This chapter focuses on the policy lessons to be taken from the preceding four chapters in Part One, as well as the key conceptual and operational issues raised in the eight chapters in Part Two. It begins by presenting three different, com-plementary approaches to assessing the available evidence about current trends and performance levels in the eight studied social health insurance (SHI) coun-tries. The chapter then explores some of the key dilemmas that this evidence raises for the future direction of policy-making for SHI systems, and the com-plex trade-offs that decision-makers face. A short concluding section suggests that a comprehensive process of what can be termed ‘strategic incrementalism’
may provide a useful way forward.
Reviewing the available evidence
The overall picture that emerges from Chapters 1–4 is complex and compli-cated. The eight studied SHI systems vary considerably along organizational and structural dimensions, reflecting differing histories and, often, different national norms and values that underpin these organizational arrangements.
This is not surprising given the range of countries reviewed, and speaks to the broadly diverse character of SHI as a conceptual model.
As diverse as these particular national arrangements are, however, this review has also demonstrated several central underlying commonalities that link these eight systems together. Prominent among these is the assumption that SHI is first and foremost a ‘way of life’, a stable, tradition-bound social institution in which economic implications play an important role but do not exercise
primary influence over decision-making. A second shared assumption is that the specific structure and organization of SHI is grounded in the bedrock of social solidarity, of a system of social cohesion that reflects national culture and social preferences. Solidarity is seen as the touchstone of social insurance, and is the core principle around which policy-making has (or is at least expected to) orient itself.
A third commonality reflects the complicated governance arrangements in SHI systems. SHI’s pluralist, corporatist, participatory model of enforced (e.g.
statutory) self-regulation, grounded in the private but cooperative realm of civil society, is seen as an alternative form of democratic control parallel to (if not entirely independent of) the state (Altenstetter 1999). Although this alternative democratic dimension is stronger in some countries (Austria, Belgium, Germany, Netherlands) than in others (France, Israel, Switzerland), it is an important fac-tor in the psychology of the citizenry in SHI countries, and in their understand-ing of what makes an SHI system different from a state-run, tax-funded framework.
These three common characteristics of SHI countries have been strengthened and reinforced by a number of the recent organizational and structural reforms reviewed in Chapter 3. This first, qualitative, approach to assessing the overall status of the eight studied SHI systems reviewed the character and consequences of recent structural and organizational reforms. Among the reform measures taken over the past decade by the eight studied SHI systems, considerable expansion occurred in coverage, extending solidarity to all citizens (Israel, Switzerland) to the self-employed (Netherlands) and to remaining lower income groups (Belgium, France). Similarly, coverage of long-term care was expanded through new programmes (Austria in 1993, Germany in 1996, Luxembourg in 1999) or new coverage initiatives (France, Netherlands). Both types of increased coverage are consistent with the traditional momentum of SHI systems, in which over time solidarity is extended incrementally to new groups and new categories of care (Abel-Smith 1988).
There were, however, other areas of reform activity which appeared to have a less supportive impact on traditional SHI patterns of stable, solidaristic and, most notably, self-regulatory behaviour. One key example concerns state-imposed efforts regarding the financial sustainability of SHI systems. These finance-related measures can be divided into two quite different categories. As Chapter 3 discussed, one series of measures taken during the past decade sought either to expand the available revenue base for SHI (France’s new CSR wealth-based tax) or, conversely, to constrain the flow of available funds into the SHI system (Germany’s coupling of increases in SHI premiums to increases in overall employee salary levels). A number of states also strengthened their regulatory efforts to rein in growth of pharmaceutical costs (Mossialos et al. 2004 forthcom-ing). Such measures are, broadly speaking, consistent with traditional SHI structures, in that they seek either to supply more funds or, conversely, to restrict funds as a device to create an incentive for more cost-effective behaviour and/or to impose more decision-making discipline on existing, long-standing organizational patterns of funds and providers.
