Introduction
In 2009 the health care system of the United States had come under great domestic scrutiny. Of the 300 million citizens living in the United States some 50 million go completely uninsured while nearly 25 million are under-insured (Kennis). The CIA World Factbook cites the United States as having a GDP (gross domestic product) larger than that of the next three closest nations combined: China, Japan, and India (CIA). Conversely, as the US tops this list it finds itself quite a bit lower on other scales. When considering infant mortality rates, a generally accepted rubric for health care indicators, the CIA places the US 44th. Trumping the US on this list are countries such as: Cuba (43rd), Canada (35th), the United Kingdom (31st), Slovenia (19th), Switzerland (16th), and Germany (15th) (CIA). If one breaks down infant mortality rates in the US by race, and further by state, a bleaker picture emerges. The US Department of Health and Human Services found in Alabama that the rate was “16 infant deaths…among 1,000 live births” for African-Americans (University of Maine). This means children of the West Bank (15.96) have a better chance of living to the age of one than some African-Americans in the rural south (CIA). In 2000 the United Nation’s World Health Organization (WHO) authored a report to assess the world’s health care systems. Notable, major industrialized western democracies in the top thirty were: France (1st), Italy (2nd), Japan (10th), Switzerland (20th), and Germany (26th). The US, even having the highest GDP globally, was ranked 37th – two places above Cuba and four places below Chile (WHO). In sum the US is by far the richest nation in the world – more than twice its nearest rival – spends more than 16% of its GDP on health care (HHS) yet has an infant mortality rate in poor areas that rivals that of occupied Palestine.
This paper seeks to apply the most similar systems approach of comparative political science to better understand the US health care system. By comparing countries that have similar systems of economics and governance one might parse out how their systems of health care have such different results. It is with this goal in mind that this analysis, comparing Switzerland and Germany with the US, has been crafted in the hopes that we might better understand the implications of the juxtaposition the figures above present.
Systems of Delivery
Germany is home to Europe’s oldest universal system of health care – the “Bismarck” model, named after former Chancellor of Germany and referred to as such following the social legislation he championed during the mid-1880s. Initially these legislative bills only affected workers of low income and certain government employees but later grew through legislative process to cover nearly the entire population (Health Care Abroad: Germany). As in the US currently, Germany’s hospitals, doctors and sickness funds (insurers) are all private enterprises; the sickness funds financed by both employers and employees. The sickness funds are run as nonprofit companies which account for 90% of public coverage. The remaining 10% of the German public opt for private insurance provided by companies that are run within a for-profit business model. With an income above 45,000 Euros, citizens are free to migrate to private coverage, although with one caveat: those opting out have to fall below the poverty line in order to be eligible for public coverage again. “This makes”, as Uwe Reinhardt, professor of health economics at Princeton puts it, “people hesitant to leave the social insurance system”. Reinhardt goes on to explain that the unemployed continue to receive coverage under the German system and that illegal immigrants “have rights to all social services” once stepping foot in the country. Germany as a whole spends 10% of their GDP on health care (Health Care Abroad: Germany).
In 1996 the Swiss government mandated that “all residents” be “required to purchase basic health coverage from one of a number of competing private insurers” that operate as “nonprofit organizations” and “must accept all applicants during specified open-enrollment periods” (Leu & Rutten). “The basic benefit package is defined by law and is quite generous”, explained Timothy Stoltzfus Jost, professor of law at Washington and Lee University. Since the reforms in 1996, Jost goes on to detail, nearly 99% of the population is now insured (Health Care Abroad: Switzerland). In addition to this basic level of insurance that Swiss citizens can purchase the private insurance companies are permitted to sell supplemental coverage with perks like private hospital rooms and dental coverage. In some regions those with basic plans must visit public hospitals while those that have purchased supplemental coverage may visit private hospitals, another perk of the additional coverage. The Swiss insurance companies, as a group, negotiate reimbursement with the regional hospitals, determining how much services cost. If the two parties cannot come to agreement the regional government is “empowered to step in and impose an agreement” (Tanner). Citizens pay out of pocket for their coverage and if they find that they can no longer afford coverage the government subsidizes their purchase in a manner that keeps any one person from spending more than 10% of their income on insurance (Healthcare Economist). It is reported that nearly a third of all Swiss citizens receive health insurance subsidies. As a country Switzerland spends 11.3% of their GDP on health care (Health Care Abroad: Switzerland).
