As the Affordable Care Act’s future continues to hang in the balance, the idea of implementing some form of universal healthcare system in California or nationwide has become increasingly popular. Much of this discussion has focused on the desirability and feasibility of adopting a Canadian-style single-payer or “Medicare for All” system. While Canada is a worthwhile case study to examine, there are other models for a universal healthcare system that may make more sense for California and the U.S., achieve better outcomes, and have a more feasible path to implementation.
One such example is a “Universal European Health System,” inspired by the Bismarck model, most clearly exemplified by Germany. This report lays out what such a model could look like if implemented in California. While this report focuses specifically on the German system, several other countries use elements of the Bismarck model, including France, Belgium, the Netherlands, Japan, and Switzerland.
Achieving Universal Coverage and Health Equity
A System That Preserves Choice and Controls Costs
Adopting a Universal European Health System model would allow California to strike a successful balance between the competing goals of securing access, controlling cost, and improving quality. The elements of such a system include:
• Not-for-Profit Health: If enacted, such a system would have one single insurance market for most people. As in the German system, residents would obtain coverage from competing wellness funds. Unlike in California’s current marketplace, however, all insurers would be non-profit, though an external market with for-profit plans may persist.
• Public Oversight to Ensure Equity and Value: As in the state’s Affordable Care Act (ACA) marketplace, Covered California, a public governing body would decide which plans are allowed to participate, based on quality and the range of options available to consumers. All plans would be required to cover a standardized set of essential health benefits. As a result, insurers would engage in managed competition, operating in partnership with systems and networks of care providers in order to improve quality.
• Universal Equitable Coverage: Plans offered by the wellness funds would be means-tested for all residents, regardless of their citizenship or immigration status. The amount that people pay for coverage would depend only on their income (and not their age); those who earn less would receive more generous subsidies. The market would offer a variety of products aimed at seniors, low-income people, and employees, but it would consist of one single risk pool and one set of options for all participants. This would spread the risk more evenly throughout the market, so the premiums of younger, healthier people would help subsidize the cost of care for people who need to utilize more health services.
• Consumer Choice: There would be no mandate for employers to provide insurance to their employees. The employer tax advantage, if preserved, would only be usable in the common marketplace and could not be paired with subsidies. However, employers would still be able to offer add-on services not covered by the insurance package in the general market and could offer complementary insurance without tax advantage.
• Lower Healthcare Costs: The new system would also include a board similar to the Independent Payment Advisory Board in the Affordable Care Act that would implement cost-control measures if medical costs rose significantly above the rate of inflation. If market competition alone does not keep health care costs below this target, this independent, non-governmental consumer commission would be established to recommend maximum prices for the highest-growth components of the health industry.