The Iron Chancellor and American Healthcare: What Would Bismarck Do?

The way we frame a problem can make all the difference. This has certainly been true in the debate about access to healthcare in America. For some, it’s all about lowering government spending so taxes can be cut and more resources be put back into the productive economy to generate new wealth. Providing access to care for everyone is just not on the to-do list. For these folks, all that is best left to the private market where, it’s assumed, people can purchase coverage if they really need it.

For others, however, the problem presents itself differently. For these Americans, and I am one of them, healthcare is not a commodity that we can do without. At some point in every life, access to care will be an absolute necessity, and postponing necessary medical care damages not only the individual but also society. 

Sick people are less productive, and delayed care usually ends up being more expensive care, with some of the additional costs passed on to the rest of us in the form of higher medical bills. In a fragmented system like the one we have now, we all end up losers to some extent. But for many of us, especially us faith-based types, access to healthcare is really a moral issue, a natural outcome of love of neighbor, something most religions emphasize. For us, it seems only reasonable—if not downright biblical—to want for others the good things we want for ourselves and our families. The problem: how to get the job done as quickly and efficiently as possible.

What to do? Well, why not take a look around and see how other countries, those who provide universal coverage to their people, manage this problem? Canada may be just too scary for some folks, doing that Medicare-for-All routine, though they get high marks in terms of outcomes while spending much, much less per capita than we do on healthcare. How about a country that uses private enterprise to fund its healthcare system and yet manages to cover everyone while providing world class care? How about Germany?

In his book The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care, journalist T.R. Reid visits about eight different countries looking for ways to improve American healthcare, especially the way it’s paid for. Germany is one of his first and most important stops since it was, in fact, the first country to attempt to provide access to care to all its people.

Back in the 1880s, Otto von Bismarck, the so-called “Iron Chancellor” of the newly unified German state, set up a “Sickness Insurance Law,” a system of mandatory medical insurance with the cost of premiums shared by both employers and employees. This “Bismarck” approach continues in place in Germany to this day (with some modifications) and has served as a model for many healthcare systems around the world. Americans who are lucky enough to receive insurance through their employers are, in fact, beneficiaries of this model.

In Germany today people can choose from a large number of private plans—over 200 at the time Reid visited but less than 140 today because of corporate consolidations—and receive care that is widely acknowledged to be first class. In comparative studies of healthcare outcomes, Germany always turns up at or near the top, and according to Reid, “Germans spend less time waiting for care than Americans do.” And, with this private insurance system, they manage to cover not only all German citizens but also millions of “guest workers” who live and work in the country, all while spending less than we do per capita on healthcare. At the time of Reid’s visit, that was about 11% of GDP as compared to our 17%.

How can this be? What’s different about the German approach?

First of all, their insurance companies are all nonprofit by law. They exist, as Reid says, “to pay medical bills not to pay dividends to shareholders.” Nor do they need to respond to the whimsies of financial markets.

Secondly, they are required to offer a defined package of benefits, a very generous package by our standards, one that provides coverage to individuals literally from the cradle to the nursing home.

Thirdly, though coverage is connected to the workplace, it does not end when an individual becomes unemployed. In that case, coverage is maintained through the government’s unemployment insurance program until that individual finds a new job.

But how do they pay for all this? In part, through much lower administrative costs. The defined package of benefits means that companies and providers work with a single set of rules. There is no need—no opportunity really—to argue over coverage, or to pay staff to interpret the more than twenty different sets of guidelines providers have to contend with in our system.

A second factor may be the full embrace of a digital health card beginning in 2008. The card eliminates a ton of paperwork while greatly simplifying the patient’s experience in a doctor’s office or hospital, and no doubt greatly reducing the anxiety associated with seeking medical care. You’re in, your covered. Period. Now, just concentrate on getting well!

A less happy aspect perhaps is the fact that doctors are paid less in the German system than in America. On the other hand, their educations—including their medical degrees—are entirely free. They graduate debt-free unlike most of their American counterparts. Their malpractice insurance costs a tiny fraction of what that insurance would cost in the United States. And, they get to work in a system that actually works—for everyone.

A lot comes down to how we frame a problem and on our resolve to go to work on solving it. But lately, we seem to have become a nation of ideologically-driven problem makers, rather than problem solvers, acting as if our core problems will simply fix themselves. In the case of healthcare, profit-driven markets have failed to deliver. Are we ready to talk about real solutions? If so, we may want to include Germany—and the Iron Chancellor—in the conversation.

Will Lane, a Lecturer in English at Gettysburg College, is a lifelong resident of Adams County and currently serves as Chair of Gettysburg Area Democracy for America.