The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care

by T.R. Reid

THE BISMARCK MODEL This system—found in Germany, Japan, Belgium, Switzerland, and, to a degree, in Latin America—is named for the Prussian chancellor Otto von Bismarck, who invented the welfare state as part of the unification of Germany in the nineteenth century. Despite its European heritage, the model would look familiar to Americans. In Bismarck countries, both health care providers and payers are private entities. The model uses private health insurance plans, usually financed jointly by employers and employees through payroll deduction. Unlike the U.S. health insurance industry, though, Bismarck-type plans are basically charities: They cover everybody, and they don’t make a profit. The doctor’s office is a private business, and many hospitals are privately owned. Although this is a multipayer model (Germany has more than two hundred funds), tight regulation of medical services and fees gives the system much of the cost-control clout that the single-payer Beveridge Model (see below) provides.