THE SOCIAL DEMOCRATIC HEALTH CARE MODEL
Marek Balicki
Warsaw 3.06.2012
In the manner of an introduction, I would like to point out certain problems which cannot be ignored if one wishes to talk of health policy—especially from a leftist perspective—with the intention to formulate what has been referred to as a social democratic health care model. What is interesting, in the last 20 years there has been no model which we could call leftist or social democratic.. It has emerged in a completely different context, after the introduction of the health funds in 1999. The following values form the ideology identified as social democratic: worker and consumer rights protection, a relatively equal distribution of national income, freedom understood as the protection and knowledge of rights, equality of rights among all social classes, the idea of participative democracy in the form of the increased influence of citizens on the government, free health care, education and social protection ensured by the state, workers' self-management, state interventionism and participation of the social sector, active state politics on the labour market. One of these is free education, health care and social protection ensured by the state. Without evaluating whether the set of values presented above is coincidental or systematic, one can easily see, that there are other values which are included in the set and are related to health care: state interventionism and the equal distribution of national income. One can also consider health care to be an element of the social policy of a given country. The health care system can be analysed from a broader perspective as health protection. This would involve all sorts of activities, not only directly related to health services and health care. Our health is dependant on the quality or manner of functioning of a state health care system only to a small degree. Obviously, this is still important, but there are also other factors which are influenced by state policy. This is also important from the point of view of social democratic policies. The factors in question are well-known, so I shall not be further describing them here. In 1974 the Lalonde Paradigm has been formulated. It is more precise in the way it defines health: as the consequence of many factors. The quality of health care has only a limited impact on our health. According to Lalonde, activity in other areas can lead to an improvement in health, which is why it is possible to rationally limit the need for medical care. Lalonde did not provide the share of each factor and we currently do not have unambiguous data which would allow us to claim that our behaviour influences our health in 90% and that only 10% is influenced by health care. The only thing Lalonde studied was the contribution of certain factors when it comes to traffic collisions. If we focus on the narrow approach to health—i.e. the health care system, health services and benefits—we will discover that we have to adhere to the division to four traditional models. The first model is the Bismarck model, formulated in Germany, and based on health funds. The Beveridge model emerged in the 40s in Great Britain. It is a national health care model. The residual model is currently functioning mostly in the United States. The fourth model is the Siemaszka model, a social realism model. I believe that there is no need to describe each of these models in detail. Instead, I will focus on trying to delineate a proper social democratic health care or health protection model. The Beveridge model, in its classic British version from the 40s, was a departure from the social insurance model towards national health care. It is probably closest to the principles and values of social democracy, as it defines health care, the fulfilment of all the health needs of citizens—which are considered fundamental—as accessible for all citizens. In Poland, the law ensures access to health care for every citizen. Practically, this was never the case. The situation improved after 2004 but we are still far behind Great Britain, where the citizen is entitled to participate in a public health care system according to the principle of equality. There is a significant centralisation of decisions in Great Britain. What also makes it different from other countries is its approach to the significance of fundamental health care. The entire model is related to the public health care system par
excellence. The Beveridge model is financed from general taxes, not from a separate premium. This is important, since if we look at general taxes, they are most commonly paid according to a progressive scale. Health premiums are basically a sort of special flat tax. In this sense, health care in Poland is financed through the use of a flat tax, even though the PIT is still progressive, though less and less so, which makes it similar to a flat tax. The Beveridge model is thus characterised by a basic right to benefits and an administrative procedure which is not the result of a contract. The residual model is just the opposite. Public responsibility for citizen health in the residual model is quite limited. The state narrows down its activity to public health. This is the case in the United States, even though Medicare and Medicaid are fully public systems, functioning according to the principles of public health care systems. They encompass about 1/3 of US populace. Thus, the United States do not utilise a public system, but people above 65 years of age, or people who find themselves in a difficult financial situation and fit into a certain income category, use the Medicare and Medicaid systems. The Siemaszka model is well-known to us. To a large degree it was related to the Beveridge model, at the same time representing real socialism. These four models are the traditional models. They basically do not function in their original form at all. They are subject to change in all countries. The literature on the subject often contains the notion of model convergence. All the models are slowly reaching a common point. In recent years Barack Obama has managed to force certain changes which also represent the convergence of models. The British model is also evolving in a direction opposite to the social democratic model from the 40s. Margaret Thatcher, without abandoning the general tax and the institution of free access to health care itself, introduced interior market principles into the health care model, and thus made more room for private sector representatives, as public care providers assumed organisational structures which placed them between autonomous public