Cost-constraining measures also included, however, finance-related efforts that could put at risk some measure of existing solidarity or which sought, in 142 Social Health Insurance Systems
principle, to radically restructure existing sickness fund and provider relation-ships. These quite different measures revolved around a desire to introduce more market-influenced, entrepreneurial, even for-profit style initiatives and mechanisms into what was seen not so much as a traditional but rather as an anachronistic and obsolescent structure of SHI arrangements. Among the pack-age of measures that some SHI systems sought (with varying degrees of success) to introduce have been patient choice of sickness fund (Germany, Israel, Netherlands); increased financial risk-bearing for sickness funds (Belgium, Israel, Netherlands, Switzerland); enhanced collective retrospective (Germany) and individual prospective (Netherlands) risk adjustment formulas; the intro-duction of non-income-related, flat rate premium payments (Netherlands);
and increased cost-sharing and co-payments (Austria, Belgium, Germany, Netherlands). Dixon et al., in Chapter 7, caution that the use of competitive mechanisms without enhanced regulatory measures runs the risk of damaging traditional norms of solidarity within SHI structures. Similarly, van de Ven et al.
(2003), in a five-country study of risk adjustment formulas, conclude that, as currently constructed, competitive mechanisms create incentives for increased risk selection in the future unless there are ‘substantial improvements’ in the structure of existing state regulations and the risk adjustment formulas being utilized.
The above assessment of the present status of trends and patterns in SHI systems can be supplemented by a second analytic approach, utilizing available quantitative techniques to evaluate the present level of performance of SHI systems and to compare that performance with the outcomes obtained among peer counterpart but tax-funded northern European health systems. This approach was explored in Chapter 4. Within the limitations of available data and methodological techniques, Chapter 4 identified not only areas where SHI systems performed slightly better than northern tax-based systems, but also several areas of activity within present-day SHI structures where future reform efforts in SHI systems might seek to make improvements.
With regard to health status, for example during the 1990s, SHI systems showed less improvement than tax-funded northern European systems on con-ditions amenable to medical intervention. With regard to access issues, ongoing reform in at least one country (Switzerland) appeared to create new administra-tive obstacles to necessary care. With regard to equity issues, comparaadministra-tive stat-istics from the early 1990s suggest that the current mix of funding sources within six of eight SHI systems (France and Israel are exceptions) likely remains broadly if mildly regressive. This likelihood is reinforced by recent OECD data indicating that SHI systems have higher out-of-pocket payments than do northern European tax-funded systems. Indeed, increased co-payments (Germany, Israel) and the introduction of flat-rate premiums (Netherlands) raise concerns that some SHI systems may be becoming more rather than less regres-sive in character – an outcome which runs directly contrary to stated principles of social solidarity.
Beyond issues of health status and regressivity of funding, the statistical review in Chapter 4 also explored a series of potential efficiency issues. In terms of total expenditure on either a GDP or a per capita basis, SHI systems spend significantly more. As noted earlier, proponents of SHI have traditionally Assessing social insurance systems 143
attributed these higher expenditures to patients’ ability to choose physician and hospital, arguing that, although this SHI approach costs more, it eliminated queues and produced greater levels of responsiveness and patient satisfaction.
Interestingly, however, the available data on satisfaction and responsiveness presented in Chapter 4 indicates that SHI systems are only somewhat more responsive and/or produce higher levels of overall satisfaction than do northern tax-funded systems. This suggests that other cost drivers such as higher resource levels and (in some countries) insufficient coordination between different levels of care may also play a role in SHI systems. More complexly, SHI’s pluralist, participatory structure of governance, rather than patients’ ability to choose doctor and hospital, may also contribute to SHI’s higher cost structure. While the extra cost attributed to the traditional governance model may be seen as necessary and acceptable to SHI policy-makers, costs associated with other administrative factors may be appropriate areas to address in future reform measures.
A third approach to assessing the current status of SHI systems can be found in the commissioned chapters in Part Two. Some of the most insightful observa-tions about the structure and performance of SHI systems can be found in the topic-based chapters grouped under ‘Key organizational issues’. Gibis et al.
(Chapter 8) suggest that the future development of benefit catalogues will depend on the abilities of government and SHI agencies to promote both greater citizen participation but also the elaboration of evidence-based clinical practice guidelines. Hofmarcher and Durand-Zaleski (Chapter 9) find that collective rather than selective contracting continues to predominate in SHI systems, attributable largely to an unwillingness to incur the higher transaction costs associated with individual contracts. Wasem et al. (Chapter 10) conclude that, while strict separation between SHI and supplementary private health insurance (PHI) is preferable, state regulatory efforts over these two insurance areas should be harmonized. Lastly, Wildner et al. (Chapter 11) suggest that existing levels of patient choice (what in the past has often been trumpeted as a successful dimension of SHI systems) are insufficient and will require substantial strengthening.
