If we are to break a potential “repeal and replace” gridlock, we must accept that health care is not a market commodity, but a public resource. We need health care for all like we need electricity for all. It is a fundamental requirement of a civil society. The government does not need to provide it, if that really is the will of a majority of Americans. The federal government needs to regulate its provision as it does our system of regulated private utilities. That is not socialism. It is a regulated economy.
The U.S. spends 17.1 percent of gross domestic product on health care, Germany 11.2 percent (2013 figures). The Germans like their system more than we like ours. But here is the banner headline, given our gridlock on health-care policy: The German system is not socialized. The Germans do not use a single-payer, Medicare-type plan. So while many other industrialized nations spend less on health care than Americans and Germans do, Germany’s system more closely resembles ours.
Here are some attributes of the German system:
• Coverage is portable.
• Premiums are based on the ability to pay.
• No deductibles.
• Copayments for service.
• Free choice of provider.
• Administrative simplicity.
• Little or no wait for surgery or diagnostic tests.
• After-hours care (by a physician) a phone call away.
• 85 percent of the population covered by supervised semiprivate plans.
• 15 percent covered by fully private insurance plans offering more amenities.
• Opt-in parallel private insurance available to the wealthy.
• Workers and employers each pay about 8 percent of salary to a health fund of their choice.
• Nonworking spouse covered by employee contribution.
• Self-employed purchase relatively affordable insurance from private providers.
• Uses few tax dollars.
• No significant rationing.
The reason Germans achieve the results they enjoy is that they effectively regulate the insurance industry. These insurers cannot refuse coverage to anybody. They cannot charge differential pricing based on age or health status. In Germany, there are about 200 such insurers.
In exchange for tightening the social compact, causing the wealthy to pay more by virtue of percentage-of-income pricing, which has long been standard progressive taxation practice, all Germans get access to insurance they can afford. Nobody is denied health coverage based on a preexisting condition.
German workers pay about 8 percent of income to the health fund. According to an National Public Radio report of a few years ago, “It’s about the same proportion of income that American workers pay, on average, if they get their health insurance through their job.” But the Germans pay no deductibles.
Does the German model work well enough for us to consider it? Germans report far greater satisfaction with their health-care system than we do, according to Lou Harris Polls. And though Germans are allowed to opt out of the sickness funds to go with private insurance, most don’t, even among affluent consumers.
It’s not socialized medicine — it’s socialized risk management.
Our health-care insurers don’t want you to like this model because it means tighter regulation for them. Under the German model, health-care providers would have to accept less in compensation, and to be compensated more for keeping people healthy. Consumers would have to accept mandatory participation and higher costs for wealthy participants. Business would have to offer insurance benefits to all workers, perhaps including part-time workers. Insurers would lose some of their autonomy and ability to generate huge revenue based on making health-care consumers fund the risk.
Employers that do not offer health care are merely foisting their burden onto the backs of their workers without compensation, or they are relying on the taxpayers to fund the health care of these workers. Maintaining a robust, viable insurance pool for all requires a national plan or mandatory participation for employers as well as consumers.
Although some U.S. insurers are not-for-profit entities, you only have to look at the revenue they generate to know something is wrong with that picture. But if you reject the Obamacare model, you are left with only a couple of other models from which to choose — and interstate provision of insurance offerings counts for little, according to the experts.
The upside for everyone, in addition to more affordable health care for the middle class, is that once the system devours a smaller percentage of our GDP, that money is available for other uses. And 1 percent of our GDP at present is about $33 billion — or enough to fund serious improvements in our health-care infrastructure. If we were able to follow the German example and shave 6 percentage points off our GDP devoted to health care, the savings would be in the hundreds of billions.
The well-respected German health-care system costs a lot less than ours. The rate of increase in its costs is less than half our rate of increase during the past 20 years, even though the German population is statistically older than ours.
Why do we insist on ignoring their example?
Is it due to our bias that no viable solution ever arises from beyond our shores — especially from “socialized” Europe? Is it that the wealthiest among us enjoy a fantastic health-care system? Are we willing to sacrifice the access to health care the 18 million people who will be left uninsured if Obamacare is simply repealed? There is no way to fix the problem short of universal participation and regulation. That’s the bottom line.
Steve Klingaman, of Minneapolis, is a nonprofit sector consultant and nonfiction author.