Health Care Reform Around the World 9780313013034, 9780865692886

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HEALTH CARE REFORM AROUND THE WORLD Edited by Andrew C. Twaddle

AUBURN HOUSE Westport, Connecticut • London

Library of Congress Cataloging-in-Publication Data Health care reform around the world / edited by Andrew C. Twaddle, p. cm. Includes bibliographical references and index. ISBN 0-86569-288-2 (alk. paper) 1. Health care reform—Cross-cultural studies. I. Twaddle, Andrew C , 1938— RA394.H4145 2002 362.1— dc21 2001053835 British Library Cataloguing in Publication Data is available. Copyright © 2002 by Andrew C. Twaddle All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2001053835 ISBN: 0-86569-288-2 First published in 2002 Auburn House, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.greenwood.com Printed in the United States of America

The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48-1984). 10 9 8 7 6 5 4 3 2 1 Copyright Acknowledgments The editor and publisher gratefully acknowledge permission for use of the following material: Figures from Andrew C. Twaddle. Health Care Reform in Sweden, 1980-1994. Westport, CT: Auburn House, 1999 Every reasonable effort has been made to trace the owners of copyright materials in this book, but in some instances this has proven impossible. The author and publisher will be glad to receive information leading to more complete acknowledgments in subsequent printings of the book and in the meantime extend their apologies for any omissions.

In appreciation of Peter J.M. McEwan, creator of the International Conferences on Social Science and Medicine, which made this book and countless other collaborative projects possible

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Contents

Figures and Tables

ix

Preface

xi Part I. Introduction

1. International Comparison of Health Care System Reforms Andrew C. Twaddle

3

Part II. Western Europe and North America 2.

Health System Reforms: The United Kingdom's Experience David J. Hunter

3.

Ideology and Interests: Explaining Swedish Medical Care Reform, 1991-1994: An Overview Andrew C. Twaddle

37

58

4.

The Changing Faces of Health Care in Canada Christel A. Woodward and Catherine A. Charles

78

5.

The United States: Live Free and Die? Albert F. Wessen

97

Part III. Eastern Europe 6.

Introducing Compulsory Health Insurance in Central Europe: Redirecting a Wheel? Stipe Oreskovic

7. The Reform That, Alas, Succeeded: The Case of Serbia Vuk Stambolovic

121 142

Contents

17//

8. The Inelasticity of Institutional Patterns: An Impediment to Health Care Reform in Post-Communist Russia Mark G. Field

160

Part IV. The Middle East 9. 10.

Modernization and Health Reform in Saudi Arabia Eugene B. Gallagher

181

Health Care Reform in Israel Revital Gross and Ofra Anson

198

Part V. Latin America 11.

Health Care Reform in Argentina Susana Belmartino

12. The Unbearable Homogeneity of Reform: The Mexican Health Care System Reform Luis Durdn-Arenas, Malaquias Lopez-Cervantes, Octavio Gomez-Dantes, and Sandra Sosa-Rubi

221

241

Part VI. Asia and Oceania 13.

Health-Sector Reform: The Indian Experience Rama V. Baru

267

14. Reform of the Australian Health Care Landscape: The Contested Terrain of Development and Innovation Donald Stewart and Ian England

282

15.

303

Rural Health Care Reforms in the People's Republic of China Ofra Anson

16. The Health Care Reform Initiative in Thailand Fathom Sawanpanyalert

324

Part VII. Conclusion 17.

Health Care Reform and Global Hegemony Andrew C. Twaddle

341

Name Index

393

Subject Index

401

About the Contributors

415

Figures and Tables

FIGURES 1.1

Trends in Medicine Affecting the Physician-Patient Relationship 1.2 Modes of Medical Care Organization 1.3 A Comparison of Fordism and Global Post-Fordism 1.4 A Framework for Comparing Health Care Reforms 1.5 Excerpts from Letter Establishing Guidelines for Chapters 2.1 Structure of the NHS (England) 1994-1999 2.2 Structure of the NHS (England) 1999-2002 12.1 The Evolution of the Mexican Health Care System 12.2 Distribution of Public Health Expenditures by Program in Mexico, 1997 17.1 Hegemonic Systems Revisited (Cf. Figure 1.4)

10 14 18 20 24 38 40 244 257 374

TABLES 6.1 Priorities in the Introduction of Health Insurance in Central European Countries 6.2 6.3

Development of Health Insurance Legislation in Selected Central European Countries Economic Development, Income, Inequality, Unemployment, and Poverty in Central Europe

125 126 138

Figures and Tables

X

9.1 9.2

Population Characteristics in Saudi Arabia, 1991-97 Physicians, Nurses, and Allied Health Staff in Saudi Arabia, 1996

186 193

12.1 Basic Health Indicators in Mexico, 1998-99

242

12.2

243

Main Causes of Death in Mexico, 1997

12.3 Main Features of the Health Systems in Mexico, Canada, and the United States

252

12.4 Public and Private Health Expenditures in Mexico, 1992-1998

255

12.5

Distribution of Health Expenditures by Type of Agency in Mexico, 1994-99

256

12.6 Basic Package of Interventions in Mexico, 1999

258

14.1 Recurrent Health Expenditures, 1995-96 (AUD $Millions)

289

17.1

343

Timelines for Medical Care Development

17.2 Indicators of Reform Types and Incidence in Study Countries

365

17.3 World Economic Forum Themes, 1990-2001

376

Preface

While this is an edited book, a collection of chapters written by different authors, it differs from most such collections in that it was from the outset a collaborative effort. The authors, along with other colleagues, started with a perceived problem—understanding what appeared to be very similar medical care reform efforts in a wide array of countries. Together they developed a conceptual framework that would discipline the writing of all the chapters. A number of people agreed to prepare chapters on specific countries documenting and analyzing health care reform efforts in that country. Our objective was to support a thesis that medical care reforms are substantially similar throughout the world and to explore whether they are a transnational phenomenon that cannot be understood in the context of the nation-state. In Chapter One, we offer a chronology of the project. Suffice it to say here that it was a collaborative effort that arose out of discussions at the International Conferences on Social Science and Medicine. In a dialogue on medical care reform, it became clear that we had few intellectual tools to deal with this issue. Most social science theories ended with the nation-state. The few attempts to explain global economic organization focused on why some states dominate others. Our first task, then, was to develop a conceptual framework for our analysis. We started with representatives from 35 countries, out of which about 28 agreed to participate in a collaborative project. However, not all the chapters materialized. We lost contact with our collaborators in Taiwan, the People's Republic of China, South Africa, Zimbabwe, Egypt and the Congo. Some of the people active in the project who actually prepared drafts of chapters never did the revisions or turned in final copy. For the most part, these countries had to be dropped from the final project. We met at sequential Social Science and

XlliPrefac

Prefaceee

Medicine conferences and corresponded by e-mail between meetings. Over a course of several years, we developed this book, which we hope provides a cohesive and coherent comparison of medical care reforms in countries that differ widely in organization and in types of medical care systems, leading to some advancement in looking at medical care reform as a global phenomenon. We leave it to the reader to decide to what degree we have been successful. I think that I can speak for the participants in this project, and emphatically for myself, when I say that the exchanges this book has engendered have been important in increasing our understanding of the world of medical care. For me, the process reshaped the way in which I think about macro-level changes. I want to express my appreciation to all of my collaborators for their enthusiasm, their insights, their good humor, and, most of all, their dogged persistence in seeing this project through. I want to especially thank my Canadian colleagues for lending a hand to non-English writers with respect to English usage. The world of international research on health care owes a tremendous debt of gratitude to Dr. Peter J.M. McEwan, the founding editor of the journal Social Science and Medicine. He initiated the International Conferences on Social Science and Medicine in 1968 and directed them until his retirement in 1996. He had the vision to shape these meetings as a place for intellectual exchange rather than the presentation of papers. Groups of people with common interests gather to discuss issues across disciplinary boundaries for several days, sharing ideas and insights. It would be very interesting to know how many collaborations began in these meetings and how much knowledge was generated because of them. This is something we will never know, but it is certain that Dr. McEwan has had an enormous impact on the state of social science and medicine. It is fortunate that Dr. Sally Maclntyre has undertaken to continue these meetings. I am especially grateful that she allowed me to organize sessions at the last meeting specifically to work on this project. Without them, it could not have been as cohesive a study. It is likely that it would never have been completed. I should also like to acknowledge some people whose help was essential, even when they did not always know that they were participating in this book. In this regard, I must single out my colleague at the University of Missouri, Ibitola Pearce. She and I have a number of common interests and we talk frequently. I discussed most of the analysis in the final chapter with her. These conversations have been invaluable in helping me sort out what I think is happening in the world. She is a great colleague. I also want to acknowledge the students I have worked with who have shared ideas and have been a sounding board for much of this work. My classes in Health Care Systems (University of Missouri) and the Sociology of Health (University of Missouri and Colby College) have been subjected to drafts of some of this work and have helped me clarify my thinking. It was again a pleasure to work with the people at Greenwood Press including Jane Garry, Marcia Goldstein, and Lori Ewen. They are complete professionals who have made this book a better product.

Prefacee

xi u

Most of all, I am indebted to Dr. Sarah Wolcott for long hours of discussions, for helping keep me on task, for her critical insights, for her love, and most of all for the 38 years of marriage we have shared. We all have made decisions that made a huge difference in our lives. Some seem extraordinarily lucky in retrospect. The decision to marry her was by far the best one I ever made.

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PARTI1

INTRODUCTION

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Chapter 1

International Comparison of Health Care System Reforms Andrew C. Twaddle ANALYZING HEALTH CARE REFORMS In the 1980s and 1990s a number of nations made concerted efforts to "reform" medical care. In a few instances, these are extensively documented. In the 1980s, for example, the Thatcher government in the United Kingdom (UK) tried to introduce "market mechanisms" into medical care by decentralizing decision making for health policy, separating "purchasers" and "sellers" of medical care, writing contracts for medical services, and so forth (e.g., Light, 1992a, 1992b; Hughes, Jost, Griffiths, and McHale, 1995; Hughes, Griffiths, and McHale, 1997; D'Souza, 1995; Dixon and Garside, 1995; Ham, 1996; Mellor, 1994; Soderlund, 1994). The 1991-94 Bildt government in Sweden took the UK as a model and attempted to introduce similar changes (Twaddle, 1999). In 1994 the private insurance carriers in the United States converted from indemnity insurance to "managed care" (e.g., Schroeder, 1994). In all three countries, there were areas where the quality of medical care was damaged (Light, 1991; Twaddle, 1999; Evans, 1997a). In a number of other countries, there were less well documented efforts at "market reform."1 Enough information is at hand to suggest that there is a very widespread international movement to "reform" medical care along the lines of a putative "market." That movement is found from the "first world" to the "third world," on all continents. It seems to have similar ideological elements and to be backed by similar socioeconomic interests. There seems to be a sudden and broad concern with the efficiency of medical care, with the assertion that democratically or professionally run systems are inherently "inefficient." Far less concern is evident for the more traditional values held regarding medical care, effectiveness (or quality) and equity.

4

Introduction

Note the word "seemed." The fact is that we have little good cross-national research that systematically addresses the reform issue. There are a large number of researchers looking at particular countries, each with his or her own research questions, methods, and theoretical framework. Indeed, we do not have consensus on a theoretical framework for looking at events that transcend national boundaries. This book addresses that problem. It has become newly problematic that while we have a history of looking at medical and health care systems in the context of the nation-state, the trends demand a transnational level of analysis. The similarities that seem to characterize reforms in a large number of nation-states call for an analysis that goes beyond "national systems of health care." Health Care Analysis at the National Level Analysis of health care systems at the national level has been quite fruitful. Clearly, there are differences in the organization and the success of medical care from one state to another, and it has been of interest, for example, to know why the Scandinavian countries achieved high levels of equity, low infant mortality, and high life expectancy while the United States has been at the other end of the spectrum in the developed world. While the features of nation-states that might be relevant to understanding their medical and health care systems might be considered almost endless, the following have been regarded as particularly important: • The history and culture of the society, with a specific focus on understanding the way in which medical and health care has been formed in that society. Each society has certain cultural features that place constraints on, or shape, the development of medical care. These cultural features are the residue of a history that is also to some degree unique. • Disease, illness and sickness patterns.2 It obviously makes a difference if a country is engaged in a battle with waterborne disease or chronic degenerative diseases; if the population feels debilitated or healthy; or to what degree people are seen by others as having health problems. Medical and health care systems are designed to respond to such problems, and we need a better understanding of differences in the problems such systems are called upon to address. • The economy. We define the economy more broadly than many economists do, as we need economic analysis that goes beyond cost accounting and takes into account the impact of economic decisions on the welfare of people. Particularly important are the size of the economy, gross and per capita, the means of financing services, the level of debt in the country (more external in developing countries and internal in some developed countries), and the distribution of resources in the population. • The nature of the welfare system. It makes a difference, we think, if the welfare system is institutional or residual, whether it is broad or narrow in scope, or whether it is a large or small part of the national effort. Medicine is a form of welfare and cannot be understood apart from other forms of social support services (e.g., education, unem-

International Comparison of Health Care System Reforms

5

ployment insurance, family support systems). Interactions among these systems need more attention. • The political system. It makes a difference if the country is democratic or totalitarian. Which parts of a population have a say in political decision making affects the kinds of decisions made. If only elites decide on medical care, we would expect a very different system than if working people also have a strong voice in such decisions. Appreciation of this fact needs to be added to the kinds of economic analysis that are currently in vogue. These elements shape, to some degree, the organization of the medical care system at the national level. The shape of national systems seems to differ along the following lines, to make a minimal list: • Public versus private. The relative size of the public and private sectors, both in general and with reference to specific services, may have a large effect on the equity of services. We would anticipate that this dimension would have less effect on either efficiency or effectiveness. Nevertheless, with regard to efficiency, the neoliberal economists' contention that private services are inherently more efficient has been called into question (e.g., Svalander and Ahgren, 1995; Evans, 1997a). • General versus specialized. Medicine has an inherent bias toward specialized care and high technology. Generalist services are underdeveloped in many economically advanced countries. There is concern about importation of a specialized high-technology model into third-world countries, where it has appeal as symbolic of modernization. Nations need to be assessed on the appropriateness of generalist versus specialist services and low-versus high-technology interventions to the needs in each country. • Prevention versus treatment. There is a substantial body of opinion in developed countries that preventive services are underdeveloped and undervalued. In third-world countries, there may be less controversy, since many have overwhelming unmet needs for curative services. There is an opinion that preventive services are more cost effective, but we do not know of much solid evidence to support this position. We need to learn the relative merits of preventive versus curative services under different national conditions. • Effectiveness, equity, and efficiency. These are core values used to assess the adequacy of medical and health care systems. In most nations, the recent tendency is toward assessment of medical care only with reference to efficiency, most often in terms of cost-benefit analysis. Efficiency is obviously an important criterion, but it is not the only criterion that should be employed. Efficiency needs to be understood not only from a provider and administrator perspective but also from the perspective of the patient. Indeed, it may not be the most important criterion unless the delivery system is in imminent danger of breakdown because of a deficiency of revenues or excess costs. Most professionals hold that a more important criterion is effectiveness, the degree to which the system works to solve the problems in its domain, namely, the health of the people it serves. Most would also hold that equity concerns, seeing that all those in need have access to effective services, would come before efficiency. Aside from our own value positions, we hold that different interests in our various countries emphasize each of these values. Those using a rhetoric of efficiency tend to favor

6

Introduction market solutions. Those focusing on equity favor democratic control of the system. Those focusing on effectiveness favor professional control of the system. We do not know to what extent these values are in conflict.

• Cost and financing. Everywhere, it seems, the cost of medical care is growing more rapidly than the economies of nations. Especially among the more technologically advanced countries, there is an almost universal intent to "cap the rise in medical care costs." To do this will require new and different constraints on the shape of medical care in most countries, especially in the rationing of service delivery. Research to date supports the proposition that costs are best contained when a nation can ration technology and personnel, yet the choice seems to be market reforms that undermine that very capacity. The measurement of effects often seems limited to the expenditures on medical care and does not include the impact of the system on the people being served.

The Need for Transnational Analysis Much of the world is still ravaged by preventable waterborne disease. Death rates are still very high in the third world and in economically weak populations in parts of the first world. Chronic diseases associated with sedentary lives and overconsumption plague the more developed countries. New types and strains of infectious diseases that defy standard means of medical treatment have emerged in recent decades. Clearly, much can be done to make health and medical care more effective and equitable, (e.g., Light, 1992b). Toward this end, the world community has organized coordinated efforts through the World Health Organization (WHO), bilateral international aid (BIA), and nongovernmental organizations (NGOs) to set goals, deliver services, and promote environmental changes to improve the health status of populations. The eradication of smallpox through immunization, the construction of hospitals and other facilities in most developing countries, efforts to train health workers, the declaration at Alma-Ata, and numerous other activities testify to that effort. The reforms of the past decades seem to have been taken, not with an eye on improved effectiveness and equity, but with the goal of improving efficiency (Enthoven 1980, 1986; Enthoven and Kronick, 1989; Jonsson and Rhenberg, 1985; Saltman, 1992; Saltman and von Otter, 1987, 1989, 1992). In part, this is a result of the success of medical care. New technologies, specialization, capitalization of expensive hospital facilities, and the like have driven up the cost of medical services wherever the "state of the art" has been approximated. The Medical Price Index has increased much more rapidly than the Consumer Price Index in all developed countries (Jonsson and Rhenberg, 1985; Olsson Horst, 1993; Twaddle, 1989; Twaddle and Hessler, 1987). Third-world nations that aspire to state-of-the-art medical care are faced with enormous capital expenses that often do not meet the needs of the majority of the population even while they serve the elites in those countries, who want the technology both for their own care and for the symbolic value it has politically. In the developed world, many countries are involved in "market" reforms,

International Comparison of Health Care System Reforms

7

which attempt to "make medical care more efficient" by transferring responsibilities from the public to the private sector, increasing competition in medical care (both in the public and private sectors), and reducing regulation of medical care to allow the market to sort out priorities, service mixes, and the like. From a purely rational standpoint, this is somewhat surprising, since the empirical evidence suggests that markets do not provide the expected efficiencies, and they undermine equity (Hirschman, 1992; Hollingsworth, Rogers, Hage, and Hanneman, 1990; Lane, 1991; Lonnroth, 1993; Relman, 1980, 1983; Evans, 1997b; Evans and Barer, 1988; Lindgren, 1988). The same kind of reform impetus seems to be at work in developing countries, where one would think that effectiveness and equity concerns would have a higher priority than efficiency. Ideologically, these reforms seem to be driven by right-wing political parties, associations of employers, and in some instances professional organizations in the developed world. Intellectually, a form of "neoliberal" economic theory has come to center stage. Medical economists, while still very much in the debate, have been pushed to the background. Other social scientists, particularly sociologists and political scientists, whose disciplines have spoken to the limitations of classical economic theory, have all but been swept into the wings. This means that alternative theoretical perspectives and an enormous amount of research that speaks directly to the efficiency, effectiveness, and equity of medical services are left outside the reform debate, making the chances for success more limited than they might otherwise be. In addition to increased use of "market mechanisms" that empower the business community's control over medical care, the reforms of the past decades have had two other consequences: (1) the decrease of professional dominance as physicians and other health workers are more constrained in the decisions they can make and (2) decreased democratic control as decisions about medical care organization and financing are removed from the political sphere. These important changes are taking place all over the world. That may be sufficient to make the point that we need to develop some ways of doing transnational, as opposed to cross-national, analysis of trends in medical care and to link these trends to other transnational events, sometimes subsumed under the concept of globalization. The Nature of the Current Project The study of these changes is limited by a lack of conceptualization. It is difficult at present to make comparisons across countries, particularly if one wants to compare nations with different levels of socioeconomic development. For some groups of developed countries, such as those in the Organization for Economic Cooperation and Development (OECD), there are reports in which broadly comparable statistics are tabulated, enabling some important comparisons to be made. Many of these reports highlight variables associated with a limited range of theories and omit data many of us regard as of core importance

