A Structural Description of Social Health Insurance

A structural description

When one moves from this inside view to a more detached, outsider

’s perspective, SHI systems can be described in more structural terms. This structural understanding incorporates seven core components that exist across all eight studied countries, and that can be considered to comprise the organizational kernel of an SHI system.

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Risk-independent and transparent contributions

The raising of funds is tied to the income of members, typically in the form of a percentage of the member’s wages (sometimes up to a designated ceiling). This has two equally important characteristics. First, contributions or premiums are not linked to the health status of the member. If a member has a spouse and/or children, they are automatically covered for the same income-related premium and under the same risk-independent conditions. Second, contributions or premiums are collected separately from state general revenues. Health sector
funding is transparent and thus insulated from the political battles inherent in public budgeting.

Sickness funds as payers/purchasers Premiums are either collected directly by sickness funds (Austria, France, Germany, Switzerland) or distributed from a central state-run fund (Israel, Luxembourg, the Netherlands) to a number of sickness funds (Belgium employs both methods). These funds are private not-for-profit organizations, steered by a board at least partly elected by the membership (except France and Switzerland), and usually with statutory recognition and responsibilities (Israel is an exception). The rules under which these sickness funds operate typically are either directly established by national legislation (Austria, France, Germany, Luxembourg, the Netherlands, Switzerland) and/or tightly controlled through a state regulatory process (Israel) (Belgium is an exception). The sickness funds use the revenues from members’ premiums (health tax in Israel) to fund collective contracts with providers (private not-for-profit, private for-profit, and publicly operated) for health services to members.

Solidarity in population coverage, funding, and benefits package Depending on the country, 63 per cent (the Netherlands) to 100 per cent (France, Israel, Switzerland) of the population are covered by the statutory sickness fund system. In countries with less than 100 per cent mandatory participation, typically it is the highest-income individuals who are allowed (Germany) or required (the Netherlands) to leave the statutory system to seek commercial
health insurance on their own (small exceptions exist for illegal immigrants, for people with objections by principle and for civil servants). Funding for all members is equalized either within national state-run pools (Israel, the Netherlands); within regional government (Austria) or foundation-based (Switzerland) pools; through mandatory risk-adjustment mechanisms (Belgium, Germany, Israel, the Netherlands); or through state subsidies (Belgium, France). In all eight SHI systems, the state requires the same comprehensive benefits package for all
subscribers.

Pluralism in actors/organizational structure SHI systems incorporate a broad range of organizational structures. Both within as well as between SHI countries, the number and provenance of sickness funds may vary widely, based on professional, geographic, religious/political and/or non-partisan criteria. Nearly all hospitals, regardless of ownership, and nearly all physicians, regardless of how they are organized (solo practice, group practice etc.) have contracts with the sickness funds and are part of the SHI system. Professional medical associations, municipal, regional and national governments, and also suppliers such as pharmaceutical companies are all seen as part of the SHI system framework.

Corporatist model of negotiations
Negotiations typically occur at regional and/or national level among ‘peak organizations’ representing each health sub-sector involved. This corporatist framework enables the self-regulation and contract processes to proceed more smoothly, with substantially more uniformity of outcome and substantially lower transaction costs. A corporatist approach among a group of ‘social partners’ (sick funds, health professionals, provider groupings and supplier groupings)
is also consistent with policy-making arrangements in other parts of the social sector in the seven studied European countries (less so in Israel).

Participation in shared governance arrangements
As befits the pluralist configuration described just above, SHI systems typically incorporate participation in governance decisions by a wide range of different actors. The most visible manifestation is the traditional process of selfregulation by which sickness funds and providers negotiate directly with each other over payment schedules, quality of care, patient volumes and other contract matters. Medical associations, hospital associations and other professional groups frequently have some decision-making responsibilities as well.

Individual choice of providers and (partly) sickness funds
Members of sickness funds can usually seek care from nearly all physicians and hospitals. In six of the eight studied systems, a referral to see a specialist is not required (Israel and the Netherlands are exceptions). Increasingly, members can also choose to change their sickness fund (Austria, France and Luxembourg are exceptions).

These seven characteristics – risk-independent contributions, sickness funds as
payers, solidarity, pluralism, corporatism, participation and choice – comprise
what is described in many writings about SHI systems as the ‘core structural
arrangements’ (Glaser 1991; Hoffmeyer and McCarthy 1994; Normand and
Busse 2002). Combined, they can be taken as the institutional mechanics of how
an SHI system is organized.

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