average, in
Sweden compared with, for instance, 6,5 in Germany.34 The
NHS, in Italy, in contrast, assigns extremely high co-payments.
The patient has to pay up to 36€ for each personal contact
with a doctor.35 For laboratory work, ultrasounds, and X-ray
examinations, the co-payments can easily total up to 100€. 36
In Ireland and Finland, patients’ high contributions to inhospital costs must be mentioned.37,38 In Finland, co-payments
for medicines are as high as 50%.39
In social insurance-type countries, high co-payments are the
current norm. The most extreme example is certainly France.
Statutory co-payments range between roughly 20% in the
hospital sector and 30% for outpatient treatment, and even
more for medicines and dental treatments. In Switzerland,
co-payments are relatively high not only for particular
medicines and dental treatments, but also for normal visits
with a doctor. Many different individual options for
co-payment, (franchises, etc.) are available. In Germany, for all
services prescribed by a doctor the statutory co-payment is
10% of the cost, but with a cap of 10€. In hospitals,
co-payment is 10€ each day, but for 28 days maximum. In
addition, 10€ have to be paid per quarter year if medical
services have been retained. Despite the relatively modest
extent of statutory co-payments in Germany, 20% of
chronically ill adults reported they had skipped medications,
not seen a doctor, or had foregone recommended care

because of costs.40 In the Netherlands, in the AWBZ scheme
for cost-intensive health care, the patient has to bear
income-related co-payments, normally at least 10%. In the
ZVW, for “normal” health expenditures, co-payment for
transportation is 10%, for dentures 30%, and for medicines
100% for the amount exceeding the fixed price. Astonishingly
enough, in the Netherlands only 5% of chronically ill adults
reported they had skipped medications, not seen a doctor, or
foregone recommended care because of costs.41 In
Switzerland, patients are sharing the cost of treatment with a
payment of 300SFr per year and, above that, they will pay
10% of costs up to an upper ceiling of 700SFr (2005). In case
of hospital treatment, 10SFr per day must be paid in addition
to the shared costs. Eventually, co-payments for medicines
have to be borne at a level of 10%. If generics exist and the
patient insists in consuming the name brand, their share will
be 20%. This strategy was very successful; the market for
originals has dropped in Switzerland.42
The fraction of non-insurance-covered statutory co-payments
on total health expenditure comes, on average, to 5% in
Germany,43 9% in France44 (despite wide-spread complementary
insurance), 14% in Switzerland,45 8.4% in Denmark46 and
4.1% in the Netherlands.47
In any case, the decision to ask for co-payments will almost
automatically be linked to exceptions for those who are not
able to pay, for vulnerable groups, or for severe medical
conditions.48 France is a good example for exempting low
income groups (below 500€) from co-payments with its
programme “Couverture Maladie Universelle Complémentaire”,
which was introduced in 2000, in addition to its allegedly
universal “Sécu Sociale – Health Insurance”. This programme
helps those who are not able to pay premiums for
complementary private insurance. About two million people
are affected.49 In addition, the “Couverture Maladie
Universelle” eases co-payments for certain groups of chronic
illnesses. Switzerland eases or eradicates completely the
co-payments for long term illnesses and for children. Lowincome earners contribute with lower or no co-payments.
Sweden and the UK eliminates co-payments for children.
Sweden applies an upper limit (291€) for co-payments by the
elderly. In Germany, hardship clauses are foreseen for
vulnerable groups.
Such exceptions not only create enormous bureaucratic
workloads and red tape, but reduce the expected steering
effects—if there are any. One more problem lies with the
possibility of covering statutory co-payments by private
insurance, thereby counteracting politically intended steering
effects. This is the reason why in Switzerland it is forbidden
to cover the relatively high statutory co-payments with
voluntary, private insurance.
Critics of co-payments, even at high international levels, deny
any meaningful effect of statutory co-payments, including the
alleged steering effect. The EU commission states that
evidence in many member states shows that “co-payments,
though raising some revenue, have not been able to restrict
unnecessary care consumption, and they may have hindered
access for vulnerable groups. Hence, a co-payment system
requires the development of a whole set of exemptions so as

12

to ensure that equity of access is maintained. Moreover,
co-payment systems imply important administrative costs
which need to be balanced with the savings generated from
deterring unnecessary care use. Critics say that they will
reduce health care access by people who most need it.”50
Other studies from international organisations active in the
field, (for instance, the International Social Security Association),
are showing that co-payments regularly diminish public
expenditures, but act in a very unspecific way and cannot
efficiently countervail wrong use of medical resources. It is only
the “first contact” that will be avoided or delayed, but then it
is the doctor who decides, in most cases, on the next steps.51

OTHER OUT-OF-POCKET PAYMENTS
Out-of-pocket payments can be the result of planned
co-payments. In addition, they can be the indirect consequence
of poor benefit packages in the public scheme—or even
worse—informal over-the-counter payments. The latter is a
normal feature in most new EU member states in Middle and
Eastern Europe. In some cases, health care is purchased
completely outside the public health care scheme. NHS-guided
countries in Southern Europe, in particular, appear to provide
relatively good health care services, but are dependent on the
patient’s ability to afford private health care as a supplement
to public health care.52
In Germany, unplanned out-of-pocket payments are mostly the
result of the ambition of contracted doctors to gain more
money. They are not allowed to do that within the public
health care package but they are allowed to “offer” additional
services, not paid by the statutory health funds. A list of
additional services was established at the end of the 1990s by
recommendation of the contracted doctors’ federal
organisation Kassenärztliche Bundesvereinigung. It contains
so-called “Individuelle Gesundheitsleistungen“ (individual
health) that must be paid exclusively by the patient. The
medical necessity is, however, contested. The volume of these
services delivered in practice is not transparent. Polls suggest
that one-fourth of patients were confronted with relevant
offers by their doctor(s), which often were hard to reject. The
main services were additional diagnostics of intra-ocular
pressure, ultrasound examinations, and additional preventive
examinations for cancer.53
In reality, the fraction of out-of-pocket payments is much
bigger than only the statutory co-payments. In Switzerland,
setting aside purely privately purchased health care,
out-of-pocket payments (co-payments, franchise, medicines,
dental care, and other treatments not covered) amount to
33%.54 Other sources report 29%,55 but, including expenses
paid by private supplemental or complementary insurance,
they total almost 44%.56 In the Netherlands, out-of-pocket
payments are 27%;57 in Germany 21,5%;58 in Finland 22%;
in the UK 16,5%59 and in Sweden 15%.60 It is difficult to
obtain a clear picture for France. According to an interview
survey, out-of-pocket household spending without
complementary insurance is estimated to be about 14% of all
health costs or 750€ per year.61 Other sources report 24%
(apparently without payments covered by complementary
insurance)62 or 45% (including payments covered by
complimentary insurance).63 However, despite private

complementary insurance, the high out-of-pocket payments
makes one-third of French patients complain about an everdeteriorating access.64 In Italy, household spending on health
care accounts for close to 30%, giving Italy one of the highest
levels of out-of-pocket payments.65
It is estimated, that all over Europe, on average, one-quarter
of all health expenditure is borne by private households.66

