Infamous for being both ridiculously expensive and having wildly high numbers of un- and underinsured citizens, the American health care system is in deep need of a major change.
Considering the inseverable connections between our health care system and the economy at large, there is no simple solution. The American health care system needs major reform, and the best way to implement that reform is to look to a similar yet more functional healthcare system as a model. It’s time we consider adopting the Bismarck model — an approach that champions competition and has proven successful in countries like Germany. Adopting a universal health care system would significantly reduce government spending and improve satisfaction in the health care system in the long run.
Nations with the Bismarck model legally require that every individual (up to a certain income level) has health insurance. In Germany, insurance plans are non-profit private entities, existing only to pay for people’s medical bills while still maintaining a level of competition. They are also obligated by law to provide a mandated list of benefits but they do not necessarily make a profit. The Bismarck model aligns seamlessly with American principles of capitalism because it maintains competition among different health care providers and still requires employment for insurance. This model stimulates innovation, efficiency and cost-effectiveness. Adopting a health care model like Germany’s that reflects the ideals of the free market in the U.S. is not only wise but essential for the well-being of our economy in a nation founded on these ideas.
Economists measure the efficacy of a health care system based on three factors: quality, access and cost. Collectively, these factors are known as the “Iron Triangle.” This triangle is formed under the assumption that as one area improves, at least one of the others must worsen. The American health care system cannot become cheaper, more expansive and more effective at the same time. According to one chief health officer, the American public needs to determine what they truly want and what they are willing to give up in order to have it. Universal health care in the U.S. will expand coverage and cost less than our current system, but it will be at the expense of the quality of our system. The Bismarck model offers a unique pathway to address these challenges of the Iron Triangle in a capitalist framework.
Quality, access and cost must always be taken into consideration when examining strategies to improve our current health care system. Quality health care is a fundamental expectation of patients, and the Bismarck model is designed to enhance that quality through competition; it encourages the development of multiple private insurance providers and institutions to the benefit of the consumer. Quality insurance policies soon become a competitive advantage that helps companies to thrive in a competitive health care insurance market. Access to the health care system is extremely important to any person’s well-being, and universal coverage removes barriers for most residents to enter or use the system. The Bismarck model empowers individuals to choose plans and services that best suit their needs and preferences, promoting a consumer-centric approach to health care. Health care providers are incentivized to reduce waiting times and expand services to meet the demands of their consumers.
The cost of health care is always one of the biggest concerns when discussing revisions to the system. The U.S. is an outlier in terms of health care spending — it spends nearly 40% more on health care than Germany. The Bismarck model’s level of competition acts as a powerful check on costs. In the current U.S. health care landscape, the absence of significant competition has allowed costs to skyrocket unchecked. Negotiations between insurers and health care institutions become pivotal in the Bismarck model, fostering cost-effective practices and encouraging the adoption of efficient processes. As a result, the Bismarck model develops a need for cost-effective health care that is balanced with the need for profit, creating a win-win situation for both consumers and providers.
In recent years, there has been a notable inclination of U.S. lawmakers to explore the expansion of Medicare, mirroring elements of Canada’s national health insurance program. Legislation that has been passed or previously introduced suggests that switching to the Canadian model is already in motion, as opposed to moving to the German model. The allure of this approach lies in the perception that Canada spends less per capita on health care compared to countries like Germany. This cost difference has led some policymakers to advocate for a transition toward a more centralized, single-payer system resembling Canada’s. However, a complete shift toward Canadian-style health care might risk hindering innovation and limiting choices for patients. Implementing either the Canadian or Bismarck model, lawmakers can develop legislation for affordable universal coverage by putting policies in place to reduce health care costs without compromising accessibility. The U.S. could explore opportunities for public-private collaboration — this approach could leverage the strengths of both models, fostering competition in areas where it is beneficial while ensuring that essential services are universally accessible
Unlike the United States, Germany has consistently ranked high in global health care rankings. In a fantasy world, the United States would adopt the Bismarck model because it is most feasible with its current economic climate, although legislation points toward the Canadian health care system. However, the German model would cover everyone while maintaining a competitive market. Although Americans often believe that the pursuit of profit is the sole driver of competition, the Bismarck model restructures competitiveness by basing success on the accumulation of clients. A competitive free market can still exist in a universal health care model if some Americans can finally accept the government’s help.
Jovanna Gallegos is an Opinion Columnist. She can be reached at jovanna@umich.edu.