The Transformation of the Social Right to Healthcare

Evidence from England and Germany

Katharina Böhm

• Publisher: Routledge
• Year: 2016
• eBook ISBN: 9781317013532
• Edition: 1
• Topic: Social Sciences
• Subtopic: Social Work
• Index: Social Sciences

This pathbreaking book investigates welfare state change in the area of health care- a field widely neglected by comparative welfare state research. While some work on health care expenditure exists, health care rights have not been systematically studied since social rights have exclusively focused on entitlement to cash benefits. Addressing this research gap, Böhm analyses in what way the social right to health care has been modified in the course of general welfare state transformation since the late 1970s. Taking England and Germany as examples, she assesses how health care reforms conducted under the conditions of constrained budgets, demographic ageing, and rapid medical progress, have altered access to and generosity of public health care systems over the past 35 years. The book's findings significantly increase our understanding of social rights and reveals fundamental differences of approach: while Germany provides absolute and enforceable rights to health care for each (entitled) individual, English social health care rights are directed towards the population as a whole and contingent upon the availability of resources, i.e. they are not absolute and not enforceable. This distinction between individual and collective social rights will be an important contribution to the theory of social rights given its applicability to other types of social rights and its usefulness in tracing changes in social rights over time.

1
The social right to healthcare and the transformation of the welfare state

The purpose of this first chapter is to provide the theoretical basis for the empirical analysis of the transformation of the social right to healthcare. In the first part, the general topic of this book – welfare state transformation in the area of healthcare – is introduced: the problems mature welfare states have been confronted with since the mid-1970s are delineated and the reforms which came in response are described. Special attention is paid to the challenges facing public healthcare systems and to healthcare reforms designed to overcome these challenges. Although the research on welfare state transformation and healthcare reform is vast, there remain several research gaps which are identified in the second part of the chapter. The research questions of this study are formulated to address these gaps. Basically, the study follows two research questions, of which one is descriptive and the other causal. Part four focuses on the descriptive research question. It develops an analytical framework for the empirical assessment of healthcare entitlement reforms and establishes more specific research questions. Part five is dedicated to the causal research question and discusses common welfare state theories explaining the (non)formation of retrenchment reforms. From this, two hypotheses that guide the analysis in Chapter 5 are derived and further discussed. In addition, the third part of this chapter develops a definition of social rights. Finally, the research design and methodology are presented.

1.1 Welfare state transformation in healthcare

The history of the welfare state is commonly divided into two parts: the post-World War II golden age, during which welfare programmes and benefits were expanded; and beginning in the late 1970s, the era of austerity, in which welfare states were confronted with various social and economic problems. Welfare states tackled these problems and have enacted numerous reforms since the end of the 1970s. The first part of this chapter describes how these reforms have altered the welfare state in general. The particular challenges facing public healthcare systems are presented in the second part, before an overview of healthcare reforms is given in the third part.

The transformation of the welfare state

The welfare state is in trouble¹ – this insight is not new. Since the late 1970s, the welfare state has faced multiple economic, political and societal challenges. Processes such as the slowdown of economic growth, rising unemployment, changing patterns of employment, increased capital mobility, demographic ageing, and changing family and social structures have undermined the foundations of the Keynesian welfare state and forced social security systems to adapt to these new conditions (e.g. Butterwegge 2001; Esping-Andersen 1999; Taylor-Gooby 2005).² The reforms have altered the welfare state effectively, but the general nature of the change is hard to specify. In the beginning, most academic literature assumed far-reaching welfare state retrenchment, but over the years, as more and more studies were published, a more diversified picture emerged.

Contrary to what race-to-the-bottom theorists had predicted, no drastic reductions in public social spending have occurred. During the 1980s and 1990s, there was even increased social expenditure in nearly all OECD countries;³ at most, a slowdown in expenditure growth has been witnessed (Castles 2004; Clayton and Pontusson 1998; Starke and Obinger 2009). A massive reallocation of resources between social programmes has also not occurred (Castles 2004). Aggregated spending data, however, gives only a small insight into the mode of welfare state transformation because it is influenced by diverse factors such as economic growth and the number of recipients, which might obscure ongoing transformations (e.g. Kangas and Palme 2007; Korpi 2003; Scruggs 2006).

Analyses of social rights show a different picture. Korpi and Palme (2003) studied income net replacement rates⁴ for three social programmes (sick pay, work accident and unemployment insurance) in 18 OECD countries.⁵ After reaching a peak between 1975 and 1985, they observe a decrease of net replacement rates in all three programmes in nearly all countries, yet with major differences between countries and programmes. Using a similar research design, but his own data, Scruggs (2006) analysed changes in income replacement rates of public sickness, unemployment and pension programmes from 1971 to 2002. He, too, finds that after peaking in the 1980s, clear signs of retrenchment were evident in nearly all 18 OECD countries studied, but again with major differences between countries.