8

Introduction

in making both economic and noneconomic comparisons. That is, they are increasingly focused on the question of efficiency and enable only the crudest estimates of effectiveness or equity. For the developing world, the situation is even more difficult. There are articles and books that report on medical care in such countries (e.g., Leslie, 1976; Conrad and Gallagher, 1993), but none to date have imposed a framework that allows for systematic comparisons of nations on the same parameters. That is, reports, even in the same book, are prepared independently and address different issues and/or use different theoretical frames that highlight different variables. It is our contention that to gain a more global picture of health care reforms, even to verify the impressionistic observations made earlier, will require the development of comparable information, and that requires an adequate conceptual framework to guide data collection. This book is an attempt to look at health care reforms in a number of countries, representing as wide a spectrum as possible, using a common conceptual framework that allows for comparable information to be gathered and presented on each. This, if it works, allows us in turn to see similarities and differences in health care reforms around the world, an essential basis for starting the process of understanding the transnational character of the reforms. Early in the project, the participants agreed on a loose set of concepts that framed the source of pressures for change at the national level ("Trends in Medicine and the Professional-Patient Relationship"), alternative modes of organization for national health care systems ("Modes of Organization") as ideal typical models, the organizational forms that have altered the latitude of action for the nation-state ("Hegemonic Systems"), and the trends in socioeconomic organization that have increased the power of hegemonic systems at the expense of the nation-state, thus setting a direction for reforms in health care. In the remainder of this chapter, we present our models, provide a brief history of the project that specifies the parameters for the chapters, and introduce the chapters. SOME MODELS FOR UNDERSTANDING REFORMS One feature of this project is that the authors agreed on a set of models that were thought to provide reasonable guidance to answering the questions of the source of pressures for reform, the alternative modes of organization that have been found in the world in recent years, and the directions of change among these alternatives. These have been presented elsewhere in more detail (Twaddle, 1996). Here we review the highlights. Trends in Medical Care The provision of a solid scientific base for medicine in the late nineteenth century and the grounding of medical training on that base in the modern medical school unleashed a chain reaction of structural alterations that have resulted

International Comparison of Health Care System Reforms

9

in a new set of problems of medical care systems in the developed world (Figure 1.1). A model of these changes has been described in some detail elsewhere (e.g., Twaddle and Hessler, 1987) and is only briefly summarized here. The following changes seem of general importance: • • • • • •

Increased demand for medical care as services become more effective Increased work pressures on health professionals Increasingly rapid technological changes in diagnosis and treatment Bureaucratization of services Increasing specialization of personnel and fragmentation of care Rapidly increasing cost of delivering services to the population

One result is that almost all developed nations have found it increasingly difficult to finance their medical care systems and have taken, or plan to take, measures to reduce the rate of increase in costs, if not the costs themselves. Another is that the medical care system is more alien to most people in the society, creating problems of legitimacy and increasing the likelihood of conflict between patients and providers. Public expressions of dissatisfaction might be expected to increase over time, and "alternatives" to medical care might become more popular. We can think of these trends as a twofold "crisis":3 fiscal and interpersonal. The Fiscal "Crisis" Over the past two decades, the growth of medical care costs has accelerated. Much of that growth has been technologically driven as new, sophisticated, and expensive methods of treatment have been added to the options within medicine. Much has been a result of the ways in which medical care has been organized, an example of cultural lag. The technological development is well known and does not require additional documentation. Suffice it to say that new means were developed at both ends of the life cycle. It was during this period that transplantation technology, which had begun on a small scale earlier, flowered into a standard means of treatment for people in extremis. Computerized axial tomography (CAT) scanners became commonplace. Nuclear magnetic resonance (NMR) machines were developed. In vitro fertilization, genetic diagnosis, and neonatal intensive care were developed and disseminated. These technologies add to costs of manufacture and purchase. There has been a marked increase in the direct capital cost of creating and maintaining a medical care facility as a result. Second, these new technologies reinforce the pressures toward bureaucratization and specialization and increase the labor-intensiveness of medical care. Technology thus creates a "feedback loop" that continuously drives up costs. While this loop is strongest in countries with less political control over medical care, it is still significant in countries that politically ration the distribution of new and established technologies.

Figure 1.1 Trends in Medicine Affecting the Physician-Patient Relationship

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In most countries, physicians have been granted control over clinical decision making. Since new technology is always more interesting than old established practices, and since it provides new capabilities and might be of use to patients, there is a "technological imperative" in medical care—a bias toward using the more complex, expensive, and challenging tools in diagnosis and treatment. There is a tendency to use the more expensive options more often than their effectiveness would warrant and for conditions that could be managed as well or better with cheaper tools. What we have described here might be considered the long-term development of an impending "crisis." During a period of economic expansion, as has characterized most Western economies for most of the post-World War II era, increases in costs have been manageable. The additional expense has been covered by growth in the economy. During the 1980s, however, most Western economies entered a period of depression (negative growth) or stagnation. The ability of societies to absorb medical care cost increases has been compromised, making it seem mandatory that some way be found to bring the growth of medical care costs under control. In those countries where a national system of health insurance already exists or where there is a national health system, it might be expected that there would be renewed interest in cost containment, the more effective use of resources, and rationing of care. The nature of these proposals, the identification of interests promoting them, and some assessment of the quality of the various arguments are the core of the present study. The "Crisis" of Alienation The other "crisis" noted in the model is that of the alienation of the public, particularly as they become patients. Here we use the term "alienation" in its technical meaning as a loss of control over important resources. It has been argued that the development of the patient-physician relationship (and perhaps all public-professional relationships) has been characterized by a growing autonomy of the professionals in that relationship4"ccoupled with a growing alien ation of patients, again in that relationship (Twaddle, 1979, 1982). Further, that autonomy-alienation relationship can be seen as having at least four dimensions: clinical, organizational, economic, and interactional. We will describe these briefly and note some implications. Clinical. If we go back to the early part of the twentieth century, we encount a situation in which the knowledge base of medicine was not much more sophisticated than the knowledge of the average patient. In that circumstance, the patient was in a position to make a greater contribution to the mutual understanding of his or her disease and to the selection of treatment. Indeed, several physicians wrote books intended to provide for a lay public the corpus of medical knowledge so that patients could handle their own conditions. As medical knowledge increased, it grew apart from "common sense." The expertise needed for effective diagnosis and treatment became more esoteric and

12

Introduction

arcane. Physicians became more autonomous in making the decisions that set diagnoses and selected treatments. Patients had to defer more to expert knowledge and hence have become more alienated. Organizational. Early in the twentienth century, most contacts with physicia took place in the homes of the patients. Physicians spent most of their time making "house calls." Medical care took place on the "turf" of the patient. This meant that physicians were the guests of their patients. They were constrained to follow the rules of the household. As medical care moved out of the patients' homes and into the clinic and hospital, medical care was at the same time shifting to the "turf" of the profession. The imbalance of power in the professional-patient relationship that had earlier been partly redressed by the guest-host relationship was now intensified by that same relationship. In addition to having to defer to the physician's expert knowledge (and monopoly of resources), the patients now had to defer as well to the "house rules" of the medical institution. The increased control of physicians was matched by a loss of control by patients. Economic. Early in the twentieth century, medical care was delivered in a communal context wherein the physician provided care "to anyone who needed it" irrespective of ability to pay. The patient then "paid' the physician for his services, with money if s/he had it, with goods or services if s/he did not. The option of bartering for services was common. It is part of the medical tradition that paying patients were charged more to offset the cost of delivering care to the poor. With the shift into institutional settings with greater cost-accounting needs, the bartering option disappeared. Care was based on a cash economy, in which physicians set the fees, determined the number and kinds of services each patient needed, and issued a bill. The patient was forced to pay, either out-of-pocket or through insurance, or do without. Again, as physicians gained autonomy, patients gained alienation. Interactional. One consequence of these developments is that physicians ha increasingly "lived in a different world" from their patients. On the one hand, they have lived more of their lives in a medical culture where the modes of thinking, the kinds of decisions taken, and the assessment of people from "outside" make "common sense" within a culture that is increasingly removed from "common sense" in other cultural contexts. On the other hand, especially in the United States, physicians have become enormously wealthy as compared with the average patient. Both these developments have made communication between physicians and patients more problematic. The language used by physicians is remote from the language of their patients. Their assumptions about priorities and their assessments of the abilities of patients to follow advice, either because of their understanding or their command of resources, have become increasingly unrealistic. In short, physicians and patients have become alienated from each other.

International Comparison of Health Care System Reforms

13

Implications. This analysis suggests that public expressions of disaffection wit medical care might be expected to increase over time (e.g., Press, 1984; Rosenthai, 1988). It also suggests that alternatives to medical care might become more attractive, particularly when these hold a promise of more "holistic" and "humane" treatment. Groups competing with medicine that had previously been dismissed by professionals as "quacks" may become more popular with the public and exert a claim for official recognition and legitimacy. Chiropractors, faith healers, diet promoters, and the like may not only see greater patronage but even seek recognition as licensed professions (Wardwell, 1952, 1980). The key point for our purpose is that these changes are a function of the evolving character of modern medicine, not of any particular form of its organization and financing. This model seems to describe not only the free-market approach of the United States, but also the more planned and publicly organized systems of Scandinavia and the UK. The applicability of the model to the third world has not, to my knowledge, been studied. We may speculate that the modeling of many third-world systems on those of former colonial powers would suggest a more general applicability. At the very least, the technology of the first world is being exported to developing countries. That technology is increasingly expensive, and its usefulness in solving quite different health problems is controversial. In the context of these large-scale trends in medical care organization, there are differences in the ways in which such services can be constructed, each having implications for the operation of the system and its ability to meet public expectations and needs. We turn now to that question.

Modes of Medical Care Organization I assume the following: (1) the activities of any society aimed at minimizing disease and illness and identifying and healing the sick are social activities. Any system is a matter of decision. There is no "natural" way of organizing such that any one form of organization is a priori to be seen as superior to any other. (2) The ways in which the social response to health problems is organized can be described in terms of different modalities of organization. Toward that end, this section will describe three ideal types5 that together are thought to encompass the range of organization found in the sphere of Europe and areas under the influence of Europe with respect to health care activity: activity organized by the community6 as a whole, activity organized by specially chosen experts, and activity organized by an economic market (Figure 1.2).7 Communal Organization Definition. A communal system is an institutionalized means for people col lectively to make and administer decisions. In its ideal form, it is a way of decision making in which every member of the community participates: that is,

Figure 1.2 Modes of Medical Care Organization

Facet

Democratic

Professional

Market

Definition

Decision making by citizens or representatives accountable to the citizenry.

Decision making by experts with special training and credentials based on abstract knowledge.

Decision making by consumers under conditions where there are a large number of providers acting independently and perfect knowledge of price and quality.

Dominant actors

Political parties, politicians, civil servants.

Professionals,

Business interests.

Dominant value

Equity/equality.

Effectiveness/quality.

Efficiency.

Dominant goals

Preservation and extension of democracy, influence in decision-making.

Enhancement of knowledge, improvement of technique and capacity, application to problems within domain of expertise.

Profit.

Mode of regulation or control

Elections, opposition parties.

Socialization, ethical standards, Competition, informal sanctions, formal sanctions imposed by colleagues.

Enhancing factors

Tradition of democracy, equality of power, constitutional limits.

Public trust, absence of exploitation.

Underniining factors

Concentration of power, wealth, and control.

Overextension of claims, Concentration of economic power, professional threats to democracy, strength of professional market incursions into ideologies, strength of democracy, professional sphere.

Newness of market, absence of hegemony, trust busting.

International Comparison of Health Care System Reforms

15

democracy. In all but the smallest population units, at least some of the decisionmaking authority is delegated to politicians. Dominant actors. Political parties are most often the means for goal settin Political parties tend to represent constituencies with particular interests and frame political agendas designed to further those interests. The dominant actors will be successful politicians: legislators and elected executives. Civil servants tend to exercise a restraining force. They set and administer routines for implementing legislation and resist changes, thus mediating against sudden alterations in political direction or pace. Dominant goals. The dominant goal of any communal model of decision ma ing is the preservation and extension of democracy. The main issue is control over the mechanisms for public decision making: in most societies, the legislative bodies and the units that give political direction to administrative units. In a democratic system, these decisions are generally made to distribute resources in a manner that meets conditions communally defined as "fair."8 The communal mode promotes universal access to those resources defined as basic and places limits on inequity in the distribution of others. Mode of regulation/social control. In any but the smallest societies, there i diversity of interests, making it likely that any group of politicians will represent, not the whole community, but the portion that was able to mobilize a majority (or plurality, depending on the system) in the last election. Elections and opposition parties, then, are the main means of social control in a democracy. Professional Organization Definition. The professional bases a claim to an exclusive right to decide o organization on his or her formal training in a field that requires abstract knowledge that is useful to others and that requires that those without such training defer to the professional. In this regard, medicine is a prototypical profession. Dominant actors. If an activity is to be organized by experts, professionals wi be the dominant groups. That dominance is typically not generalized; it is limited to the problems the professionals knowledge is supposed to solve.9 Dominant goals. To the degree that professionals take seriously their expertis and to the degree that they feel the need to maintain the trust of clients or potential clients, their goals will include enhancement of knowledge, improvement of technique and capacity, and application to problems within the domain of expertise. Aside from that, the goal of the professionals will be to maintain, enhance, and defend their domain of dominance. Mode of regulation/social control. There are severe limits on the ability of " side" groups to regulate professional activity or to control any but the most obvious and egregious violations of conduct norms. To a degree not found in other forms of organization or with reference to other kinds of occupational groups, one element of public trust is that the professionals will regulate themselves.

16

Introduction

Market Activity Definition. A perfect market must meet three conditions: (1) The largest un in the arena must have a trifling amount of the total economic activity. There must be a large number of units. (2) Each unit must act independently. Economic competition must be impersonal. "The essence of perfect competition, therefore, is not strong rivalry, but rather the utter dispersion of power to influence market behavior" (Stigler, 1968:181). (3) Participants in the market have perfect knowledge of (proposed) transactions. In the empirical case, perfect markets are an abstraction, in Weber's terms, an "ideal type." They do not exist, but under rare circumstances may be approximated.10 In a market, activity is organized around people who see needs that might be filled by providing goods and services for others to purchase. The only requirement for participation as a provider is that s/he have something to put up for sale. The only requirement for a purchaser is to have the means to execute a transaction (i.e., money or some equivalent medium of exchange). Dominant actors. Business interests dominate markets. The image of the entr preneur is ideologically at the core of the actor in the market. The conception of an individual who by his or her own creative efforts takes personal financial risks and builds a new enterprise is internalized by every business person and is put forth in debate to suggest that the market generates creativity and energy.1' Dominant goals. Actors in the marketplace are motivated by the potential f profits. Mode of regulation/social control. Competition among a myriad of unitsith approximately equal power in the economy will force each of them to provide goods and services on equivalent terms if the quality of information to consumers is good. A market is thus self-regulating because firms will be forced to lower prices if their product is provided more cheaply by another firm. Indeed, the ideology of those who work in markets is one that sees external regulation, particularly communal, as not only unnecessary, but harmful, creating artificial imbalances between supply and demand and/or reducing the connection between supply, demand, and price (cf. Carniero, 1967). The state has a limited function of creating the climate for market activity, most importantly by enforcing private agreements as expressed in contracts. One caveat is critical. There is no empirical system that can be characterized by any one of these above models. The models are ideal types that serve as benchmarks for analysis. Real societies are almost always some mix of these types, although most approximate one model more than the others. Democratic-communal models tend to emphasize equity as a value. Professional models emphasize effectiveness, and market models emphasize efficiency. That said, the degree to which these values are realized is an empirical question. Further, emphasis placed on one value to the exclusion of others produces a seriously unbalanced view of the needs of both social systems and human beings. The core policy issue is where the balance should be struck.