RISK STRUCTURE ADJUSTMENT67
In a statutory universal health scheme with multiple health
funds, risk structure compensation is an important tool to
maintain national solidarity. Compensation becomes almost
indispensable in statutory schemes where sickness funds have
to compete for clients. It is a precondition for a fair competition
on efficiency and quality. Only schemes with one single
sickness fund, one single NHS scheme with a central (and not
regional) budget, or voluntary schemes based on risk-adjusted
premiums will not rely at all on risk structure compensation.
The main goal of such compensation is to avoid risk selection,
competition for good risks instead of quality. Even the legal
obligation to contract and the prohibition of discriminatory
practices do not eliminate incentives for skimming. For
instance, quality-distortion problems can occur when plans
compete on the basis of medical service quality. It is tempting
to under-provide some services associated with bad risk users
and over-provide others. In addition, elements of choice for
the insured such as co-payments, voluntary enrollment in
managed care programs, etc. are creating gateways and
opportunities for indirect discrimination. In addition, service
negligence could be applied to bad risk clients; the offices and
contacts which sick people rely on could be reduced, while
marketing could be targeted to the healthy and wealthy.
In Germany, the risk structure equalization will be organized in
the future by the so-called “Gesundheitsfonds”(global health
funds). It will be fed by payroll taxes of about 15% of wages
and a state contribution. The global health fund allocates
for each insured person certain payments to the responsible
sickness fund. This allocation is comprised of a uniform per
capita sum and a risk adjusted supplement. The supplement is
calculated upon age, sex, and status as a recipient of an
invalidity pension or not. In addition, starting next year, morbidity
will be taken into consideration. This will be extremely
difficult—between 50 and 80 sicknesses or health conditions
are under discussion. The Ministry for Health will set up an
extra scientific committee (wissenschaftlicher Beirat), charged
with the development and maintenance of a classification
system for the morbidity equalization.
In the Netherlands, the risk equalisation scheme will involve
payments to health insurers, which compensates for public
service obligations and which intends to neutralise the
different risk profiles of the health insurers. The compensation
is financed from the “Zorgverzekeringsfonds” (health care fund),
which is administered by the Health Care Insurance Board
(CVZ) and financed by income-related contributions and
subsidies financed out of the general budget. Risks
compensated for are: age, gender, morbidity by diagnosis cost
groups, morbidity by pharmaceutical cost groups, the kind of

13

income (kind of employment, social benefits such as disability
benefits), and the region.68 The nine diagnostic cost groups
reflect in-house expenditure; the 17 pharmaceutical cost group
risk adjusters identify individuals who show indications of chronic
health conditions. These groups are an outpatient morbidity
measure, using selected drugs. In addition, for very severe
cases (expenditure above 12.500€ per year) an ex post facto
payment or “retro perspective equalisation” scheme is used.69
In Switzerland, a risk structure compensation has been introduced
for age, sex, and region within a canton (state), but not for the
health condition. In addition, there is no risk compensation across
cantons. At the moment, there is no risk compensation for
morbidity, but a change can be expected for the near future.
Hospitalisation dating back one year is likely to be used.
Risk equalisation schemes exist even in voluntary supplemental
schemes, but only in rare cases (Ireland70).

CHOICE
At the center of this topic is certainly the right to choose
between medical service providers. The degree of consumer
choice varies considerably—from direct assignment to a given
provider without any choice in certain NHS schemes or
managed care schemes to almost free choice. In many cases
however, completely free choice has to be paid for by
additional contributions, fees (out-of-pocket payments), or
supplemental insurance.
In NHS schemes, one should not expect too many individual
rights and choices, but—with exception of the UK—it exists. In
Italy, those who accept high co-payments have more choice
between service providers. In Denmark’s public NHS, people
can choose between an almost “for free“ basic scheme (group
1) and a more liberal scheme with their choice of doctor
(group 2). The overwhelming majority has chosen group 1.
It is associated with enrollment with a general practitioner as a
gatekeeper for special care. The more liberal group 2 scheme
offers choice of doctors, without any gatekeeping procedure.
In exchange for this freedom, group 2 patients must pay a part
of the expenses themselves, for both the general practioner
and specialist. The co-payment amounts to the share exceeding
the amount covered in the basic scheme. Danish patients can
also choose between three kinds of hospitals. Access to public
hospitals is free. Using a privately contracted hospital requires
the patient to bear the cost exceeding the public tariff. Using a
non-contracted private hospital means the patient must pay all
costs. For Norway, the patients’ free choices of (public and
contracted) hospitals is remarkable. In Sweden, for ambulatory
care, most patients can choose between local health centres
and hospital outpatient departments, but the latter case is
linked to higher co-payments. Alternatively, since 1994, citizens
can freely choose a contracted family doctor; this decision is
binding for one year.
In contrast to state-run health systems, insurance-based
schemes have the tendency to contract a wide range of service
providers not employed with the national health system, giving
patients many opportunities to decide for themselves whom to
trust. Some health schemes are even going as far as giving its
insured people complete freedom to choose between all

licensed service providers, without restriction. The Swiss
scheme gives its insured people complete choice between
service providers, only restricting patients to hospitals situated
in the relevant canton. In Austria and France, the decision to
consult a non-contracted provider means the patient must pay
higher co-payments. In Germany, sickness funds may offer a
cost-reimbursement tariff instead of the normal direct clearing
procedure between the health fund and service provider
(benefit-in-kind principle). This gives the patient access to
non-contracted doctors, but is regularly linked to higher
co-payments.
The problem with this kind of choice between contracted and
non-contracted doctors is the emergence of a “double” or
“parallel” structure on the supply side. Some doctors commit
themselves to treat patients for fixed tariffs in the public health
scheme. Other doctors are also approved to treat members of
the social health insurance but are, in principle, free to create
their own tariffs—with the consequence of additional
out-of-pocket payments by the patients. In France, there exists,
side-by-side, sector 1 and sector 2 doctors. Sector 1 doctors
work for contracted tariffs and fees; sector 2 doctors are
completely free to charge their clients their own (but, in theory,
transparent) tariffs. All this is not a problem as long as there
are enough doctors in sector 1. But, depending on the
specialist discipline and region, it can be almost impossible to
find a sector 1 doctor in a timely fashion. This results in the
necessity of going to a sector 2 doctor and accepting high
co-payments, often not even covered by the private
complementary insurance. Is this compatible with the principle
of universal access? A similar situation can be observed in
Austria. Insured people can use contracted and non-contracted
doctors. But the use of non-contracted doctors is associated
with additional out-of-pocket payments of at least 20%, if not
more. And again, in some regions, it can be hard to find the
required specialist.
This kind of problematic trend is not restricted to insurancebased schemes, but exists also in NHS-type schemes. One
cannot only find parallel structures of public or private care,
but in many cases, the same institution or doctor offers
both features, according to the willingness of the patient to
accept high out-of-pocket payments.71
Longer waiting times are often associated with the need for
choice. So the often very long waiting lists in Italy—dependent
on region and discipline—can drastically be shortened by using
the medical parallel structure mentioned above—with drastic
out-of-pocket payments, leading to a sort of two classes of
medicine.72 In France, many people prefer to look for a sector 2
doctor, even if this is associated with higher co-payments. As
far as this is discussed in the public, those doctors do not
provide better quality, but faster access and more choice in
setting a date for an appointment.
Choice does not always mean increased or better access to
medical services, but rather the freedom to choose the
provider. So, in Germany, sickness funds are obliged to offer
their insureds different managed care programs; for instance,
associated with binding on a restricted group of providers;
participation in disease management programs. Patients
choosing a managed care program might be rewarded by