health care institutions and companies. We have witnessed the convergence of models in the last 20-30 years. Interesting changes have also been introduced in Germany. In recent years Germany has founded an institution similar to our National Health Fund. All the premiums in Germany go to one fund and are divided into separate health funds according to an approved algorithm. In this sense, the Polish solution from 2003-2004 has somewhat predicted what would happen in Germany, though please keep in mind that this is a certain simplification. The evaluation criteria for models are also changing. Currently, we mostly look at accessibility, complexity and continuance of care. The values or general principles pursued by a given model are not considered as important as its goals. Looking at scientific literature and the debates which revolve around the forming of health care, one can notice that in Poland, in recent years, the basic values which cannot be ignored if we wish to talk of a health care system have not been taken into account in the mainstream. These values are justice and solidarity. The principles of justice and solidarity have been written down in the decision of the Constitutional Tribunal from 2004, regarding the first National Health Fund act. In a way, The Tribunal imbued both principles—which are also mentioned in the Polish Constitution—with relevance in the context of health care. The principle of justice in the procedural sense is quite obvious: it has to do with the proper assessment of citizens who are applying for something. The principle of division is very important here, especially when it comes to limited goods. Health care resources are always limited, just like the funds we can dedicate to health care. When discussing any model, we need to start from certain assumptions or values, e.g. the axiological content of the principle of justice. Justice and solidarity have nothing to do with the market principles of the distribution of goods. These two principles should undoubtedly have their place in health care, especially since we are assuming a social democratic approach to the subject. The choice of criteria and the establishing of the method of providing health care determines the degree of realisation of the principle of justice. In a more detailed
approach, we should introduce the division to horizontal and vertical justice. Horizontal justice has to do with situations when in the same context everyone is entitled to identical treatment. If there are two patients and the status of their health before a potential intervention is the same, they should be treated identically. Vertical justice has to do with a situation in which a given person is treated depending on the circumstances: the more different is the status of their health, the more different treatment is received by each patient. A patient that is more severely sick or requires the fulfilment of greater needs than another patient, should be treated differently than if the differences between them were smaller. That is why we have to remember that the principle of justice is quite complex when discussing equality in access to health care. The second principle is the solidarity principle. The aforementioned decision by the Constitutional Tribunal has been formulated as follows: equal access to health care is independent from the degree of participation in funds dedicated to health care. Health care expenditures in relation to the GDP rise dramatically in the case of citizens above 65 years of age. This is evident e.g. in the case of the American Medicare system. This is not as sudden in other countries and is more related to health status, rather than reaching a certain age. The second important issue has to do with the goals of health care or health model which we consider to be most important. Only after we establish certain goals, principles and values can we address further matters related to the optimisation of the system. In many mainstream debates or media commentaries regarding health care the fact that early choices related to fundamental health care issues have their specific consequences is most often omitted. If we decide that our goal is to promote the longevity and proper health of the entire populace, we can then undertake certain specific actions which could sometimes lead to a situation in which not everyone will receive what they expect when it comes to health services. There was a grand altercation regarding so-called non-standard therapy two years ago. This had to do with the issue of access of certain group of patients to very expensive therapy. Since our resources and funds are limited, and we know that on certain occasions the effects of such therapy may prolong the life of cancer patients with no metastases, but will not improve the quality of their life, which means we will not ensure additional months or years of life in health, we can decide to withdraw funding. We also talked about the principle of justice in its technical aspect. Justice in this case was definitely breached, since the patients did not know the principles according to which the decision regarding their health can be made. The main goal of health care should have to do with actions towards the long lives and good health of the entire population. Secondary goals are related to more detailed indicators regarding the sick or social groups, since we can also take social indicators into account. There are also additional goals, e.g. the quality of choice, the satisfaction of patients, access to health care etc. Currently there are two options in the typology of health care models: the market (liberal) option and the collectivist option, which is more leftist in its approach. There is also lots of middle ground between these options. In Poland, at different times, especially in the last 10 years, more focus is given to the market option, which stresses the need for individual freedoms and rights regarding freedom and private property, personal responsibility for oneself and one's relatives, limiting the role of the state and treating the market as a mechanism which ensures the best allocation of resources. In 1999, Jerzy Buzek's government introduced four reforms, including the health fund reform. Minister Anna Knysok, responsible for implementing this reform, stated that if the health funds work well, the invisible hand of the market will solve the problem of hospital distribution. Three years ago similar arguments were uttered by Minister Kopacz during a debate on the subject of the hospital network act project. She claimed that the state should not get involved in hospital planning.