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17

Internationalization of Economies It is no longer the case that nation-states can be the arena in which macroeconomic decisions can be made and implemented. Indeed, there is speculation about whether the economic models that have been credited with successful management of national economies in the twentieth century are any longer relevant. Work on transnational social organization, however, is new to the social sciences, and we do not yet have models that provide a fully satisfactory basis for analysis. As expressed by Esping-Andersen (1990:222), "Ours is an epoch in which it is almost universally agreed that a profound realignment, if not revolution, is underway in our economy and society. The proliferation of labels . . . often substitutes for analysis. But it mirrors the recognition that we are leaving behind us a social order that was pretty much understood, and entering another the contours of which can be only dimly recognized." Most analysts would agree that there has been a large and important change in the organization of economic activity (e.g., Antonio and Kellner, 1992; Bonanno and Constance, 1995; Clarke, 1990; Gramsci, 1971; Harrison and Bluestone, 1988; Harvey, 1990; Hicks and Misra, 1993; Huber, Ragin and Stephens, 1993; Jameson, 1991; Lambert, 1991; Lipietz, 1992; Picciotto, 1991; Pitelis, 1991; Sassen, 1991; Wallerstein, 1979, 1991, 1992). Figure 1.3 identifies some of the main characteristics of the change as identified by "global post-Fordist" theorists.12 To underline the facts that seem to have particular importance, the nationstate becomes incapable of economic or social regulation, and the working class, including most of what was earlier the middle class, is pushed into a new condition of powerlessness in the absence of any internationally organized labor movement. Until international law with regulatory powers can be created, it seems likely that we will experience growing unregulated capitalist development and growing social anarchy. Wallerstein has long contended that there is a world economic system, one historical form of which has been a world capitalist system identifiable for more than 200 years. That system has had a core that originated in Europe and expanded to North America. Within the capitalist world system, the core seems to be shifting toward Asia. The point for us is that Fordism marks one historical compromise or adjustment in the global organization of capitalism. It was a compromise that provided for redistribution toward the working class and the strengthening of the nation-state as an economic arena. It is that compromise that is now being unraveled. Indeed, there is reason to believe that the internal contradictions of capitalism have reached a point of crisis as defined in note 5. One core concept in Wallerstein's work has been a distinction between "core" and "periphery." The core countries are those that engage in production and in which the accumulation of wealth is concentrated. The peripheral countries are those that supply resources to the core, but are prevented from engaging in meaningful wealth-producing activity. The economics of households has been

Introduction

18 Figure 1.3 A Comparison of Fordism and Global Post-Fordism Fordism

Global Post-Fordism

N a t u r e of "Regime" National economies based on domestic mass production and consumption regulated by welfare

stateB

• National and multinational corporations • "Rigidity''

International economic relations based on flexible accumulation (decentralization of production, ^uiformalization" of labor), global sourcing, and transformation of the nation-state • flexibility"

Goals • Growth of national internal market • Extraction of low-cost resources and labor from third world by first-world multinational corporations • Matching domestic production with domestic consumption • Development of international trade

• Avoidance of higher cost of doing business in first-world states • Bypassing regulations (e.g., environmental) and welfare-state arrangements • Deindustrialization of first world • Deregulation of global finance; capital flight to newly industrialized and third-world states

Mode of Regulation • Strong local, regional, and national controls • Bretton Woods Agreement • Stable, neo-corporatist labor-capital arrangements mediated and enforced by welfare state (social security, unemployment) • Keynesian economic policies, state as bearer of monetary constraint, consumer credit • National relations • Collective bargaining, corporatist "class compromise" • International relations

• Absence of local, regional, and national controls • GATT, EC/EU, NAFTA, IMF, World Bank • Internationalization of capital • Transnational corporations • Globalization of economy

Characteristics • Centralized production, strong unions • Full-time employees with job security, benefits, step increases on ladder • Corporations identified with nations • Financial and research capacity located in first world • Development of welfare state

• Decentralized production, weak unions • Part-time and temporary employees with no security, benefits, or career ladders • Corporations independent of nation-state •Financial and research capacity remaining in first world • Rollback of welfare state

shown to differ markedly between the core and periphery in the mix of income that comes from wages, market activity, rent, transfer payments, and subsistence. Core-country households rely more on wages and transfer payments; peripherycountry households rely more on subsistence (1992). The central activity of medicine has been both more international and more local than other welfare activities. Medicine as a body of knowledge and practices has been international since at least the eighteenth century. The content of

International Comparison of Health Care System Reforms

19

Figure 1.3 (Continued) Consequences • National sovereignty • Separation of sphere of influence of the state • Social norm of consumption fromfromere of influence of capita of capitalll • Growth of service sector • State fiscal crises • Homogenization • Segmentation • Strong worker bargaining power • Weak worker bargaining power • Improved working conditions, wages, and job * Poorer working conditions, lower wages, and security loss of job security • Political decision making in democratic process • Political decision-making removed from • Steady or reduced class differences democratic process • Growth of middle class • Increased class polarization • Facilitation of worker association, • Decline of middle class communication and organization; worker • Fragmentation of work force; worker identification with job and class identification with residence, ethnic, nationality, and consumption patterns

medicine and the standards for medical care were shared throughout the developed world and widely diffused to the less developed world in the twentieth century. Medical care organizations and the nature of medical work are easily recognizable from one country to another. Medical training is grossly similar in all medical schools, regardless of location, as are standards for treatment. On the other hand, medicine is a local activity. Except for the most esoteric treatments, people tend not to travel long distances to get medical care. Indeed, unless it is unavailable locally, people seldom leave town for primary care. This means that trends toward internationalization of economies will probably have little special significance for medicine. That is, one would expect the pressures on medical care activity to be grossly similar to those on the welfare system in general. It would be under pressure to privatize and to introduce competition into the public sector. The main caveat is that medicine may be in a stronger position to resist change than are other welfare activities. It is, as seen earlier, treated as a special category of service that requires a licensed monopoly to maintain standards. In its core activities, it has been relatively immune to external controls. Indeed, that is at the core of what it means for medicine to be a profession (Freidson, 1970; cf. Abbott, 1988; Brante, 1988; Stevens, 1966, 1971; Twaddle and Hessler, 1986). To the degree that physicians see the preservation of their organization as a profession as important and threatened by pressures to behave more like a market mode of organization, they may be able to withstand pressures to become more like a business. The increased power of international or transnational forms of organization has been conceptualized as "hegemonic systems" that set limits and controls on national development in both developed and developing countries (Figure 1.4). In the case of the latter, these systems often set boundaries outside of which development is all but impossible. Among them are the following:

Figure 1.4 A Framework for Comparing Health Care Reforms

Hegemonic Systems

World Bank International Monetary Fund (IMF) World Health Organization (WHO) Economic Unions (e.g,, EU, WTO, NAFTA) Bilateral Aid Programs Non-governmental Organizations (NGOs)

National Systems • History and Culture • Health Problems • Finance and Debt • Welfare System • Political System

National Health Systems • Public v. Private • Generalist v. Specialist • Prevention v. Treatment • Cost and Financing • Equity, Effectiveness, Efficiency

Reform Pressures, Plans, and Programs Professional Model Democratic Model Market Model

International Comparison of Health Care System Reforms

21

• Multilateral aid organizations such as the World Bank and International Monetary Fund. These are the main sources of development funds. To the extent that they are pursuing their own political agenda (strongly suspected) and/or to the extent that they are constrained by an impoverished sense of alternatives (also strongly suspected), they may act as much to constrain as to facilitate development in health care. • International economic agreements such as the World Trade Organization as (WTO), the European Union (EU), and the North American Free Trade Association (NAFTA) set a climate that makes it difficult or impossible for nations to set their own course. They weaken possibilities for a democratic process to guide national development and constrain the kinds of development that are possible. Virtually all of the literature relating such arrangements to medical care has focused exclusively on efficiency, ignoring the dimensions of effectiveness and equity. Even then, the discussions are often theoretical and lack firm empirical grounding. It is not known what impact such developments will have, but they likely will be important. • Bilateral international aid. With a large number of bilateral developmental aid programs there are more opportunities for different kinds of development in different countries. When many countries are reducing or terminating bilateral aid programs in favor of channeling such aid through international agencies, there may be a loss of diversity that could lead to less appropriate developments and/or the limitation of autonomy of nations in setting their destinies. • Nongovernmental organizations, many of them sponsored by church groups and/or private foundations in the developed world, are not unimportant. They mobilize private resources and target them on specific projects, some of which may be quite useful. It is not known how effective such projects are in general or what differentiates levels of effectiveness. It is also not known to what degree such efforts aid or hinder national development, how they impact equity, how they relate to local needs (for example, where is the planning for specific projects done, who does the planning, how are resources mobilized, and to what degree do NGOs resolve problems as perceived in targeted countries?). It is known that the resources involved are substantial. These considerations increasingly influence the shape of national health care systems, as described earlier.

Hegemonic Projects As discussed by Jessop (1990), hegemonic projects are broadly based agendas designed to promote a particular kind of accumulation regime. The project must "resolve the abstract problem of conflicts between particular interests and the general interest" (p 208). Jessop contends that both at the international and national levels, particular classes exercise hegemony by creating such projects, thereby ensuring that they will be favored by the accumulation regime. One has to untangle the concept from a thicket of nested ideas. The place to start would seem to be the concept of an accumulation regime. This is defined as "a specific economic 'growth model' complete with its various extra-economic preconditions a n d . . . a general strategy appropriate to its real-

22

Introduction

ization" (p 198). Establishment of a regime is a means by which a class exercises economic hegemony, 13 which is "won through general acceptance of an accumulation regime." "Fordism" and Keynesian political-economic policy are offered as examples of accumulation strategies found within a regime founded on markets. Presumably, neoliberal political-economic policy would be another. The hegemonic project is a means of (re-)creating an accumulation strategy and hence a means of legitimating and undergirding an accumulation regime. As described by Jessop, . . . this involves the mobilization of support behind a concrete, national-popular program or action which asserts a general interest in the pursuit of objectives that explicitly or implicitly advance the long-term interests of the hegemonic class (fraction) and which also privileges particular "economic-corporate" interests compatible with the program. Conversely, those particular interests which are inconsistent with the project are deemed immoral and/or irrational and, in so far as they are still pursued by groups outside the consensus, they are also liable to sanction. Normally, hegemony also involves the sacrifice of certain short term interests of the hegemonic class (fraction), and a flow of material concessions for other social forces mobilized behind the project. It is thereby conditioned and limited by the accumulation process, (p 208) A "project" to promote equality, solidarity, and security for all by extending democracy might constitute a hegemonic project for interests mobilized by social democratic forces, as in the middle half of the twentieth century in Scandinavia. A project to make the state more efficient, reduce government, and trim welfare expenditures might constitute another for forces mobilized around right-wing political parties, as in the UK of the Thatcher years and the United States of the Carter, Reagan, Bush, and Clinton years. Jessop noted first that many states experience a "crisis of hegemony" where there is a lack of consensus on a project. In this regard, he distinguished two kinds of projects: "one nation" and "two nations": . . . one nation strategies aim at an expansive hegemony in which the support of the entire population is mobilized through material concessions and symbolic rewards (as in "social imperialism" and "Keynesian welfare state" projects). In contrast, "two nations" projects aim at a more limited hegemony concerned to mobilize the support of strategically significant sectors of the population and to pass the costs of the project to other sectors (as in fascism and Thatcherism). . . . two nations projects require containment and even repression of the "other nation" at the same time as they involve selective access and concessions for the more favoured "nation." (pp. 211-12) One important point for our purposes is that reform of medical care systems can be a hegemonic project in itself (although I suspect that this would be rare) or, more likely, can become a part of a larger hegemonic project. Impressionistically, I would hazard a guess that we have seen a shift from "one-nation" to "two-nation" strategies in most of Europe and North America, with projects

International Comparison of Health Care System Reforms

23

more closely tied to the interests of international corporate interests. Another point is that to the degree that hegemonic systems are controlling international development, they may frame hegemonic projects at the national level, providing a transnational context for understanding national systems. A BRIEF HISTORY OF THIS PROJECT This project began at the 1994 meeting of the International Conference on Social Science and Medicine in Balatonfiired, Hungary. A group of us convened a rump session on the first day of the conference and continued through the week discussing health care reform efforts in our respective countries. By the end of the week, representatives of some 35 countries had entered the discussions, and we had outlined the models presented earlier.14 We agreed to continue work at the next meeting. At the 1996 International Conference on Social Science and Medicine in Peebles, Scotland, we had a session on the international comparison of health care reforms. I prepared a background paper that formalized our discussions in the 1994 meeting (Twaddle, 1996). The models discussed earlier were first presented in that paper. At that meeting, agreement was reached to collaborate on a project in which we applied these models to the analysis of health care reform in a number of countries. A letter was sent to all participants in the discussions in 1994 and 1996 asking for a commitment to participate in the project. For those responding positively, a letter was prepared establishing guidelines for writing the chapters (see Figure 1.5). These guidelines referenced a theoretical framework that was to be used in framing the chapter while allowing for considerable flexibility in the application of the guidelines to specific countries. Since we were essentially engaging in an exploratory study, we did not feel that we could or should pose limits that would cause authors to exclude information that might be counter to the theoretical framework or that could disclose dimensions not previously considered. At the same time, we wanted to be certain that all chapters included information that would allow comparisons among the countries on the features thought to be of great potential importance. Between 1997 and 1999, chapters were prepared by almost everyone who had agreed to participate. They were distributed electronically to all participants in the project with the goal of collectively critiquing them at the Social Science and Medicine Conference in Turkey in 1999. When that conference was canceled and rescheduled for 2000 in the Netherlands, a decision was taken to assign each participant the task of taking the lead in critiquing one of the other chapters. As the chapters came in and were reviewed, it was apparent that even with the guidelines, the diversity of approaches taken by different authors made comparisons difficult. Different authors had included or excluded different kinds of information. Accordingly, a second directive was issued asking that when re-

24

Introduction

Figure 1.5 Excerpts from Letter Establishing Guidelines for Chapters All papers should be written within the following guidelines: 1. The background paper for the 1996 meeting "Health System Reforms—Toward a Framework for International Comparisons," Social Science and Medicine, 43:5:63754 will constitute the theoretical framework for each paper. Authors are to adapt the framework as needed to fit the circumstance of their country. 2. All papers will include discussion of the following items from that theoretical framework: a) a description of the medical care system prior to the most recent reform efforts, including the division between public and private sectors and the control of the clinical, allocation, and fiscal decision making by democratic, professional, and market interests; b) a description of the medical care reform efforts (what the reformers are trying to do); c) analysis of the interests sponsoring and resisting the reform efforts; d) discussion of how the reform efforts relate to economic and political interests within the society, and e) discussion of how the reform efforts relate to international socio-economic developments.

visions were made following the XV International Conference on Social Science and Medicine in October 2000, information be included on a list of specific items: 1. Did your country create sickness funds? If so, when and under what auspices? 2. Other than sickness funds, did your country establish voluntary health insurance covering medical care costs? When and under what auspices? Was voluntary health insurance made compulsory? When? 3. Did your country enact health insurance to cover lost income while sick? When and under what auspices? 4. Was there a time when your country established a schedule of payment for physician services? When? How was that schedule negotiated? Was extra billing limited or abolished? If so, when and how? 5. Was there a period when there was a power struggle between health care providers and insurers (including sickness funds) for control of the system? 6. Are health care providers public employees? When did this happen and how? 7. When, and from what source, did the first proposals for national health insurance come? When was it enacted? What interests supported and opposed its creation? What social factors enabled its enactment? 8. Are pharmaceuticals covered under health insurance? When did this coverage get created? Is the coverage different than for medical services? If so, how?

International Comparison of Health Care System Reforms

25

9. Has there been a move to privatize all or part of medical services? When did this take place? How complete is the privatization? Is that move now over, or does it continue? 10. Have providers or insurers been permitted in recent years to introduce or increase extra billing or special charges for services? 11. Has there been any move toward enactment of prospective payment schemes? When did these occur and under what auspices? How widespread is their use? 12. Has there been a move to decentralize medical care responsibilities? From what level to what level? Who mandated the decentralization? What interests were behind it and why? 13. Have any public sources of medical care been abolished in recent years? When and by whom? 14. Has there been a move toward "regulated competition" or "managed care" in your country? 15. Has there been "cost shifting" in which patients are being forced to pay a larger share of their medical care costs? 16. Have there been reductions in medical benefits in recent years? How have these been accomplished? 17. Has there been a problem in your country with "bed blockers"? How has this problem been addressed? With what result? 18. Has there been a move to establish primary care providers as "gatekeepers"? 19. Has there been a move to separate "purchasers" and "sellers" of medical services? How has this been arranged? With what result? At some point in your paper, please try to specifically address whether medical care in your country has been organized as a democratic, professional, or market system and whether the changes are in the direction of democracy, professions, or the market. Also, if you have not done so, please try to identify the socioeconomic interests behind attempts to reform medical care in your country. If your country has parallel systems of medical care (say, public, sickness funds, and private), please be careful to keep those systems distinct in your write-up. In a few instances, they are quite conflated and hard to untangle.

THE CHAPTERS The chapters assembled in this book speak to medical care reforms in a number of countries on several continents representing different levels of development and different sociohistorical conditions. While each was prepared independently, all were written within the same conceptual framework. As they were prepared, they were distributed electronically to all of the authors, allowing not only for critiques but for mutual influence in coverage of materials. To the degree we have been successful, we have roughly comparable information on

26

Introduction

the countries included in this volume, which allows for a more careful comparison across nation-states. As indicated in the Contents, after considering several classifications of national health care systems (e.g., Elling, 1980; Roemer, 1977), we have grouped the chapters by geographic region.

NOTES 1. Among these, by way of illustration: Australia (Duckett, 1999; Hall, 1999; Leeder, 1999), Chile (e.g., Scarpaci, 1987; Viveros-Long, 1986), China (e.g., Peabody, Yu, Wong, & Bickel, 1995; Bloom, Shenlan, and Xing-yuan, 1995; Bloom and Xingyuan, 1997; Shi, 1993), Costa Rica (Pan American Health Association, 1999) Denmark (Vale, 2000), El Salvador (Fiedler, 1993, 1996), France (Lassey and Jinks, 1997:151-71; Alpers, 1998), Germany (e.g., Burchardi, Schuster, and Zielmann, 1994; Heinrichs, 1995), India (e.g., Banerji, 1992; Jyothi, 1993), Ireland (e.g., Brugha, 1991), Japan (e.g., Kobayashi and Reich, 1993; Tajimi et al., 1994; Toguchi, 1995), Mexico (e.g., Soboron, Frenk, and Sepulveda, 1986; Cardoso, 1993), New Zealand (Ashton, 1998), Russia (e.g., Field, 1995; Elioutina and Tarasov, 1995), South Africa (e.g., Pillay, 1992; Brock and Grace, 1993), and a number of other countries in Africa (e.g., Kloos, 1998; Murray et al., 1994; Monekosso, 1993). 2. Disease refers to those biological events that reduce capacities or life expectancy. Illness refers to more subjective individual self-definitions of health status most often based on feeling states. Sickness is the socially defined health status based on capacities for participation in the social order (Twaddle and Nordenfelt, 1994). 3. The evidence is not yet complete as to whether there is a "crisis" that would satisfy Wallerstein's definition, ". . . the circumstance in which an historical system has evolved to the point where the cumulative effects of its internal contradictions make it impossible for the system to 'resolve' its dilemmas by 'adjustments' in its ongoing insitutional patterns" (1991, p. 104). The term, however, is widely used, and we adopt it in its more popular sense. 4. In other contexts, physicians may have lost autonomy. McKinlay (1978), for example, argues that physicians, as they become salaried employees, become "proletarianized." 5. In the same meaning as that ascribed by Weber (1947; cf. Miller, 1963). 6. By community, we mean any geographically based collectivity that constitutes a population. People in any area can function at some level as a collectivity. Discussion of decision making in such a context is, of course, more complex the larger the population under consideration. Much of what is here referred to as "community" is called the "state" in other literature. While I intend "community" to encompass the state, I do not wish to limit the definition to units that meet conditions of sovereignty, and I do want to include smaller units of organization such as provinces, cities, villages, and so on. There is another definition of community as a "natural" order based on tradition and including family, neighborhood, and kinship, what Habermas called the life sphere. That is not the meaning intended here. 7. In different ways, each of the ideal types has already been discussed with reference to medical care organization. In the discussion of medical care, for example, Talcott Parsons (1968; cf. 1951, 1964, 1975) argued that the market was unsuitable for medical care organization. Given the importance of medicine for individuals and the vulnerability

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27

of the sick to exploitation, only a professional mode of organization that makes the patient's needs central would be appropriate. Other observers have discussed medicine as a market activity, with special emphasis on its putative superiority to communal modes of organization in providing a more efficient and cost-effective service (Lane, 1991; cf. Enthoven, 1980, 1986; Enthoven and Kronick, 1989; Hirschman, 1992; Jonnson and Rhenberg, 1985; Saltman, 1992; Saltman and von Otter, 1987, 1989; 1992). Several observers have framed discussion of medical care changes in terms of a conflict between professional and market modes of organization, seeing the growing strengths of market modes of organization as a threat to professional modes (McKinlay, 1976; EspingAndersen, 1985, 1990; Relman, 1980, 1983; Ginzberg, 1995; Evans, 1997a, 1997b). All of this would suggest that the dimensions we have suggested might be both relevant and fruitful for clarifying discussion of medical care organization, particularly the role of interests in modes of organization and political agendas for changes. 8. It is to be expected that neither the concept of "fairness" nor the criteria for judging what is "fair" in any instance will be uniform throughout any but the smallest and most homogeneous communities. 9. There is another dominance issue, that of the authority of different experts in the professional arena. There may be different disciplines with different bodies of expert knowledge and some real ambiguity regarding which might be most beneficial at a given time and place under given circumstances. It is the former, and not the latter, that most concerns us in this instance. 10. Economic theory, however, is predicated on the model of the perfect market. Very little attention has been paid to the organization and effects of an imperfect market. This is not to say that economists have not studied imperfect markets, only that a theory of imperfect markets is still awaited. Among business interests, perfect markets are often assumed, even when all of the stipulated conditions have been violated. 11. With the advent of the limited-liability corporation owned by stockholders and controlled by a board of directors, the reality became quite different for most people in business. 12. A particularly good summary can be found in Bonanno and Constance (1995). 13. Jessop differentiates economic hegemony from economic domination and economic determination. The former occurs when "one fraction is able to impose its own particular 'economic-corporate' interests on the other fractions regardless of their wishes and/or at their expense" (p. 199). It is an exercise in power. The latter is not formally defined in Jessop's book. Economic hegemony, by contrast, "derives from economic leadership won through general acceptance of an accumulation regime" (p. 199). 14. At that time I was at work on a study of health care reform in Sweden (Twaddle, 1999).

