Rethinking the Welfare State: The prospects for ... - e-Library

Health care 109
While these features of the managed-competition model are attractive, other features
are more problematic: constraining cream-skimming by health plan providers to screen
out high-risk patients, which requires administratively complex policies either to compel
mandatory pooling of patients or differentiated risk-rated subsidies directly or indirectly
from government to mitigate the incentives faced by the health plan providers to screen
out high-risk patients. These policies in a decentralized, multi-payer system are likely to
increase administrative/transactions costs, offsetting to an important extent the
adaptability, flexibility, and dynamism of a more decentralized, competitive system.
Germany
The German health care system has been described as “the prototype of the European
social insurance-based health care system.” 67 In the German model, individuals pay a
premium that operates like a payroll tax, in that it is collected by the government and
redistributed to insurers on the basis of the number of enrolees. 68 Insurers are free to enter
and exit the market and as of 1996, each individual is allowed to choose among existing
health care providers. 69 This availability of choice has substantially increased the
competitive incentives among insurance providers.
Although various market incentives exist within the German system, Germany still
outspends most of its European counterparts in terms of both per-capita expenditures and
health care spending as a proportion of the GDP. 70 In recent years, the German
government has made attempts to contain costs by increasing patient cost-sharing, 71
altering the payment structure to health care providers and insurers, 72 and removing
inefficient services from the bundle of entitlements provided to patients. 73
Although insurers (known as sickness funds) are theoretically private entities, they
have become increasingly subject to government regulation. The government mandates
individual contribution levels, which are currently set at approximately 13 percent of
each person’s salary (half of which is paid by the individual and half of which is paid by
the employer). 74 For those who are unemployed or who receive social assistance, the
government subsidizes the insurance contributions normally paid by individuals. 75 In
addition, citizens with salaries exceeding a fixed amount are free to opt out of the public
system and purchase private insurance. An important feature of both the public and
private insurance systems that operate in Germany is that insurers are not permitted to
refuse clients. This ensures that high-risk individuals do not face prohibitive costs in
obtaining comprehensive insurance. 76 However, there exists some suspicion that sickness
funds may engage in more subtle forms of cream-skimming by adopting an insurance
system that is more likely to attract high-income and/or healthier individuals. 77
The Netherlands
The Dutch health care insurance system encompasses many of the structural features
found in the German system, but differs from it in several design particulars. For
example, the income threshold (for opting out of the public system) is much lower in the
Netherlands, and 30 percent of the population has opted for private insurance as opposed
to 10 percent in Germany. 78 Another important variant in the Dutch system is the
existence of separate insurance schemes for ordinary medical insurance and so-called