Similarly, the two chapters in the ‘Beyond acute care’ section of Part Two raise important issues regarding current practices in SHI systems in preventive public health and in long-term care for the elderly. McKee et al. (Chapter 12) suggest that SHI systems have yet to grapple adequately with the need to develop new networks to implement population-based public health measures. De Roo et al.
(Chapter 13) conclude that SHI systems need to make greater efforts to coordin-ate and integrcoordin-ate long-term care services into the overall focus of the service delivery system.
Taken together, the observations from these three different analytic approaches – current trends and patterns, statistical performance, and the issue-based chapters – sketch out a broad assessment of the current status of key policy issues within the eight studied SHI countries. These observations can provide a useful framework for the ongoing health reform debate about making organizational and institutional improvements within existing SHI systems, as well as raising a variety of issues that require additional research.
144 Social Health Insurance Systems
The broader policy challenge
The process of health reform in the studied SHI systems can be broadly characterized as one of careful incrementalism (funding reforms in Israel and Switzerland are exceptions). Most steps have been measured and their impact limited. Outcomes from any individual reform measure have rarely affected the overall social or economic nature of the system itself. In many ways, this limited impact can be considered a success of recent SHI policy-making. Maarse and Paulus (2003) conclude their recent study of solidarity in four SHI countries by stating ‘reform proposals that would threaten solidarity never achieved a political majority’ (p. 610).
Yet, when one looks beyond the impact of specific individual reform measures to consider the overall pattern of change and the potential implications that this pattern could hold in the foreseeable future, the central policy dilemma that SHI systems face appears to be not technical or incremental in nature but rather fundamental and strategic. Moreover, considered as a pattern, the current careful process of small technical reforms may well itself be helping to generate some of the more serious strategic risks that SHI systems currently confront.
As explored in Chapter 1, the key challenge for future policy-making in the studied SHI countries revolves around complex interrelationships among ques-tions of economic, political and social sustainability. The central imperative of reinforcing future financial sustainability in a period of rapid technological advance, ageing populations and rising economic volatility, while (for six of the eight countries) accommodating an ongoing process of political integration within the European Union (EU), involves a complicated mix of often contra-dictory measures. To be successful, this reoriented policy process must be under-taken without fatally weakening the core social solidarity-based foundation upon which these health systems have been constructed – that is, without undermining the very social configuration that national policy is dedicated to defending.
The danger that lies just below the surface in present-day SHI policy-making is that the long-standing priority of defending the social character of these health systems will be replaced by a new economic priority of achieving sustainable funding regardless of the structural consequences. This inversion of current pol-icy priorities, this substitution of economic concerns for the ‘non-economic benefits’ that inhere within traditional SHI arrangements, need not – and prob-ably will not – reflect a consciously adopted change of strategic direction.
Rather, the shift may well occur through a process of accretion, in which tech-nical economic measures, each seemingly reasonable and unthreatening by itself, add up over time to a change of fundamental proportions. The concern is that the accumulation of technical mechanisms such as selective contracts, risk-bearing sickness funds, flat-rate rather than income-proportional premiums, patient co-payments, ‘no use’ rebates, and a host of similar instruments will aggregate into not a technical but a strategic change that reduces or eliminates important dimensions of SHI as a ‘way of life’.
A critical aspect of this strategic challenge reflects the unusually configured roles of public and private, and of social and market, in SHI systems. In the civil society-based structure of SHI systems, the dimension of social solidarity and Assessing social insurance systems 145
accountability is associated with the ‘private’ (not-for-profit) sickness funds.