The system of health care delivery in the United States utilizes a multi-faceted approach. There are three types of insurance in the United States: employer based group/managed coverage, privately purchased individual coverage, and programs provided by the government such as Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), and the Veterans Administration. For nearly 60% of US citizens their insurance is provided through their relationship with their employer. This in most cases results in what’s been termed “managed care” where the insurance company, through contractual agreements with hospitals and other health care providers, limit which hospitals you may visit to receive treatment. 9% of Americans purchase individual insurance coverage through independent channels. Even though individual insurance coverage accounts for less than 10% of the market it accounts for 35% of total health spending. This shows that individuals who lack the resources of a large group or company pay a disproportionately larger amount for their health coverage. They pay inflated insurance rates for individual coverage or else are forced to pay out of pocket for health services.
Employer based insurance and the privately purchased variety, as well as most hospitals, operate as private enterprises within a for-profit business model. Programs overseen by the government cover 83 million or 28% of US citizens. Medicare covers the disabled and citizens over the age of 65. Medicaid, which is administered on the state level, seeks to assist certain low income citizens such as the disabled, pregnant women, and children. The SCHIP program, another state level system, provides insurance for poor children that didn’t meet eligibility standards under Medicaid. The Veterans Administration (VA) provides services for veterans and their families at VA hospitals peppered throughout the United States. All of these have grown to make up what has been coined a “multi-payer” system. The Kaiser Family Foundation reported that the United States spent $7,400 per capita on health care in 2007, almost twice the nearest country Switzerland ($4,311), and well above Germany (roughly $3,200). In sum the United States in 2007 spent $2.2 trillion on health care (Kaiser Family Foundation).
The Influence of Profit Motive and as a Result, Interest Groups
The Swiss and German health care models detailed above share a commonality – neither of them permit the majority of insurance providers to turn a profit. The German government tightly regulates the sickness funds in the areas of coverage, fees, and medical services – ensuring that money is spent wisely (Health Care Abroad: Germany). As noted above the German model does allow for supplemental coverage to be sold for a profit, but given the size of the market (10%) it amounts to little in comparison to the 90% market share that either falls below the 45,000 Euro threshold or decide that they are pleased with the public option. The Swiss model of delivery is a market-oriented approach yet still embraces the nonprofit business model. It was written into the law that multiple nonprofit insurance providers should compete for the business of those seeking basic benefit packages.
In contrast the United States health care delivery system, for a majority of citizens, operates just like any other capitalist endeavor in the North American market. The largest health insurance company, Aetna, provides coverage for 15 million people (Articles.DirectoryM.com) and netted nearly $2.5 billion through December of 2009 (AOL Money and Finance). The US Department of Health and Human Services projects that the total cost of health care will have increased 5.5% by the end of 2009 (HHS). Another startling figure to note is – on average, health care costs have grown at a rate 2.4% faster than the GDP for the last four decades (Kaiser Family Foundation). An American Journal of Medicine study found that “As recently as 1981, only 8% of families filing for bankruptcy did so in the aftermath of a serious medical problem. By contrast, our 2001 study in 5 states found that illness or medical bills contributed to about half of bankruptcies”. Data compiled in 2007 show that 62% of all bankruptcies now have a medical cause (Medical Bankruptcy…). US Senator Al Franken during a Senate sub-committee hearing on medical bankruptcies drove home the point. During an exchange with a spokesperson for the Hudson Institute, Senator Franken confrontationally noted that no modern industrialized western democracy has had an incident of bankruptcy due to medical causes in the last year (YouTube).
The trend is as obvious as the reasons. The general US perspective on liberty and choice, coupled with a drive for private enterprise to turn a larger and larger profit year after year, has created the atmosphere where making money comes before providing the services and funds needed for a healthy populace. This is clearly demonstrated by the practice of US insurance companies denying people initial coverage because of pre-existing conditions or digging through old medical records to find rationale to deny a particular treatment after having become a subscriber. This sort of behavior is strictly prohibited in Switzerland and Germany.