Certain countries have introduced various privatisation strategies in the last decade as part of this option. In recent years, there is an attempt to promote the development of private, voluntary health insurance and additional fees in Poland. As for the latter, everything depends on their form. When it was enabling additional private insurance, Platforma Obywatelska attempted at introducing fees which would become a health care access barrier for most of society. The fees could be considered part of a finance privatisation strategy. More manipulative fees have been currently introduced in Germany and in the Czech Republic. The advocates of the social democratic option can decide whether such fees could to a certain degree serve the better realisation of goals and basic principles which I have already mentioned. There has also been a conflict regarding tax relief. If it were not for the current economical crisis and the functioning of the Open Pension Fund, i.e. if public finances were not as burdened as they currently are, we would have tax relief in Poland. A certain concept of the Polish insurance market which has been advocated in the recent years is the possibility to leave the obligatory system and enter an alternate, private system. The privatisation of service production is also becoming increasingly prominent. Contracting services outside of the public system has been an ongoing process since about the year 1999, which saw the implementation of the health funds. In the first year after they have been introduced 10% of public sources entered the private sector. The hospitals have also become indebted due to the territorial allocation of funds and because of the fact that less funds entered this part of care providers while the public infrastructure remained unchanged. The reasons for this imbalance and indebtment in certain regions have later been described in detailed studies, including those undertaken by liberal institutions. The remaining elements are also being implemented in Poland to a various degree. Currently, the greatest threat is related to the change in the organisational form of public health care facilities, which enables direct capital privatisation. A certain percentage of institutions have also been privatised in Germany. In some Länder privatisation is currently quite radical, yet it is not as uncontrollable as it may soon be in Poland if the local governments decide to turn health care facilities into companies. So far not one hospital in Poland has been chosen for that using the new act, which was passed last year. It seems, however, that we might see a mass movement for the change in the organisational-legal status of health care facilities next year. This mostly has to do with hospitals. Transforming a hospital into a company allows for the further privatisation using only one resolution. That is why such transformation might lead to direct capital privatisation. The market option also brought about something which I refer to as a change of paradigm. The Act on Medical Activity which became effective on July 1 2011 and which allows for the transformation of facilities into companies, states that medical activity is a regulated business activity as defined in the Act on Freedom of Business Activity. Regulated means that one has to meet certain criteria regarding the registering of the activity. Thus, medical activity is economic activity, which, as defined by the Freedom of Business Activity act, is undertaken for profit. The same act also mentions that companies—which are the target form for the functioning of public health care facilities— are not subject to communal economy regulations. Communal economy, defined in the Act on Communal Economy, involves public utility activities, which are not undertaken for profit, but constantly fulfil the common needs of people when it comes to providing commonly accessible services. So far, the Act on Health Care Facilities views medical activity as a type of public utility activity, which means it serves as a mission to fulfil human needs, and is not undertaken for profit. The new act introduces a major change of paradigm. This has never been the subject of proper deliberation. Health care becomes a business. Medical activity, also within a non-autonomous public health care facility, is thus legally considered a business activity and is not based around the idea of fulfilling fundamental needs, as it is in the case of water supply systems, public transport etc.
