The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care

The Bismarck model refers to a system of health care based on sickness funds (krankenkasse), and it was invented by the statesman and unifier of Germany, Otto von Bismarck. To keep the German workforce healthy, Bismarck made health care accessible and affordable to the entire population.

Within the Bismarck model, employers and employees purchase private health insurance plans and split the cost of premiums. The Bismarck model is used in its native Germany, France, Japan, Switzerland, Belgium, and some Latin American countries. Health care providers operate privately, but the funds are nonprofit and offer universal coverage. In some countries, such as Japan, a ministry negotiates fees with health care providers.

The United States employs some aspects of the Bismarck model—that is, employers and employees share the cost of premiums. However, health insurance is a for-profit industry in the US; there is no universal coverage; and insurance companies reserve the right to refuse some claims, which is forbidden in Bismarck countries. Also, in Bismarck countries, patients still have coverage—premiums are paid by the government—when they are unemployed. In the US, when patients lose their employment, they lose their health care coverage.