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Mellor, A.C. 1994. "Resource Costs of Capitation Maintenance Care in Britain." Community Dental Health, 11:4:188-91. Miller, S.M. (ed.). 1963. Max Weber: Selections from His Work. New York: Crowell. Monekosso, G.L. 1993. "Meeting the Challenges of the African Health Crisis in the Decade of the Nineties." African Journal of Medicine and Medical Sciences, 22:4: 7-12. Murray, C.J., J. Kreuser, and W. Whang. 1994. "Cost-Effectiveness Analysis and Policy Choices: Investing in Health Systems." Bulletin of the World Health Organization, 72:4:663-74. Olsson Horst, Sven. 1993. Social Policy and Welfare State in Sweden. Lund: Arkiv. Pan American Health Association. 1999. Costa Rica: Profile of the Health Services System. Washington, DC: Pan American Health Association. Parsons, Talcott. 1951. The Social System. Glencoe, IL: Free Press. Parsons, Talcott. 1964. Social Structure and Personality. Glencoe, IL: Free Press. Parsons, Talcott. 1968. "Professions." International Encyclopedia of the Social Sciences, vol. 12, p. 536. New York: Macmillan. Parsons, Talcott. 1975. "The Sick Role and the Role of the Physician Reconsidered." Milbank Memorial Fund Quarterly, 53:3:257-78. Peabody, J.W., J.C. Yu, Y.R. Wang, and S.R. Bickel. 1995. "Health System Reform in the Republic of China: Formulating Policy in a Market-based Health System." Journal of the American Medical Association, 273:10:777-81. Picciotto, Sol. 1991. "The Internationalisation of the State." Capital and Class, 4 3 : 4 3 63. Pillay, Y.G. 1992. "Ethical Issues in the Transformation of Health Policy in South Africa." South African Medical Journal, 82:1:32-34. Pitelis, Christos. 1991. "Beyond the Nation-State: The Transnational Firm and the Nation-State." Capital and Class, 43:131-52. Press, Irwin. 1984. "The Predisposition to File Claims: The Patients' Perspective." Law, Medicine and Health Care, 12:2:53-66. Relman, Howard. 1980. "The New Medical-Industrial Complex." New England Journal of Medicine, 303:963-70. Relman, Howard. 1983. "Investor-owned Hospitals and Health-Care Costs." New England Journal of Medicine, 309:6:370-72. Roemer, Milton. 1977. Comparative National Policies on Health Care. New York: Dekker. Rosenthal, Marilyn. 1988. Dealing with Medical Malpractice: The British and Swedish Experience, Durham, NC: Duke University Press. Saltman, Richard. 1992. Patient Choice and Patient Empowerment: A Conceptual Analysis. Occasional Paper 40. Stockholm: Studieforbundet Naringsliv och Samhalle. Saltman, Richard, and Casten von Otter. 1987. "Revitalizing Public Health Care Systems: A Proposal for Public Competition in Sweden." Health Policy, 7 : 2 1 ^ 0 . Saltman, Richard, and Casten von Otter. 1989. "Public Competition versus Mixed Markets: An Analytic Comparison," Health Policy, 11:43-55. Saltman, Richard, and Casten von Otter. 1992. Planned Markets and Public Competition: Strategic Reform in Northern European Health Systems. London: Open University Press. Sassen, Saskia 1991. The Global City: New York, London, Tokyo. Princeton: Princeton University Press.

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Twaddle, Andrew, and Richard Hessler. 1987. A Sociology of Health. 2d ed. New York: Macmillan. Twaddle, Andrew, and Lennart Nordenfelt. 1994. Disease, Illness and Sickness. Studies on Health and Society, Universitet i Linkoping. Vale, Whitley. 2000. "The Development and Reforms of the Danish Health Care System: Path Dependency and Structural Rationalization." Unpublished manuscript, Department of Sociology, University of Missouri, Columbia. Viveros-Long, A. 1986. "Changes in Health Financing: The Chilean Experience." Social Science and Medicine, 22:3:379-85. Wallerstein, Immanuel. 1979. The Capitalist World-Economy: Essays. Cambridge: Cambridge University Press. Wallerstein, Immanuel. 1991. Geopolitics and Geoculture: Essays on the Changing World-System. New York: Cambridge University Press. Wallerstein, Immanuel. 1992. Creating and Transforming Households: The Constraints of the World-Economy. Paris: Cambridge University Press. Wardwell, Walter. 1952. "A Marginal Professional Role: The Chiropractor." Social Forces, 30:339-48. Wardwell, Walter. 1980. "The Future of Chiropractic." New England Journal of Medicine, 302:688-90. Weber, Max. 1947. The Theory of Social and Economic Organization. Glencoe, IL: Free Press.

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PART II

WESTERN EUROPE AND NORTH AMERICA

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Chapter 2

Health System Reforms: The United Kingdom's Experience David /. Hunter Health care in the United Kingdom (UK) is provided mainly by the National Health Service (NHS). Created in 1948, the NHS belongs to the group of health care systems funded from central taxation often referred to as Beveridge-type systems, as distinct from those based on insurance principles known as Bismarck-type systems. The NHS is a centrally funded system (around 7.1% of Britain's GDP is allocated to health care, as compared with an average of 9.9% in the Organization for Economic Cooperation and Development [OECD] as a whole, although the budget will grow by one-third in real terms over five years as a result of a recent injection of additional resources intended to put the level of funding on a par with other European health care systems) with its resources coming principally (82%) from general taxation. The remainder comes from a mix of national insurance contributions (around 13%) and user charges (4%). Private insurance remains fairly static and provides coverage for around 11 % of the population. It has very limited coverage (e.g., elective procedures). The NHS provides universal coverage, and its founding principles of equity, comprehensiveness, and no charges at the point of access to care have remained in place, with a few exceptions, notably dental, ophthalmic, and prescription charges. The principle of solidarity and collectivism remains strong in the NHS, and the public appears committed to such an arrangement. There is no significant public support for a different type of health care system. Of the prototypical configurations, the UK NHS is an example of the "classical national health service" model, although the market-style reforms introduced in the early 1990s by the Conservative government represented a shift to the "modified national health service" model. Following the election of a Labour government in May 1997, more recent changes have retained some elements of the modified NHS model while also reinstating features of the classical NHS model.

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Figure 2.1 Structure of the NHS (England) 1994-1999

Introduction of the latest reforms (considered later) commenced in April 1999, so it is too early to predict their impact or their sustainability in the longer term. The UK NHS has been in a state of almost "permanent revolution" since its first major reorganization in 1974 (Webster 1998). Successive waves of change have had in common an attempt to improve the efficiency and effectiveness of health care provision through strengthened management arrangements. Cost containment and improved efficiency have been constant features of all the changes, but there has also been a concern that resources devoted to health care were not being utilized to their optimal effect. Throughout the various organizational and management changes, the funding of the NHS from general taxation has remained unchanged. Although the UK is regarded as having a single National Health Service, there

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are in fact four health care services, each covering one of the four countries making up the UK—England, Wales, Scotland, and Northern Ireland. Prior to political devolution becoming a reality in 1999, Wales, Scotland and Northern Ireland already enjoyed considerable administrative devolution in respect of their health care services and displayed significant differences while subscribing to a common overall set of principles and values governing a public health care system. These differences are likely to grow as political devolution begins to take effect and mature. The devolved Scottish Parliament was established in July 1999, and there are elected assemblies operating in Wales and Northern Ireland (Hazell and Jervis 1998). Wales, Scotland, and Northern Ireland have long enjoyed higher per capita funding on health care compared with England (ranging from 19 to 24%). How long this differential will (or can) be maintained after devolution is unclear, although the expectation is that the English regions (or some of them) will complain loudly that the funding of health care between the four parts of the UK is unfair and inequitable and must be reexamined at some stage. The remainder of this review of developments in the UK health care system concentrates on England. The structure of the NHS in England from 1994 to 1999 is shown in Figure 2.1, and the structure from 1999 to 2002 is shown in Figure 2.2. The structure will undergo further change around the middle of 2002. It should not be forgotten that health care systems are a means to an end and not an end in themselves. They exist primarily to improve the health and quality of life of their recipients. A test of health care reform in any country must be the extent to which it contributes to tackling successfully the health problems it faces while acknowledging that the solution to such problems lies beyond health care services acting in isolation. The UK has some of the highest areas of deprivation among developed countries, and the level of child poverty is among the highest in the world. THE CONTEXT FOR REFORM POLICIES As noted, since the early 1970s the NHS has undergone almost continuous organizational and managerial change in the search for better ways of resolving a set of policy problems or puzzles. These problems are by no means unique to the British NHS and have their counterparts in other countries that are also engaged in significant reform of their health care systems (Collins, Green, and Hunter 1999). Like all health care systems, the NHS displays a number of strengths and weaknesses. Among its strengths are the following (and even if it is difficult to demonstrate whether these exist or not, it is enough that they are perceived to exist): • Contribution to health improvements • Equal access to health care regardless of social group, ethnic origin, income, or need

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Figure 2.2 Structure of the NHS (England) 1999-2002

• Free care at the point of delivery • General practitioners (GPs) as gatekeepers—over 90% of the population is registered with a GP, and referral to hospital care, except in the case of an emergency, is through the GP, which acts as a brake on demand. • High reputation—the NHS is used by the majority of the public across all social groups. • Popularity and durability—despite dissatisfaction with aspects of care and with long waiting lists, the public remains strongly committed to the NHS and wants it to succeed even if this requires further investment (public support is strongest among those aged 40 and over; it is weaker among the younger age groups). • Cost-effectiveness—generally, for what the UK spends on health care, the output as measured by infant-mortality and life-expectancy indicators is comparable to that of

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many other countries that spend much more on their health care (although this may be at the expense of inferior quality in terms of the caring experience, such as long waiting lists). There is no perfect health care system operating anywhere, and the NHS suffers from its share of weaknesses. These include the following: • Being provider-led—a common criticism is that the NHS is run more for the benefit and convenience of providers than of patients; clinical governance is intended to shift the balance of power away from the professions towards greater public transparency and accountability. • Limited patient choice—patients have always in fact been able to change their GP if they wish, and they can also sometimes choose their hospital consultant, although this is not common. • Variations in performance—despite there being a national health service, marked variations in the level and quality of care persist across the country, both within localities and between them; where you live determines your life chances. From this brief review of strengths and weaknesses, the principal policy problems confronting the UK NHS can be listed as follows: • Cost containment • How best to ensure high-quality services • Provision of health care that enhances health gain • Appropriate regulation of providers • Achieving equity • Locating the optimal balance between public and private inputs • Involvement of the public in priority setting These problems are not unique to the UK, and many, if not all, are to be found in virtually all health care systems regardless of their funding and organization. In 1991, the then Conservative government introduced the (hitherto) most radical set of changes to the NHS: a series of market-style reforms based on competitive principles. They were intended to make the NHS more efficient, effective, and responsive to the needs of patients and sought to ape or mimic the management practices of the private sector. Governments' leanings towards the business world and the relevance of their practices for the public sector were nothing new in the UK. There is a long tradition of businessmen being brought into government to advise ministers on a range of topics. What was distinctive about the Thatcher era was the strong ideological theme running through all its actions that centred on the almost exclusive virtues of markets. Reform of the NHS was not on the government's agenda in the late 1980s despite a desire on the part of many on the right of the Conservative Party to

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end the NHS's monopoly of health care in the UK. The public popularity of the NHS made the government nervous about tampering with it or abandoning its founding principles or funding basis. During the late 1980s, pressures were building in the media over alleged underfunding despite government protestations that it was putting additional funds into the NHS. A series of dramatic cases in which treatment was denied on grounds of resource shortages resulted in the government losing patience, the consequence of which was the sudden and unexpected announcement of a review of the NHS by the prime minister during a celebrated television interview in early 1988. The subsequent review took 12 months and was led from the prime minister's office at No. 10 Downing Street rather than from the Department of Health. Despite the events that triggered it, the review did not focus on finance (either its source or level) but on structure and management. Attention was focused on ways of using the given allocation of resources more efficiently to improve performance. Competition was seen as the necessary catalyst for change. Sir Roy Griffiths, a prominent businessman and architect of the general management reforms in the NHS introduced in the early 1980s who remained health advisor to the government, described the NHS review as "an astonishing episode" because, having started out to examine new methods of funding the NHS, it abruptly switched to building on the existing management reforms and sought to inject more competition and choice into the Service (Griffiths 1991). But as Griffiths went on to observe, "It chose to do this by means which would have made strenuous demands on a well established management, let alone the still fledgling management process" introduced only a few years earlier. Although the NHS review, very much Prime Minister Thatcher's personal initiative, may have appeared from nowhere and surprised everyone, its approach and philosophy were very much in keeping with reassessments of other sectors of public policy, notably education and the civil service. Common to all these reforms was the "new public management" (NPM) (Hood 1991; Ferlie et al. 1996). Critics of NPM view it as a market-based ideology invading public-sector organizations and imposing private-sector business practices on public-sector values (Rhodes 1995). Others see NPM as a management hybrid with a continuing emphasis on core public service values (Ferlie et al. 1996). For Pollitt (1990), the NPM movement can best be understood as an ideological thought system characterized by the importation of ideas generated in private-sector settings into public-sector organizations. As such, to its critics, NPM took no account of the distinctive properties of public-sector organizations. Components of the NPM include a concentration on outputs and outcomes rather than inputs; improving incentives and encouraging competition to promote entrepreneurial behavior; management techniques that are more traditionally associated with the private sector than the public sector; and a focus on governments "steering more and rowing less" (Osborne and Gaebler 1993). The significance of this body of ideas lies in their international appeal. They

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were not peculiar, or confined, to the UK (James and Manning 1996). Numerous other European countries and, further afield, New Zealand were all subjecting their health care systems to reform at about the same time, drawing on NPM ideas for inspiration. In the case of both the Griffiths general management changes and the later market-style reforms, the aim was the same—to overcome a perceived "institutionalized stagnation." The antecedents of the NHS 1991 market-style changes lie in various proposals fed to Prime Minister Thatcher during the 1980s from a range of rightwing policy "think tanks," notably the Adam Smith Institute and the Centre for Policy Studies. They were keen to push forward the privatization process, and this set the stage for the introduction of market principles into public services. There was felt to be significant scope for achieving cost improvements in the NHS. Compulsory competitive tendering for cleaning, catering, and laundry services was introduced as a way of realizing these savings, although in the event most contracts were awarded in-house. A timely monograph by an American economist, Alain Enthoven, who spent six months in Britain in 1985 at the invitation of the Nuffield Provincial Hospitals Trust, proved influential (Enthoven 1985). The thrust of his thesis was that the NHS could benefit from a dose of efficiency and that to secure this, the necessary incentives must be put in place. He proposed an internal market to create the requisite incentive structure. Though Enthoven's monograph was little noticed when it first appeared, it assumed unexpected importance following the 1987 general election when the alleged funding "crisis" in the NHS assumed proportions that the government could not ignore, however much it tried. Enthoven's analysis of the NHS's weaknesses centered on the "gridlock" of forces that made it resistant to change. Incentives were needed to reduce costs and raise quality. Changes were needed to make managers' influence, newly acquired following the Griffiths changes, felt. Enthoven believed that the tendering arrangements already in place for cleaning, catering, and laundry services led the way. They could be extended to acute-care services and thus provide the full benefits that the private sector could offer. But the NHS did not know its own costs and needed to develop information systems to remedy this deficit. Thus a full internal market would emerge within the NHS itself. To make the concept more palatable to a British audience, Enthoven described it as "market socialism" rather than privatization. Importantly, Enthoven advocated testing his proposals in pilot projects. He was subsequently critical of the government's resistance to pilot schemes until late in the reform process. At the outset of the NHS review, Prime Minister Thatcher stated the principles that would guide it. Free care would continue for everyone, but changes would be made to raise standards, widen choice, and promote the making of financial as well as clinical decisions at the level closest to patients. In the course of the NHS review, various methods of finance were considered as alternatives to taxation—social insurance, private insurance—but were rejected. Different methods of provision were also considered: the existing NHS model, prospective

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payments based on episodes of care (like DRGs [Diagnosis Related Groups]), provider or internal markets, and markets that allowed consumer choice in order to create competition between purchasers as well as providers. GP fundholding was also proposed as a means of allowing greater choice and improving quality of service. The government opted for changing the NHS's structure rather than altering the principle of central funding from general taxation. Prime Minister Thatcher did not wish to threaten the public's belief in "free" health care but saw her aim as simulating within the NHS as many as possible of the advantages that the private sector and market choice offered, but without privatization. Many observers and members of the public were not convinced and suspected a hidden agenda of "backdoor privatization" or "privatization by stealth." When the policy was published in early 1989, it was not a blueprint. Much of the detail remained to be completed. Not surprisingly, there was great nervousness on the part of many, including the prime minister, that the changes would not work, principally because of data deficiencies and a lack of managerial grip and/or competence. Rather than postpone the reforms, the decision was taken to slow them and to phase them in over a period to allow a "smooth takeoff." In the event, the proposed changes were less radical than many had either hoped or feared. What was politically acceptable became a more important reform principle than what was ideologically attractive. The intellectual basis of the 1989 reforms, which owed a good deal to the ideas of Enthoven described earlier, is the assumption that an internal market, in which NHS health care institutions compete with one another, will produce both greater efficiency and responsiveness to users. The creation of such a market entailed the separation of two functions that had previously been conflated in the role of district health authorities (DHAs): the provision of hospital and community health services and the purchase (or commissioning) of care, that is, the allocation of funds to providing institutions to ensure that the needs of the local population are met. A controversial proposal was that institutions (hospitals and community health facilities) would be able to apply to the secretary of state for health to become "self-governing," that is, to be released from ownership by a DHA. Once trusts were established, with membership analogous to that of DHAs, they would enjoy a number of freedoms not available to those institutions that remained as directly managed units. The most important of these freedoms would be freedom from nationally determined pay scales and terms and conditions of service and the freedom to accumulate financial year-end surpluses for reinvestment. Changes were also proposed in general practice. Individual general practices were to receive "indicative" prescribing budgets rather than cash limits but would have to justify any expenditure over budget. Changes to the relative importance of different elements of GP income were to be made as follows: capitation fees (received in respect of each patient on a GP's list) would increase in importance while basic practice allowances would decrease, and fees for

