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Social Policy on Healthcare: A Comparative Analysis of Germany, Sweden and USA

| February 6, 2017

Introduction

This essay aims to examine healthcare policies in the countries of Germany, Sweden and USA. A discussion on how these countries differ in access to healthcare services, funding and how they address health inequalities will be done. The perspectives of convergence and path dependence will be used to examine the healthcare policies. The first part of this brief presents a brief overview of the healthcare policies present in the three countries. The second part will discuss the key concepts and models of social policy on healthcare in these countries. In the third part, the perspective of path dependency and convergence will be used to analyse healthcare policies of the three countries. A conclusion that will summarise the key concepts and issues raised in this essay will be presented at the end.

Overview of the Healthcare Policies in Germany, Sweden and USA

Healthcare policies in these three countries have significant differences. The World Health Organization (2014) has stressed that access to healthcare services should be equitable. This means that all individuals, regardless of their socio-economic background, religious beliefs, gender and race should receive the same type of care. Equitable distribution of healthcare services ensures that health inequality is addressed. The latter relates to the unfair distribution of healthcare services and health status between different socio-economic groups (Figueras et al., 2008). Those with higher socio-economic status tend to enjoy better health, have lower incidence of cardiovascular diseases, obesity, diabetes, hypertension and other chronic and acute conditions (Figueras et al., 2008). In contrast, those in the lower socio-economic status tend to have poorer health status and are more vulnerable to chronic diseases (World Health Organization, 2014). This disparity explains the differences in access to healthcare services in both groups (Blank and Burau, 2007).

These observations should be a cause of concern since good health is viewed as a fundamental right for all individuals (Reibling, 2010). Amongst the three countries, the healthcare industry in the US is regarded as the most expensive when compared to the rest of the highly developed capitalist countries (Moody, 2011). However, in terms of child mortality, life expectancy and death due to medical errors, US fares the worst (OECD, 2011, 2009; HDR, 2011). The percent of public funding for healthcare is also the lowest in the US compared to Germany and Sweden. In recent surveys (OECD, 2009, 2008; Adema et al., 2011) public funding for healthcare in the US is only 47.7%. In contrast, the government of Germany spends 76.9% on healthcare while Sweden spends 81.5% (OECD, 2009). Amongst the three countries, the US spends the highest percent of its gross domestic product (GD) as of 2010 for healthcare (OECD, 2011). In 2010, the US spent 17.9% of its GDP on healthcare while Germany allocated 11.6% and Sweden, 9.6% (OECD, 2011). All these countries exceeded the recommended allocation for healthcare from the country’s GDP (Adema et al., 2011).

Access to healthcare service also varies in the three countries. Access to healthcare is universal in Sweden while Germany exemplifies the quasi-universal with compulsory insurance (Baldock, 2011). In contrast to these two countries, there is a low degree of universality in the US and funding is mostly through employers of individuals (Glyn, 2006). There is also a debate on the coverage of healthcare policies in the US especially during the 2008 financial crisis where the government was forced to support healthcare of many poor, unemployed individuals (Moody, 2011). Funding of healthcare service in the US is also employer-based while insurance companies fund health service in Germany (Moody, 2011). In Sweden, taxation supports healthcare service regardless of the socioeconomic background of the individuals. Hence, most hospitals are publicly funded in Sweden while Germany enjoys a private-public partnership. In the US, private hospitals and clinics mostly provide for healthcare service in the country (Greve, 2013).

With focus on reducing health inequalities, the US places more importance on the healthcare needs of the poor (Glyn, 2006). Using the gatekeeping model (Greve, 2013), primary healthcare practitioners in the US screen individuals before they could gain access to publicly funded healthcare services. Only those with income levels in the poverty level, have disabilities, have very young children are allowed to access Medicaid (Greve, 2013). In contrast, patients in Sweden are referred to specialists by their general practitioners (GPs) regardless of their socio-economic background (Anell, 2012). However, there is very little gatekeeping in Germany, explaining the rich supply of doctors and specialists (Reibling, 2010). This means that there is no cost-sharing between the patients and the government when accessing healthcare specialists.

Social health insurance in Germany follows the concepts of shared responsibility between the individuals and the state in funding and accessing healthcare services (Wahl, 2011). For example, Statutory Health Insurance (SHI) covers majority of the population. Employers and employees share in paying for the SHI (Reibling, 2010). When patients visit GPs and specialists, they also have to pay 10 euros for each doctor visit (Reibling, 2010). Only 10% of the population pays for private health insurance. Since patients have freedom of choice when selecting their providers, this tends to create high expectations for the quality of service offered by doctors, nurses and other healthcare professionals. However, this create dissatisfaction amongst doctors since their fees are regulated, unlike in the US where doctor fees vary from one state to the other. There is also an observation that doctors in most European countries earn less than their counterparts in the US, fueling dissatisfaction amongst this group (Rechel et al., 2006). While both countries have rich supply of doctors, the payment scheme for healthcare professionals greatly varies. Similar to Germany, the US has also little gatekeeping for individuals who do not belong to the lower socio-economic status. The latter could choose healthcare providers and specialists according to their preference.