There have been attempts in Sweden a number of years ago to transform public hospitals into companies, but the Swedish Left abandoned this sort of solution. Public funds in Belgium cannot be transferred to institutions aimed at profit within the public system. The other option is a community option, which has to do with an approach typical for the Beveridge model. It considers health-related needs to be fundamental. Thus, it ensures universal legal access to health care. In Poland, as early as in the beginning of the 70s, a large percentage of the population had no access to a public health care system. Edward Gierek enabled workers to have this sort of access and later included citizens working on their own account. This was at a time when the share of citizens working in agriculture and owning individual holdings in society was growing, yet a significant part of the Polish populace was not entitled to health care. It was until 2004 that there were certain groups which did not enjoy health benefits, or were only entitled to social welfare. Since then, if someone fits the income criteria for social welfare and is not insured, the administrative decision of a commune head, i.e. the mayor or w贸jt, is sufficient to gain access to benefits financed from public funds for six months, just like in the case of insured citizens. Despite of that, yesterday's Gazeta Wyborcza claims that the current income criteria for social welfare are higher than what one can consider extreme poverty. This means that one can live in extreme poverty, not be entitled to any kind of insurance and still have limited access to social welfare, since they do not fit in the income criteria detailed in the Act on Social Welfare. The next value: freedom. Freedom is when there are certain organisational conditions which enables us to perform certain actions. We know that the market is not a just mechanism. When it comes to health care it is also economically inefficient. The average expenditures on public and private health care in OECD countries equals 9.5% of GDP. In Poland it is a little over 7%. In 2009, the expenditures in the United States have exceeded 17%. If this was accompanied with high efficiency, the health of American citizens should be better than the average health in OECD countries. But there is also another indicator: the average life expectancy at the moment of birth. In the States it is less than the average in OECD countries. The piece of data which I consider to be most important is that the American taxpayer spends more than 8% of GDP for health care. Thus, the residual system proves to be wasteful and most expensive. At the same time, it bends the justice rules, since a high percentage of Americans still does not belong to any health insurance system. It seems that there are lobbies which believe that the current solution is sufficient. Information asymmetry is another factor. It is hard for us to gain information which would enable us to make proper choices regarding medicaments. True, the situation is different than it was 10 or 20 years ago due to the development of the Internet. The asymmetry is not as severe when it comes to access to knowledge in certain areas. It is actually possible to have certain paradoxical examples of patients knowing more than the medical expert they visit to get a prescription. One example has to do with treating Parkinson's, which is very difficult due to the side effects of medicaments used in the process. It turns out that many Polish neurologists have been educated by patients' associations in more effective treatment. Regardless of certain marginal examples, information asymmetry is still a problem. Quite often the doctor assumes the role of the patient's guardian, while the patients themselves resign from making choices regarding their health. When delineating a model which we could call a social democratic model, it might be wise to be aware of something which is unfortunately omitted in Polish public debate: the limited nature of our resources, which brings the need to formulate priorities. But how are we to make decisions regarding the use of available funds? I find this to be a serious problem, since the decision-making process is quite often very non-transparent. It is also
often the subject of lobbying, depending on the bargaining force of certain circles. Since many years cardiology in Poland is underfunded. The share of health care funding in GDP is on the same level in our country as it was 20 years ago in other European states. Even though we are the “green island,” we are far behind in this respect. There are certain areas where it is very easy to achieve a surplus. Allow me to provide the example of the hospital I work in. The costs of the entire public facility equal 80 million PLN, 15% of hospital beds belong to the cardiology ward, and yet last year cardiology brought us 6-7 million PLN of pure profit. In the case of a non-public care provider there are areas where through speculation using various financial instruments money comes without real effort. The allocation of funds in Poland is hugely non-transparent. It is a certain pathology. “Rationing” is a very unpopular term in the context of public relations, yet it gets to the point. Formulating priorities and methods of rationing is one of the major challenges faced by public systems. It is interesting that at the beginning of the transformation in Poland, Tadeusz Mazowiecki's government formulated a very interesting