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individual vaccinations and cervical smears would be replaced by payments for reaching a specified target coverage of relevant patients. The intention behind such changes was to provide a greater incentive to GPs to attract patients and to widen the coverage of preventive measures. GPs, like hospital consultants, would be required to participate in medical audits. A more controversial proposal was that GPs in larger practices could opt to receive budgets direct from the (then) regional health authority. Fundholding status meant that budgets would be devolved to individual GPs to cover prescribing costs and staff salaries, premises, and improvements in addition to GPs receiving an amount reflecting a practice's potential hospital referrals, to outpatients, to pathology and X ray, and for specified elective surgical procedures. Unspent allocations would remain with the practice. The GP fundholding scheme was voluntary, although the government was keen to see it succeed and prosper. It offered various incentives and inducements to encourage GPs to join the scheme. Many did, even if they had reservations, and by 1997 the majority of general practices (around 63%) were fundholding. Some GPs subsequently withdrew from the scheme because they found the workload intolerable and/or because they found themselves caught up in too much bureaucracy or paperwork. Not all GPs became fundholders out of enthusiasm for the concept. Many, particularly those in the third and fourth waves of fundholding, did so from a negative stance, feeling that they had no option if they were not to be left behind or perhaps suffer at a later stage. The internal market rested heavily on the assumption that DHAs and fundholding GPs would be prepared to commit resources prospectively to meet the anticipated health needs of their populations or patients, retaining only a relatively small proportion of funds for contingencies. For some "core" services, like accident and emergency, or immediate medical and surgical admissions, contracts would necessarily be placed locally, though not necessarily within the DHA's boundaries. Other services might be the subject of contracts with hospitals in any location if a good deal could be struck in terms of price and quality. Contracts would need to specify the type of patient or procedure involved, the standards under which treatment would be given, and the basis of the price offered. Most contracts would be expected to specify the number of cases or level of service over which they would apply. OPERATION OF THE NHS INTERNAL MARKET The market-style reforms introduced into the NHS owed more to political ideology and dogma than to sound evidence that they would achieve their objectives. As noted earlier, they were in keeping with the government's approach to public-sector reform more generally and closely followed the precepts of new public management. The UK was not the only country to experiment with such changes, and some, like New Zealand, went further. A review of market forces in the health systems of European Union member states found that reform often

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occurred where it was politically easiest to enact rather than where it was most needed (European Health Management Association 2000). To this extent, health system reform is highly contextual and shaped by the prevailing social, economic, and political systems in each country. The government was utterly committed to driving through its reforms regardless of the strong opposition to them from staff groups within the NHS and the public at large. For the most part, the complexity of the reforms was not well understood by staff or public alike, but this did nothing to dispel a general and persistent suspicion of the government's true motives and a widespread perception that the changes would damage the NHS irretrievably, and probably intentionally, thereby destabilizing it and allowing its gradual privatization. It is widely believed that this view was a factor in the Conservative Party losing the 1997 general election. For its part, although the then Conservative government was committed to continuing with a publicly funded service, it was not opposed to the private sector providing and delivering care within a system of public regulation. But, as subsequent events have shown, neither is the Labour government now in office opposed to such a mixed economy. Indeed, it has gone further than the Conservative government in entering into public-private partnerships and in encouraging the private provision of health care services. To those inside and outside the NHS wedded to a system of health care publicly funded and provided, the previous government's internal market reforms remained a source of concern. The most supportive staff group was the managers, who did quite well out of the changes in terms of their numbers and status (both of which grew). The government looked to them to implement the changes in accordance with its wishes. There were concerns among other staff groups, as well as some managers who for the most part remained silent, that the reforms would be costly to operate, and that a "contract culture" would seriously erode the trust that was claimed to exist between different parts of the NHS. This, in turn, would raise equity problems if, for instance, patients with GP fundholders received faster or better treatment than patients registered with nonfundholding GPs.

Patient's Charter As part of its drive to empower the consumer, the Conservative government introduced a Patient's Charter specifying 10 "rights," including the rights to information on local services and waiting times, a guaranteed admission date to a hospital, and a maximum wait of 18 months on a waiting list for treatment. The Charter had no legal status and did not provide users with any legal right to health care. Critics of the Charter claim that it introduced a "blame culture" and offered rights that were not really rights at all. As a result, expectations about what the NHS can deliver have been raised beyond what can reasonably be achieved within existing resource levels, and there exists a new assertiveness

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among users who have been actively encouraged to behave as consumers would in any other marketplace. National Health Strategy From 1992 to 1997, the Health of the Nation (HOTN) strategy was the central plank of health policy in England and formed the context for the planning of services provided by the NHS (Secretary of State for Health 1992). The strategy was modeled on the World Health Organization's (WHO) Health for All initiative. Its importance lay in the fact that it represented the first explicit attempt by any government to provide a strategic approach to improving the overall health of the population. HOTN focused on five key areas: coronary heart disease and stroke; cancer; mental illness; HIV/AIDS and sexual health; and accidents. An independent review of HOTN commissioned by the Department of Health concluded that though the strategy was widely welcomed, it failed over its fiveyear life span to realize its full potential and was handicapped from the outset by numerous flaws (Department of Health 1998a). By 1997 its impact on local policy making was negligible. It was not seen to count, while other priorities, for example, waiting lists and balancing the books, took precedence. Few of the targets were met, and even where there was success, the trends were already in the desired direction, so the target would have been met even in the absence of HOTN. Whether the emphasis on market forces was a contributory factor in the essentially symbolic exercise in policy making that the HOTN proved to be is hard to substantiate. Certainly the government's ideological stance made it impossible to confront openly the issue of health inequalities, so it was hardly surprising that the strategy was heavily criticized for not acknowledging the extent of such inequalities and for not tackling them. Furthermore, behind the government's market-style changes was an intense dislike of nationally developed and led strategies. Central planning had received a bad name in the 1970s for being overly rigid, bureaucratic, and insensitive to local differences. In contrast, markets were by definition local and responsive to changing signals and circumstances. The health strategy therefore did not fit comfortably the spirit of the times. EVALUATION OF THE NHS INTERNAL MARKET A major criticism of the NHS reforms between 1991 and 1997 is the lack of sound, independent research to assess their impact (Maynard and Bloor 1996; OECD 1995). Although evidence-based medicine and clinical effectiveness have been seized on enthusiastically by ministers, they have shown less enthusiasm to apply such discipline in respect of their own policy making. Evidence-based policy is not a common feature of government in Britain (Ham, Hunter, and Robinson 1995).

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Anecdote, assertion, and ideology have in large measure substituted for robust independent evaluation (Robinson and Le Grand 1994). The government was not keen to invest in significant evaluation of its NHS reforms, especially in the early years, so few major studies have been completed (Smee 1995). Those that were done suffered from a further problem directly related to the nature of the change process itself. Few of the reforms have remained sufficiently stable long enough for their impact to be fully assessed. Invariably one set of changes has been overtaken by another or has been overlaid on an earlier set with remarkable speed. It has therefore proved impossible to establish cause and effect with any degree of confidence or reliability. Researching the NHS changes has been likened to trying to hit a moving target. A comprehensive review of available published research on the NHS internal market reforms concluded that while they did not succeed, neither did they fail (Le Grand, Mays, and Mulligan 1998). The NHS did not collapse, nor did many of the most frequently predicted problems, for example, adverse selection of patients by GP fundholders, occur. But there was not much evidence of success either, which, given the high transaction costs associated with the introduction of the reforms, could be considered a failure of some sort. However, much of the new investment in management could be viewed as overdue since over the years the NHS has suffered from an absence of good information systems and skills. The research evidence reviewed found some improvements, including the following: a small increase in overall efficiency, greater cost consciousness, and a shift in power from hospital specialists to GPs. GP fundholders in particular were able to get greater responsiveness from hospitals and kept some costs, notably drug costs, down. But even these modest gains can be contested. The increase in efficiency in terms of higher activity levels in hospital care was already under way before the internal market was introduced and probably owed more to the significant amounts of new investment being directed towards the NHS as well as advances in medicine that allowed shorter inpatient stays and community-based alternatives to hospital care. The most striking finding from the review of research evidence was how few changes there were and how few of those were attributable to the market. The authors of the research review concluded that the unimpressive impact of the internal market was probably the result of there having been no real internal market in practice. The political reality had resulted in a very controlled, regulated market operating in the NHS in which the incentives were too weak and the constraints too strong, so while the language of the market was evident, the reality of a market in the NHS did not materialize. Market conditions were never really met, and the government proved risk averse and anxious not to let the market rip in a way that would result in a loss of control and prove irreversible. Maintaining the status quo while making a few changes around the edges became the survival strategy for managers. Given the huge upheaval involved and the significant investment of resources

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to make the changes work, and when the changes are judged on the basis of what was achieved, it is by no means self-evident that the gains outweighed the costs, both financial and human, involved (Maynard and Bloor 1996). If the changes are judged in terms of the reaction to them by staff groups and the public, the general impression is one of puzzlement and confusion over the changes mixed with anger, demoralization, and frustration. Again, some of these reactions might have occurred regardless of the type of reforms introduced, as coping with change is often difficult and threatening, and many peoples' immediate response is to resist it. There were also advocates of the internal market changes, particularly GP fundholding, although some changed their minds over time. But the vast majority of those working in the NHS were opposed to the market-style reforms both out of principle (markets have no place in health care) and because they probably felt threatened by them and the associated talk of service rationalizations and efficiency gains. Among professionals, especially clinicians, there is a widespread belief that managers have been allowed to increase their authority and numbers while those providing direct care have been under greater scrutiny to account for their activities and use of resources—evidence-based medicine, clinical audit, and now clinical governance are all seen as examples of the relentless advance by management into previously forbidden territory that had hitherto remained the preserve of suitably qualified professionals. Some doctors have welcomed such developments, but for most, they pose a threat to their professionalism and have contributed to low morale and a sense of low trust between managers and providers. Although it is not possible to generalize and hard evidence is lacking, impressionistic evidence supported by the occasional survey of staff attitudes does suggest that in general terms the market-style reforms have not been welcomed or considered an unequivocal success. For its part, and like many staff groups, the public has simply never really understood the 1991 NHS changes. Therefore, its opposition to them probably stems largely from ignorance. However, even this response may be deemed part of the failure on the part of government since little attempt was made to communicate the changes to the public in terms it could easily comprehend. The reforms were ideologically driven by a government that appeared at times almost contemptuous of the interests of staff and the public, who it believed were either displaying naked self-interest or were being obstructive and resistant to change. The government believed that it knew best and that staff and public would come to see the wisdom of its approach in the end when the reforms began to bear fruit. More significant, perhaps, is the depressing evidence documented most recently by the Acheson inquiry into health inequalities that over the past 20 years or so the health gap between rich and poor has widened (Department of Health 1998b). Of course, the responsibility for this cannot be laid entirely at the door of the NHS market reforms, but the evidence suggests that the public health

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agenda was not pursued particularly vigorously in a climate where, as noted earlier, the term "health inequalities" had been outlawed. THE LABOUR GOVERNMENT AND NHS REFORM: 1997 TO THE PRESENT The Conservative Party's defeat at the general election in May 1997 ended 18 years of uninterrupted government. The Labour Party entered office committed to ending the internal market, reducing waiting lists, cutting management costs that it believed had become seriously inflated (rising from 5% of annual expenditure on health care to somewhere around 12%) as a result of the complex contracting system introduced by the internal market, and giving a higher priority to public health in order to tackle health inequalities and narrow the widening health gap between social groups. One of Labour's principal criticisms of the internal market in the NHS was the competitive and allegedly dysfunctional behavior it encouraged and the ensuing fragmentation that resulted. It placed a heavy emphasis on collaboration in place of competition and on partnership working and "whole-systems" thinking. "Joined-up" policy has become its watchword. While the government has not jettisoned all the businesslike practices introduced since the early 1980s under the rubric "new public management," it has been at pains to distance itself from the competitive internal market system and to emphasize its commitment to replacing this with a system of integrated care. As the former Secretary of State for Health put it: "We are moving beyond laissez-faire without winding the clock back to centralised command and control. We are keeping what works about the current system, while discarding what failed. This is our 'third way' for the NHS: clear national standards matched by strong local incentives with new external performance monitoring and intervention" (Dobson 1999). The government unveiled its plans for modernizing the NHS in a major policy statement published in December 1997 (Secretary of State for Health 1997). It promised to avoid any further "big-bang" reforms, preferring an incremental, evolutionary approach based on retaining what worked and modifying what did not. But the government was impatient to act and to see results, and the pace of reform accelerated. The government moved quickly to demonstrate its commitment to public health by appointing the first-ever Minister for Public Health and publishing a new health strategy that appeared in its final form in July 1999 (Secretary of State for Health 1999). But the frantic pace of change and generation of new policies, resulting in complaints of "reform fatigue" and "initiativitis," did not stop there. Increasingly frustrated by the slow pace of change in modernizing the NHS and tackling marked variations in performance across the country, the government published a 10-year plan for the NHS in July 2000 (Secretary of State for Health 2000). This brought together and built on earlier policy statements but was designed to demonstrate the government's commitment to a pub-

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licly financed health care system and its determination to tackle what it regarded as deep-seated, inefficient, and outmoded practices. The plan followed the announcement of additional generous funding for the NHS and reflected the government's insistence that the funds be used to modernize the NHS and not simply to maintain the status quo. The government claims that for all its strengths, the NHS is a 1940s system operating in a twenty-first-century world. In particular, it lacks national standards, maintains old-fashioned demarcations between staff and barriers between services, lacks incentives and levers to improve performance, and is overcentralized. Apart from seeking to redress the lack of investment in new staff, the centerpiece of the NHS Plan is its insistence that the NHS be redesigned around the needs of the patient. In response to criticism that it has adopted an inappropriate top-down command and control style, the government wishes to see a new relationship develop between the central department and the NHS locally. The principle of subsidiarity is to apply, and a new system of "earned autonomy" will devolve power from the center to the local health service as modernization takes hold. The central department is to set national standards and police these through new and strengthened national organizations. The government asserts that much of what it wishes to see happen by way of faster access to health care facilities and the removal of barriers between staff and services is already happening somewhere in the NHS. Its principal aim is to "universalize the best." As in previous reforms, and having reviewed the alternatives against the efficiency and equity tests, the government remains committed to a publicly funded health care system. The principles of the NHS remain sound in contrast to some of its practices, which need radical reform. The government draws strength from the WHO tables of health care systems which show that the UK has one of the fairest systems in the world for funding health care (WHO 2000). Although the Labour government is committed to ending the internal market, it may be a case of "The internal market is dead! Long live the internal market!" This is a view shared by Enthoven, who recently returned to the UK to review the experience of the internal market to whose introduction he had contributed (Enthoven 2000). The plans for structural reform involve retaining the purchaser-provider split and maintaining the previous government's emphasis on a primary-care-led NHS but without GP fundholding. Instead, 481 Primary Care Groups (PCGs) have since April 1999 assumed responsibility for most purchasing of health care services in England (slightly different arrangements prevail in Wales, and significant differences are evident in Scotland; Northern Ireland has yet to come to a decision about primary care). All GPs are members of a PCG that will have a devolved budget to meet the needs of its population. The Boards of PCGs include membership by community nurses, other primary care practitioners (e.g., community pharmacists), local government (social services), and the public. GPs will dominate the boards and will, for the most part, chair them. Any surpluses generated may be retained by the group, probably to

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be split between it and the individual practices (possibly up to 50 or so) comprising the group. The changes in primary care are intended to bring about a substantial devolution of responsibility and budgetary control to primary care to determine health care priorities and shape services in a local area. PCGs are now rapidly being replaced by Primary Care Trusts (PCTs) that will be granted additional responsibilities and powers to commission and provide health care. The government has stated its wish to see the transition to PCT status complete by 2004. It is a high-risk strategy because the changes demand major cultural changes on the part of GPs and others working in primary care (Marks and Hunter 2000). It is by no means evident that the majority of practitioners will be capable of delivering on the changes in the time scale envisaged by the government. Consequently, while there exists much support for the general direction of policy and the welcome assault on health inequalities, there is real concern over the frenetic pace of change, which risks jeopardizing the reforms. Contributing to the sense of unease is the rising demand for health care that is putting intolerable pressure on staff and facilities. The additional investment in the NHS is intended to ease the pressure, but it will be several years before this investment results in new trained frontline staff. Like its predecessor, the government prefers not to talk about explicit rationing but to use the language of cost-effectiveness in respect of new and existing treatments and therapies. Only those of demonstrable value to health gain should be sanctioned by the NHS. Despite calls in some quarters for adopting an honest stance on the rationing issue, there has been no explicit attempt to define core NHS services or to exclude procedures. Some health authorities locally have sought to exclude certain treatments and procedures, but they have largely been confined to cosmetic interventions or somewhat peripheral activities. Under the April 1999 reforms, the newly established National Institute of Clinical Excellence (NICE) periodically issues guidance to the NHS on the cost-effectiveness of new drugs and treatments. The NHS is expected, though not required, to follow such guidance and needs to have good reasons for not doing so. The Commission for Health Improvement (CHI), established at around the same time, has the task of investigating areas of poor performance and works with local bodies and professional groups to ensure that guidelines and protocols are followed. Both NICE and CHI are examples of national bodies set up at arm's length from ministers. In one sense they serve to depoliticize delicate or difficult political issues. However, neither body is wholly independent, as their respective agendas and reports are approved by ministers. The scope for political interference is therefore considerable. With its battery of new initiatives and the reintroduction of strategic planning as a respectable tool of government to achieve change, there is much in the Labour government's style and approach to reform that has strong echoes of the rational comprehensive planning era of the 1960s and 1970s. The result is a

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strongly top-down, centralizing administration that has been the subject of considerable criticism on the grounds that its reform program will fail unless the key stakeholders are signed up to the changes and have some ownership of them, and there exist powerful incentives to change (Enthoven 2000). This is not currently the case. The modernization initiative may be designed to shift the balance of power between doctors and managers in favor of managers, but the cult of managerialism to which the NHS has been subjected over several decades has done little to win the support of the medical profession (Hunter 1992, 1996, 1998). Indeed, it has had a corrosive, alienating influence (Allen 1997). Many predict that the NHS is in the "last-chance saloon" and that if the NHS Plan fails, that will mean the end of the NHS in its current form. What might replace it is not openly talked about, but some glimmers of a possible future can be detected in the government's approach to the private sector. A mixed economy already exists in social care. It also exists at the margins of health care. It may not be long before it comes to occupy a mainstream role in the NHS. PRIVATE HEALTH CARE Although the NHS is financed principally from general taxation, there have been moves to encourage the use of private finance, especially in respect of capital developments. Although the level of public spending on health care in Britain is broadly comparable with that in other countries, the level of private spending is significantly lower. Though the private health care sector is small compared with those in other developed countries, it has grown significantly in selected areas, notably dentistry, ophthalmology, and long term nursing and residential care, where public provision has virtually disappeared. A further growth area for private health care has been the private funding of capital developments in the NHS, that is, hospital buildings and other infrastructure schemes. So far in the context of the private finance initiative (PFI), there have been few initiatives in the area of primary care or in service development, although these areas are being actively promoted by ministers for private-sector investment. The emphasis so far has been on "bricks and mortar." Introduced by the Conservative government as a means of financing major public-sector investments, PFI has been enthusiastically embraced by the Labour government in the face of much opposition from its own backbench MPs and from the trade unions. For Labour, the attraction of PFI is that it allows the development of public-sector schemes in the NHS and elsewhere to proceed while not contributing to increases in the public-sector borrowing requirement. Finance comes from the private sector, and the facilities are then leased back to the NHS to manage and run. A problem with the PFI is that hospitals being built have fewer beds (often up to one-third reduction in capacity) in order to cover the costs of PFI schemes. The government denies that the PFI program has been the cause of fewer hos-

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pital beds and insists that fewer beds are required as a result of new developments in health care. These include more day case surgery requiring fewer inpatient stays, and more care being provided in primary and community care settings. While the government rejected criticism that the PFI schemes had resulted in fewer beds, it nevertheless changed the rules so that any new PFI scheme must not result in fewer beds. Critics of the PFI also argue that the NHS is being "hollowed out" because in 25 to 30 years' time the NHS estate, or a significant proportion of it, could be in the hands of private owners (Pollock 1995). They contend that this amounts to nothing less than a massive privatization of the NHS. They also argue that it is a small step from allowing the private sector to design and build facilities to staffing and operating them. Finally, there is a concern that if the NHS's buildings are in private hands, where the profit motive is the principal concern of shareholders, then how can the government be sure that its policies and strategies will be implemented successfully since its wishes may well conflict with the commercial considerations of the companies and contractors that will own the buildings (Coote and Hunter 1996)? So far, ministers have been unable to answer these concerns to the satisfaction of their critics. Their agenda is clearly a short-term one, namely, how new resources can be found quickly to repair and rebuild worn-out buildings without putting a strain on public spending. This policy is being actively pursued despite the fact that the costs of borrowing under the PFI are significantly higher than if the same schemes had been publicly funded. There are additional overhead costs arising from consultants' and lawyers' fees that make the PFI a very costly way of funding capital schemes. Until recently, the government discouraged public-private partnerships in the direct provision of health care. This was in contrast to its pragmatic stance in other policy areas like education, where it was guided by the notion that what works is what is best. The NHS plan, however, has paved the way for a concordat with private providers of health care to enable the NHS to make better use of facilities in private hospitals. NHS care will remain free at the point of delivery. Since the private sector remains so small in the UK, this may be a cunning attempt by the government to control the entire production of health care in the UK, both public and private. Other observers are more critical of the government's stance, believing that it is reneging on its commitment to a publicly funded and provided service. One influential left-of-center think tank, the Institute for Public Policy Research, has urged the government to consider an experiment whereby an entire hospital would be managed by the private sector employing the staff but using NHS funds. Similar proposals have been advanced for running primary care services, perhaps with particular disease categories being provided privately as integrated care packages. Whether these options appeal to the government is unlikely to be revealed in advance of an election.

