SOCIAL SCIENCE MEDICINE PERGAMON Social Science Medicine 54(2002)1559-158 www.elsevier.com/locate/socscimed One hundred and eighteen years of the german health insurance system: are there any lessons for middle- and low-income countries? Till Barnighausen* Rainer Sauerborn Department of Tropical Hygiene and Public Health, Medical School, University of Heidelberg, INF 324, 69120 Heidelberg, Germany Abstract A number of low and middle income countries(LMICs)are considering social health insurance(SHD) for adoption into their social and economic environment or striving to sustain and improve already existing SHI schemes. SHI was first introduced in Germany in 1883. An analysis of the German system from its inception up to today may yield lessons relevant to other countries. Such an analysis. however, is largely lacking, especially with regard to LMICs. This paper attempts to fill this gap For each of the following lessons, it considers if and under which conditions they may be of relevance to LMICs. First, small, informal, voluntary health insurance schemes may serve as learning models for fund administration and solidarity, but in order to achieve universal coverage government action is needed to formalise these schemes and to introduce a principle of compulsion. Once compulsory health insurance exists for some people. incremental expansion of coverage to other regions and social groups may be feasible to achieve universality. Second, in order to ensure sustainability of SHi, the mandated benefit package should be adapted incrementally in accordance with changing needs, values and economic circumstances. Third, in a pluralistic SHI system equity, as well as risk pooling and spreading, can be enhanced if funds merge. The optimal number of funds. however, will depend on the stage of development of the Shi system as well as on other objectives of the system, including choice and competition a risk equalisation scheme may prevent the adverse effects of risk selection, if competition between insurance funds is introduced into the system. Fourth, as an alternative to both state and market regulation, self-governance may serve as a source of stability and sustainability as well as a means of decentralising and democratising a health care system inally, costs can be successfully contained in a fee-for-service system, if cost-escalating provider behaviour is onstrained by either political pressure or technical means. C 2002 Elsevier Science Ltd. All rights reserved Keywords: Health care reform; Health care financing: Social health insurance: Universal coverage: Benefit package; Risk equalisation; Self-governance; Cost containment: Low and middle income countries; Germany Introduction (Tangcharoensathien, Supachutikul, Lertiendumror 1999: Nitayarumphong Pannarunothai, 1998; Khe A number of low and middle income man, 1997), Viet Nam (Ensor, 1999), Indonesia, (LMICs) are considering social health insurane Philippines, Bangladesh (Tan, 1998; DSE: SHINE/ for adoption into their political and economic GTZ, 1998), South Korea (Yang, 1995: Shin, 1996) ment or striving to sustain and improve already existing Kazakstan (Ensor, 1999), Russia(Sheiman, 1995), SHI schemes, e.g. China (World Bank, 1997), Thailand Bosnia, Romania (The InterHealth Institute, 1998) Hungary(Donaldson Gerad, 1993: Deppe& Ores- orresponding author. Tel: +49-6221-56-53-44: fax:+49. kovic, 1996), the Czech Republic (Deppe Oreskovic 6221-56-594 1996) E-mailaddresstill-baernighausen(@yahoo.com The main reasons for choosing SHI as the method of health care financing are that SHi can provide a stabl 0277-9536/02/Ssee front matter C 2002 Elsevier Science Ltd. All rights PI:s0277-9536(01)00137X
Social Science & Medicine 54 (2002) 1559–1587 One hundred and eighteen years of the German health insurance system: are there any lessons for middle- and low-income countries? Till Barnighausen*, Rainer Sauerborn . Department of Tropical Hygiene and Public Health, Medical School, University of Heidelberg, INF 324, 69120 Heidelberg, Germany Abstract A number of low and middle income countries (LMICs) are considering social health insurance (SHI) for adoption into their social and economic environment or striving to sustain and improve already existing SHI schemes. SHI was first introduced in Germany in 1883. An analysis of the German system from its inception up to today may yield lessons relevant to other countries. Such an analysis, however, is largely lacking, especially with regard to LMICs. This paper attempts to fill this gap. For each of the following lessons, it considers if and under which conditions they may be of relevance to LMICs. First, small, informal, voluntary health insurance schemes may serve as learning models for fund administration and solidarity, but in order to achieve universal coverage government action is needed to formalise these schemes and to introduce a principle of compulsion. Once compulsory health insurance exists for some people, incremental expansion of coverage to other regions and social groups may be feasible to achieve universality. Second, in order to ensure sustainability of SHI, the mandated benefit package should be adapted incrementally in accordance with changing needs, values and economic circumstances. Third, in a pluralistic SHI system equity, as well as risk pooling and spreading, can be enhanced if funds merge. The optimal number of funds, however, will depend on the stage of development of the SHI system as well as on other objectives of the system, including choice and competition. A risk equalisation scheme may prevent the adverse effects of risk selection, if competition between insurance funds is introduced into the system. Fourth, as an alternative to both state and market regulation, self-governance may serve as a source of stability and sustainability as well as a means of decentralising and democratising a health care system. Finally, costs can be successfully contained in a fee-for-service system, if cost-escalating provider behaviour is constrained by either political pressure or technical means. r 2002 Elsevier Science Ltd. All rights reserved. Keywords: Health care reform; Health care financing; Social health insurance; Universal coverage; Benefit package; Risk equalisation; Self-governance; Cost containment; Low and middle income countries; Germany Introduction A number of low and middle income countries (LMICs) are considering social health insurance (SHI) for adoption into their political and economic environment or striving to sustain and improve already existing SHI schemes, e.g. China (World Bank, 1997), Thailand (Tangcharoensathien, Supachutikul, & Lertiendumrong, 1999; Nitayarumphong & Pannarunothai, 1998; Khoman, 1997), Viet Nam (Ensor, 1999), Indonesia, Philippines, Bangladesh (Tan, 1998; DSE; SHINE/ GTZ, 1998), South Korea (Yang, 1995; Shin, 1996), Kazakstan (Ensor, 1999), Russia (Sheiman, 1995), Bosnia, Romania (The InterHealth Institute, 1998), Hungary (Donaldson & Gerad, 1993; Deppe & Oreskovic, 1996), the Czech Republic (Deppe & Oreskovic, 1996). The main reasons for choosing SHI as the method of health care financing are that SHI can provide a stable *Corresponding author. Tel.: +49-6221-56-53-44; fax: +49- 6221-56-59-48. E-mail address: till baernighausen@yahoo.com (T. Barnighausen). . 0277-9536/02/$ - see front matter r 2002 Elsevier Science Ltd. All rights reserved. PII: S 0277-9536(01)00137-X
