Of Bismarck and Beveridge


Given the backdrop of controversy about the coalition government’s plans for the NHS, the Euro-Canada Health Consumer Index 2010 – which assesses health systems from the consumer’s perspective, looking at patient rights, waiting times, outcomes, range of services, and availability of medicines – makes interesting reading. As in previous years, one of their key findings is as follows:

Our analysis of the performance of the 34 countries in this index shows that performance tends to be higher in countries that are organized around the “Bismarck” model than in those that are organized around the “Beveridge” model. This means that healthcare systems that allow competition between insurance providers, and in which insurers are organizationally independent of healthcare providers, tend to be the top performers. The Beveridge model, of which Canada is an example, uses a single organizational system that includes financing bodies and providers and does not offer choice between insurers. This model generally tends to create inefficiency, unwieldy bureaucracy and a general unresponsiveness to consumer needs.

Indeed, if you look at how they rank the various health systems in Western Europe, the supremacy of competing insurance over single-payer systems is pretty clear: (1) Netherlands; (2) Germany; (3) Iceland; (4) France; (5) Switzerland; (6) Austria; (7) Denmark; (8) Luxembourg; (9) Sweden; (10) Belgium; (11) Norway; (12) Finland; (13) Ireland; (14) Italy; (15) United Kingdom; (16) Greece; (17) Spain; (18) Portugal. In case you were wondering, the ‘Bismarck’ countries are in bold.

For me, that list has a handful of implications. Firstly, competing insurance ‘Bismarck’ systems are generally better for patients than single-payer ‘Beveridge’ systems. Secondly, Beveridge systems work better in small countries than in large ones (indeed, the health system in Sweden is significantly decentralized as well). Thirdly, if Britain is going to reform its health system, it should stop tinkering with the NHS (i.e. trying to make socialism work) and ditch ‘Beveridge’ altogether.

The top-ranked Dutch system provides a good model. To simplify somewhat, everyone is required to purchase a minimum package of health insurance from a number of licensed, private insurers. These insurers compete with one another on price and service, but are prohibited from discriminating between patients – they have to offer everyone the same benefits at the same price, and cannot turn applicants away. Individuals pay insurers directly, but receive subsidies if they cannot afford the premium. The government regulates and helps with funding, but beyond that, it does not get involved. To quote from the report:

The Health Consumer Powerhouse states that politicians and bureaucrats seem to be further removed from operative healthcare decisions in the Netherlands than any other country in the index, and argues that this is an important reason for the Netherlands’ outstanding performance.

In other words, the Dutch system combines private competition, consumer choice and minimal bureaucracy with universality and ‘equity’. No system is perfect (I’d like to see more direct patient-doctor payment), but it does seem like a good place to start.