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CONCLUSION As many observers have concluded, the most striking aspect of successive NHS reforms is how little measurable change there has been when set alongside the huge upheaval to which the service has been, and continues to be, subjected. Indeed, the turbulence and high emotion generated by health care reform have not been matched by its results, which have resembled more of a whimper than a bang. Commenting on the internal market reforms, Klein (1998) has succinctly summed them up in the following terms: "The outcome was less catastrophic than its opponents feared and less radical than its proponents hoped." Whether the present government's attempt to modernize the NHS will fare any better remains to be seen. The jury is still out. More difficult to assess have been the unmeasurable and more subtle changes that may have occurred as a consequence of the internal market reforms that still linger over the NHS. There is a perception that the NHS has a very different feel to it at the start of a new century than it did a decade ago. Arguably, some of the cultural traits to emerge in respect of a more demanding, assertive public, the advance of a particular style of management, and the idea of a primary-careled NHS were already in evidence, if only in embryo in some cases, prior to the introduction of the 1991 reforms. It was perhaps not so much a case of the reforms unleashing such developments as of these factors contributing to, and possibly even triggering, the reform agenda in the first place. It may also be the case that a strong public service ethos has proved more resilient to the onslaught of market forces than those of a market persuasion appreciated. However, continuing public support, particularly among the young, for the NHS depends on the ability of the service to become more responsive to users' wishes. This creates a major tension in a service whose founding principles include collectivism and solidarity. The NHS is designed to meet a need that is largely clinically defined. It was never intended to respond to every demand placed upon it by the assertive consumer in an era when more can be done to treat problems that were previously untreatable with expensive new drugs. Part of the problem obviously is funding, but it is also a matter of culture and attitude since no health care system can meet the demands of every individual. Although repeated public opinion surveys show that the public would be prepared to spend more on health care, governments have been reluctant to translate this into a preparedness to pay higher taxes. Ironically, it may be easier to find the necessary resources to fund services. What may be more difficult to change are the attitudes of health care professionals and the public. On the one hand, tribalism and strong cultural differences among professions create barriers to the achievement of improved services and better practices. On the other hand, the public appears less inclined to assume any responsibility for its own health.

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REFERENCES Allen I. (1997). Committed but Critical: An Examination of Young Doctors' Views of Their Core Values. British Medical Association: London. Collins, C , Green, A., and Hunter, D. (1999). "Health Sector Reform and the Interpretation of Policy Context." Health Policy, 47:69-83. Coote, A., and Hunter. D.J. (1996). New Agenda for Health. Institute for Public Policy Research: London. Department of Health. (1998a). The Health of the Nation: A Policy Assessed. The Stationery Office: London. Department of Health. (1998b). Independent Inquiry into Inequalities in Health (Chairman: Sir Donald Acheson). The Stationery Office: London. Dobson, F. (1999). "Modernizing Britain's National Health Service." Health Affairs, 18: 3:40-41. Enthoven, A.C. (1985). Reflections on the Management of the NHS. Nuffield Provincial Hospitals Trust: London. Enthoven, A.C. (2000). "In Pursuit of an Improving National Health Service." Health Affairs, 19:102-17. European Health Management Association. (2000). The Impact of Market Forces on Health Systems: A Review of the Evidence in 15 European Union Member States. EHMA: Dublin. Ferlie, E., Pettigrew, A., Ashburner, L., and Fitzgerald, L. (1996). The New Public Management in Action. Oxford University Press: Oxford. Griffiths, R. (1991). Seven Years of Progress: General Management in the NHS. Audit Commission Management Lectures No. 3. Audit Commission: London. Ham, C , Hunter D.J., and Robinson, R. (1995). "Evidence Based Policymaking." British Medical Journal, 310:71-72. Hazell, R., and Jervis, P. (1998). Devolution and Health. Nuffield Trust Series No. 3. The Nuffield Trust: London. Hood, C. (1991). "A Public Management for All Seasons?" Public Administration, 69: 1:3-19. Hunter, D.J. (1992). "Doctors as Managers: Gamekeepers Turned Poachers?" Social Science and Medicine, 35:557-66. Hunter, D.J. (1996). "The Changing Roles of Health Care Personnel in Health and Health Care Management." Social Science and Medicine, 43:799-808. Hunter, D.J. (1998). "Medicine." In M. Laffin (ed.), Beyond Bureaucracy? The Professions in the Contemporary Public Sector. Ashgate: Aldershot. James, O., and Manning, N. (1996). "Public Management Reform: A Global Perspective." Politics, 16:3:143^9. Klein, R. (1998). "Why Britain Is Reorganizing Its National Health Service—Yet Again." Health Affairs, 17:4:111-25. Le Grand, J. (1999). "Competition, Cooperation, or Control? Tales from the British National Health Service." Health Affairs, 18:3:27-39. Le Grand, J., Mays, N., and Mulligan, J.A. (eds.). (1998). Learning from the NHS Internal Market: A Review of the Evidence. King's Fund: London. Marks, L,, and Hunter, D.J. (2000). "From PCGs to PCTs—Work in Progress." Bath: NHS Alliance.

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Maynard, A., and Bloor, K. (1996). "Occasional Notes: Introducing a Market to the United Kingdom's National Health Service." New England Journal of Medicine, 334:9:604-8. National Audit Office. (1996). Health of the Nation: A Progress Report. HC 656 Session 1995-96. HMSO: London. Organization for Economic Cooperation and Development (OECD). (1995). Internal Markets in the Making. Health Policy Studies No. 6. OECD: Paris. Osborne, D., and Gaebler, T. (1993). Reinventing Government. Plume: New York. Pollitt, C. (1990). Managerialism and the Public Services: The Anglo-American Experience. Blackwell: Oxford. Pollock, A. (1995). "The NHS Goes Private." Lancet 346:683-84. Rhodes, R.A.W. (1995). "Foreword: governance in the hollow state." In M. Blunden and M. Dando (eds.), Rethinking Public Policy-making: Questioning Assumptions, Challenging Beliefs. Sage: London. Robinson, R., and Le Grand, J. (eds.). (1994). Evaluating the NHS Reforms. King's Fund Institute: London. Secretary of State for Health. (1992). The Health of the Nation: A Strategy for Health in England. Cm 1986. HMSO: London. Secretary of State for Health. (1997). The New NHS: Modern, Dependable. The Stationery Office: London. Secretary of State for Health. (1999). Saving Lives: Our Healthier Nation. Cm 4386. The Stationery Office: London. Secretary of State for Health. (2000). The NHS Plan: A Plan for Investment, A Plan for Reform. Cm 4818-1. The Stationery Office: London. Smee, C. (1995). "Self-Governing Trusts and GP Fundholders: The British Experience." In R. Saltman and C. von Otter (eds.), Implementing Planned Markets in Health Care. Open University Press: Buckingham. Webster, C. (1998). The National Health Service: A Political History. Oxford University Press: Oxford. World Health Organization. (2000). The World Health Report 2000: Health Systems: Improving Performance. WHO: Geneva.

Chapter 3

Ideology and Interests: Explaining Swedish Medical Care Reform, 1991— 1994: An Overview Andrew C. Twaddle Between 1989 and 1994, the rhetoric in the debates on medical care reform in Sweden underwent a dramatic change. Between the late 1950s and 1989, the debate was centered on principles of social solidarity, central planning by public agencies, and effectiveness or quality. By 1990, it had shifted to competition, markets, and privatization. This seemed to be an abandonment of the principles of the welfare state that had characterized Sweden in the post-World War II era. Given that Sweden had developed the most comprehensive welfare system in the world and that it was generally regarded as the premier success story of the welfare state, these developments are of special interest. In this chapter, I will attempt a brief accounting of this change by systematically exploring the explanations offered by the Swedes themselves.1 There were three types of such explanations: (1) that the medical care system had developed in such ways that internal contradictions or stresses made its continued development difficult or impossible; (2) that the medical care system was not a problem—and might even be considered excellent—but the economy could no longer sustain it; and (3) that the shift was fundamentally ideological and did not rest in either medical care or economic needs. I put the reforms in context by reviewing very briefly the development of the medical care system and the system changes between 1980 and 1990. I then take up in turn the three types of explanations just noted. Finally, I offer conclusions about the social sources of reform efforts and discuss the implications of the analysis in the light of the models presented in chapter 1. OUTLINE OF REFORMS There are three general points that need to be made about Swedish medicine. First, public medicine in Sweden has long historical roots. Hospitals for the

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treatment of leprosy and the poor date back to the 1200s. In 1533 they were placed under public control. Town medical officers go back to the 1600s. An acute-care general hospital was created in 1752, and public authorities took control of primary care in 1773. Voluntary sickness funds were created in the 1870s and became compulsory in 1947. Second, when the Social Democrats took power in 1932, the elements of the welfare state were already in place: public education, public medicine, social services, and so on. They did not create the welfare state, but expanded it in cooperation with other political parties, including the Conservatives (Uddhammar, 1993). Third, the Swedish medical care system had developed along lines consistent with the rest of Western medicine. The consolidation of the modern medical school had generated trends toward bureaucracy, specialization, high technology, high cost, and fragmentation of care. By the latter part of the 1900s, there were two arenas of problems: alienation of patients and financing the system. Other than in historical detail, there were no important differences between Swedish medicine and medicine in the rest of Europe, North America, Oceania, or other economically advanced areas of the world. In the mid-1970s the Swedish medical care system could be described as a state-mandated and controlled system financed and administered for the most part by the counties. It was dominated by specialized medicine and more than in other countries was practiced in hospitals. Hospitalization rates were high and length of stay was long. Primary care was underdeveloped. Ambulatory visits were few compared with other developed countries. Quality was high and access was universal. Infant and maternal mortality was the lowest in the world. At the unit-of-service level, costs were low. The national government controlled the allocation of personnel. Technology was rationed by medical care regions consisting of groups of counties. Indeed, the distribution of medical effort seemed to be in line with need, rather than ability to pay. The system was extremely expensive, consuming a proportion of national wealth exceeded only by that in the United States. As summarized in an earlier publication: "The problems, then, were at the macro level. What was needed was a shift of care from the hospitals to ambulatory care, an increase in the numbers of primary care physicians, and improvements in the accessibility of primary care" (Twaddle, 1994). Health and Sickness Care Law (HSL) 1982 The laws governing medical care were detailed and specific. By the mid1970s they were generally considered in need of revision. In 1975 a Commission of Inquiry on Health and Sickness Care was formed to review national legislation. It issued a report in 1979 that resulted in a new national law in 1982, the Health and Sickness Care Law (HSL), which decentralized all responsibility for medical care to the counties, including decisions on the allocation of resources. The national government retained only the right to set standards for training and oversight of quality. HSL opened the door to an expansion of

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private medicine. As private practitioners could bill the National Health Insurance plan for their services and there was no national regulation of their numbers or activity, national expenditures, especially in primary care, escalated rapidly. Dagmar Reform, 1984 In response, the national government passed the so-called Dagmar Reform in 1984. This legislation stopped fee-for-service reimbursement, replacing it with block grants to the counties and a requirement that private physicians enter into contracts with the counties. Between 1984 and 1985, the number of private physicians fell from 5,000 to 2,000. It was at this time that the percentage of GNP consumed by medical care began to fall. Adel Reform, 1991 To accommodate pressures on medical care from a rapidly aging population, a commission of inquiry called Aldredelegationen was created in 1988. Counties had responsibility for medical care, and municipalities had responsibility for social services. One problem was that these were not well integrated. In 1992, four laws were passed to shift responsibility for primary care of the aged from the counties to the municipalities. There were several problems with this change. First was that there was not an adequate transfer of funding from the counties to the municipalities to cover the costs of care. Second, the municipalities did not have the knowledge or experience needed to run a medical care program. Third, a new national law forbade counties from raising taxes. The result was that patient care was put into social service bureaucracies that did not have the expertise, the linkages between research and practice, the ethical sensitivities, or the necessary finances (Wigzell, 1999). Starting in 1993, there were continuing reports that the quality of care for the aged had declined seriously (Johansson, 1993a, 1993b, 1993c; Lindholm, 1993; Socialstyrelsen, 1993, 1998). Another major feature of the Adel reform addressed the issue of "bed Mockers," patients, mostly elderly, whose treatment in the hospital had been completed and who needed to be placed in another facility. The municipalities, which ran most of the residential facilities for the aged, had no interest in a quick transfer because the counties paid for hospital care. The bill required the municipalities to pay for hospital care once they had been notified that the patient was ready for transfer. This reform was quite successful, and the numbers of bed blockers declined sharply within one year (Socialstyrelsen, 1993). Care Guarantee Reform, 1992 Another reform took place in 1992, not through legislation, but through negotiations between the national government and the Federation of County Councils. This was a Care Guarantee that provided that for a list of defined conditions

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for which there were long waiting lists for care, patients could seek care in any county if their own county did not treat them within three months. It was held that clinic chiefs had a vested interest in long waiting lists because they provided justification for budget increases. For whatever reason, queues for elective surgeries shortened dramatically. Point-of-Service Primary Care Reform, 1993 The final national reform to be considered here was the Huslakare Reform.2 The Liberal Party had had the goal of having every Swede tied to a primary care physician since before 1977. It led the passage of legislation in 1993 to expand primary care and to have every resident of Sweden register with a primary care physician. Primary care physicians would act as gatekeepers for their patients with the specialized medical sector. The bill provided for compensation through a combination of capitation and fees and the "free establishment" of physicians—that is, private physicians could set up practice without restriction and compete for contracts as primary care providers. The result was a sharp increase in private physicians and another sharp increase in the cost of primary care. County Reforms As important as the national reforms were reforms sponsored by the Federation of County Councils in a number of counties. Several—among them the counties of Bohus, Dalarna, and Stockholm—introduced various "market mechanisms" into the organization of their systems. These consisted of various "purchaser-provider" splits wherein public authorities paid for services provided by nongovernmental units. Several other counties experimented with providing incentives within budget-driven systems. Among them were the counties of Jonkoping, Kronoberg, Varmland, and Alvsborg. They simply made cost control a political priority and experimented with different ways of implementation. The thought was that market mechanisms would be more "efficient" and bring down the cost of care. In fact, the budget counties were more successful in reducing costs, with involvement of the clinical people in cost control a major factor in success (Landstingsforbundet, 1990, 1995). By and large, the market reforms were only modestly successful at best. When the Social Democrats were returned to power in 1994—as the public was increasingly concerned with the threats to the welfare system from the right— they repealed most of the national legislation enacted during the mandate of the bourgeois parties. They did not, however, substantially alter the general drift of medical care policy toward market solutions, which has continued to the time of this writing. The general thrust of the reforms, taken together, was toward expansion of the private sector, decentralization (of control over personnel and technology

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and of administration and financing), and increasing "market" influence at the expense of professional and democratic control. Physicians, or at least their national union, supported the reforms because of their perception that politicians had encroached too much on medical care at the expense of physicians. Among professionals, it was the Nurses' Union that carried the issue of quality into the fray. Other professional groups did not enter the debates. The major support for the reforms came from the Physicians' Union, the Federation of County Councils (Landstingsforbundet), and the Liberal-headed Ministry of Health in the Conservative-led bourgeois government elected in 1992. Ideological support came from the Center for Business and Policy Studies (Studieforbundet Naringsliv och Samhalle) which was linked to the Swedish Employers' Association. All of the nonsocialist parties supported the reforms, as did the Social Democrats who had been part of the 1982-91 government leadership. The Social Democrats in Parliament and the Left Party opposed the reforms. Our intent is not to evaluate the reforms, however, but to account for them. EXPLANATIONS OF THE REFORMS Structural Problems in Medical Care When pressed in interviews, not even those who supported oriented reform of medical care would state that there was medical care system. Most held that there were problems but medical care system was among the best in the world. Key problems identified in interviews in 1993 included the

a major marketa "crisis" in the that the Swedish following:

• The rapidly aging population of Sweden with the attendant chronic disease burden. Sweden had the oldest population in the world. Demands on the system had increased dramatically and were projected to increase for at least a decade. • The cost of high-technology intervention was rising faster than the economy as a whole. • Patients lacked freedom of choice, and physicians were restricted in where they could practice. For primary care, patients were limited to the district where they resided or worked, and for hospital care, they were restricted to their county. Public-sector physicians could apply for vacancies, and private physicians could only practice under contracts with counties. Distribution of physicians was too controlled. • The hospital sector was too rigid, bureaucratic, and inflexible. Routines could not be adapted to patient needs. Resources could not be mobilized where they were needed. • Productivity of physicians had declined sharply. They were seeing fewer patients and spending more time in administration, research, and teaching. • There were long waiting lists for elective procedures. These critiques came from the leadership of the Physicians' Union, the economic offices of unions, the Federation of County Councils, the Ministry of Health,