1560 source of revenues, a visible flow of funds into the Incremental achievement of universal coverage health sector, and a combination of risk pooling ith mutual support. In addition, a SHI scheme Developments in health care systems can be cate- can be established independently from the gorised according to their scale and the pace at which government, while it can nevertheless operate in line they occur on a continuum between transformational with government health policy. Disadvantages of SHl, and incremental change. Unlike many other health care on the other hand, comprise problems with insuring systems(such as the British NHS), the formation of th informal sector workers and a lack of cost control German system has been characterised by incremental (Normand Weber, 1994) changes and adjustments during both its nascent and its While the experience of Latin American more mature stages. in developing SHI systems has been with respect to transitional economies(Ensor Small, voluntary, informal risk-sharing schemes as the it is striking that literature analysing the lessons starting point learnt from the evolution of the German system d their potential relevance to LMICs is lac Statutory sickness funds evolved out of the relief With this paper, we intend to fill this gap. We will funds that had originated as solidarity-based do so by analysing the long-term evolution of the support systems within the medieval guilds. Since the German health insurance system and examining what, if end of the 17th century, five types of relief funds had EAy. lessons can be derived for the design of SHI in developed in different regions of Germany: relief funds for journeymen, relief funds for craftsmen modelled As Germany has the world's oldest SHI system, it after the mutual support systems of the guilds, factory naturally lends itself to historical analyses. Yet, although relief funds founded by socially-oriented entrepreneurs, the value of diachronic analyses that trace the paths relief funds founded by local authorities for workers or of an insurance systems evolution over time is increas- trades people and community relief funds for people ingly recognised (Field, 1999), most English language who could not otherwise find insurance(Zorn, 1912: articles about the German health care system take a Peters, 1978) synchronic perspective, providing a snapshot, rather When Bismarck reformed the german health care than a longitudinal, overview of the system as it exists at system in 1883, the policies he needed to implement to moment(see, for instance, Brown Amelung, 1999: establish a comprehensive, social insurance system Jost, 1998; Wahner-Roedler, Knuth, Juchems, 1997; were-compared to their far reaching consequences- Lassey, Lassey, Jinks, 1997: Roy, 1993: Von der of relatively m The Schulenburg, 1992: Reinhardt, 1990). The exceptions to work of a century was, in fact, an incremental this rule tend to concentrate on one-often technical rather than a transformational change of structures aspect of the system(for instance, Busse Schwartz, already in existence. The law of 1883 built on,first 1997; Henke, Murray, Ade, 1994; Kirkmann-Lift, experiences gained in the administration regional relief 1990)or confine themselves to a background chronology funds and, second, social change brought about by without working out the more general implications membership in the funds(Caron, 1882; Peters, 1978; flowing from history(for example, Altenstetter, 1999: Abel-Smith, 1992; Herder-Dorneich, 1994). Administra Iglehart, 1991). If one leaves the more short-term tively, the voluntary relief funds had served as an political and statistical vagaries behind and chooses apprenticeship stage for the development of skills in instead to look-where meaningful-with the widest insurance administration and actuarial science at the angle lens that history permits, some sequential level of the fund as well as in insurance regulation at the dynamics and cumulative effects otherwise hidden level of government. More specifically, the basic become apparent which are of potential relevance to principles under which Bismarck's system was to operate the context of lmics had already been tried and proven to work in its B In the following, we will examine how during this numerous, regional predecessors: (1)The support funds history up to date ( universal coverage was achieved, were largely self-governed. (2)Both employers and equal access to a comprehensive benefit package was employees were represented in the bodies of self- established, (ii) equity in financing was improved, (iv) governance in most of the company-based funds. (3) consumer choice and competition were introduced into Company-based funds were financed in part by employ the system, (v) sustainability was ensured and (vi) costs ers, in part by employees. (4)Compulsory insurance had were contained. We will focus our analysis on the mode already been introduced in many municipalities(Alber, of development and the institutional arrangements For 1992) each question analysed, we will consider whether the experiences from the german case may be of use to the In 1876, 869204 people were insured in 5239 officially contexts of lmics recognised regional sickness funds(Peters, 1978)