This leads us to ask about the influence of interest groups in each country given the nature of their health care systems, respectively. In the American Journal of Medicine, Landers and Sehgal found that in the United States:
Health care lobbying expenditures totaled $237 million in 2000. Health care lobbying expenditures accounted for 15% of all federal lobbying and were larger than the expenditures of every other sector, including agriculture ($78 million), communications ($201 million), defense ($60 million), energy and natural resources ($159 million), finance ($229 million), ideological and single-issue lobbying ($85 million), miscellaneous business ($224 million), other ($169 million), and transportation ($138 million) (Lander & Sehgal).
These health care lobbyists work within a tightly regulated system of oversight as evidenced by the passing of the Lobbying Disclosure Act of 1995. As a result this law “requires lobbyists to submit biannual reports describing the organization for which they lobbied and the amount spent on lobbying activities” (Lander & Sehgal). Collusion between representatives in Congress and private insurance companies play out before an American audience when members leave their office to become lobbyists. For example Billy Tauzin, one of the largest recipients of health care lobby money in Congress, took a job as CEO of PhRma, a lobbying firm that “represents the country’s leading pharmaceutical research and biotechnology companies” (PhRma). In 2000, PhRma reported that it spent $7.5 million on lobbying expenditures (Lander & Sehgal).
This type of data simply is not available in Germany. Even though “the German Bundestag is currently the only parliament in Europe that has adopted formal rules on registration of lobbyists” to promote transparency there is no way to approach the amount oversight in the United States by comparison. In Chari, Murphy, and Hogan’s comparative analysis they applied a method (CPI) that allowed them to study regulatory oversight of lobbying in different jurisdictions. They found that Germany scored a 17 on a scale of zero to 100, with a passing score being 60. Germany was given this score because “they have rules on individual registration, where lobbyists must register, but few details have to be given (such as in the case of the EP (European Parliament), where lobbyists do not have to state which subject matter/bill/ institution they are lobbying).” Furthermore, “there are no rules on individual spending disclosure (lobbyists are not required to file spending reports) or an employer spending disclosure (lobbyists’ employers are not required to file spending reports).” This is why the type of data available for the United States in regard to each industry’s investment in interest articulation is just not available for Germany (Chari, Murphy & Hogan).
It could be argued that Germany’s corporatist past and present may directly impact the citizen’s absence of desire to have more rigorous oversight or more transparency. In this model peak associations are granted a “monopoly of representation” in return “for their cooperation in developing policy” (University of Virginia). This is seen as a cooperative relationship, unlike how lobbyists are perceived in the United States. It is this sense of distrust that differentiates the general conceptions of interest groups in the United States from the conception of them in Germany. Without a major insurance provider market predicated upon a for-profit business model lobbying won’t reach the proportions seen in the United States and the health care industry as a whole will provide better services for their population – probably for less.
The Swiss have a long history of “direct democracy”. “Between 1981 and 2006, only at the federal level, there were 223 referenda initiatives to decide on” (Kirchga¨ssner) As can be easily understood with this level of direct participation in policy making, interest groups play a powerful role in Swiss government. In contrast to Germany and the United States there’s absolutely no regulations or oversight in regard to lobbyists. This fact, like in the case of Germany, makes quantifying funds spent and associating those funds with a particular position impossible (Kirchga¨ssner). Thus it could be concluded that given the procedural role of referendums in policy making in Switzerland, interest groups have the ability to hold political capital over the heads of their legislative representatives to a great extent, but absent a profit motive in the health insurance industry, as is the case in Germany, the Swiss population will be better provided for than US citizens.
Conclusion
The American cultural subscription to capitalism has made all of government a market place to be exploited – like Guatemala throughout the early 1900s. What would be understood as unethical collusion between Congressmen and lobbyists behind closed doors is perfectly acceptable when given the appearance of transparency. Like Wal-Mart the insurance companies seek to dominate the retail marketplace by strong arming health providers into providing fewer services at discount rates. The profit generated from this enterprise is funneled back up into the shareholders of the insurance providers while health care facilities are forced to cut costs and staff just to survive. The desire to profit drives insurance companies to deny coverage and invest upwards of $237 million towards their vested interests – the most boisterous voice of all in the “lobby”. If health insurance providers were forced to migrate to a nonprofit business model these companies would get back into the business of providing quality, affordable health care, and not be motivated to spend millions upon millions of dollars lobbying to increase their market share. In conclusion this migration away from the for-profit model would begin to assist in bridging the gap between the 225 million Americans with adequate health care and the 75 million without.
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