14

rebates up to two monthly premiums or 600€ maximum.
Likewise, in the Netherlands, the system creates many
opportunities for health insurers to offer preferred provider
arrangements and managed care. But there is little evidence,
until now, that the “Hausarzt Model”, family doctor-oriented
care introduced at the end of 2004, has measurable results.
Six million insured are enrolled in such a programme, but
patients’ compliance with the directive not to see a specialist
directly is low.73 In addition, the model could neither prove a
significant amelioration of the health status of enrolled
patients nor economies in cost. This is put down to too few
incentives for both patients and doctors to use the program in
an efficient way.74 In Switzerland, the insured can opt for an
HMO-like family doctor model with restricted choice. This option is
rewarded with a premium rebate. An alternative would be to
enroll in a “Telmed” model; here, the insured is obliged to
consult a medical call centre before consulting a doctor. This
option is also rewarded with a rebate. Sixteen percent of new
entrants decide in favour of one of these programs.75
In a few cases, there is choice in the range of the benefit
package. German sickness funds may offer their insureds a
special additional tariff for certain expensive medicines,
such as for homeopathic treatments.
In addition, insurance-based schemes may offer special tariffs
linked to out-of-pocket payments, refund arrangements in
case of non-use of the insurance, etc. Such tariffs intend to
induce a responsible consumption of medical services and
to follow a healthy lifestyle. In Switzerland, the insured might
choose—in return for a premium reduction—an increased
franchise up to 2.500 SFr per year; 40% of insured people opt
for this program.76 Alternatively, the insured can opt for a
“bonus insurance”; in case of non-utilization of the insurance,
the insured person receives a premium reduction, increasing
with each year of non-utilization. After the recent reform of
the German health system, the sickness funds are allowed to
offer a “premium refund tariff” that refunds two monthly
premiums, or up to 600€ maximum, in case of non-use of
medical services. In addition, the sickness fund may offer a
franchise tariff with a patient’s participation on occurred cost
until a contracted upper ceiling. The rebate offered to the
insured must not be higher than one monthly premium. In the
Netherlands, the health insurers offer franchise tariffs
combined with premium rebates (co-payments between 100€
and 500€ per year). But only 5% of all insured make use of
this offer (2006).77 In addition, one can choose between cost
reimbursement and direct clearing between health insurer and
service provider.
Summing up, it’s clear that NHS- and insurance-based schemes
do not automatically curtail the degree of freedom, choice, or
sovereignty they grant their members. Many NHS-type
schemes readily allow for an upgrade in individual choice—for
an additional charge. On the flip side, insurance-based
schemes often offer premium rebates as a compensation for
an in-advance contracted downgrade in choice. It is
noteworthy, however, to look at the UK. In this country, the
only choice is to stay in the state NHS under preset conditions
or to leave the system completely for a given treatment and
pay the whole bill out of pocket. There are no other options.

VOLUNTARY PRIVATE HEALTH INSURANCE
In general, there are three different classifications.78
Substitutive insurance is private insurance that replaces coverage
otherwise available through the state or social insurance.
Complementary insurance provides coverage for services
excluded or not fully covered by the public schemes (statutory
user charges). Supplementary (or supplemental) insurance
coverage offers faster access and increased choice, typically
in countries with reasonable waiting times and strict
gatekeeper provisions.
Substitutive insurance plays a minor role all over Europe,
with the exception of Germany, where it covers 10% of
population. In the future, German private health insurers are
obliged to offer a basic tariff for all those not obliged to join
the Public Statutory Health Insurance. In that case, a private
health insurer is obliged to contract without any risk testing or
exclusion of benefits. The private contract has to cover all
benefits that are obligatorily covered by the public scheme and
must not exceed the maximum premium applicable in the
public scheme, i.e., an amount of roughly 550€ per month. In
case of low income, the premium has to be lowered to 75%
of the maximum; beyond that, the state subsidizes the
premium. In practice, it exists as competition between the
public sickness fund and private health insurers for selfemployed clients and higher-earning people (more than
3.600€ per month, for three consecutive years).
Complementary private insurance is not prevalent, except in
the Netherlands, Denmark and, particularly, France. In France,
the statutory basic social health insurance only covers roughly
between 70% and 80% of the real cost of contracted service
providers. The rest has to be paid by the patient. However, the
patient can draw on additional insurance that covers at least
part of the rest. More than 90% of the population possess
such a contract. About 14% of health expenditures is paid by
voluntary health insurance.79 In Switzerland, the basic benefit
package is relatively low80 so there is a lot of room for
complementary insurance. Complementary insurance covers
dental care, glasses, insurance abroad, medicines not paid by
the basic insurance, among other things. It is interesting to see
that complementary insurance does not only exist in
insurance-based but also in NHS-style countries. In Denmark,
three commercial insurance companies cover the additional
cost of using private hospitals. However, since 1986, premiums
to this insurance are no longer tax deductible.
Complementary private insurance can become counterproductive in cases where public health policy has introduced
cost-sharing and co-payments in order to steer the
consumption behaviour of the patient. Some countries even
forbid enrollments in private complementary health insurance
plans. In Switzerland, it is forbidden to cover co-payments
stipulated by law or chosen in the form of a contract variant
within the statutory health insurance. Totally different is the
situation in France. There, taking voluntary complementary
insurance is politically welcome and associated with tax subsidies.
Supplemental insurance can be found in many countries.81 In
Ireland, despite universal access to the public health care
system, 50% of the population have taken supplemental

15

insurance. It covers mostly more comfort in hospitals.82 In Italy,
10% of the population has supplemental health insurance
(other sources suggest it is 33%, but without specifying what
the insurance covers83). Insurance often takes the form of
lump sum payments in case of hospital treatment; in addition,
it gives better access to private doctors or increased comfort in
hospitals.84 In Denmark, mutual insurance institutions cover
benefits otherwise not or only poorly provided by the basic
NHS, i.e., medicines and dental treatment. Twenty-eight
percent of the Danish population is thus insured. However,
since 1986, premiums to this insurance are no longer tax
deductible. All together, financing through private complementary
and supplemental insurance accounts for 20% of overall
health cost, leaving 80% to the state budget. In Austria, 38%
of households are covered by a private complementary or
supplemental insurance.85 In the UK, 15% of the population is
covered by supplemental private insurance.86 It covers easier
access to specialists, and gives fast access to treatment
otherwise delayed by long waiting lists, particularly for
non-elective surgery. In the Netherlands, 93% of insureds are
in possession of a voluntary supplemental health insurance
contract.87 It is particularly important to have this in order to
cover some services almost completely excluded from the basic
package, such as dental care and physiotherapy. In theory,
there is no binding link between the basic contract (obligatory
package) and the supplemental contract. By law, insurers may
not terminate a supplemental contract when the insured
decides to switch the basic contract. But in practice, not all
insurers comply.88 In Sweden, voluntary private health
insurance plays only a minor role; 150.000 people are covered.
Insurers promote this product by addressing the chance to
bypass waiting lists and use private hospitals. In Switzerland,
supplemental insurance covers certain treatment in hospitals
such as that by the medical superintendent; free choice of the
hospital beyond the borders of the canton; avoidance of
waiting lists; consumer-friendly visits (including the ambulatory
sector); and continuity of the personal doctor. Thirty percent of
insured are contracted in a complementary or supplemental
insurance. Supplemental and complementary private insurance
together account for 10.5% of overall health costs.89
In general, voluntary insurance does similar things as
out-of-pocket payments: It improves choice, quality, and access
for those who can pay and can diminish access, at the same
time, for those who cannot pay or who exhibit poor health
conditions. In addition, in most countries, private, voluntary
insurance is loosely regulated, linked to medical risk testing
and the exclusion of pre-existing conditions, and the insurer
can easily terminate it. There are only a few exceptions. In
Germany, substitutive private insurance has to provide a
standard contract without risk testing. In Ireland, risk testing is
forbidden by law. In Italy and France, tax deductibility is
dependent on the absence of risk-adjusted premiums.90 In the
Netherlands, health insurers committed themselves by their
umbrella organisation not to introduce risk selection in
supplemental health care insurance. This self-commitment is
observed by most, but not all.91 The problem is that insurers
are not legally obliged to accept an applicant. But normally, in
the absence of strict regulation, there is no community rating
in voluntary health insurance. So, in the worst case, it