source of revenues, a visible flow of funds into the health sector, and a combination of risk pooling with mutual support. In addition, a SHI scheme can be established independently from the government, while it can nevertheless operate in line with government health policy. Disadvantages of SHI, on the other hand, comprise problems with insuring informal sector workers and a lack of cost control (Normand & Weber, 1994). While the experience of Latin American countries in developing SHI systems has been analysed with respect to transitional economies (Ensor, 1999), it is striking that literature analysing the lessons learnt from the evolution of the German system and their potential relevance to LMICs is lacking. With this paper, we intend to fill this gap. We will do so by analysing the long-term evolution of the German health insurance system and examining what, if any, lessons can be derived for the design of SHI in LMICs. As Germany has the world’s oldest SHI system, it naturally lends itself to historical analyses. Yet, although the value of diachronic analyses that trace the paths of an insurance system’s evolution over time is increasingly recognised (Field, 1999), most English language articles about the German health care system take a synchronic perspective, providing a snapshot, rather than a longitudinal, overview of the system as it exists at moment (see, for instance, Brown & Amelung, 1999; Jost, 1998; Wahner-Roedler, Knuth, & Juchems, 1997; Lassey, Lassey, & Jinks, 1997; Roy, 1993; Von der Schulenburg, 1992; Reinhardt, 1990). The exceptions to this rule tend to concentrate on oneFoften technicalFaspect of the system (for instance, Busse & Schwartz, 1997; Henke, Murray, & Ade, 1994; Kirkmann-Liff, 1990) or confine themselves to a background chronology without working out the more general implications flowing from history (for example, Altenstetter, 1999; Iglehart, 1991). If one leaves the more short-term political and statistical vagaries behind and chooses instead to lookFwhere meaningfulFwith the widestangle lens that history permits, some sequential dynamics and cumulative effects otherwise hidden become apparent which are of potential relevance to the context of LMICs. In the following, we will examine how during this history up to date (i) universal coverage was achieved, (ii) equal access to a comprehensive benefit package was established, (iii) equity in financing was improved, (iv) consumer choice and competition were introduced into the system, (v) sustainability was ensured and (vi) costs were contained. We will focus our analysis on the mode of development and the institutional arrangements. For each question analysed, we will consider whether the experiences from the German case may be of use to the contexts of LMICs. Incremental achievement of universal coverage Developments in health care systems can be categorised according to their scale and the pace at which they occur on a continuum between transformational and incremental change. Unlike many other health care systems (such as the British NHS), the formation of the German system has been characterised by incremental changes and adjustments during both its nascent and its more mature stages. Small, voluntary, informal risk-sharing schemes as the starting point Statutory sickness funds evolved out of the relief funds that had originated as solidarity-based support systems within the medieval guilds. Since the end of the 17th century, five types of relief funds had developed in different regions of Germany: relief funds for journeymen, relief funds for craftsmen modelled after the mutual support systems of the guilds, factory relief funds founded by socially-oriented entrepreneurs, relief funds founded by local authorities for workers or trades people and community relief funds for people who could not otherwise find insurance (Zorn, 1912; Peters, 1978). When Bismarck reformed the German health care system in 1883, the policies he needed to implement to establish a comprehensive, social insurance system wereFcompared to their far reaching consequencesFof relatively minor immediate impact. The Bismarckian ‘work of a century’ was, in fact, an incremental, rather than a transformational change of structures already in existence. The law of 1883 built on, first, experiences gained in the administration regional relief funds and, second, social change brought about by membership in the funds (Caron, 1882; Peters, 1978; Abel-Smith, 1992; Herder-Dorneich, 1994). Administratively, the voluntary relief funds had served as an apprenticeship stage for the development of skills in insurance administration and actuarial science at the level of the fund as well as in insurance regulation at the level of government. More specifically, the basic principles under which Bismarck’s system was to operate had already been tried and proven to work in its numerous, regional predecessors:1 (1) The support funds were largely self-governed. (2) Both employers and employees were represented in the bodies of selfgovernance in most of the company-based funds. (3) Company-based funds were financed in part by employers, in part by employees. (4) Compulsory insurance had already been introduced in many municipalities (Alber, 1992). 1 In 1876, 869 204 people were insured in 5239 officially recognised regional sickness funds (Peters, 1978). 1560 T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587
T. Barnighausen, R. Sauerborn Social Science Medicine 54(2002)1559-1587 Socially, the voluntary relief funds served at least two analyses start with a dichotomy between real insurance important functions: first, as an opportunity to build and informal risk sharing, but often end up emphasising trust between the management of a scheme and its that many similarities exist. In a study of the traditional participants, and second, as learning models for tontine systems in Africa, Lespes(1990) found that as solidarity, the functioning of which could be experienced the tontines grow they take on many of the formal first hand among people with similar social identities. characteristics of insurance. Platteau(1997). in a review Both a basic trust in risk-sharing schemes and an of the concepts underlying traditional risk sharing, starts understanding of solidarity eventually translated into by pointing out that traditional mutual aid schemes are increased willingness to participate in larger schemes. based on balanced or generalised recipro The German experience during this phase of the insurance is based on conditional reciprocity. Under evolution of the health insurance system suggests the both balanced and generalised reciprocity people expect. following lesson: over time, to receive as much from a scheme as they contributed; under balanced reciprocity there are tight Small, informal, voluntary health insurance schemes rules on how and when a return will be paid, und may serve as learning models for fund