strategic document regarding the directions for changes in the health care system. The document offered a certain principles, values and goals related to the changes in question. To a large degree these are still up to date, especially from the point of view of social democracy. Obviously, gradual alterations to the document have been implemented. The first major departure from the document was the health funds reform and the changes we witnessed in the last few years. What sort of principles should we approve or at least discuss when it comes to a social democratic health care model? First of all, health care should be considered a fundamental good, and as such it should be accessible to the entire populace. We currently do not know the amount of people who do not have such access, but there are those working exclusively on contracts of mandate, citizens from the grey area and the excluded. There is thus a couple of hundreds of thousands of citizens who are not entitled to health care benefits, as they are not insured and are not entitled to any sort of insurance. A conflict regarding prescriptions has lately attracted a lot of attention. Should the doctor at a clinic be responsible for identifying whether a given patient is ensured or not before they decide to write a prescription? This sort of situation is practically non-existent, since excluded citizens do not go to a clinic at all. They show up in admission rooms only when they know they will be treated on the basis of a wójt or mayor's decision. That at least is the case in our hospital: excluded citizens do not show up in the admission room. I have already mentioned the justice and solidarity principles. I also talked about common and free access to health care. Free access has been introduced in Great Britain as part of the Beveridge system. I do not know whether we should adhere to free health services in all cases. Perhaps some manipulative fees would serve as an element of managing or quasi-rationing limited resources. A lot of countries which maintain a very social health care model, like the Czech Republic, have introduced certain fees. Germany is also a good example: the fees bring more benefits than threats, but one has to be very careful about them. This was not the case in the recent years in Poland, when one had to pay a couple of hundreds of złoty for an endoscopy. Perhaps up to 20 PLN would be justified if that would not lead to a fewer number of patients undergoing the operation. Research conducted in various countries of a lower level of socio-economic development show that even symbolic fees lead to a decrease in the number of people who undergo treatment. In Germany, after introducing a fee for the first visit once every 3 months there has been a 20% decrease in ambulatory care treatment in certain Länder. We can thus decide for ourselves whether this sort of solution is sensible, but we need to take all the risks involved into account. The large role of the state in providing health care is definitely an important aspect
of a social democratic model. In Poland, the state has resigned from coordinating and planning investments almost entirely. From a rational point of view, letting go of the instrument of planning investment expenditures is the greatest mistake made by the government in the recent years. Direct expenditures are controlled with less than 10% of all expenditures. It is common in Europe to plan a network of resources for investment expenditures. In Poland, we have an arms race instead, since there is no instrument which can be used to limit or licence access to public funds. This is why an increasing number of private subjects invests in areas which bring revenue. This leads to excessive resources in well-financed areas and to actions dedicated to maintain the current state of things. The state has thus lost control over a very important element. The general tax is a more rational solution, but only if the government and parliament make sensible decisions regarding the distribution of funds on the macro level. This sort of approach proved to be inefficient in Poland, which is why perhaps a specific tax is more applicable. But not in the form of the tax collected by ZUS—this is certainly some sort of misunderstanding. Establishing priorities and mechanisms of rationing is a challenge for the government just as planning and coordination. Introducing competing payer institutions which has been proposed by SLD since 2001, when Mariusz Šapiński wanted to create a number of competing public funds, is unjustified. Platforma Obywatelska's idea is extremely absurd as a single health fund alone is a certain limitation, so there is no need to introduce more of them. This would only increase administrative costs, without solving the problem in question. The manner of paying wages to care providers is characteristic of the market option: you pay for a service which improves productivity. Productivity, however, does not always lead to an improvement in effectiveness. A greater number of operations does not always mean that we are fulfilling the health aims we have established. The state should not support private insurance. They will obviously still be functioning, but there is no need for the state to support it. As for care providers, I am convinced that public health care funds should be directed exclusively to subjects functioning on a non-profit basis, since market mechanisms do not improve the allocation of resources.