Conversely, the role of the ‘public’ sector (e.g. the state) has recently become in considerable part associated with national policies to introduce more market-oriented mechanisms into the health sector, potentially worsening existing levels of regressivity and reducing social solidarity more generally. This creates a pattern of relations that is the converse of what is typically seen in tax-funded health care systems (Saltman 2003). In the current framework of SHI decision-making, the private not-for-profit funders rather self-consciously see themselves as the defenders of social responsibility, while the public sector has been cast as having prioritized economic efficiency, to be achieved through socially disrup-tive market mechanisms. There is the further dimension that SHI systems feel increasingly threatened by growing national-level state intervention in health-related decisions that previously had been allocated to self-regulating private arrangements. Combining these two elements, the strategic dimension of the current dilemma is seen by a variety of SHI stakeholders as pitting ‘state/
economic’ concerns against traditional ‘private/social’ interests, with a not unfounded fear that ‘state/economic’ will eventually come to dominate in overall health sector decision-making.
The worry about the long-term aggregate consequences of market-oriented reform measures reflects the degree to which these seemingly reasonable finan-cial mechanisms can potentially fragment both the organizational and the social cohesion of traditional SHI structures. Many of these concerns are dis-cussed directly in Part Two both by Chinitz et al. (Chapter 6) and Dixon et al.
(Chapter 7). There are also concerns that, at least in some contexts, certain mar-ket-oriented mechanisms may not be very efficient in the health sector. Among other concerns, there may be increased transaction costs associated with these approaches – as noted in Chapter 4, administrative costs are already higher in SHI countries than in their tax-based counterparts. Similarly, when funders become risk-bearing, they may decide to adopt both visible and less visible mechanisms to pick among potential and, ultimately, existing subscribers – something Germany already began to experience in the late 1990s (Pfaff 2001).
Ultimately, an unrestrained commitment to cost-focused economic incentives could potentially lead to a situation in which not-for-profit private entities slowly jettison their social role while simultaneously creating new financial costs to the health care system.
Concern about long-term social and organizational fragmentation caused by the introduction of technical mechanisms of financial efficiency is neither new nor restricted to western European SHI systems. A large literature exists regard-ing the inability of market-based efficiency mechanisms to incorporate moral or social dimensions, including highly regarded work by Arrow (1963), Daniels (1985), Etzioni (1988), Sen (1992) and Rice (1998). Moreover, the substitution of public/economic for private/social priorities has occurred previously, in other health care systems, although under quite different national, political and cul-tural circumstances. On this issue, the United States can serve as a worst case example. In the 1960s, its health care system also was predominantly private not-for-profit (though not statutory) in nature (Starr 1983), with the large majority of funders (Blue Cross/Blue Shield) and hospitals formally committed to an organizational mission to improve health in the local community. This 146 Social Health Insurance Systems
social dimension of the US health care system changed irrevocably over the next two decades. Although no official national or regional legislation was ever adopted, the accumulated weight of individual mechanisms designed to increase technical efficiency ultimately generated a fundamental shift to a fully market-based, for-profit system.
It is, of course, difficult to imagine that western European SHI systems, with their very different organizational, cultural and statutory arrangements, could undergo such a transformation. The point here is thus not that continued incremental accumulation of economic efficiency measures in western Europe threatens to push these systems into a US-style health sector transformation.
Rather it is that the uncalculated, step-by-step introduction of seemingly rea-sonable efficiency measures has the potential to result in undesirable strategic consequences for both the social and economic characteristics of the overall health system.
One important caveat to this argument concerns the importance of differen-tiating between those market-oriented measures that have the potential to aggregate into a serious problem for SHI health systems, in notable contrast to the particular market-oriented mechanisms recently introduced within tax-funded health systems across northern Europe. Two crucial distinctions need to be made, reflecting not only the actual market-oriented mechanism itself, but, equally as important, the regulatory context within tax-funded health systems in which these measures were adopted, and the consequent constraints upon their impact on the overall health system. First, market-oriented mechanisms in tax-funded systems have been utilized exclusively on the supply or production side, typically to create more efficient behaviour among hospitals (Busse et al.
One important caveat to this argument concerns the importance of differen-tiating between those market-oriented measures that have the potential to aggregate into a serious problem for SHI health systems, in notable contrast to the particular market-oriented mechanisms recently introduced within tax-funded health systems across northern Europe. Two crucial distinctions need to be made, reflecting not only the actual market-oriented mechanism itself, but, equally as important, the regulatory context within tax-funded health systems in which these measures were adopted, and the consequent constraints upon their impact on the overall health system. First, market-oriented mechanisms in tax-funded systems have been utilized exclusively on the supply or production side, typically to create more efficient behaviour among hospitals (Busse et al.