administration generalised reciprocity these rules are much looser. and solidarity, both of which will make introduction of Under conditional reciprocity, on the other hand, the larger, more formal, compulsory schemes an easier task. giver will only receive a return if she herself falls victim to the event she insured against by enrolling in the Whether such a development can be repeated in scheme, i.e, income is redistributed between the lucky LMICs may depend on how far the experiences with and the unlucky. Platteau ends his analysis by arguing voluntary schemes in other countries mirror those in that traditional risk-sharing schemes may be able to Germany. From the study of the rural cooperative health serve an insurance function if either some standard of insurance schemes in rural China since the 1960s, evidence balanced reciprocity is upheld or redistribution does exists that the development of good management practice take place, but is not visible to enrolees. Similarily as well as of a trust relationship between administrators Cashdan (1985) argued that generalised reciprocity and beneficiaries are crucial elements for the long-term could act in the same way as conventional insurance. survival of schemes(Feng, Tang, Bloom, Segall,& G In addition, under generalised reciprocity, those whe 1995: Liu, Hsiao, Li, Liu,& Ren, 1995; Khan, Zhy, lave gained most during a certain time period are Ling, 1996: World Bank, 1997). While the existence of expected to give most to those who lose most during the voluntary, non-profit health insurance schemes in itself same period-even if at some unspecified point in the does not guarantee that such developments take place, it future reciprocal action is expected. As such, a higher offers opportunities for learning, which may not be degree of solidarity is realised in the short term than in otherwise provided. The implicit danger is that, if the both risk- and community-rated insurance, in which scheme fails, the patch may be spoilt for more promising contributions are independent of the financial situation efforts at a later time (World Bank, 1997) of the individual. In Thailand. for instance. a number of In many African countries traditional risk-sharing voluntary community-based funds originally founded as schemes exist. For instance, anthropological studies non-insurance schemes to provide loans to mem from Burkina Faso (to be published elsewhere) have bers-have for some years successfully provided health revealed a dense network of traditional mutual aid care insurance coverage as well (Nitayarumphong organisations based on profession or on risks(such as Pannarunothai, 1998 funeral funds). It is intuitively tempting to compare Going back to the origins of the German funds for these schemes to the guild-based relief funds of the pre- mutual aid as they developed within the medieval Bismarckian era and to consider initiatives to integrate miners associations and guilds, especially before the health risk into the cover of these funds. It has, however, 16th century, generalised rather than conditional re- been argued that the development of SHI in 19th ciprocity stands out as the main principle. What is more, century Germany(and Europe) is unlikely to repeat it was under this principle that an understanding of itself in todays Africa. The first argument is that community self-help, social justice and solidarity was traditional informal risk-sharing schemes differ in logic developed, which later formed the conceptual and function from insurance(Criel, Van Dormael, the evolution of more formal insurance funds Lefevre, Menase, Van Leberghe, 1998) Dorneich, 1994). Thus, the European and The different logics underlying informal risk histories of risk sharing, though separated by time d insurance (as understood in developed to be related ir economies)have been analysed from different perspec- The second argument points to the fact that where tives, notably anthropological and economic(see for voluntary health insurance schemes exist, they are instance, Platteau, 1997; Besley, 1995; Coate Ravail mostly initiated by agencies external to African society. lon, 1993; Lespes, 1990: Cashdan, 1985). As a rule, these namely foreign NGOs, and thus lack the dynamic of an
Socially, the voluntary relief funds served at least two important functions: first, as an opportunity to build trust between the management of a scheme and its participants, and second, as learning models for solidarity, the functioning of which could be experienced first hand among people with similar social identities. Both a basic trust in risk-sharing schemes and an understanding of solidarity eventually translated into increased willingness to participate in larger schemes. The German experience during this phase of the evolution of the health insurance system suggests the following lesson: Small, informal, voluntary health insurance schemes may serve as learning models for fund administration and solidarity, both of which will make introduction of larger, more formal, compulsory schemes an easier task. Whether such a development can be repeated in LMICs may depend on how far the experiences with voluntary schemes in other countries mirror those in Germany. From the study of the rural cooperative health insurance schemes in rural China since the 1960s, evidence exists that the development of good management practice as well as of a trust relationship between administrators and beneficiaries are crucial elements for the long-term survival of schemes (Feng, Tang, Bloom, Segall, & Gu, 1995; Liu, Hsiao, Li, Liu, & Ren, 1995; Khan, Zhy, & Ling, 1996; World Bank, 1997). While the existence of voluntary, non-profit health insurance schemes in itself does not guarantee that such developments take place, it offers opportunities for learning, which may not be otherwise provided. The implicit danger is that, if the scheme fails, the patch may be spoilt for more promising efforts at a later time (World Bank, 1997). In many African countries traditional risk-sharing schemes exist. For instance, anthropological studies from Burkina Faso (to be published elsewhere) have revealed a dense network of traditional mutual aid organisations based on profession or on risks (such as funeral funds). It is intuitively tempting to compare these schemes to the guild-based relief funds of the preBismarckian era and to consider initiatives to integrate health risk into the cover of these funds. It has, however, been argued that the development of SHI in 19th century Germany (and