contributes to health inequalities instead of easing them.
One more problem with private health insurance is high
administrative cost, up to 25%.92

SCALE, GENEROSITY, AND FINANCIAL BURDEN
OF PROTECTION FOR OLDER PEOPLE
Even generous health systems are challenged with serious
shortcomings regarding the needs of older people. This could
be the result of open and transparent targeting of scarce
resources to the active population. In many cases, medical
resources are withheld depending on age. Rules for these
restrictions are often not written, but can be found at the
clinical level, (e.g., the UK).93
Beyond direct discrimination, there might be a lot of
hidden and indirect access constraints that will hit older people
in particular, starting with a generalized system of high copayment or out-of-pocket payments.
In Switzerland, three factors are indirectly burdensome for the
elderly.94 The per-capita premium to the health fund is putting
pressure on older people’s incomes since pensions are normally
lower than earned income. In a similar way, high co-payments
in the Swiss system hit older people more than younger.
Reliance on voluntary, private insurance, as well, puts older
people at risk. Since 1996, in Switzerland, where voluntary
private complementary and supplemental insurance play a high
role, insurers are obliged to calculate risk-based premiums,
typically more expensive for older people. So it is this group
who cannot afford this kind of insurance any longer. Similar
problems exist for the elderly in the UK, who have problems
paying the premiums for private supplemental health insurance—
since the premium is, among other things, linked to age. In
Denmark, complementary insurance covering expenditures for
private hospital use automatically stops at age 67.
Generally, any company-based organization of basic or
additional health insurance turns out to be risky for the elderly
and pensioners. Even in France, complementary protection is
often organized at the company level in the form of group
contracts with obligatory adhesion by all workers, but such
contracts will expire when a worker retires and leaves the
company. The insured might have the right to continue the
contract on an individual basis, but the insurer is allowed to
ask for a substantial increase of contributions, up to 50% or
more.95 This puts the insured in a rather weak position and
creates serious problems from an international accounting
standards perspective, since they oblige the insurer to finance
and fund this lifelong protection in advance.
Generally, co-payments burden the chronically ill and
particularly the elderly. Even in Germany, where structured
co-payments (dental care excepted) are relatively moderate,
more than 40% of older people feel particularly burdened by
the per-capita family doctor enrollment fee and other
co-payments, saying they have to economize elsewhere in
order to be able to pay their additional fees.96 The particular
burden co-payments represent to elderly people gives rise for

16

subsidies targeted to this group. Sweden is a good example:
Older people’s statutory co-payments to hospital care and
dentures are reduced in relation to younger people.
Discrimination at the clinical, provider, or administrative level
is common and hard to detect. It is often hidden in allegedly
purely medical considerations. This can occur, for instance,
even in Germany where open prioritisation regimes do not
exist. Occasionally, the sickness fund refuses treatment with
the argument that the treatment isn’t suitable, as for an older
patient, for instance. This is quite justified with medical and
scientific recommendations, even by international expert
organizations. So in one case, the competent sickness fund
rejected a bone marrow transplant for a 64-year old person,
saying that he would be too old for this kind of treatment.
Doing this, the fund followed a recommendation by the
European Blood and Marrow Transplantation Group, which, in
some cases, defines the age limit as 55 for donations between
brothers and sisters.97 In Sweden, apparently as a
consequence of budgeting, it’s hard for the elderly to obtain
certain types of treatment such as the after-care of a heart
attack or to have cataract surgery.98 A certain province or
region had, in order to cope with prioritisation requirements,
abolished surgery related to gastro-intestinal diseases by
elderly, multi-diseased patients; now, they have to pay the
whole treatment by themselves.99
In order to ease the burdens of elderly people, targeted (or
indirect) “rebates” (as well as targeted tax advantages) can be
granted. In France, for example, health care-related social
contributions and taxes on pensions are lower than the related
deductions on salary.

POOLED RISK AT THE EMPLOYER LEVEL
Up until now, the company or industry-wide organisation
played only a minor role in the organisation of sickness
insurance and is almost exclusively restricted to complementary
or supplemental insurance. This is of interest to the
predominantly employer-based system in the U.S.
In France, 50% of private complimentary health insurance
contracts are collective contracts, agreed by social partners at
the company level100 and purchased through employers, who
often pay a part of the premium. The advantage, besides
special tax breaks, is the cheaper cost structure and
community rating—instead of the complicated premium
differentiation for individual contracts. In addition, these group
contracts tend to be more generous than individual
contracts.101 The consequences of retirement for those
collective contracts are not easily understood. Retirement
alone must not be a reason to terminate the contract, but the
premium will be recalculated on an individual basis, since after
retirement the age will be taken into consideration. In Italy,
similar group contracts exist at the company level. This gives
access to more comfort in hospitals and faster access to
specialized care.102

One more country with group contracts is the Netherlands,
with its ZVW scheme for normal medical treatment. These
contracts are agreed upon, for example, between employers
and trade unions. Patient federations or groups are also active
in group health insurance contracting. In any case, people
cannot be forced to join such contracts, even when such a
contract exists in their firm. Health insurers are allowed to
offer rebates up to 10% on the flat rate part of the premium.
In practice, 46% of insureds are enrolled in a group contract,
67% of them in a contract negotiated by the employer.103 The
average rebate in the mandatory insurance package is 6,8%;
in voluntary insurance it is 8%.104 In Switzerland, companywide group insurance exists in the voluntary sector. Whole
staffs are insured for a unique community rate that reflects the
average age of the employees.

