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The Bismarck model

***Summary of the following section is in bold
Overview

           The Bismarck model is a universal healthcare system where everyone is required to have health insurance by contributing to a government sickness fund, run by non-government insurers. This sickness fund pays for those that require medical care, even if they couldn’t afford to pay into the fund for a while due to poverty or unemployment. People who earn enough in their salary can opt out of a mandated government insurance plan and buy a private plan. Even under the government plan people can still buy private, supplemental insurance. All insurance companies are private and not run by the government, though they can’t make a profit off of the basic government plan.

           "A Prussian Chancellor named Otto von Bismarck invented a welfare platform as part of Germany’s reunification years ago. This system, now called the Bismarck model, offers healthcare coverage for citizens in Germany. And several other countries have also adopted the centralized funding platform, including European neighbors and Japan. The model provides an insurance ecosystem that is different from what we know health insurance to be here in the states. 

The Bismarck model is a health insurance-based system. However, there are significant limitations that make it much different than the health insurance industry we have here. For example, the government requires every citizen must be covered with health insurance and participate at some level. And the insurance companies there don’t necessarily make a profit.

           In Germany and other countries that function under the Bismarck model, citizens pay into government funding earmarked for healthcare costs. In Germany, for example, there are more than 200 different funds allocated for citizen healthcare spending. In these scenarios, everyone makes a contribution to the pool, and the government agencies manage the control of payouts for individual health-related services.

           There are government and private providers under the Bismarck model. And the doctors and hospitals tend to be privatized. Japan, another Bismark model adopter, actually has more privatized hospitals than we do in the U.S.

We’ll keep using Germany as an example, and there, it’s mandatory for every citizen to have health insurance. Reports estimate roughly 86% of the entire population is enrolled in what officials call statutory health insurance. This is a general coverage that pays for inpatient, outpatient, mental health care, and prescriptions.

           Often called sickness funds, the Bismarck model of healthcare is paid for with allocated payments. Industrial sick funds function much like financial institutions and extend cash payouts for members who become injured or sick. In a way, it works much like our health insurance companies do here in the states, as well as its method of reimbursements for healthcare costs.

           Sickness funds are also financed by employers who jointly contribute on behalf of their employees. There is a general wage contribution of about 14.6% and a supplementary contribution of about 1% in total. Copayments are applied to prescriptions and inpatient services, and there are a variety of deductibles that also apply. In Germany, participants who earn more than $68,000 annually can opt out of the government-sponsored version and choose a private health insurance provider if they want. The government subsidies, however, don’t apply in the private sector.

The healthcare funds and general subsidies are managed administratively by non-government insurers. The German government, for example, doesn’t play a role in selecting a person’s healthcare. However, the government maintains control and monitoring of the fund collections and manages the insurance program that all citizens use to contribute."

The Bismarck Healthcare Model Explained

Benefits

  1. Individuals do not need to worry about being uninsured or going broke from expensive health care bills.

  2. Compared to the US, the administrative costs of this model are much lower.

  3. There is little waiting time to receive primary care services.

Health Care System Choices: The Bismarck Model

Faults

  1. The focus on low costs and efficient care means there are fewer health care services available for citizens living in rural areas.

  2. Mandatory employment taxes are high in order to keep health care affordable.

  3. There are longer waiting times for patients to receive elective secondary and tertiary services.

Health Care System Choices: The Bismarck Model

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