Europe) is unlikely to repeat itself in today’s Africa. The first argument is that traditional informal risk-sharing schemes differ in logic and function from insurance (Criel, Van Dormael, Lefevre, Menase, & Van Leberghe, 1998). The different logics underlying informal risk-sharing and insurance (as understood in developed market economies) have been analysed from different perspectives, notably anthropological and economic (see for instance, Platteau, 1997; Besley, 1995; Coate & Ravaillon, 1993; Lespes, 1990; Cashdan, 1985). As a rule, these " analyses start with a dichotomy between ‘real’ insurance and informal risk sharing, but often end up emphasising that many similarities exist. In a study of the traditional tontine systems in Africa, Lespes (1990) found that as " the tontines grow they take on many of the formal characteristics of insurance. Platteau (1997), in a review of the concepts underlying traditional risk sharing, starts by pointing out that traditional mutual aid schemes are based on balanced or generalised reciprocity while insurance is based on conditional reciprocity. Under both balanced and generalised reciprocity people expect, over time, to receive as much from a scheme as they contributed; under balanced reciprocity there are tight rules on how and when a return will be paid, under generalised reciprocity these rules are much looser. Under conditional reciprocity, on the other hand, the giver will only receive a return if she herself falls victim to the event she insured against by enrolling in the scheme, i.e., income is redistributed between the lucky and the unlucky. Platteau ends his analysis by arguing that traditional risk-sharing schemes may be able to serve an insurance function if either some standard of balanced reciprocity is upheld or redistribution does take place, but is not visible to enrolees. Similarily, Cashdan (1985) argued that generalised reciprocity could act in the same way as conventional insurance. In addition, under generalised reciprocity, those who have gained most during a certain time period are expected to give most to those who lose most during the same periodFeven if at some unspecified point in the future reciprocal action is expected. As such, a higher degree of solidarity is realised in the short term than in both risk- and community-rated insurance, in which contributions are independent of the financial situation of the individual. In Thailand, for instance, a number of voluntary community-based funds originally founded as non-insurance schemes to provide loans to membersFhave for some years successfully provided health care insurance coverage as well (Nitayarumphong & Pannarunothai, 1998). Going back to the origins of the German funds for mutual aid as they developed within the medieval miners’ associations and guilds, especially before the 16th century, generalised rather than conditional reciprocity stands out as the main principle. What is more, it was under this principle that an understanding of community self-help, social justice and solidarity was developed, which later formed the conceptual basis for the evolution of more formal insurance funds (HerderDorneich, 1994). Thus, the European and African histories of risk sharing, though separated by time, appear to be related in concept. The second argument points to the fact that where voluntary health insurance schemes exist, they are mostly initiated by agencies external to African society, namely foreign NGOs, and thus lack the dynamic of an T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587 1561
T. Barnighausen, R Sauerborn/ Social Science Medicine 54(2002 )1559-1587 endogenous social movement. As such, they usually lack structures, to establish new structures of social support some components, which, it could be argued, are or to expand coverage On a more abstract level, three important for scheme performance, notably participa lines of incremental developments in these laws can be tion, accountability and social control(Atim, 1999). In distinguis addition, non-movement-based schemes normally do First, the content of the laws moved from general not pose a threat to government and will thus fail to principles to more and more concrete rules and prompt government regulation or take over of those regulations. While, for instance, the Prussian Common schemes, as in Germany. Without government involve- Land law of 1794- established basic, general tenets of ment, it has been argued, broad social protection will public welfare and officially sanctioned the existing ly remain elusive for a majority of the population chain of subsidiarity (individuah-family-guilds and relief (Criel Van Dormael, 1999) funds-communities-the state), the laws that followed up Atim(1999), in a comparison of voluntary, non-profit on those tenets laid out detailed rules on how sickness health insurance schemes in Ghana and Cameroon, funds should be organised(including provisions about found that the character of social movement was not a contributions, the benefit package, entry conditions and main determinant of scheme performance. In addition, the management of the funds). he argues that, where circumstances suggest that social Second, the character of the laws gradually changed movement characteristics would improve performance, from permissive to obligatory. In 1843, the Comm non-movement-based schemes could over time incorpo- Law of Trade conceded municipal authorities the right rate elements of a social movement to recognise existing voluntary funds and make insur- Government involvement as well does not depend on ance in these funds compulsory-a first, albeit hesitant, a social movement character of voluntary schemes. step away from the liberal principle of the early relief While health insurance legislation based on existing funds towards compulsion. The right was extended in voluntary schemes may, in fact, be intended to gain 1849, when local governments were given permission to support of industrial workers, as in Germany(see make insurance compulsory for certain employment above) and in many Latin American countries(Abel- groups. In 1854, local governments were allowed Smith, 1976), the schemes in themselves do not need to pressure all uninsured into creating insurance funds for be an expression of social dissatisfaction in order for mutual support(Hirsch, 1875; Gladen, 1974: Peters, that goal to be reached. The current Chinese government, 1978; Herder-Dorneich, 1994) for instance, views well-functioning community-based Third, the laws