Sweden also has a mix of private and publicly owned healthcare facilities. However, the government fund for most healthcare expenditures (Greve, 2011). This means that even when individuals seek care in privately owned facilities, the government pays for healthcare costs. This scheme also benefits the government since this will ease the volume of patients seen in publicly owned healthcare facilities. Since there is competition for healthcare, patients have more choice on the type of healthcare provider they want to access (Kangas and Palme, 2009). All healthcare employees in both public and private-owned healthcare facilities receive salaries while patients share in the healthcare costs (Kangas and Palme, 2009). There is also a ceiling on the costs of medications. Due to the minimal user fee and healthcare cost, healthcare is suggested to be equitable (Kangas and Palme, 2009). However, there is evidence (Brown, 2008) that the long waiting list and disparity in supply and demand derail timely access to healthcare services in Sweden.

Key Concepts and Models of Social Policy in the Three Countries

The impact of health and social care policies in countries are often measured by health outcomes. These include incidence of diseases, daily adjusted life years (DALYs) for burden of disease and human development index (HDI) (World Health Organization, 2014). The HDI is a critical measurement of a country’s health status since it has been shown that positive measure of health is intricately linked with human development and economic productivity (OECD, 2011). Amongst the three countries reviewed in this essay, USA ranked the highest in terms of human development followed by Germany and Sweden. The succeeding table summarises the HDI, life expectancy at birth, mean years of schooling, expected years of schooling, gross national income (GNI), GNI per capital rank minus HDI rank and nonincome HDI value in 2011:

HDI Rank Human Development Index Value Life expectancy at birth (years) Mean years of schooling (years) Expected years of schooling (years) Gross national income (GNI) per capita (Constant 2005 PPP $) GNI per capita minus HDI rank Nonincome HDI Value
United States (rank 4) 0.910 78.5 12.4 16.0 43,017 6 0.931
Germany (rank 9) 0.905 80.4 12.2 15.9 34,854 8 0.940
Sweden (rank 10) 0.904 81.4 11.7 15.7 35,837 4 0.936
Source: OECD, 2011

As shown in the table above, the life expectancy at birth is lowest in the US but high in Germany and Sweden. Better life expectancy in the latter two countries could be due to earlier treatment of childhood diseases (Mackenback and Bakker, 2003). The funding scheme in the US might also account for disparities in healthcare (Mackenback and Bakker, 2003). As opposed to Sweden and Germany, two-third of the population in the US either has private insurance or is covered by their employers. Employed individuals also make personal contributions in addition to employer contribution for their health coverage (Moody, 2011). The scheme employed in the US has important implications in healthcare access. It is shown that approximately 46 million people in the US do not have public or private insurance (Moody, 2011). The number of insured individuals decreases as income also decreases (Moody, 2011). It has been shown that those in higher income quintiles tend perceive better health status as compared to those in the lower income quintile.

The cost of healthcare is also regulated in Germany and Switzerland as opposed to the US where there is very little containment of cost (Blank and Burau, 2007). The concept of equity could be used to explain why there are significant differences in health status in the US. The OECD (2009) emphasise that measurement of equity in health status is focused on mortality and morbidity rate for the individuals. Currently, the OECD determines the health status of a state through its life expectancy at age 65 for the elderly and infant mortality rate for children (OECD, 2008). Both life expectancy and infant mortality rate is generally lower in the US compared to Germany and Sweden (OECD, 2009). This would show that despite having high human development index, the US is lagging behind Germany and Switzerland in terms of healthcare for the elderly and the very young.

The OECD (2009) also notes that healthcare administration costs in the US is significantly greater than other OECD countries. Sometimes, the costs are twice as high compared to Sweden and Germany. While doctors in Sweden and Germany have ceiling rates for their healthcare services, doctors in the US charge higher (Moody, 2011). While competition for healthcare services is present in Sweden, the competition in the US has a negative impact since it inflates the cost instead of driving down the cost while maintaining quality of care (Moody, 2011). At present, Medicaid only covers those with disabilities, the elderly, families living in the poverty level and those with very young children (Rosenbaum, 2011). Meanwhile, Obamacare or the Patient Protection and Affordable Act mandate employers to provide for health coverage on their respective employees (Rosenbaum, 2011). Those who are eligible for subsidies would be given government subsidies to pay for their health insurances. Since Obamacare pushes those who are not covered by Medicaid to private insurers, it is expected that this will create competition amongst insurance companies (Rosenbaum, 2011). For instance, these companies might offer more health coverage for a wide range of health conditions at a lesser cost. Companies might also compete on the healthcare providers available to deliver healthcare for the insurers.