Expenditure studies, as well as social rights studies, have their limits because welfare state ‘recalibration’ (Pierson 2001) is a complex, multidimensional process that is hardly captured by quantitative analyses alone (Bonoli and Natali 2012). Moreover, welfare state transformation takes different shapes in different countries and different policy areas since it is heavily influenced by the institutional framework of the particular welfare state or policy area. Despite these differences, some major trends of welfare state reform can be identified.

Many reforms may be described as adaptations to new social needs. The transition to post-industrial society involves various socio-economic changes that create new social risks not addressed by the ‘old’ welfare state (Rothgang et al. 2010; Taylor-Gooby 2005). One of these changes is the increased labour market participation of women. This has raised the demand for social provisions that allow for the reconciliation of family and work. To address this need, governments all over the OECD realm introduced parental leave schemes and transfer payments, as well as expanded child care provision. The increased labour market participation of women causes a second problem: traditionally, women also cared for the elderly, but with changing employment patterns and family structures, alternative care arrangements are needed. Welfare states responded by adopting long-term care insurance schemes, expanding private or public care services and by introducing diverse other measures. Further new risks arise from structural changes in production. Rationalisation caused by technological progress, together with relocation of companies abroad, decreased the demand for low-skilled workers and heightened their risk of unemployment. At the same time, traditional unemployment insurance and assistance were perceived as inappropriate solutions to long-term unemployment because of their weak incentives for labour market re-integration. In attempting to bring people back into the labour market, activating policies were introduced in nearly all welfare states. While some form of activation such as training schemes or work creation programmes have always been part of most labour market policies (Clasen and Daniel 2006), activation became the leading paradigm of reform. Activation instruments aim at making benefits more conditional by linking them through incentives and sanctions to behavioural requirements (e.g. active job-seeking, participating in job-creation programmes) (Gilbert 2002). Additionally, activation reforms are often accompanied by restrictive measures like the tightening of qualifying conditions or the shortening of the duration of benefits receipt. The expansion of activation policies is impressive: spending for activation measures quadrupled in the EU between 1980 and 1999 (Taylor-Gooby 2005, p. 19).

However, activating policies are far more than just a reaction to changed risks. They express the paradigm shift in social policy which Gilbert (2002) has characterised as ‘the enabling state’. The dominant principle of this paradigm – the primacy of the market – has guided various reforms. Capital has been unburdened from taxes and contributions by privatising welfare costs through the introduction of optional or occupational supplementary private insurance schemes (e.g. in pension, health and long-term care). Likewise, following the assumption that private markets work more efficiently than public administrations, public services have been contracted out to private providers and market structures have been introduced into public administration (Gilbert 2002, p. 44). Within this market-oriented approach, benefit recipients are more and more perceived as consumers, and thus many welfare reforms have aimed at strengthening consumer rights in order to enable market participation (Clarke et al. 2007; Gilbert 2002; Needham 2007). The rhetoric of consumer choice and consumer rights has been complemented by the theme of personal responsibility, the support of which has become a main target of the enabling state (Gilbert 2002, p. 43). These transformations indicate a changed understanding of the role of the state and of the relationship between the state and its citizens.

A further reform strategy to be observed in many OECD countries is the restriction of access to welfare through the tightening of eligibility criteria. The aim of these reforms is to target resources to the most needy (Ferrera 2008, pp. 93ff.; Gilbert 2002, p. 44). The tightening of qualifying conditions has also been a strategy with many pension reforms. However, the aim has not so much been to target resources for the needy but to reduce the number of pension beneficiaries in order to stabilise or reduce pension expenditures. Other pension reforms aimed at prolonging the contribution period by postponing retirement age, or by restricting early retirement (Ebbinghaus and Schulze 2008, p. 285).

Challenges facing healthcare systems

The problems welfare states face in the area of healthcare are particularly fierce. In addition to demographic ageing and slowing economic growth, public healthcare systems have had to cope with technological change and medicalisation, both of which have increase demand and boosted expenditures. Furthermore, demographic ageing is especially problematic in healthcare as it has not only an impact on the income base of public healthcare systems, but may also lead to rising expenditures.