moved from regional to supraregional health insurance as a means of ensuring'social stability in competence. In 1854, compulsory insurance was for the rural areas. It therefore supports still existing scheme first time established on a supraregional level covering (which were originally established by the central govern- the entire territory of Germany for one employment ment through legislation in the 1960s ), while promoting group: all miners were required to join one of the many the re-establishment of schemes in communities where regional miners' insurance funds. a number of non- arrently none exist( Gwatkin, 1999). What is more, it has Prussian states had, at this time, already established been argued that non-movement-schemes may, over time, compulsory health insurance for workers. In some incorporate elements of a social movement and thereby states, compulsion was tied to a specific fund(such as enhance their success(Atim, 1999) in Hannover); in other states, workers had a choice To sum up potential lessons learnt with respect to between different sickness funds(such as in Hamburg) LMICS, the German case, among others, demonstrates(Herder-Dorneich, 1994) that small, informal, voluntary, community-based In 1883, these three lines of incremental development health insurance schemes may serve as crystallisation were brought together in Bismarck's workers'insurance. points from which larger, more formal, compulsor It laid out detailed rules for the provision of health schemes can be developed Countries should investigate insurance including a minimum benefit package, the how to promote such schemes, especially if alternative types of sickness funds, management of the funds and insurances currently do not seem feasible. As an the extension of coverage to family members (Vogel alternative to the de novo creation of health insurance 1951: Laden, 1974; Herder-Dorneich, 1994). It made schemes, consideration should be given to including health insurance coverage a legal obligation for most health in the cover of pre-existing non-health risk- workers and people employed in trade and crafts. And sharing schemes above all, it replaced the existing regional principle of compulsory insurance by a supraregional principle-a Before 1883: incremental legislative changes to achieve epoch-making, but nonetheless incremental step. In supraregional compulsory insurance laying the groundwork for universal Six major laws led up to the reform of 1883, 2Allgemeines preussisches landrecht tempting either te
endogenous social movement. As such, they usually lack some components, which, it could be argued, are important for scheme performance, notably participation, accountability and social control (Atim, 1999). In addition, non-movement-based schemes normally do not pose a threat to government and will thus fail to prompt government regulation or take over of those schemes, as in Germany. Without government involvement, it has been argued, broad social protection will likely remain elusive for a majority of the population (Criel & Van Dormael, 1999). Atim (1999), in a comparison of voluntary, non-profit health insurance schemes in Ghana and Cameroon, found that the character of social movement was not a main determinant of scheme performance. In addition, he argues that, where circumstances suggest that social movement characteristics would improve performance, non-movement-based schemes could over time incorporate elements of a social movement. Government involvement as well does not depend on a social movement character of voluntary schemes. While health insurance legislation based on existing voluntary schemes may, in fact, be intended to gain support of industrial workers, as in Germany (see above) and in many Latin American countries (AbelSmith, 1976), the schemes in themselves do not need to be an expression of social dissatisfaction in order for that goal to be reached. The current Chinese government, for instance, views well-functioning community-based health insurance as a means of ensuring ‘social stability in rural areas’. It therefore supports still existing schemes (which were originally established by the central government through legislation in the 1960s), while promoting the re-establishment of schemes in communities where currently none exist (Gwatkin, 1999). What is more, it has been argued that non-movement-schemes may, over time, incorporate elements of a social movement and thereby enhance their success (Atim, 1999). To sum up potential lessons learnt with respect to LMICs, the German case, among others, demonstrates that small, informal, voluntary, community-based health insurance schemes may serve as crystallisation points from which larger, more formal, compulsory schemes can be developed. Countries should investigate how to promote such schemes, especially if alternative insurances currently do not seem feasible. As an alternative to the de novo creation of health insurance schemes, consideration should be given to including health in the cover of pre-existing non-health risksharing schemes. Before 1883: incremental legislative changes to achieve supraregional compulsory insurance Six major laws led up to the reform of 1883, attempting either to regulate more closely existing structures, to establish new structures of social support, or to expand coverage. On a more abstract level, three lines of incremental developments in these laws can be distinguished. First, the content of the laws moved from general principles to more and more concrete rules and regulations. While, for instance, the Prussian Common Land law of 17942 established basic, general tenets of public welfare and officially sanctioned the existing chain of subsidiarity (individual–family–guilds and relief funds–communities–the state), the laws that followed up on those tenets laid out detailed rules on how sickness funds should be organised (including provisions about contributions, the benefit package, entry conditions and the management of the funds). Second, the character of the laws gradually changed from permissive to obligatory. In 1843, the Common Law of Trade3 conceded municipal authorities the right to recognise existing voluntary funds and make insurance in these funds compulsoryFa first, albeit hesitant, step away from the liberal principle of the early relief funds towards compulsion. The right was extended in 1849, when local governments were given permission to make insurance compulsory for certain employment groups. In 1854, local governments were allowed to