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and members of Parliament in the New Democratic (populist right-wing), Conservative, Christian Democratic, Liberal, and Social Democratic parties. The problems, then, were perceived across a wide range of interest organizations and political parties. The source of the problems, however, was assessed differently by different interests: • Public monopoly. The Physicians' Union, the Federation of County Councils, and the Conservative Party attributed the problems to the fact that services were publicly organized and there were restrictions on the operation of the private sector. The public sector was seen as a monopoly that behaved like any other monopoly. • Perverse economic incentives. The budgetary process encouraged waiting lists. The division of responsibility among political jurisdictions made it difficult for them to cooperate to solve problems. Those holding this position were the Physicians' Union, the Federation of County Councils, the New Democrats, the Conservatives, and the Liberals. • Demographic trends. The aging of the population was the core explanation of TCO (The Federation of White-Collar Unions) and the Social Democrats in Parliament. • Economic depression, budget deficit, and unemployment. The Swedish economy had been in the doldrums for almost a decade, but especially in the late 1980s and early 1990s. The historically low unemployment had skyrocketed in the early 1990s. The state's deficit had exploded following a tax reform in 1991. This was the position of the Nurses' Union, the Federation of Blue-Collar Unions, the Blue-Collar Municipal Workers' Union, and the Ministry of Health. • The European Community (later the European Union). The decision to enter the EU meant that Sweden's tax structure and levels of public expenditure would have to be "harmonized" with those of less developed welfare states. This meant less money for medical care. This was the view of the Federation of White-Collar Unions, the Christian Democrats, and the Center Party. • Loss of solidarity. The public stance of the bourgeois parties as well as the right wing of the Social Democrats over more than a decade had eroded the sense of solidarity among Swedes. A more individualistic ethic had developed that undermined the possibilities for collective security. The Nurses' Union and the Federation of White-Collar Unions held this viewpoint. • Medical System Problems. Overspecialization, overreliance on the tertiary care sector, underdevelopment of primary care, and a tradition of top-down decision making were the main dimensions. The system was too reliant on the most expensive units to deliver service, and the insights of workers, professional and otherwise, into opportunities for improvement were not taken into account by decision makers. This was the viewpoint of the Nurses' Union, the Federation of Blue-Collar Unions, the Federation of WhiteCollar Unions, and some elements of the Liberal Party. • Political decisions. These included a legislative cap on spending by municipalities, ensuring that they could not meet their new responsibilities for care of the aged, the deregulation of banks, leading to massive failures of lending institutions, and the dominance of neoliberal (classical economic, anti-Keynesian) ideology. Some variant of

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these views was held by the Nurses' Union, the Federation of County Councils, the Ministry of Health, the Christian Democratic Party, the Center Party, the Social Democrats, and some of the independent participants in the debates. • Patient expectations. The public expected much of the medical care system and had come to expect that virtually any health problem could befixedby medical care. These expectations were unrealistic because of both the limits of medical knowledge and the finite capacity of the system. The problem was to scale back these expectations. Thi view was voiced within the Conservative Party. It was also held that the public had poor health habits (diet, exercise, and so on.) and needed to reform. This view came from within the Liberal Party. While there were variations and permutations of these themes among those interviewed, they exhaust the range of themes captured in interviews in 1993 at the height of the debate on medical care.3 Clearly, the medical care system had some structural problems as well as some major challenges. Equally clearly, there were major opportunities for instituting changes in the public system that would reduce the costs of service delivery, including a shift from tertiary to primary care as the core emphasis, reasserting national control over the distribution of personnel and technology, and greater involvement of workers in the system in identifying inefficiencies and proposing corrective action. The question was whether a shift from the public welfare model of medical care to one that involved privatization, markets, and competition could reasonably be expected to accomplish the goal of lowercost, high-quality medicine or whether such a change was necessary. Here the Swedes supplied their own answer. A comparison of the "market-reform" counties with those that made cost containment a priority in "central-budget" counties showed that when clinic chiefs are involved in the planning, budget-driven counties do better (Landstingsforbundet, 1995). There was nothing to suggest that problems within the medical care system required a reform of the nature being proposed. Indeed, the problems in medical care could be solved within the system. Economic Limits The second argument was that the medical care system was in good shape, perhaps even exemplary, but the weak economy could no longer support it. As commonly expressed, "We have a costume [suit] that is too big for us." This was portrayed by some on the right end of the political spectrum as a welfare state that had grown so large that it could not only no longer be sustained, but was dragging down the economy in general (Ekonomikommissionen, 1993; Bergstrom, 1992; Bildt, 1992; Langby, 1983). In the early 1990s the Swedish economy was in difficulty. Unemployment had skyrocketed to levels unprecedented in the twentieth century. In late 1993 it was over 15%. All but one of the banks in Sweden were in receivership and

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were being restructured under a public commission. Inflation was seen as high. The state had a large budget deficit. Wages were being restrained, and there were pressures to roll back the security that had been attained by labor. Everyone agreed that there was a short-term crisis in the economy. The question was whether there was a long-term crisis as well. The national economists at Stockholm University, the Conservative Party, the Swedish Employers' Association, and other groups on the right held that there was. They contended that the "collectivist approach" of the Social Democratic governments in building a strong public sector constituted "decades of mismanagement" that required reduction of public-sector programs, increased investment in export industry, and reduction of the scope of democratic decision making. Equality and security were weakening the economy. This was the view of the Conservative-dominated government in power between 1992 and 1995. The center and left, represented by some labor-union economists, were skeptical, saying that the economy was basically sound although some past decisions had created serious short-term problems. The recession could be managed by stimulating demand. The bank and real-estate problems were already coming under control. Unemployment would take some time to manage, but it required a reassertion of policies abandoned by the government. With this in mind, we can look at the historical development of the economic crisis. There are a number of points where we can see the challenges to the system mounting:

• The oil shock of 1973-74 when OPEC was formed: output of oil was restricted on the world scene, and the price of crude oil increased dramatically. Sweden, without oil resources of its own and dependent on petroleum for a variety of basic economic activities, was hard hit. The increase in the price of oil was long-lasting and constituted a "permanent" increase in the cost of production and distribution. • The recession of 1980 to 1982 raised unemployment to nearly 3% and was largely responsible for the Social Democrats being returned to power in 1982 after six years of Center- and Liberal-led coalition governments. • There ments at the banks gaged

was a banking reform between 1985 and 1990 in which restrictions on investoutside of Sweden were lifted and requirements for reserves were reduced just time when the inflated real-estate market in Europe began to collapse. Swedish rushed to take mortgages in Europe, only to find that the properties they mortfell sharply in value, leaving them insolvent.

• The Finance Ministry shifted its priority from unemployment to inflation in 1989. In earlier governments, the Social Democrats had staffed the Finance Ministry with economists from the labor movement. In the 1982 government, they took economists from academia who were much more theoretically focused on a more "classical" (neoliberal) kind of economic thinking. Labor unions pushed for higher wage increases than, in hindsight, they think they should have, increasing inflationary pressures. With the shift of focus in 1989, unemployment again began to increase, and in 1991 it skyrocketed to unprecedented heights.

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• A tax reform in 1991 was inspired by the U.S. reform in the early 1980s under the Reagan government and the United Kingdom reform under the Thatcher government. It took the same premise: that a tax cut targeted toward the wealthy would stimulate new investment and hence generate an expansion of economic activity that would increase collections for the government. That did not happen in the United States, the United Kingdom, or Sweden. The result in all three countries was a massive budget deficit. • There was a decision to enter the European Community (later the European Union) in 1993. This intensified the pressure to reduce welfare spending. To bring Swedish taxes and services into line with the rest of Europe, a requirement for membership, would put the welfare state at risk (Twaddle, 1997). While this did not add to the economic crisis directly, it placed important constraints on the options for seeking a solution. Throughout the crisis, the transfer payments, the core of the welfare state, remained in balance. The crisis was in features that were not specifically in the Swedish model. There is no question that it was serious, nor is there any question that it constrained public services by making funding more difficult. It is clear at the same time that the economic crisis was largely the result of political decisions. Political Changes From what we have seen, there was no crisis in the organization and operation of the medical care system itself, but there was a crisis in the economy largely created by political decisions. It is to the political system that we must turn to find an explanation. We can argue that since the high point of the creation of the Swedish model for the welfare state, there had been both a demise in the political power of the Social Democratic Party and an increase in the power of the political right. Some of the magnitude of this change was captured by Wickbom (1989:16— 17): In 1969 the Social Democrats were a majority party, with over half the electorate behind them. In 1969 the Social Democrats were an ideological party, which was guided by the dreams and visions of the class struggle. In 1989 pragmatism was in control. In 1969 questions of distribution stood in the foreground. Growth took care of itself. In 1989, growth was the dominant question. Distribution was taken care of by already enacted reforms and by the voracious giant of the "demand machine." In 1969 the catchword was socializing or nationalization or in any case social influence. In 1989 one talks openly of privatizing care, child care and TV. Demise of the Social

Democrats

The Social Democrats represented the vehicle for left/labor politics, essential to the successful development and operation of any welfare state (Back and

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Moller, 1990; Esping-Andersen, 1985, 1990; Korpi, 1978; cf. Terborn, Kjellberg, Marklund and Ohlund, 1978). In 1976 they lost control of the government for the first time since 1932. They returned to power in 1982, only to be voted out again between 1991 and 1994. Each time they returned, it was to promote programs that were further from the socialist agenda of the 1932-76 period, the expansion of democracy into economic decision making. Several things contributed to this shift, a few of which are especially important. Gunnar Myrdal and the critique of centralization. Gunnar Myrdal, a Nobel Prize winner in economics and one of the architects of the post-World War II Swedish welfare state, wrote a powerful critique of the welfare state (1982) in which he made the following points: • Programs were created to meet real needs of people that were not being met in the private-market economy or were being met in a way that provided opportunity to only a socioeconomic elite, denying equal opportunity to others. • Over time, institutions grew in size and became more centralized, covering larger geographic areas and promulgating a standard of service that was more uniform. They were removed from, and increasingly insensitive to, local conditions and needs. • People with professional training, most often with no grass-roots experience, entered decision-making levels directly from college or university programs. • Even while such programs were ideologically committed to making the society more equal, they were increasingly developed and governed by a large, centralized bureaucracy far removed from the everyday experience of those they were intended to serve. What was lost was not only the close connection between programs and the lives of ordinary people, but the process of collective decision making: democracy itself. Kjell-Olof Feldt and the chancellery right wing. After 1968, the Social Democrats lacked a single core commitment to service as a centerpiece of their policy. This along with several other events weakened the democratic left in Sweden. • The 1967 party congress placed emphasis on government initiatives to make business more competitive, introducing "capitalistic" arguments for state initiatives. • Students in May 1968 occupied the Student Union at Stockholm University to protest what was seen as a business-oriented higher-education reform package, attracting little public sympathy. • Miners in northern Sweden staged a wildcat strike in 1969, starting a wave of such strikes (Hadenius, 1988:131). The government was just another employer, and the class struggle was framed in opposition to the Social Democrats. • The Soviet Union invaded Czechoslovakia in August 1968. Social Democrats were portrayed as having a weak stand on opposition to Soviet oppression (Hadenius, 1988). • The government took foreign policy positions in opposition to the U.S. role in Vietnam, leaving it open to criticism on the one hand for not providing more open support for the Vietnamese guerrillas and on the other for not taking a similar stand vis a vis the Soviet Union in Eastern Europe.

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• Between 1970 and 1973, there were new concerns about the shrinking industrial sector and the danger of an adverse balance of payments. Credit policy was tightened. Tax reforms reduced marginal income-tax rates. • In 1973 the international oil crisis occurred. Rather than cut back on programs, the government cut state taxes and increased employer social insurance contributions in an effort to pave the way for labor-management contracts in which pay raises would not be eaten up by taxes and inflation (Hadenius, 1988:135). The 1976 elections were framed around two issues that had not before been on the national political agenda: nuclear power and wage-earner funds. While much of the population was passionate about each of these issues, the Social Democrats were internally divided and had no public position on either (Hadenius, 1988). The result was a small loss at the polls for the Social Democrats and a small gain for the nonsocialist parties. This shift was enough to send the Social Democrats into opposition for the first time in 44 years. Between 1976 and 1982, the economy showed signs of difficulty. Unemployment and a state budget deficit rose, and "the state under bourgeois aegis had started to borrow abroad. Especially for an older generation of Social Democrats 'living on borrowing' was synonymous with a decadent and irresponsible lifestyle" (Feldt, 1991:19). According to Kjell-Olof Feldt's memoir, the Social Democrats formed a "Crisis Group" to frame a long-term policy should they return to power in 1982. By 1980 they had reached two conclusions: "One was that Swedish industry found itself in a serious structural crisis caused in part by strong increases in the cost of wages" (Feldt, 1991:20). "Neither the Swedish economy nor a Social Democratic government would be able to survive with a budget deficit the size that we . . . could forecast for 1982. . . . the key to solving Sweden's economic problem lay in shaping the conditions for a new period of industrial expansion in our country" (Feldt, 1991:21). Effective debate on economic policy came to an end. Economic opinion turned against welfare services. Documents prepared for the 1982 election focused on improving the profitability of industry, introducing wage-earner funds, and reforming the tax system. A campaign against inflation would be needed to return to full employment. Even more to the point, the Crisis Group actively sought input on a proposal to • • • • • •

restore a "waiting day" for sickness insurance; increase mobility in the labor market; institute a two-hour-longer workweek over several years; reduce the right to leave from work with maintenance of wages; close unprofitable companies to make space for new, competitive ones; and prune transfers such as pensions, child-support allowances, grocery supports, and housing allowances (Elmbrant, 1993:75-76).

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This line of thinking did not become the platform of the Social Democrats in 1981. Their campaign program, Framtid for Sverige, was a balanced mix of Keynesian and liberal economics and affirmed traditional party values. Indeed, Olof Palme campaigned against "neoliberal threats to the Swedish model" (Elmbrant, 1993; cf. Feldt, 1991). Nevertheless, neoliberal policies were enacted by the new government: a 16% devaluation of the crown (following a 10% devaluation by the previous bourgeois government) unleashed speculation, stimulated international trade, and supported the import of luxury goods; wages were held down by agreement with LO (The Federation of Blue Collar Unions), and workers lost the equivalent of a month's wages; an attempt was made to set norms for price increases; priority was placed on the budget deficit; and state expenditures on social programs were cut by almost 5% (Elmbrant, 1993; cf. Feldt, 1991). The well-off benefited. The working class did not. The only exception to the promotion of traditional Conservative values was "wage-earner funds" to shift investment from international speculation to Swedish industry, thus generating jobs in Sweden. They were also a means of placing new economic power in the hands of representatives of working-class interests (Feldt, 1991; Elmbrant, 1993). The 1991 campaign program, entitled 90-tals Programmet, was one in which Keynesianism had all but disappeared. The core program was fighting inflation, controlling interest rates, holding taxes down, and reducing the size of the public sector. Proposals for health and medical care were embedded in a general critique of social services, which were seen as too centralized and undifferentiated. The general programmatic thrust was to limit politicians to setting goals and leaving it to personnel at each level to decide how these goals would be met. While the report flatly rejected privatization as a solution on the grounds that it would lead to increased class differences in quality and access, it endorsed the introduction of "market mechanisms" into the public sector, including a separation of "buyers" and "sellers" of services and of "producers" and "finance." It is clear that by 1989 the leadership of the Social Democratic Party had bought into markets and competition as a solution to the problems of the welfare state. The only thing that distinguished them from the right in this area was that they still drew the line at privatization. Where did my party go? The left, having depended on the Social Democrati Party to manifest "socialist principles," was appalled. The aftermath of the 1985 election was an open breach between the Social Democratic Party and the LO, characterized as the "War of the Roses." The trigger was the budget proposal, a plan for a three-million-crown reduction in state support to municipalities and an increase of 20 crowns in individual contributions to unemployment insurance. According to Elmbrant (1993:118): "Very clearly, organized blue collar labor . . . no longer saw the party as unambiguously representing its interests. . . . At issue was whether the Social Democrats had become a 'bourgeois' party." The traditional Social Democratic voter could no longer "recognize" the party. Those

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advocating a return to the Right Party politics of the 1920s became "new thinkers." The party was faced with two conflicting tendencies, "tradition" or "modernization." In the "War of the Roses," Kjell-Olof Feldt represented the modernization side, Social Democrats as employers and directors; Stig Malm represented the traditional, Social Democrats as promoters of equity and solidarity. A strong tradition of democratic decision making had been abandoned. The democratic process in social movements, such as labor, was both a political base for the Social Democrats and an alternative to "egoism" and the free market. When the Social Democrats abandoned that process, the workers became passive and withdrew from politics. In 1991 the Social Democrats had held only a minority of their 1988 adherents. Most of those who failed to vote for the socialists did not move to other parties, but cast blank ballots. The 1991 election, then, was not a center-right gain as much as a Social Democratic loss (Groning et al, 1993). In summary, the Social Democratic Party lost power, certainly hegemony, and perhaps even legitimacy, not only with the center and the right of the political spectrum, but with its own constituency, the labor movement. It was seen to abandon support for the welfare state and socialist principles. Perhaps more important, it was changing without meaningful involvement of labor interests. This, however, accounts for only part of the changing political climate. Another important factor was the impressive growth of ever more conservative and even more extreme right-wing elements in the political debates. The Rise of the Right By the 1970s the Conservative Party increasingly took a line in opposition to the welfare state, seeking not only to limit its growth, but to reverse the trends toward increased regulation of commerce, expansion of worker rights, and expansion of planned, public services. The new line was that a less regulated market was more efficient and would provide greater economic growth and better ensure the high Swedish standard of living. The employers' offensive. The "Directors' Revolt" that came at the initiative the Swedish Employers' Association (SAF). It was a long-term strategy to change the mind-set of the Swedish culture by framing the public debate and by preparing "educational materials" and distributing them to teachers in the compulsory schools. The debate was framed as "Profits are needed for prosperity! Competence is justice! Take care of yourself! Creative Sweden!" (Wickbom, 1989:37). A "Directors Club, consisting of the heads of the five largest Swedish corporations, was formed in 1973 to provide 'discrete' support to non-socialist parties." An organization called the New Welfare (Den Nya Valfarden) was formed and financed by the SAF-owned Fund for Commerce (Naringslivets Fond). This think tank was a promoter of neoliberal arguments for reduced

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public welfare programs and lower taxes (Engellau, 1987; Elmbrant, 1993:25657). In 1990 the employers unilaterally withdrew from the Saltsjobaden accord, regarded as the core of the Swedish model. Peak organizations of employers and workers had worked in a system where they came to "central agreements" on the general level of wage increases for the year. The unions were then obligated to negotiate within those limits. In 1990 the workers' organizations (LO and TCO) proposed a two-year agreement as a contribution to stabilization, "but the Swedish Employers Association flatly said no. SAF opposed all forms of central negotiations" (Elmbrant, 1993:215). With this, the key to the Swedish model was destroyed. Without central wage negotiations, the policy of wage solidarity was undermined. The employers divided the labor movement into the discrete unions, which had less power independently than they did collectively. They were able to exploit the weakness of the socialists, more importantly in the wedge that had been driven between the Social Democratic Party and the blue-collar unions. The Centrist Nonsocialist Government of 1976-82. Throughout the 1960se, bourgeois parties were not only in opposition to the Social Democrats, but also sharply divided among themselves. At least two "new" issues were found in the 1976 campaign, one of which, nuclear energy, did not fit the old left-right divisions. The other was wage-earner funds. Olof Palme took a rather strident ideological stand that alienated many voters and undermined the cooperation that characterized the political process in Sweden. The Social Democrats were viewed as arrogant, seeing themselves as having a mandate to govern that was assumed rather than sought, and they were portrayed successfully as an inflexible "concrete party" (Wickbom, 1989). In the 1976 election, a three-party nonsocialist coalition assumed control of the government under the leadership of the Center Party. Coalition partners were the Liberals and the Conservatives. The Social Democrats went into opposition for the first time since 1932. As the Liberals and the Center Party were generally in favor of a strong welfare state, the government did not mount a frontal challenge to the Swedish model. The Conservatives lacked the clout to make a serious effort at implementing their program. The result was that the government tinkered with health and welfare programs but made few substantive changes. The new government was divided on the nuclear-power issue. The Center Party had positioned itself as an antinuclear party that would not participate in a government that authorized the fueling of any new atomic-energy plant. While it initially waffled when the next plant came on line, it ultimately resigned from the cabinet. The Liberals refused to go into coalition with the Conservatives and formed a minority government. The Three Mile Island catastrophe in the United States threw the Social Democrats into confusion, and a decision was taken to have a public referendum after the next election. The core issue in the 1979 election, once the nuclear-power issue was removed, was the wage-earner funds. This time the Social Democrats supported

