Sunday, December 26, 2010

The Beveridge Model

William Beveridge
Want is only one of the five giants on the road of reconstruction and in some ways the easiest to attack. The others are Disease, Ignorance, Squalor, and Idleness. 
-Social Insurance and Allied Service, a.k.a. The Beveridge Report (1942)
In 1940, Great Britain tottered on the edge of extinction. Its armies badly mauled by the Wermacht in France, its cities absorbing a ferocious shellacking from the Luftwaffe, and the United States still over a year from entering World War II, the British government in an act of supreme optimism began making plans for post-war life on the assumption that it would prevail over both Nazi Germany and the Empire of Japan.

There was little doubt that the aftermath of two world wars and an economic depression would wrought profound changes on British life. The working- and middle-class men who had fought the wars would insist on taking charge, and the heretofore dominant patricians admitted that they had a point. Prime Minister Winston Churchill appointed noted economist and social reformer Sir William Beveridge to define a paradigm for the brave new world; Beveridge's effort changed the face of Europe.

Social Insurance and Allied Service, published in 1942 and also known as the Beveridge Report, became the blueprint for the postwar British welfare state. A bestseller in its day, the report was distributed to British troops despite an aborted attempt by Churchill to suppress it until after the war. Wildly popular across the political spectrum, the post-war implementation of the Beveridge Report became a foregone conclusion.

While it focused mainly on social insurance -- what Americans think of as Social Security -- the report also articulated the right of anyone to receive health care on the basis of clinical need regardless of ability to pay, and gave rise to a health care system known as the Beveridge Model. While the term "socialized medicine" is often used carelessly and inaccurately, the Beveridge Model is in fact socialized medicine: A health care system owned and operated by government.

Today, the Beveridge Model is applied by Cuba, Denmark, Finland, Great Britain, Hong Kong, Italy, Norway, Spain, and Sweden. With the exception of Cuba, all are capitalist democracies that have decided to remove the profit motive from health care on the grounds that it compromises equity and efficiency.

While the model is implemented differently in each country, it operates on the basis of a set of one or more common characteristics:
  • Health care is a human right, not a privilege
  • Government ownership and operation of health care
  • National government responsibility for delivery of equitable and efficient health care
  • Full access to all regardless of ability to pay
  • Primary care physician as gatekeeper to the rest of the system
One misconception about the Beveridge countries is that the costs of providing expansive health care for all residents have been prohibitive and bankrupting. The following table shows that Beveridge Model countries deliver health care efficiently and with great effect:


As a whole, Beveridge Model countries spend a lower percentage of GDP on health care than any other nation. Why? Because the Beveridge Model is tax-based and not insurance-based, the governments of those countries have great incentive to emphasize the biggest bang for the health care buck, that being preventive care. As a result, Beveridge Model countries tend to have robust public health programs (Finland is one of two countries to reverse the obesity epidemic plaguing the developed world) and a strong emphasis on primary care. (Seventy per cent of British doctors are PCPs as opposed to 30% in the United States.) Primary care contributes to better outcomes, increased use of preventive services, fewer hospitalizations, reductions in overall costs, fewer hospitalizations, and less use of emergency departments.

All approaches to health care have tradeoffs, and the Beveridge Model is no exception. Welfare state values that call for a high level of social services also mean higher taxes. The emphasis on efficiency often results in less choice for patients, and broad service offerings tend to concentrate in urban areas. While doctors receive free education, have little administrative burden, and are almost never sued for malpractice, they are also salaried and earn less than their American counterparts. Equal access and the emphasis on primary care can translate into long wait times for non-acute secondary and tertiary care. Finally, the imperative to hold down costs means that the newest technologies are not easily available.

Converting the United States to the Beveridge Model -- and there's little reason to believe that the American people want this -- means eliminating the health insurance business, making virtually all physicians salaried government employees, tightening the regulatory screws on pharmaceutical companies, and establishing wholly new government bureaucracies at the federal, state, and local levels. In the absence of a complete societal breakdown, American history suggests that this degree of systemic change requires a sustained nationwide mass movement of at least 8-10 years. Given the undesirability of the former and the unlikelihood of the latter, it's most productive to think of the Beveridge Model in terms of what can be gained from it.

So while opponents of socialized medicine can rest easy, there are nonetheless lessons to be drawn from the Beveridge countries:
  • The value of a national health policy to provide guidelines and direction for federal response to national health issues
  • The importance of a strong public health program (at all levels of government) to preventive health and reduced costs
  • The key role of primary care, again in prevention and efficient allocation of health care resources
Later, HealthMatters will look in detail at the health care systems of Beveridge Model countries.