Path Dependence and Convergence

Path dependence suggests that history and institutional context play crucial roles in the development of healthcare policies (Kennett, 2001). Once a healthcare policy, however, is established, it tends to be resistant to changes or when reforms are inevitable, it stays within the boundaries of the original policy. On the other hand, socio-economic changes greatly influence the direction of healthcare policies in the ‘convergence’ perspective (Starke et al., 2008). To illustrate, a number of countries in the European Union tend to follow similar paths in healthcare policies and integrate best practices from each nation. The convergence of healthcare policies is described as ‘positive integration’ (Starke et al., 2008). Since market competition for healthcare services are introduced in the welfare states in Europe, this creates ‘negative integration’ of healthcare policies (Starke et al., 2008).

Germany’s healthcare policy tends to follow the path dependence amongst the countries in Europe. Healthcare policies in this country were established as early as the 19th century (Arts and Gelissen, 2010) beginning with the introduction of the social health insurance. Although the complexities of healthcare have increased, little have change on how healthcare service is funded and delivered. The long- standing tradition of corporatism still exists. For instance, governing boards that make decisions or negotiate terms with health care practitioners, the insurers and pharmaceutical industry are all composed of representative employers and employees (Starke et al., 2008). All those sitting in these boards are elected through democratic means. This has been practised for many years and little have changed on how governing boards are convened. On the other hand, subsidiarity is still practiced today Arts and Gelissen, 2002). This means that legislative framework is created or reformed by the government alone.

Meanwhile, Sweden also follows the path dependency perspective. Similar to Germany, universal access to healthcare service has been practiced since the post-war period (Arts and Gelissen, 2002). The public through the city councils continue to provide funds for healthcare (Arts and Gelissen, 2010). It should be noted that this practice has been existence since the 19th century. However, there have been criticisms on the healthcare system in Sweden. Foremost amongst this is its struggle to cope up with the increasing demands for healthcare with low supply of healthcare providers (Van Kersbergen and Hemerijck, 2012). The ageing of the population coupled with the complexity of healthcare also pushes the national health services system of Sweden to look for innovations to deliver healthcare at a lesser cost (Van Kersbergen and Hemerijck, 2012). The challenge of meeting all healthcare demands with tighter financial resources might drive the country to look for alternative ways in funding healthcare of the people.

Finally, the US exemplifies the ‘convergence’ perspective. Healthcare reforms have increased in the last 20 years with the culmination of Obamacare in recent years. This suggests that healthcare policies in the country are subject to change, depending on the political, economic and social context of healthcare. To illustrate this point, the Patient Protection and Affordable Care Act also known as Obamacare is currently driving more individuals in the country to purchase private insurance. This is a source of conflict in the country since coverage of Medicaid is very restrictive (Rosenbaum, 2011). Medicaid will continue to expand coverage in the succeeding years to include those with mean annual income of 40,000 USD. This suggests that healthcare policies could continue to change until a consensus is reached between the government and healthcare consumers. The perspective of convergence would suggest that countries tend to follow best practices and create policies that could respond to current needs. Basing on this perspective, the US is a good example of how it changes its healthcare policy to meet the increasing demands for healthcare.

Conclusion

Variations in healthcare policies are noted in the countries of Germany, Sweden and the US. While all countries have high HDI, they differ in the life expectancy at age 65 and infant mortality rate. These two indicators are cited by the OECD as measures of how a country exercises equity in healthcare. Sweden and Germany almost have similar life expectancy for the elderly. These countries also differ in public spending for healthcare and access to healthcare services. Sweden has been practicing universal health care since the post-war period while Germany has shifted to quasi-universal in the last decades. The US, through its Medicaid, provides universal access to healthcare services only for those with disabilities, families with very young children or based on need. Those not covered with Medicaid have to purchase their own healthcare insurance or are provided with insurance by their employers. Hence, the US only practices very low universal access to healthcare. Finally, the perspectives of ‘path dependence’ and ‘convergence’ are discussed in this essay. Sweden and Germany follow the path dependence perspective while the US demonstrates the convergence perspective. Finally, this brief shows that path dependence healthcare systems are faced with the challenge of providing universal access in the face of tightening budgets. Further, the US has to further expand its Medicaid or make reforms to make healthcare more equitable.

References

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