REGIONAL DISPARITIES
The degree of autonomous regional organisation and
financing of health insurance and health care is directly linked
to the question of how much national solidarity will be needed
or accepted. In Europe, this is not a big topic for discussion,
even if the phenomenon of regional disparities exists. Therefore,
the topic requires only a brief mention, but regional issues
might become an important subject in US health care reform.
In Italy, the NHS (Servicio Sanitario Nazionale e Regionale) is
largely financed through regional taxes or tax-like
contributions with very complicated features. At the national
level, an essential benefit package has been defined and a
fiscal equalisation mechanism (National Solidarity Fund) has
been developed to transfer funds to those regions unable to
raise sufficient resources. However, coverage differs between
regions.105 The regionalization is associated with unequal
geographical spread of medical standards, including extremely
different waiting times.106 In the UK, regionalized budgets
often result in regionally different waiting lists and even
priority decisions.107 In Switzerland, the basic health care
benefit package as well as tariffs can be different from canton
to canton; even tariff zones between cantons are allowed.

COMPETITION BETWEEN INSURERS FOR CLIENTS
Competition between sickness funds and private health
insurers for clients for basic coverage is rather an exception in
Europe. For decades, in Germany, there was competition
between public sickness funds and—in the case of substitutive
insurance—also between public sickness funds and private
health insurers.
In Switzerland, all citizens are obliged to subscribe to a private
health insurer contract for a basic basket of health care. For
those who fail to select an insurance, the government assigns
the citizen to a health insurer. But insurers have to comply
with many legal demands and restrictions. The system is
financed by a pay-as-you-go-principle, without capital reserves:
A basic health care benefit package has to be provided,
including hospital care and a prescribed list of medicines;
dental care is largely excluded. The basic package can be

17

different from canton to canton. The obligation for the insurer
to contract is stipulated by the law, regardless of individual
risk. The premium is calculated as a uniform per capita fee. In
principle, the amount of this fee is the decisive competition
parameter. But since competition does not exist beyond canton
borders and additional regionalization is possible, competition
on price is limited.
For people with low incomes and for families, the premiums
are subsidized by the Swiss Confederation and the cantons.
The idea is—very roughly—that the amount of the premium
does not exceed 8% of family income. Thirty-three percent of
the insured people were eligible for premium subsidies. In
principle, an insurer must apply one single tariff to everyone.
However, differentiation is allowed between the different
cantons, and even tariff zones within a canton are possible. In
addition, premiums can be differentiated by three age groups:
0-18, 18-25, above 25. No further discrimination is allowed.
Every insured has the opportunity to change insurers at any
time, but only among the supply given in the region.
Premiums charged to the insured for the obligatory, basic part
of the health insurance are not allowed to be used for other
purposes than exclusively for financing medical care defined by
the basic package. That means statutory contributions by the
insured must not be used for distribution of profits in favour
of the investors of the health insurance company. A risk
structure compensation has been introduced for age, sex, and
region within a state, but not for health conditions. In addition,
there is no risk compensation beyond canton borders. There is
only a little competition between health insurers for efficient
purchasing of health care services.
All doctors licensed to practice are automatically allowed to
treat the insured in the basic scheme. The decision to give a
license is, among other things, guided by capacity planning
and restricting, but it is the cantons and not the health insurers
who decide. Remuneration of hospitals is contracted between
insurers and hospitals, both acting individually as well as
collectively; there are 100 such contracts, but they are strictly
controlled by the cantons and the federal level and have to be
approved by both. The only way to gain some autonomy is the
possibility for insurers to reach an agreement with single or
participating doctors on managed care arrangements and
model disease management and case management.
Today, nearly 100 health insurers are licensed with the
obligatory health insurance scheme. A diversity of insurers are
approved, among them for-profit and not-for-profit
organizations, HMOs, owned by insurers or other private
investors. It is noteworthy that administrative costs in the
obligatory sector created by commercial insurers are four times
as high as administrative costs by not-for-profit organizations.108
The problem with the Swiss health insurance is the steep
increase in costs by 4% to 6% each year, 10% alone in
2000.109 This makes the scheme the second most expensive in
the world, after USA.110 The introduction of competition
between health insurers in 1996 did not bring economies.
Critics say that competition is incomplete as long as the
obligation for health insurers to contract with all existing

service providers is not abolished and as long as there is no
public requirement planning, restricting the offer of health
services. In addition, the principle of fee-for-service payment is
held responsible for driving costs upwards. Last, but not least,
shortcomings are identified in the construction of the risk
adjustment scheme (without compensation for morbidity),
since it gives more incentives to compete for healthy
consumers instead of competing for management of service
and administration cost. Apparently, the incentives for
skimming and discriminating against bad risks were so
tempting that the insurers couldn’t resist.111
Special attention should be given to the Netherlands. Since the
reform of 2004, coming into force in 2006, a universal general
health insurance system (ZVW, in addition to the AWBZ
system) covers the whole population, independently of the
individual status as a worker or of individual income. For
statutory, basic health insurance, there is one marked for
private health insurers (including old sickness funds that had to
change status). All licensed insurers are required to comply
with both general legislation covering the private insurance
sector and with specific provisions of the Health Insurance Act.
In order to maintain solidarity, important restrictions are
imposed upon health insurers.
The government determines the risks which have to be
covered and the medical services to be delivered by a
compulsory standard insurance package. The insurer must
offer this package nationwide, with obligation to contract,
open enrollment, and with community-rated premiums.
A risk equalisation scheme will hamper competition on the
basis of risk selection. A no-claim reimbursement is obligatory.
It is prohibited to differentiate the premiums according to
individual health risk. Insured people can change to another
insurer once a year. At least in theory, every single health
insurer will purchase services by health care providers. But in
practice, the competition between insurers for the best supply
of contracts has not yet occurred.112 In practice, 14 insurers
are active in the relevant market, the four biggest among
them insuring 80% to 90% of all insured people.113
As a consequence of strict legal requirements, risk
management as a source of competition and return for
investors in insurance is reduced. This appears to make
obligatory insurance not so interesting for the commercial
financial industry and gives reason for legal complaints.

OUTLOOK
Summing up, after this lengthy discussion of the strengths and
weaknesses of the public health schemes and arrangements in
different countries, are there some lessons to draw for
American health care reform? What could America do better
and what should it better abstain from? The answer will
depend largely on the analysis of what is wrong with the
American scheme. And this is not only a question to be
answered by experts, but a question deeply rooted in political
preferences and priorities. Is it the rising costs that are
regarded to be the main problem? Is it failing access for the
poor? If the measure challenge is the latter, the introduction of

18

a state-run NHS with strict budgets and prioritisation rules
could be the solution. But are the consequences fully
acceptable? Such a move would result in a budget-based
health system instead of a needs-based one.
If it turns out that the employers are no longer willing to pay
increasing health care premiums for their workers, maybe the
introduction of a general obligation to buy coverage could
help. This solution would bring to an end the “45 million
Americans without coverage” phenomenon and could do
away with frequently reported “unwanted Medicare and
Medicaid.” If the premiums were calculated as a per capita
lump sum instead of a percentage of wages, separation of
health care provisions from labour market participation would
be complete. However, a comprehensive legal and supervisory
environment would have to be created to steer the
competition between health insurers. There will also be a
need for a complicated regime of premium subsidies, with
their concomitant political debates.
This leads directly to the question of how much solidarity and
how much redistribution there should be in any scheme? Who
will be expected to “give” or compromise for the sake of
solidarity and in favor of whom? Would the guiding solidarity
principle be motivated by the idea of an inclusive welfare
state, capable of avoiding poverty and helping the most
vulnerable? Would a lesser degree of solidarity be based on
citizens’ wanting to have the chance to maintain the former
living standard, independent of the health status of the
nation? From the perspective of the insured and the patients,
decisions must be made on the meaning of competition and
choice and on the extent of a basic healthcare package. In
short, many problems that have been deceptively buried will
be resurrected if America undertakes fundamental changes in
the health care system.
I have tried to offer a broad menu of experiences from
European countries, being as forthright as possible in my
descriptions. Change, even when desperately needed, carries
many consequences. It is best to be aware of them without
being discouraged by them.

