Health Care System Models

Health-care systems come in four basic models:


Bismark model, named for Prussian Chancellor Otto von Bismark, who initiated the welfare state when he unified Germany in the 19th century.

~ Both health-care providers and payers are private, cover everyone and are non-profit.
~ Private plans are usually jointly financed by employers and employees.
~ Both are tightly regulated for medical services and fees, thus providing as much cost control as does the Beverage model.
~ This model is used in Germany, Japan, Belgium, Switzerland, and some Latin American countries.




Beveridge model, named for Sir William Beveridge, who inspired the British National Health Service.

~ Health care is both provided and financed by the government.
~ Taxes pay this public service, thus there are no bills.
~ Hospitals and clinics are mostly owned by the government.
~ Some doctors are government employees; others are private but collect from the government.
~ System tends to have low costs per capita; the government controls procedures and payments.
~ This model usually referred to as “socialized medicine.”
~ This model used in Great Britain, Italy, Spain, and most of Scandinavia. Hong Kong has a version and refused to give it up when they passed from British to Chinese control in 1997.
~ The two purest examples of this model are Cuba and the United States Veterans Affairs.


National Health Insurance model, where health care providers are private, but the payer is the government.

~ Every citizen pays into insurer system.
~ Expenses of insurer minimized since there is no need for marketing or for expensive underwriting to deny claims, thus tends to be less expensive and simple to administrate.
~ System has tremendous power to negotiate prices.
~ System offers best universal application and equality of treatment (fairness).
~ Paradigmatic example is Canada, but variations are also used in Korea and Taiwan.


Out of Pocket model, or non-system countries, represents all but the top 40 developed, industrialized countries.

~ Examples include 91% of medical expenses in Cambodia, 85% in India, 73% in Egypt, compared to 3% in Britain or 17% in the United States.
~ Most nations are too poor and/or too disorganized for more.
~ Basic principle is simple and brutal: the poor stay sick or die.


The United States has a mixture:
~ Most workers under 65 years of age have the Bismark model.
~ Native Americans, military, and veterans have the Beveridge model.
~ Over 65 and end-stage renal patients have National Health Insurance (Medicare).
~ Approximately 46 million have the Out-of-Pocket model.

Source: The Healing of America, T.R. Reid, 2009, p. 16-22.