The Bismarck model (also referred as "Social Health Insurance Model") is a health care system in which people pay a fee to a fund that in turn pays health care activities, that can be provided by State-owned institutions, other Government body-owned institutions, or a private institution. The first Bismarck model was instituted by

Otto von Bismarck Otto, Prince of Bismarck, Count of Bismarck-Schönhausen, Duke of Lauenburg (; born ''Otto Eduard Leopold von Bismarck''; 1 April 1815 – 30 July 1898) was a German statesman and diplomat who oversaw the unification of Germany and served as ...

in 1883 and focused its effort in providing cures to the workers and their family. Since the establishment of the first Beveridge model in 1948, where the focus was into providing healthcare as a human right to everyone with funding through taxation, nearly every Bismarck system became universal and the State started providing insurance or contributions to those unable to pay.

History

After the formation of the German Empire in 1871, Chancellor Otto von Bismarck experienced opposition from German Democratic Socialists. In response, anti-socialist legislation was passed in 1878, and Bismarck made the decision to incorporate social protection schemes into his budgetary planning. Three major pieces of legislation that established state social insurance were the Compulsory Insurance Act of 1883, the Accident Insurance Act of 1884 and an old-age and disability pension system that was enacted in 1889 and began in 1891.

Implementation

Unlike single-payer healthcare, the state does not directly insure the population through a single publicly-owned insurance provider. Instead, all residents are mandated to enroll in one of several publicly- or privately-managed insurance funds to ensure universal coverage. Community rating protects insurance applicants from sale and

price discrimination Price discrimination (differential pricing, equity pricing, preferential pricing, dual pricing, tiered pricing, and surveillance pricing) is a Microeconomics, microeconomic Pricing strategies, pricing strategy where identical or largely similar g ...

, while risk equalization subsidizes providers that are forced to insure high-risk individuals. Governments will also use

all-payer rate setting All-payer rate setting is a price setting mechanism in which all third parties pay the same price for services at a given hospital. It can be used to increase the market power of payers (such as private and/or public insurance companies) versus prov ...

to fix prices at private healthcare providers.

Examples

States such as

Germany Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...

Austria Austria, formally the Republic of Austria, is a landlocked country in Central Europe, lying in the Eastern Alps. It is a federation of nine Federal states of Austria, states, of which the capital Vienna is the List of largest cities in Aust ...

Switzerland Switzerland, officially the Swiss Confederation, is a landlocked country located in west-central Europe. It is bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. Switzerland ...

and

Czech Republic The Czech Republic, also known as Czechia, and historically known as Bohemia, is a landlocked country in Central Europe. The country is bordered by Austria to the south, Germany to the west, Poland to the northeast, and Slovakia to the south ...

have Bismarck healthcare, while states such as

South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia. It constitutes the southern half of the Korea, Korean Peninsula and borders North Korea along the Korean Demilitarized Zone, with the Yellow Sea to the west and t ...

and

the Netherlands , Terminology of the Low Countries, informally Holland, is a country in Northwestern Europe, with Caribbean Netherlands, overseas territories in the Caribbean. It is the largest of the four constituent countries of the Kingdom of the Nether ...

, while having a basic state insurance, have a much stronger private presence in the healthcare providers and insurance systems. In

Europe Europe is a continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere. It is bordered by the Arctic Ocean to the north, the Atlantic Ocean to the west, the Mediterranean Sea to the south, and Asia to the east ...

, countries like

France France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...

Hungary Hungary is a landlocked country in Central Europe. Spanning much of the Pannonian Basin, Carpathian Basin, it is bordered by Slovakia to the north, Ukraine to the northeast, Romania to the east and southeast, Serbia to the south, Croatia and ...

and

Slovakia Slovakia, officially the Slovak Republic, is a landlocked country in Central Europe. It is bordered by Poland to the north, Ukraine to the east, Hungary to the south, Austria to the west, and the Czech Republic to the northwest. Slovakia's m ...

, while theoretically Beveridge system, have some degree of Bismarck politics in their laws.{{cite web , title=How European nations run national health services: Belgium, France, Germany and Sweden , date=2011-05-11 , website=

The Guardian ''The Guardian'' is a British daily newspaper. It was founded in Manchester in 1821 as ''The Manchester Guardian'' and changed its name in 1959, followed by a move to London. Along with its sister paper, ''The Guardian Weekly'', ''The Guardi ...

, archive-url=https://web.archive.org/web/20230205135832/https://www.theguardian.com/healthcare-network/2011/may/11/european-healthcare-services-belgium-france-germany-sweden , archive-date=2023-02-05 , url-status=live , url=https://www.theguardian.com/healthcare-network/2011/may/11/european-healthcare-services-belgium-france-germany-sweden, last=Gold, first=Steve Some in

Italy Italy, officially the Italian Republic, is a country in Southern Europe, Southern and Western Europe, Western Europe. It consists of Italian Peninsula, a peninsula that extends into the Mediterranean Sea, with the Alps on its northern land b ...

argue that the Lombard socio-health system, which prescribes equality between the private and public sector and payment by performance, has some typical characteristic of a Bismarck system.

Advantages

The Euro health consumer index calls the statement "Bismarck beats Beveridge" a "permanent feature" since 2014. Bismarck systems usually have significantly higher accessibility, lower waiting times and, thanks to the competition between operators, higher quality and more consumer-oriented healthcare.Single-Payer Isn’t The Answer
/ref> Studies show that the introduction of the Bismarck system in Germany led to a significant drop in mortality.Bismarck’s health insurance and its impact on mortality
/ref>

Criticism

Since in the Bismarck health system the core financing are contributions, people in poverty can't pay and get limited coverage. In some countries, like Switzerland, the cost of insurance is high and continues to grow, leading part of the population to be under-insured.In 170'000 non pagano l'assicurazione sanitaria
/ref> Another criticism is that since institutions are paid by performance some isolated localities may have little hospital coverage. While primary care is significantly faster to get in a Bismarck system than in a Beveridge system some argue that some elective care may be slow to get even in a Bismarck system than in a free-market healthcare, like the US.

References