pressure all uninsured into creating insurance funds for mutual support (Hirsch, 1875; Gladen, 1974; Peters, 1978; Herder-Dorneich, 1994). Third, the laws moved from regional to supraregional competence. In 1854, compulsory insurance was for the first time established on a supraregional level covering the entire territory of Germany for one employment group: all miners were required to join one of the many regional miners’ insurance funds. A number of nonPrussian states had, at this time, already established a compulsory health insurance for workers. In some states, compulsion was tied to a specific fund (such as in Hannover); in other states, workers had a choice between different sickness funds (such as in Hamburg) (Herder-Dorneich, 1994). In 1883, these three lines of incremental development were brought together in Bismarck’s workers’ insurance. It laid out detailed rules for the provision of health insurance including a minimum benefit package, the types of sickness funds, management of the funds and the extension of coverage to family members (Vogel, 1951; Gladen, 1974; Herder-Dorneich, 1994). It made health insurance coverage a legal obligation for most workers and people employed in trade and crafts. And, above all, it replaced the existing regional principle of compulsory insurance by a supraregional principleFa epoch-making, but nonetheless incremental step. In addition to laying the groundwork for universal 2Allgemeines Preussisches Landrecht. 3Allgemeines Handelsrecht. 1562 T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587
T. Barnighausen, R. Sauerborn Social Science Medicine 54(2002)1559-1587 1563 coverage, the supraregional principle solved the problem insurance system-from informal to more formal, from of providing insurance coverage for an increasingly voluntary to compulsory, and from small to larger mobile population, for whom -as social ties were schemes--can and should be emulated in LMIC may be severed and regional insurance was lost-social security highly contingent on the context: the power stru had become a more and more elusive concept trust and legitimacy between the different actors. Will In introducing the workers' insurance Bismarck did informal schemes be opposed to government regulation? not primarily intend to further social justice, but to Will the participants and the current non-participants in fortify the state against the threat from a proletariat, the scheme resist being compelled to join? will solidarity which had become both well organised in the trade (or generalised reciprocity) suffer as the average distance unions and politically powerful, as its interests wer physical and social) between members increase? Will represented by the Social Democratic Party. By incor- trust in the scheme and its management remain intact as porating formerly self-administered insurance into the community participation and social control becom state Bismarck hoped to counter the increasing politi- increasingly difficult? cisation of the working class. Indirect evidence supports As in the german case. it has been suggested his view. First, compulsory insurance at the inception of elsewhere for the context of LMICs that incremental the system was limited to workers. Although blue-collar changes may be easier to implement than transforma workers were employed in the formal sector economy, tional changes in developing efficient and equitable they were harder to insure than many other groups, as health insurance( Carrin, De graeve, deville, 1999a) they had low incomes and high risks of work-related In many of the formerly socialist Eastern European illness, accidents, and disability. Better risks in terms of countries a development towards sHI similar to that in income and health care needs such as civil servants were Germany had been taking place, starting in the 18th not included under compulsory health insurance cover century until restructuring of the health care sector by until 30 years later. The likely explanation is that the communist governments(see, for instance, Observa- Bismarck expected civil servants to be naturally loyal to tory, 1999a, b). In Hungary, voluntary self-help funds the state and interested in preserving the status quo. for industrial workers were legally legitimised in 1840: a Second, a number of provisions in Bismarck's "Socialist voluntary General Fund for sick and disabled workers Law, passed in 1878, were intended to obstruct the was established in 1870: a national compulsory insu functioning of those sickness and relief funds that had ance for industrial workers, similar to Bismarcks been founded by workers-the stick preceded the workers' insurance, was established; and, finally, at the carrot. Third, both trade unions and the Social turn of the century a national insurance fund for Democratic Party were openly opposed to Bismarcks agricultural workers was set up(Observatory, 1999b). social insurance, as they-correctly-viewed the pro. It is safe to say that a number of Eastern European gramme as a means to tie the workers to the existing countries picked up threads of development that had state structures(Herder-Dorneich, 1994) been abandoned during the communist era when the (re-)established SHI. The mode of reforms, however, did If informal risk-sharing schemes exist, the creation of not follow the earlier incremental pattern. A crisis in legal frameworks formalising these and health care financing accompanied by a fall in life Itually making them compulsory expectancy in an environment characterised by rapid important step towards establishing un litical and economic changes had opened a window health insurance of opportunity, in which fast and drastic, rather than slow and steady, action was felt to be required. Introducing compulsory health insurance has been Of the three transitions described above the move to part of health care reform in many countries of South compulsion may be the most difficult to achieve even if East Asia, Central and Eastern Europe and has come it is only for one segment of the population and in one under consideration in a number of African countries region of the country. In many contexts, the establish Zwi Mills, 1995; Bennet Ngalande-Banda, 1994). ment of any form of compulsory insurance may be Countries where successful informal voluntary risk- deemed not to be politically feasible. In such situations, sharing schemes for health exist should consider making voluntary schemes may remain a second-best option. them more formal, as without such government action The recommendations regarding rural community-based risk-sharing social protection will remain limited (or cooperative) health insurance schemes in the Peoples contingent on local circumstances( Criel Van Dor- Republic of China in 1998 to promote voluntary mael, 1999). A legal framework may define a minimum community-based health insurance in the countryside benefit package and regulate contributions, provider exemplify this. Although policy makers were aware that payment mechanisms and scheme administration problems with adverse selection could arise and that Whether the three transitions that took place at this willingness-to-join could be generally low because of phase in the development of the German health