19

NOTES

24 Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik
6/2007, 57.

1

Wisbaum et al, 2002.

2

Ruiss, 2005, p. 177.

3

Health Consumer Powerhouse, 2007. Other experts report a distinct

25 Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik
6/2007, 57.
26 OECD-Beschäftigungsausblick, zit. nach Der Standard v. 20. 6. 2007

deterioration of the Swedish health system, Die Qualität des

“Die OECD fordert Lohnentlastung”. U.a. wurde Österreich zu einer
Umfinanzierung aufgefordert.

schwedischen Gesundheitswesens hat sich erheblich verschlechtert, only
slightly improved in last years, for instance, in the fields of heart attack
and stroke, Tiemann, 2006, p. 223. In addition, corruption appears to
become a problem, Tiemann, 2006, p. 224.

27 Tiemann, 2006, S. 300.
28 Douven, in: Wille 2007, p. 163.
29 Heike Korzillius in DÄBl 2007, 267.

4

Tiemann, 2006, p. 202.

5

Richard B. Saltman, The Appropriate Role of Public versus Private Funding

Gesundheitspolitik – Die Patienten mit ins Boot holen – IWD v. 12.

for Health Care. March 1998. Paper, presented at an ISSA Conference in

Sept. 2002.

Naples, Italy, 25-27 March 1998, p. 4.
6

Health Consumer Powerhouse, 2007, p. 2.

7

Commonwealth 2007 Survey.

8

Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik

30 However, high co-payments are asked for medicines, s.

31 Tiemann, 2006, p. 302.
32 See Ruiss, 2005, p. 177.
33 Ruiss, 2005, S. 177.
34 Ruiss, 2005, p. 177.

6/2007, 59.
35 Gesundheitspolitik – Die Patienten mit ins Boot holen – IWD v. 12.
9

Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik

Sept. 2002.

6/2007, 57.
36 Ruth Reimertshofer, Mamma Mia!, Gesundheit und Gesellschaft, 11/07,
10 Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik

S. 24, 27.

6/2007, 57.
37 Gesundheitspolitik – Die Patienten mit ins Boot holen – IWD v. 12.
11 Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik

Sept. 2002 – Obergrenze 330,- pro Jahr.

6/2007, 57.
38 Gesundheitspolitik – Die Patienten mit ins Boot holen – IWD v. 12.
12 Health Consumer Powerhouse, 2007
13 Commonwealth 2007 survey.
14 Health Consumer Powerhouse, 2007.
15 Spärliche Quellen; v.a.: Regulating Marked Activities in Public Sector,
OECD Journal of Competition Law and Policy, Vol. 7 No. 3, 123 ff.
16 S. hierzu v.a. Dirk Ruiss (2005), p. 176 f.; Tiemann, 2006, p. 222.
17 Tiemann, 2006, p. 222.
18 Tiemann, 2006, S. 223.
19 Tiemann, 2006, p. 222.

Sept. 2002 – 23€ für jeden Tag –ohne Limit.
39 Gesundheitspolitik – Die Patienten mit ins Boot holen – IWD v. 12.
Sept. 2002.
40 Commonwealth 2007, p. 729. Self reported.
41 Commonwealth 2007, p. 729. Self reported.
42 Commonwealth 2007, p. 729. Self reported.
43 Deutsches Bundesministerium für Gesundheit und Soziale Sicherung,
Zuzahlungen im internationalen Vergleich, Pressemitteilung vom 14. 5.
2004 (aufbauend auf einer Studie von Markus Schneider u.a., BASYS). It
should be slightly higher today as a consequence of the health care

20 In France, at least in the hospital sector, waiting times are not a problem.

modernisation law.

In the ambulant sector, the situation can be different.
44 Deutsches Bundesministerium für Gesundheit und Soziale Sicherung,
21 Health Consumer Powerhouse, 2007; GVG, Gesundheitssysteme in
Europa, 2006.
22 Kritisch zu den Wartezeiten auch Günter Danner, Gedanken zur
Sensationsreform des niederländischen Gesundheitswesens, ErsK
10/2004, 391.
23 Health Consumer Powerhouse, 2007.

Zuzahlungen im internationalen Vergleich, Pressemitteilung vom 14. 5.
2004 (aufbauend auf einer Studie von Markus Schneider u.a., BASYS). It
should be slightly higher today as a consequence of the health care
modernisation law.

20

45 Deutsches Bundesministerium für Gesundheit und Soziale Sicherung,
Zuzahlungen im internationalen Vergleich, Pressemitteilung vom 14. 5.

68 Wille, 2007, p. 173.
69 Wille, 2007, p. 181 f

2004 (aufbauend auf einer Studie von Markus Schneider u.a., BASYS).
It should be slightly higher today as a consequence of the health care
modernisation law.
46 Deutsches Bundesministerium für Gesundheit und Soziale Sicherung,
Zuzahlungen im internationalen Vergleich, Pressemitteilung vom 14. 5.
2004 (aufbauend auf einer Studie von Markus Schneider u.a., BASYS).
47 Tiemann, 2006, S. 312.
48 See Tiemann, 2006, S. 311.

70 Brian Turner, Recent developments in the Irish private health insurance
market, Euro Observer 2004, Vol 6, Mo. 1, p. 5.
71 Ruth Reimertshofer, Mamma Mia!, Gesundheit und Gesellschaft, 11/07,
S. 26.
72 Ruth Reimertshofer, Mamma Mia!, Gesundheit und Gesellschaft, 11/07,
S. 26, 27.
73 53% of patients enrolled in a family doctor centred program visited
directly the specialist, Sabine Rieser, Hausarztmodelle in Deutschland,

49 In addition, the Couverture Maladie Universelle covers all those people in

Deutsches Ärzteblatt 2008, p. C122.

France that for different reasons did not fulfill the eligibility criteria (a
certain minimum income) for the basic health care scheme, the régime
général. It is paid by the state. Today, 4,5 million people are affected,
8% of the population.
50 Draft Commission Staff Working Document to the Joint Report on Social
Protection and Social Inclusion – supporting document, spring 2008.
51 Xenia Scheil-Adlung, Kostensteuerung durch Verhaltensanreize?,
BKK 1998, 89; 93.
52 For Italy and Spain: Health Consumer Powerhouse, 2007.
53 Flintrop/Gerst, Ausfransungen eines grauen Marktes, DÄBl. 2205, 371 ff.

74 Among other evaluated by the Bertelmann Foundation, Sabine Rieser,
Hausarztmodelle in Deutschland, Deutsches Ärzteblatt 2008, p. C122.
75 According to a survey by Comparis. 10% of insured are enrolled in
a HMO / family doctor model, Leu/Beck, in Wille, 2007, p. 119.
76 Leu/Beck, in Wille, 2007, p. 119.
77 Walser ebd. S. 395.
78 Thomson/Mossialos, 2004
79 Dominique Polton, Recent reforms affecting private health insurance in
France, Euro Observer 2004, Vol. 6, No. 1, 4.

