In the 1880s, under pressure from liberal democratic reformers and socialists, the arch-conservative monarchist Otto von Bismarck, chancellor and de facto ruler of newly united Germany, attempted to co-opt the rival Social Democratic movement by promulgating Sozialgesetzgebung, or social legislation. Bismarck wanted to foster loyalty to and dependence upon the state—literally Staatsbindung, “binding to the State”—among German workers by offering medical and accident insurance. He later expanded the legislation to include a pension plan.
In the end, Bismarck failed to crush what became the Social Democratic Party of Germany (SPD), which remains one of the country’s major contemporary political parties. But Bismarck’s legislation, amended and adapted over time, may have saved the state from revolution and certainly provided the basis for Germany’s generally successful social system today. The career of any current serious political actor would be jeopardized if he or she were to question its permanence.
Today’s U.S. Republicans could learn from Bismarck by working with Democrats and the Biden Administration to reform health care on conservative principles. In the process, Republicans might even be able to mend the split between their populist and business-oriented factions, preserve individual choice in health care, and improve national health outcomes.
America the Sick
There is little doubt that American health care desperately needs reform. In 2020 a national survey revealed that 92 percent of Americans want changes to the system. Data comparing American health expenditures and outcomes to those of other high-income countries in the Organization for Economic Cooperation and Development (OECD) support the view that our current system is relatively inefficient and unsatisfactory in results. The United States spends significantly more per capita on health care than any other developed country. In 2019 it spent 17 percent of its GDP on healthcare; the next highest expenditure, in Switzerland, was only 12.1 percent.
Part of this disparity reflects the incredibly high administrative costs generated by our patchwork system. Yet in other ways we spend too little. For instance, the United States actually spends significantly less per capita on long-term care than other OECD countries do.
Despite our relatively high health care expenditures, we suffer from appallingly high infant mortality and low life expectancy at birth. We have the highest number of hospitalizations from preventable causes and the highest rate of avoidable deaths. Around 28 percent of Americans have two or more chronic health conditions, higher than in any other OECD country. Our obesity rate is twice the OECD average.
Yet despite the obvious need for reform, the way forward is unclear. Although Trump repeatedly promised to replace Obama’s 2010 Affordable Care Act with “something terrific,” he never articulated an alternative. His Republicans never passed comprehensive reform, partly because the Affordable Care Act, despite its inadequacies, became more popular during Trump’s presidency.
A Market-Oriented Model
If conservatives want a say in the future of American health care, they should be proactive in finding a solution that can garner at least some support from Democrats. While the American Left has largely embraced a single-payer, Medicare-for-all model, the German system may provide a more palatable market-based model while still offering significantly better health outcomes and lower costs.
When Bismarck passed his social legislation, hundreds of Krankenkassen, or sickness funds, were already acting as private insurance organizations. These funds have since evolved into private nonprofit insurance companies that provide levels of care mandated by the government but compete against each other in the market. Depending on the particular Krankenkasse, a customer may pay slightly more for additional benefits like coverage for alternative medicine or a gym membership. While all German residents are required to have health insurance, they can choose among these insurance companies.
Rather than basing insurance premiums on risk factors like pre-existing conditions, the German companies charge almost 15 percent of an employee’s salary; employers and employees each pay around half. To reduce costs, the government mandates maximum prices for certain procedures and drugs and forbids prescription drug companies to advertise to the public. For the consumer, healthcare is simple: a Krankenkasse customer just presents his insurance card to the doctor of his choice and gets care. Prescriptions require a copay of five to ten euros, but the cost is insignificant compared to that of copays in the American system.
Private insurance companies for the wealthy also thrive in Germany. Workers earning above a certain income (€64,350 in 2021) can decline the Krankenkasse and enroll in a fully private insurance plan instead; it will charge a risk-based premium instead of a percentage of salary and will cover benefits beyond the medically necessary. People with base Krankenkasse coverage can also get extra benefits through a private company—covering, for instance, a private hospital room or a more experienced surgeon.
Structurally, the German system is quite similar to the American: A large number of independent plans compete with each other in the market. Individual insurance groups and health care providers negotiate without government intervention on cost and treatment. Individual insurance companies, hospital networks, doctors, and patients all have considerable autonomy. Like Americans, Germans largely avoid the long waits for care that plague single-payer systems, though German health outcomes are generally much better. Unlike American health care, the German system is widely popular. In September 2020 a survey showed that 78 percent of those enrolled in nonprofit Krankenkassen were satisfied or very satisfied with their system.
Of course, the German system has weaknesses. While its costs are significantly lower than those in America, the German model is more expensive than single-payer systems. Germans visit the doctor more often, since there is no mechanism to discourage patients or providers or limit visits. German physician salaries, while still high, have fallen significantly relative to the average German salary. Our system would almost certainly require government aid to reduce our medical education costs to those of Germany’s: German doctors generally attend state medical schools and, thus, graduate without the enormous debt that burdens American doctors.
Overall, though, the German system could serve as a useful model for conservatives seeking an effective, market-based approach to American health care. Were we to adopt something similar to it, Democrats would appreciate the fact that all American residents, regardless of income or employment status, would be insured. The enormous cost of the country’s health care would fall to more reasonable levels. Our health outcomes would rise. Finally, the U.S. public would approve of the considerable choice and autonomy remaining with doctors and patients.
Reform, not Repression
For Republicans, the German model offers a viable ideological alternative to the massive government-run health plans advocated by Elizabeth Warren, Bernie Sanders, and Alexandria Ocasio-Cortez. It would also appeal to both the populist elements in the Republican Party that call for affordable health care and to business interests, which could continue to compete in new, expanded markets. Instead of campaigning in opposition to change, Republicans could claim credit for change that would be popular and effective.
Republicans have lost the popular vote in seven out of the last eight national elections. The country is rapidly becoming less White and Evangelical. Republicans, faced with their losses in the 2020 elections and lured by baseless claims of widespread voter fraud, are resorting to draconian election legislation that makes voting more difficult, in a transparent bid to retain power by effectively restricting the franchise to their voter base.
It would be more effective to legislate popular reforms, just as Bismarck did in the 1880s. The social system is one of Bismarck’s greatest legacies to modern Germany. It was so popular that it outlived several governments, two world wars, a divided Germany, and reunification. Like the aristocratic Bismarck facing a rising Social Democratic movement amid oppressive income inequality, American conservatives are outnumbered and aging. Their best way forward is through practical, bipartisan reform that would expand their electoral base by means of effective governance.
Paul Kroeger is currently a soloist opera singer in the ensemble of the Mecklenburgisches Staatstheater in Schwerin, Germany. He will return to Texas to study at the Bush School of Government and Public Service at Texas A&M University in the fall of 2021.
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