When Bismarck introduced the first public health insurance in 1883, average life expectancy was 45 years (Gilbert 2002, p. 32). Today, people live almost 80 years on average (OECD 2012b).⁶ In addition, fertility rates have declined, meaning that there are two factors contributing to an ageing population. On the income side, this double burden of demographic change implies that fewer workers must finance a growing share of retirees, which in turn may lead to increased taxes and higher social contributions, and may eventually negatively impact economic growth. To what degree the financial basis of social health programmes is in fact endangered by demographic change depends on the particular type of funding, the development of economic growth and on the actual effect of labour costs and taxes on competitiveness. In general, contribution-based healthcare systems are expected to be hit more heavily by demographic changes as they are primarily financed from wage deductions and thus funding becomes problematic as the number of wage earners decrease. The problem is less intense with a tax financed healthcare system, because these can resort to a broader source of revenues.

With regard to the expenditure side, increased life expectancy is believed by many health policy actors to boost health spending. This expectation is based on the assumption that older people need more healthcare services (World Bank 1994, p. 4). Yet this assumption is questioned by many experts (e.g. Braun 1998; Reiners 2009). Empirical data indeed shows that health expenditure surges with age, but this can be explained by the proximity of death in old age. A great share of healthcare expenses are generally incurred at the end of life, and because the probability of death increases with age, there is a correlation between age and costs (Dormont et al. 2010, p. 18). Apart from this ‘natural correlation’ between age and death, it depends on the morbidity of the older population whether growing life expectancy is associated with higher healthcare costs. If people live longer, but at the same time become healthier, costs do not necessarily rise. In fact, empirical findings support the thesis that morbidity is deferred to later phases of life (Dor-mont et al. 2010; Fries, Bruce and Chakravarty 2011). Whether this ‘compression of morbidity’ thesis remains valid, however, hinges on the health behaviour of the population and thus can be influenced by health policy measures. Summing up the findings on demographic change and health expenditures, it seems that ageing is not a major problem for public healthcare systems. However, reforms result from the perceived need for reform, and demographic ageing has played an important role in legitimising the healthcare reforms of the last decades.

The second highly discussed cost driver is technological change. Usually, technological progress facilitates rationalisations and hence brings about cost savings. In healthcare, however, technological progress is associated with rising costs. Before shedding light on that puzzle, it needs to be noted that the healthcare sector is very labour intensive, so that rising costs can partly be explained by Baumol’s cost disease, i.e. low productivity growth in services leads to rising relative prices and thus to rising costs (Dormont et al. 2010, p. 16; Hacker 2004, no. 12). Gelijns and Rosenberg (1994) addressed the puzzle of mounting costs despite high innovation in healthcare and found several explanations. Many new technologies do not aim at saving costs but at improving the quality of treatment. This is the case because innovation in healthcare often does not occur at the drawing board but comes about through practice (p. 36). However, if a new technology is less expensive than its precursor or than alternative therapies, then aggregate expenditure is also likely to increase due to intensified usage and expanded application. The increased intensity of use can be explained by various factors. One reason is that high-technology medicine is greatly valued in our societies. Hence, its application enhances the professional prestige of doctors, and furthermore, its provision gives hospitals a competitive advantage (p. 34). Moreover, it has been shown that the specialisation of doctors boosts technology-intensive treatment. Intensified usage of high technology, however, might be confined by restrictive reimbursement schemes or cost competition between providers (pp. 34f.). Another reason for mounting expenditure with new technologies is the expansion of application (p. 38). Once on the market, a new technology is often found to be applicable for the treatment of further indications. Furthermore, innovations might allow patients to be treated who formerly were left without treatment either because it was too risky or not even possible. Innovations might also increase application because the new treatment has fewer side effects and thus the risk-benefit analysis becomes positive, even for less serious illnesses (pp. 38f.).

Although less prominent in the public debate, the ‘medicalisation’ of society certainly constitutes a further factor contributing to rising healthcare expenditure. Medicalisation – understood as a ‘process by which nonmedical problems become defined and treated as medical problems’ (Conrad 2007, p. 19) – is not a new phenomenon, but in recent decades has assumed vast dimensions.⁷ More and more life problems such as menopause, childbirth or sexual dysfunction, for example, have come to be defined as medical problems (Conrad 2007, p. 3), le...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of illustrations
• Acknowledgements
• List of abbreviations
• Law abbreviations
• Introduction
• 1 The social right to healthcare and the transformation of the welfare state
• 2 Healthcare entitlement in England
• 3 Healthcare entitlement in Germany
• 4 The transformation of the social right to healthcare
• 5 Explaining healthcare entitlement reforms
• Conclusion
• Appendix
• References
• Index