54 Tiemann, 2006, S. 175.

80 Tiemann, 2006, S. 177.

55 Eric Amelung, Health Care vor der Wahl, Gesundheit und Gesellschaft

81 Thomson/Mossialios 2004, p. 1 f.

1/08, 22; 23.
56 Tiemann, 2006, p. 175; but see as well p. 313: 41%.
57 Tiemann, 2006, S. 313.
58 Tiemann, 2006, S. 313.
59 Tiemann, 2006, S. 313.

82 Brian Turner, Recent developments in the Irish private health insurance
market, Euro Observer 2004, Vol 6, Mo. 1, p. 5.
83 Ruth Reimertshofer, Mamma Mia!, Gesundheit und Gesellschaft, 11/07,
S. 25; volume: 25 Mrd. € (UK: bln) each year.
84 Vincenco Atelle, Federico Spandonaro, Private health insurance in Italy:
Where we stand now, Euro Observer 2004, Vol 6, Mo. 1, p. 6 f.

60 Tiemann, 2006, S. 313; Wisbaum et al, 2002: 17%, including
expenditure for medical services and goods not covered by the
public scheme.
61 Ergebnis einer Umfrage unter Versicherten, Agence fédérale
d’information mutualiste No 3135, 27. 11. 2007.

85 Peter Wieninger, in: Hans Salmutter (Hrsg.), Wieviel Globalisierung
verträgt unser Land ? Wien 1998, S. 233.
86 Tiemann, 2006, S. 321.
87 Walser, a.a.O. S. 397.

62 Tiemann, 2006, S. 313.

88 Walser, a.a.O., S. 397 f.

63 Ergebnis einer Umfrage unter Versicherten, Agence fédérale

89 Tiemann, 2006, S. 175.

d’information mutualiste No 3135, 27. 11. 2007.
64 Ergebnis einer Umfrage unter Versicherten, Agence fédérale
d’information mutualiste No 3135, 27. 11. 2007.
65 Vincenco Atelle, Federico Spandonaro, Private health insurance in Italy:

90 Vincenco Atelle, Federico Spandonaro, Private health insurance in Italy:
Where we stand now, Euro Observer 2004, Vol 6, Mo. 1, p. 7.
91 Walser, a,a,O. S. 397.
92 Thomson/Mossialios 2004, S. 3.

Where we stand now, Euro Observer 2004, Vol 6, Mo. 1, p. 6.
93 Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik
66 Tiemann, 2006, S. 310.
67 See Eberhard Wille et al, Wettbwerb und Risikostrukturausgleich im
internationalen Vergleich, Baden-Baden 2007.

6/2007, 58.
94 Tiemann, 2006, S. 326

21

95 Agence Fédérale d’information mutualiste (afim) No. 3122,
8 novembre 2007.
96 Result of a survey conducted by the Deutsche Bundesarbeitsgemeinschaft
der Senioren-Organisationen in Bonn, Welt Kompakt v. 30. 11. 2007,
p. 25
97 Rhein-Zeitung v. 2. 3. 2002, “Zu alt für lebensrettende Therapie?“
98 Tiemann, 2006, p. 224.
99 Ruiss, 2005, S. 178.
100 Tiemann, 2006, p. 60.
101 Dominique Polton, Recent reforms affecting private health insurance in
France, Euro Observer 2004, Vol. 6, No. 1, p. 4
102 Vincenco Atelle, Federico Spandonaro, Private health insurance in Italy:
Where we stand now, Euro Observer2004, Vol 6, Mo. 1, p. 7.
103 Christina Walser, Erste Ergebnisse der niederländischen Reform des
Krankenversicherungssystems, BKK 8/2006, 395.
104 Walser, ebd. S. 395.
105 Vincenco Atelle, Federico Spandonaro, Private health insurance in Italy:
Where we stand now, Euro Observer 2004, Vol 6, Mo. 1, p. 7.
106 Ruth Reimertshofer, Mamma Mia!, Gesundheit und Gesellschaft, 11/07,
S. 23 ff.
107 Rationierung und Wartezeit im britischen Gesundheitssystem, PKV publik
6/2007, 57.
108 Tiemann, 2006, p. 175.
109 Tiemann, 2006, p. 174.
110 Tiemann, 2006, p. 185.
111 One insurer started to develop very “creative“ models, urging other
insurers to follow, see Leu/Beck in Wille, 2007, p. 123, 127.
112 Heike Korzillius in DÄBl 2007, 267.
113 Stefan Greß, Maral Manouguian, Jürgen Wasem, in: Gesundheit und
Gesellschaft 1/2007, S. 39.
114 Danner, a.a.O. S. 391.
115 Commonwealth 2007 review, w 718

22

Respondent Carol Ann Lockhart, Ph.D.
Carol Ann Lockhart, Ph.D.
President, C. Lockhart Associates
Carol Lockhart is president of C. Lockhart Associates, a health systems relations and policy
consulting firm. Lockhart Associates provides assistance to local, national and international
organizations planning and implementing health and public health policy and program
change. Dr. Lockhart is also a professor at the University of Tennessee Health Science Center,
College of Nursing in Memphis where she teaches health economics and health policy in
the Doctor of Nursing Practice distance learning program.
She has held local and state public health positions, including director positions in the Arizona
Department of Health Services. While there, she was the first director of the Arizona Health
Care Cost Containment System (AHCCCS), the nation’s first (1981) statewide capitated
Medicaid system. Dr. Lockhart was also one of the original 13 commissioners appointed to
the Physician Payment Review Commission (PPRC) to advise Congress on payments to
physicians under Medicare. She served two terms (1986-1991).
Co-author of two books on labor relations in health care plus articles and chapters on health
care management and nursing, Dr. Lockhart has taught in baccalaureate and masters
program in schools of public health, health administration, and nursing. Her doctoral studies
in health policy were done at the Heller School at Brandeis University as a Pew Health Policy
Fellow. Her bachelor of science degree was granted from Case Western University, Bolton
School of Nursing and her master of science from the University of California at San Francisco.

h
Let me say at the outset that I have a bias toward efforts to expand access to health
care for our population. That bias is reflected in the fact that I have been involved for
many years in multiple state and local efforts to expand care in Arizona. I remain
committed to that idea and welcome the exploration of options that might make that a
concrete reality sooner rather than later.
One could say that I was predisposed to find hope in Dr. Schultz-Weidner’s
presentation. He describes universal health care systems that are not incompatible with
the values in the United States and our insurance-based approach to care. The countries
described in his lecture provide examples of what might be possible, practical, and
compatible with U.S. health care, yet allow universality.
In the United States, “socialized” is usually the word thrown at anyone suggesting
some universal approach to health care, and it is not meant as a compliment.
Dr. Schultz-Weidner specifically separates his descriptions of universal health systems
between: 1) national health systems such as in the United Kingdom; and, 2) social
security systems with different levels of private insurance participation (social insurance
schemes) such as in the Netherlands, Switzerland, and Germany, systems that are much
like our own Medicare system. He clearly demonstrates that a universal health care
system can involve private insurance groups, and the paper explains and explores the
approaches very fully.
Consensus for change to a universal health care policy will not come easily in the U.S.,
with our very large and diverse population and interests. If change occurs, it will most
likely be instituted in incremental steps over a number of years. But, system-wide
changes are occurring at the state level. States are reaching consensus on health care
changes that provide universal access to a basic level of care within a state.
Whether you liked the Clinton health plan in the early 1990s or not, the effort
stimulated some of the first serious discussions on all sides of the debate about what care
should be offered and what a “basic” health plan might look like. Before that time,
we tried to avoid the idea that there might be differences in what people could be
assured and that money might mean you are able to buy more than your neighbor.
What this presentation shows is that there can be some agreed upon definition of basic
care and that the definition varies between nations and states; however, the lecture also
shows that there is universal health care of some type in these nations and states.