coverage, the supraregional principle solved the problem of providing insurance coverage for an increasingly mobile population, for whomFas social ties were severed and regional insurance was lostFsocial security had become a more and more elusive concept. In introducing the workers’ insurance Bismarck did not primarily intend to further social justice, but to fortify the state against the threat from a proletariat, which had become both well organised in the trade unions and politically powerful, as its interests were represented by the Social Democratic Party. By incorporating formerly self-administered insurance into the state Bismarck hoped to counter the increasing politicisation of the working class. Indirect evidence supports this view. First, compulsory insurance at the inception of the system was limited to workers. Although blue-collar workers were employed in the formal sector economy, they were harder to insure than many other groups, as they had low incomes and high risks of work-related illness, accidents, and disability. Better risks in terms of income and health care needs such as civil servants were not included under compulsory health insurance cover until 30 years later. The likely explanation is that Bismarck expected civil servants to be naturally loyal to the state and interested in preserving the status quo. Second, a number of provisions in Bismarck’s ‘Socialist Law’, passed in 1878, were intended to obstruct the functioning of those sickness and relief funds that had been founded by workersFthe stick preceded the carrot. Third, both trade unions and the Social Democratic Party were openly opposed to Bismarck’s social insurance, as theyFcorrectlyFviewed the programme as a means to tie the workers to the existing state structures (Herder-Dorneich, 1994). If informal risk-sharing schemes exist, the creation of legal frameworks formalising these schemes and eventually making them compulsory, can be an important step towards establishing universal social health insurance. Introducing compulsory health insurance has been part of health care reform in many countries of South East Asia, Central and Eastern Europe, and has come under consideration in a number of African countries (Zwi & Mills, 1995; Bennet & Ngalande-Banda, 1994). Countries where successful informal voluntary risksharing schemes for health exist should consider making them more formal, as without such government action risk-sharing social protection will remain limited and contingent on local circumstances (Criel & Van Dormael, 1999). A legal framework may define a minimum benefit package and regulate contributions, provider payment mechanisms and scheme administration. Whether the three transitions that took place at this phase in the development of the German health insurance systemFfrom informal to more formal, from voluntary to compulsory, and from small to larger schemesFcan and should be emulated in LMIC may be highly contingent on the context: the power structure, trust and legitimacy between the different actors. Will informal schemes be opposed to government regulation? Will the participants and the current non-participants in the scheme resist being compelled to join? Will solidarity (or generalised reciprocity) suffer as the average distance (physical and social) between members increase? Will trust in the scheme and its management remain intact as community participation and social control become increasingly difficult? As in the German case, it has been suggested elsewhere for the context of LMICs that incremental changes may be easier to implement than transformational changes in developing efficient and equitable health insurance (Carrin, De Graeve, & Deville, 1999a). ! In many of the formerly socialist Eastern European countries a development towards SHI similar to that in Germany had been taking place, starting in the 18th century until restructuring of the health care sector by the communist governments (see, for instance, Observatory, 1999a, b). In Hungary, voluntary self-help funds for industrial workers were legally legitimised in 1840; a voluntary General Fund for sick and disabled workers was established in 1870; a national compulsory insurance for industrial workers, similar to Bismarck’s workers’ insurance, was established; and, finally, at the turn of the century a national insurance fund for agricultural workers was set up (Observatory, 1999b). It is safe to say that a number of Eastern European countries picked up threads of development that had been abandoned during the communist era when they (re-)established SHI. The mode of reforms, however, did not follow the earlier incremental pattern. A crisis in health care financing accompanied by a fall in life expectancy in an environment characterised by rapid political and economic changes had opened a ‘window of opportunity’, in which fast and drastic, rather than slow and steady, action was felt to be required. Of the three transitions described above the move to compulsion may be the most difficult to achieve, even if it is only for one segment of the population and in one region of the country. In many contexts, the establishment of any form of compulsory insurance may be deemed not to be politically feasible. In such situations, voluntary schemes may remain a second-best option. The recommendations regarding rural community-based (or cooperative) health insurance schemes in the Peoples’ Republic of China in 1998 to promote voluntary community-based health insurance in the countryside exemplify this. Although policy makers were aware that problems with adverse selection could arise and that willingness-to-join could be generally low because of negative past experiences with community-based T. Barni . ghausen, R. Sauerborn / Social Science & Medicine 54(2002) 1559–1587 1563