Comparing Health Insurance Reforms in Bismarckian Welfare Systems

Author: Thomas Gerlinger
Submitted: Thursday 3rd of November 2011 09:04:09 AM
Submitted by: egf
Language: English
Content type: Learning resource
Educational levels: expert, qc2, qc3


The health systems of the OECD countries resp. EU Member States have been in a dynamic transformation process since the early 1990s, and those belonging to the Bismarckian type are no exception. The very core of these reforms was, and still is, to strengthen a regime of managed care and managed competition in health care. This fundamental change is both affecting in its care structures and its financial and regulatory mechanisms. For all the differences of detail, Bismarckian health care systems are characterized by the following shared core elements: - Healthcare is funded primarily by income-related contributions paid by employers and employees, not by taxes. - As a rule, coverage of health insurance depends on individual employment status. Compulsory health insurance extends to the employed and their relatives. - Healthcare is usually managed by semi-state (often corporatist) bodies (sickness funds, organizations of health care providers) acting in a broad regulatory framework provided by the state. These bodies are negotiating and contracting details of health care delivery and financing supervised by government or public bodies. Since the beginning 1990s, in many Bismarckian health care systems, as well as in many systems based on a national health service, change has proceeded at a pace and to an extent that would have been almost inconceivable just a few years ago. Bismarckian health care systems have been through a process of change which has taken most of them in essentially the same direction, although the core of their institutional regimes has remained intact. Nevertheless, there is a distinction between Bismarck systems traditionally based on an (almost) unitary health insurer (e.g. France, Austria) and those traditionally based on a multitude of health insurers (e.g. The Netherlands, Germany, Switzerland). While the former prove themselves to continue to rely on a single-payer system (and thus to be rather reluctant to implement competitive relations between insurers), the latter turned out to heavily rely on competition between sickness funds. This also applies to the health care systems of the former socialist countries that established a multiple-payer system in health care (e.g. Czech Republic, Slovak Republic). The individual health care systems have reached different points along the path of reform, their progress determined by their historical legacies and starting points. Since the paradigm change began, health policy has proceeded down that chosen development path, generally by means of incremental reforms. In terms of care structures the paradigm change involves modernisation and rationalisation of the provision of medical care and efforts, though only in part successful, to strengthen primary care. In financing it is characterised by a new welfare mix, i.e. the financial burden shifts from collective solidarity to individual patients and fund members. Risks of illness, and costs of health care, have been privatized to varying degrees while the employers’ share has been reduced. At the same time, the weight of taxation in health funding has increased. In terms of regulation the paradigm change is characterised by the implementation of competition-based structural reforms. Simultaneously, a trend has emerged towards the establishment of a unitary health insurance scheme and a centralization of competences for regulation in health care policy. Thus, the state continues to play a prominent role as the architect of political order in health care and can be characterized as the institutional fulcrum of the transformation process. It has put in place a differentiated system of financial incentives, which it is constantly modifying in the light of experience of stakeholders’ reactions. This competitive transformation of health care systems requires governments to display greater assertiveness than in the past vis-à-vis service providers. A further shared characteristic is the incremental nature of the transformation. Proceeding in this stepwise manner makes it easier both to take full account of the complexity of the governance problems and to limit the number of opponents of reform. The expectation that the shift towards a health care governance regime in which competition plays a much greater role would lead to the state’s withdrawal from health care policy has to date remained unfulfilled. In fact, the opposite is the case. It is true that, in abolishing the obligation to contract, the state has given individual actors’ greater freedom of action. To that extent, it is possible to speak of a partial withdrawal. At the same time, however, new tasks have emerged. Since the logics underpinning economics, on the one hand, and medical practice, on the other, are fundamentally incompatible with each other, the introduction of financial incentives brings with it a need for strong regulation. New regulatory spheres continue to emerge (e.g. quality assurance) and there is an increased need for state supervision in order to identify and penalize undesirable reactions on the stakeholders’ part. As a result, there continues to be a high level of state intervention in all Bismarck systems. However, the linkage between the establishment of a market and state regulation is highly variable. If a high level of state intervention can still be observed, this suggests that the political elites regard such intervention to be desirable or necessary. Whether this perception lasts will depend largely on the social conflicts surrounding health care policy. In the course of this process of transformation the core elements of the Bismarck system continue to exist and seen as a whole continue to dominate. However, this transformation has already robbed some of the core elements of the Bismarck system of a great deal of their importance. Market-oriented management reforms play a growing role in the control of healthcare processes, and the state intervenes more strongly than ever in the statutory health insurance structures, appropriating a series of important management powers for itself. In the course of this process the scope for self-government – both the self-government of the sickness funds by employers and members and the collective self-government of the health system by funds and service providers – is tangibly squeezed between market and state. Corporatist bodies are still important, but they operate in an ever-tighter state corset and are active predominantly in fields where management knowledge of the immediately involved actors is relevant for regulation. A health system controlled by the market has no need of collective corporatist agreements. At the same time the weight of taxes in the funding of health insurance has increased considerably, even if it is still of secondary significance. The Bismarckian features in health care are not as predominant as they once were, and it must be expected that their significance will continue to decline as the reform process progresses.


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Original version - English

abstract Thomas_Gerlinger_20110830_5162.pdf

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Thomas Gerlinger. Comparing Health Insurance Reforms in Bismarckian Welfare Systems. EUROGENE portal. November 2011. online:



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