23

Respondent Bradford L.
Kirkman-Liff, Dr.P.H.
In the early 1980s, Arizona moved to a state-wide rather
than county-specific system of care for the indigent
partially because the counties differed so much in what
care they offered. Our newly adopted Medicaid system,
the AHCCCS, was unique in the country. It was the first
pre-paid capitated state-wide Medicaid program.
Offsetting the escalating cost for indigent health care with
millions of Medicaid dollars was a driving factor in the
move to that system, but so was a desire for consistent
services across the state and an effort to move the
indigent to private providers of care and away from
county run systems.
How did that happen? It happened because we had
leaders on both sides of the aisle that wanted Arizona to
be a better place to live. They found a way to talk, push,
and cajole. Those were leaders who had a vision and
worked together to make it real. Arizona has done it
before. Other states are moving to some sort of universal
program. It is not unlikely Arizona could craft another
innovative yet universal health care program.
The presentation today outlined some of the struggles
universal insurance systems face, and the list of 14
criteria for the analysis presented is the same list of
problems, questions, and struggles we already face in our
country with our existing system. What this tells us is
there is no “perfect” policy, system, or solution. No
matter how we craft it, we will face the same issues, and
policies will need to change as the population grows,
ages, and diversifies, as economies boom and struggle
and as technology brings innovation. The difference will
be whether we are struggling to assure everyone gets
something through some rational approach or whether
we shift people and costs in an ongoing chess game
where some people are completely left out or going into
bankruptcy to care for themselves and their families.
The systems described do not provide access to everything
at all times. There are limits/differences within these
systems and between nations and even within them
between states in nations. There are limits in funding,
resources, and services. But, people have access to basic
care, however it is defined. As a person with a long
history in public health, that, for me, is the bottom line:
Is there access to care that can help ensure a good health
status for Arizona’s citizens? There is room for solidarity
and individual responsibility in that vision, and the
presentation today offers insight into how that might
take place.

Bradford L. Kirkman-Liff, Dr.P.H.
Professor, School of
Health Management
and Policy
W. P. Carey School of
Business, Arizona
State University
Bradford Kirkman-Liff
has been a faculty
member in the
School of Health
Administration and
Policy, W. P. Carey
School of Business,
Arizona State
University since 1981. He has also taught at the Centre for
Public Policy and Management, Manchester Business
School, University of Manchester, and the Centre for Health
Care Planning and Management, Keele University, in England
and the Institute of Health Care Policy and Management,
Erasmus University, in Rotterdam, The Netherlands.
Dr. Kirkman-Liff currently teaches on the global pharmaceutical
and biotechnology industries, biotechnology entrepreneurship,
health management and health policy in the ASU Masters
of Health Sector Management program. He has previously
taught courses on managed care, health insurance, health
reform in industrialized nations, and health information
management. His current research is focused on collaborative
networks and knowledge management and their application in
health care. His comparative policy research is focused on the
Netherlands, Germany, and England, examining health care
reform and physician payment.
Professor Kirkman-Liff has published more than 50 papers in
such journals as the Journal of the American Medical
Association; American Journal of Public Health; Hospitals
and Health Services Administration; Health Policy; Journal of
Health Politics; Policy and Law; Health Affairs; and Health
Research. He has been a World Health Organization Fellow
and has served as a consultant to governments (including
the U.S. Congressional Budget Office the U.S. General
Accounting Office), foundations, hospitals, physician group
practices, health care trade associations, biotechnology
businesses, and insurers in the U.S., Canada, England,
Belgium, Ireland, and the Netherlands. He received his
bachelor and master of science degrees from
Carnegie-Mellon University and his doctor of public health
degree from the University of North Carolina at Chapel Hill.

h

24

Respondent Bradford L. Kirkman-Liff, Dr.P.H.
LESSONS FOR THE UNITED STATES. There seem to be some resonances between the values
in the health care systems of the Netherlands, Switzerland, and Germany and traditional
American values. Most American physicians and health care executives would state that
patients and their insurers should be obligated to pay for the costs of their treatment. Most of
the American public would state that physicians and hospitals are obligated to serve all people
who need care. In my view in 2008, most employers would prefer to pay taxes to subsidize
low-income individual and household purchase of health insurance than to have to continue
to arrange and pay for health coverage. Most large American employers and their employees
expect that insurers will cover all of the employees of an organization, without medical
underwriting or exclusions for preexisting conditions. Insurers expect that providers will enter
into good faith bargaining and negotiation over fees and charges. Overall, there are many
parallels between the values described in these system and values currently held by the various
parties in the American system.
The health care systems of these European nations provide American policymakers with some
models that are close to our own current structure and our traditional values. In these
nations, it is the private sector competing in the marketplace that is responsible for assuring
universal coverage for preventive and curative medical care, not the government operating a
single-payer agency. Fees and budgets are not dictated to providers, but arrived at through
negotiation between private parties with increasing use of “pay for performance” incentives.
Determination of health policy is shared by the national government and autonomous interest
group associations. Such a system seems closer to American traditions than one involving
government-provided insurance.
These systems have five lessons that can guide future policy:
1. Explicit public discussion about the underlying values is essential if a consensus is to
be reached on the strategy to achieve universal coverage, sustainable costs, and choices for
clinicians and patients,
2. Mandated coverage and mandated offering are both essential to achieve universal
coverage through a private sector approach. No individuals—be they part-time, seasonal,
temporarily employed or unemployed—should be excluded from insurance coverage. There
must be no gaps or options for coverage. The unemployed and chronically ill as well as the
young who might feel invulnerable, all have a responsibility to continue their insurance.
3. There is a danger that in a competitive market there will be favorable and adverse
risk selection. There needs to be a strong mechanism to provide risk equalization among
insurers. Those plans that attract a disproportionate number of patients with more complex
and chronic health care needs and so have to contract with clinicians and institutions to meet
those needs must have the financial resources to meet those patients’ needs.
4. Choice can be assured in a system that provides universal coverage. HMOs, PPOs, and
consumer-directed health plans with health savings accounts can all be made available. Some
form of refundable tax credits in advance will be necessary.
5. Separating catastrophic risks from conventional risk is one feasible approach to make
mandated coverage affordable. The approach in the Netherlands of covering long-term care,
mental retardation, developmental disabilities, maternal and child health, and public health
separately works well.

© 2008 Arizona Board of Regents, 08.128
Editor Emilia Martinez-Brawley, Technical Editor Julie Riddle
Graphic Design Chrys Gakopoulos Printing Ben Franklin Press
Event Photography Deanna Johnson Mullican