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them. In addition, the Conservatives campaigned aggressively for a reduction in marginal tax rates. Both the Social Democrats and the Conservatives gained in the election, but the left-right split still favored the bourgeois bloc, which formed a coalition with the Center Party in the leadership (Hadenius, 1988). The main activity of the government was coping with the recession. Against all expectations, the government and the Social Democrats managed to agree on a "three stage cut in marginal tax rates" in exchange for "partial elimination of income tax deductions on the interest paid for home mortgages and the like." This put the [Conservatives] in a precarious situation. Should they accept the agreement and thereby give in on an issue that was perhaps their most important one in maintaining their political image? Or should they resign from the Cabinet in protest, thereby once again demonstrating that the three non-socialist parties were incapable of reaching agreements within a Government? (Hadenius, 1988:154) They chose to resign, creating the third governing combination in five years. The only initiative in the health arena was an effort to enact a "house doctor" (huslakare) bill (SOU 1978:74). A commission of inquiry was formed with a directive to propose means of countering the trend toward high technology and highly specialized hospital care by shifting the emphasis in medical care toward ambulatory care. The models included development of care centers (vdrdoentraler), expansion of training opportunities for general physicians, retraining programs for other specialists to change to general medicine, and studies directed at expanding primary care as a proportion of all care (SOU 1978:74). Prior to that report, decisions had already been taken administratively to cap specialty training outside of general practice, geriatrics, and psychiatry while expanding the size of medical-school classes. The intent was -that a much larger proportion of medical students would be forced into general practice. The proposal did not have the full support of the governing parties. The Conservatives, perhaps reflecting the opposition of the Swedish Medical Association, opposed it. The Center Party supported the existing system and saw no need for changes. The Liberals stood alone, and their proposal was never acted upon. With the return of the Social Democrats to power in 1982, it went on the back burner. The right-wing nonsocialist government of 1992-94. A coalition of the Constive, Christian Democratic, Center, and Liberal parties took power after the 1991 election. This time the Conservatives were the largest party, and it was their program that the new government promoted. The coalition partners were given support in one or more of their "questions of the heart," but the new government was otherwise hard-line right-wing. Important groundwork for the new government had been laid in the 1985 election when Conservative Party leader Ulf Adelsohn campaigned for a "jump start" (rivstart), a very quick implementation of right-wing programs, on the premise that anything not done in the first three months would never get done.

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Adelsohn had used the campaign to sharply profile the Conservatives as opponents of the Swedish model, which was a significant hardening of the Conservative line. Another important development was the emergence of a new political party, the New Democrats (Ny Demokraterna), under the leadership of Count Ian Wachmeister and record promoter Bert Karlsson. Wachmeister had been an active participant in the New Welfare and had made an effort to convert the organization into an antitax, antiwelfare political party. When Wachmeister and Karlsson founded the New Democrats, they simply took the New Welfare program as their platform, with the addition of an anti-immigrant stance (Elmbrant, 1993). The election was one that "nobody won." The four bourgeois parties together did not have a majority, nor did the socialist bloc. While the New Democrats were just over the threshhold for entry into Parliament with only 25 seats, they held the balance of power. Hence a new four-party minority government was dependent on the support of either the New Democrats or the socialists to enact programs. While the Conservatives were the largest bourgeois party and had support from the Liberals on economic issues, there were important differences as well. The Conservatives were set in opposition to the Social Democrats in principle. Most often the middle parties compromised to ensure that a nonsocialist government could hold together for a whole mandate period (Elmbrant, 1993). The new government took a strong neoliberal line: • It took two immediate symbolic decisions: to compensate an automobile dealer a million crowns in damages for excess taxation, and to approve 3.6 billion crowns in new shares for Nordbanken. • It moved to privatize the bank, holding that the bank crisis was an example of the evils of state ownership. • It reduced taxes during itsfirstyear on working-capital industry, rented property, property, capital gains, inheritances, gifts, profits from sales, securities, and private pensions. In addition, it lifted the limits on deductions for interest. • It moved to abolish closed-shop unions in the hope of undermining labor power in political decision making at a time when the demand for labor was weak. • It moved aggressively to bring Sweden into the European Union, described as Prime Minister Carl Bildt's "question of the heart" (Elmbrant, 1993). In Elmbrant's analysis, this government accomplished the "fall of the Swedish model." In health policy, the government took a much more moderate stance than in economic policy. The Ministry of Social Affairs, where medical care concerns fall, was held by the Liberals, who supported strong public services. With one exception, the initiatives taken by the minister of health, a deputy social minister, were pragmatic attempts to solve real problems rather than an ideologically

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driven program. The exception was the point-of-service reform described earlier. It changed the way in which primary care was to be delivered and opened the door again to the expansion of private practice. SUMMARY AND DISCUSSION In summary, the medical care reforms in Sweden during the 1980s and early 1990s were not "caused" by inefficiencies or ineffectiveness or inequity in the medical care system. While there were areas in which efficiency could be improved, none of these were addressed by the reform movement. Second, the economy faced serious problems caused by political decisions that created a huge budget deficit and a large, mostly private, international debt. The problems were not inherent in the economy, but rather were the result of deregulation of banks and an ill-advised tax reform. While economic problems created pressures that made funding the medical care system more difficult, they did not explain these reforms. Instead, the reforms were mostly ideologically driven and reflected shifts in the relative power of the "socialist" and "bourgeois" blocs over a 20-year period. Of particular importance was the alienation of organized labor from the Social Democratic Party on the one side and the "employers' offensive" from the right that shifted economic discourse from Keynesian to "neoliberal" models. When the Social Democrats abandoned Keynesianism and accepted the neoliberal critique in the 1982-90 government, the way was open for medical care to be portrayed as inefficient solely because it was organized on "old-fashioned" economic thinking. As we have seen, there was no solid empirical basis for that critique. If we turn to the models described in chapter 1, we find uneven support for them in the Swedish case. With reference to Figure 1.4, we see little direct effect of hegemonic systems. The national system is a major item, especially the trends in disease, illness, and sickness and in the economy. Both the rapid increase in the aged as a share of the population and the economic problems created by politicians were at the core of problems in need of solution and the reform effort itself. The characteristics of the medical care system defined the issues in the reform effort: the balance between public and private, and the cost and financing of the system. The generalist/specialist issue was one that Sweden had addresssed successfully in the mid-1970s. The trends in medical care organization described the Swedish case as well. The core of the reform effort was focused on the "fiscal crisis." Medical care was increasingly expensive, especially when high technology and specialized hospitals dominated the system. At the same time, Sweden was one of the few places in the world that had actually reduced the share of GNP spent on medical care during the 1980s. The "crisis of alienation" was noted by only a few of our respondents and even there focused more on the alienation of health care workers than on patients.

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Clearly, the reform effort was one intended to reduce the scope of democratic decision making in favor of a market model. It was explicitly designed to introduce "market mechanisms" such as limiting political entities to funding medical care and removing the "providers" from public employment. Separation of "buyers and sellers," "producers and finance," and "purchasers and providers"; "free establishment" of private physicians; cost shifting to patients: all these were based on market ideology. The portrayal of democratic institutions as a "public monopoly" suggested that governments acted as private monopolies did, to maximize profit without accountability. It was an attempt to delegitimate public services, ignoring mechanisms for accountability to an electorate. Certainly, some actors were motivated by the profit potential in a privatized system. Many, we suspect, had simply been convinced by the propaganda of the employers' offensive. One interesting aspect of the Swedish case was the stance of the professions in the debates. The Physicians' Union was one of the champions of market reform. Physicians found themselves increasingly in conflict with their employers, the counties, and thought that they would have more freedom in a privatized system. That a market system is the only kind that has historically encroached on professional prerogatives (e.g., managed care in the United States) was not seen as relevant since the United States was such an "extreme case." The Nurses' Union was the only professional group to oppose the reforms, seeing them as a threat to the well-being of "weak" people in the society: the aged, the mentally ill, women, and so on. It saw the current system as providing protections that would be lost. Meaningful reform could come about only if those who worked with patients daily had a greater voice in the content of reform. No other professional groups were active in the debate. The internationalization of economies had only an indirect effect on the reform effort, although it was in the rhetoric, particularly with reference to the economy. The decision to join the European Union meant that Sweden would have to "harmonize" its tax structure at the level of welfare services with the other EU members. As Sweden had a much more developed welfare system and higher taxes than most EU countries, there would be pressure to reduce taxes and scale back social services, including medical care. As membership had not been accomplished during the study period, these were potentials that provided arguments for privatization. They had not yet impacted the system. Since 1994, there has still been no dramatic change in the medical care system of Sweden, the most important development being the decentralization of psychiatric care from the counties to municipalities. The Social Democrats returned to power in 1994 and repealed the reforms of the Conservative-led government. Since then, there have been a number of small decisions, mostly in the direction of the market (Twaddle, 1999). At the same time, there seems to be broad and solid support for maintaining a strong public system. If there is to be a shift, it will be a slow slide toward the market.

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NOTES 1. The arguments and materials in this chapter are summary statements that are more developed in Twaddle, 1999. 2. Literally, husldkare translates as "house physician." Official translations generally call it the "Family Doctor" reform. It does not, however, designate a medical specialty in family medicine, but a point-of-service system in which a primary care physician serves as a gatekeeper for specialized care. For that reason, I prefer the translation "Pointof-Service" reform. 3. Transcriptions of these interviews can be found in Twaddle, 1994.

REFERENCES Back, Mats, and Tommy Moller. 1990. Partier och organizationer. Stockholm: Publica. Bergstrom, Hans. 1992. Pressures behind the Swedish Health Reforms. Viewpoint Sweden, Bulletin No. 12. New York: Swedish Information Service. Bildt, Carl. 1992. "Sverige halkar efter ekonomisk." In Korpi, 1992:220-24. Ekonomikommissionen. 1993. Nya vilkor for ekonomi och politik. Stockholm: Finansdepartmentet, SOU. Elmbrant, Bjorn. 1993. Sd foil den svenska modellen. Stockholm: T. Fischer. Engellau, Patrik. 1987. Pa spanning efter moder Sveas sjal. Stockholm: Timbro. Esping-Andersen, G. 1985. Politics against Markets. Princeton, NJ: Princeton University Press. Esping-Andersen, G. 1990. The Three Worlds of Welfare Capitalism. Princeton, NJ: Princeton University Press. Feldt, Kjell-Olof. 1991. Alia dessa dagar—i regeringen, 1982-1990. Stockholm: Norstedt. Groning, Lotta, Walter Korpi, Carina Nilsson, Marten Strom, Soren Wibe, Lillemor, Arvidsson, Kerstin Back, Mona Hillman Pinheiro, and Klaus Amark. 1993. / mbrkret blir alia katter grd. Stockholm: Tiden. Hadenius, Stig. 1988. Swedish Politics during the 20th Century. 2d ed. Stockholm: Swedish Institute. Johansson, Astrid. 1993a. "Aldre for samre vard: Personnel pa sjukhem kritisk mot Adelreform." Dagens Nyheter, 18 September, p. A14. Johansson, Astrid. 1993b. "Adelreform gav samre aldrevard." Dagens Nyheter, 20, September, p. A7. Johansson, Astrid. 1993c. "Svart vardera Adel-effekten." Dagens Nyheter, 11 October, p.A6. Korpi, Walter. 1978. The Working Class in Welfare Captialism: Work, Unions and Politics in Sweden. London: Routledge. Korpi, Walter. 1992. Halkar Sverige efter? Sveriges ekonomiska tillvdxt, 1820-1990, jamforande helysning. Stockholm: Carlsson. Landstingsforbundet. 1990. Some Innovative Projects of Swedish County Councils. Stockholm: Landstingsforbundt. Landstingsforbundet. 1991. Crossroads: Future Options for Swedish Health Care. Stockholm: Landstingsforbundet. Landstingsforbundet. 1993. Vdgaval. Stockholm: Landstingsforbundet.

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Landstingsforbundet. 1995. Vad ska man kail det some hdnder i Mora?—och andra frdgor om styrmodller. Stockholm: Landstingsforbundet. Langby, Elisabeth. 1983. Vinter i vdfdrdlandet. Stockholm: Brombergs. Lindholm, Ann-Marie. 1993. "Sjuk patient blev boende." Dagens Nyheter, 14 August, p. D4. Milton, Anders. 1991. En ny primdrvdrd: Idekiss frdn Ldkarforhundet. Stockholm: Lakarforbundet. Socialstyrelsen. 1993. Adelreformen: Arsrapport 1993: Socialstyrelsen foljer upp och utvarderar. Stockholm: Socialstyrelsen, 1993:8. Socialstyrelsen. 1998. Aldrreuppdraget, Arsrapport 1998: Socialstyrelsen foljer upp och utvarderar. Stockholm: Socialstyrelsen, 1998:9. SOU (Government Printing Office). 1978. Husldkare—en enklare och tryggare sjukvdrd. Stockholm: Ministry of Social Affairs. Terborn, Goran, A. Kjellberg, S. Marklund, and U. Ohlund. 1978. "Sweden before and after Social Democracy: A First Overview." Acta Sociologica, Supplement, 21: 37-58. Twaddle, Andrew. 1994. Salvaging Medical Care: Views of Swedish Opinion Leaders and Decision Makers on Dealing with the Medical Care Crisis (If There Is One). Linkoping: Tema H, Universitet i Linkoping. Twaddle, Andrew. 1997. "EU or Not EU? The Debate on Swedish Entry into the European Union 1993-1994," Scandinavian Studies, 69:2:189-211. Twaddle, Andrew. 1999. Health Care Reform in Sweden, 1980-1994. Westport, CT: Auburn House. Uddhammar, Emil. 1993. Partierna och den stora staten: en analys av statsteorier och Svemsk politik under 1990-talet. Stockholm: City University Press. Wickbom, Ulf. 1989. Blagula Rosor: Nedslag i Svensk Samtidshistoria, 1969-1989, Stockholm: LTS Forlag. Wigzell, Kerstin. 1999. "Personalen skyddas—inte klienterna," Dagens Nyheter, 26 January, Debatt page.

Chapter 4

The Changing Faces of Health Care in Canada ChristellA..WoodwarddanddCatherineeA.CCharleseas THE CANADIAN HEALTH CARE SYSTEM The Canadian health care system, known to Canadians as "medicare," is, in fact, a national program consisting of ten provincial and three territorial health insurance plans. It is the cornerstone of Canada's social security measures. During the debate leading to the passage of the Medical Care Act in 1966, the minister of national health and welfare in the Canadian government articulated "the fundamental principle that health is not a privilege but rather is a basic right which should be open to all" (Canada, House of Commons, 1966:7545). Although constitutionally health was seen as a provincial responsibility in the British North America Act of 1867, over time the federal government has played an instrumental role in funding and setting national standards for the provincial health insurance programs (Charles and Badgley, 1999). The modern Canadian health care system developed after World War II. Until that time, the costs of hospital and medical care were primarily paid by individuals as out-of-pocket expenses. Municipal and/or provincial government subsidies covered some of the operating costs for hospitals during this period. Underlying these arrangements was an ideology that health care should be a matter of personal responsibility rather than a basic human right and that government should step in to help fund such services on a residual basis only when market forces failed. The Saskatchewan government introduced the first Canadian public insurance plan for hospital services in 1947, demonstrating the role of provincial innovation in the evolution of Canada's health care system. The federal government subsequently offered to cost-share inpatient hospital and diagnostic services with the provinces through the Hospital Insurance and Diagnostic Services Act (1957). By 1961, all provinces and territories had joined

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the federal program and had agreed to make these services available free of charge to at least 95% of each province's eligible residents (Taylor, 1986). Public medical care insurance was also first introduced in Saskatchewan in 1962 and initially led to a bitter strike by physicians (Badgley and Wolfe, 1967). The federal government introduced a national medical care insurance program modeled on Saskatchewan's program in 1968, and by 1972 all provinces and territories had joined this national cost-shared program. Under the initial funding formula, the federal government agreed to pay the provinces half the per capita cost of each provincial hospital and medical care program multiplied by the number of eligible residents in each province. Thus the initial federal-provincial cost-sharing arrangement was open-ended; the more money the provinces spent on insured hospital and medical care services, the larger the required federal contribution to help cover these costs. Federal contributions were of two types: cash transfers and tax points yielded from the federal government to the provinces.1 To be eligible for federal funding, provinces had to agree to meet five national program standards: (1) public administration and operation on a nonprofit basis; (2) comprehensiveness (coverage to include all medically necessary services provided by physicians and/or in hospitals); (3) entitlement of all eligible residents to insured health services on uniform terms and conditions; (4) provision of reasonable access to insured services without financial barriers; and (5) portability of benefits from one province to another. In 1979 a federal review assessed the state of the health care system and concluded that Canada had an excellent health care system but that extra billing by doctors (requiring patients to supplement public insurance payments to doctors) and fees charged to patients by hospitals threatened universal access to care and were helping to create a two-tiered system (Hall, 1980). It suggested that the health care system was not underfunded, as claimed by the Canadian Medical Association, and recommended changes to ensure that access to insured services for all Canadians would be maintained. The Canada Health Act, passed in 1984 by the federal government, sought to remedy the problems pointed out by the health services review. The act reaffirmed and spelled out more clearly both the standards that provincial plans must meet to qualify for federal transfer payments and the financial sanctions that the federal government would apply to aberrant provinces. The federal government's authority to set national standards for the provincial programs was reasserted. Extra billing declined. All provinces must report their compliance with the act on an annual basis. However, occasional skirmishes between individual provinces and the federal government occur, and federal funds to a province may be withheld in an amount equal to the extra-billing charges deemed as levied. Total expenditures for health rose steadily throughout the 1970s and 1980s, from 7.1% of Canadian GDP in 1975 to 8.7% in 1989, and peaked at 10.2% in 1992 (Health Canada, Policy and Consultation Branch, 1997a). The annual percentage increase in total health expenditures (in current Canadian dollars) peaked

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in the early 1980s at around 17%. It started to drop in the mid 1980s, remaining relatively stable at around 8-9% until 1992, when reforms began. Public-sector expenditures for hospitals fell from 54.3% of total health expenditures in 1974 to 45.4% in 1992, while public expenditures for physician services were constant at around 20%. In 1992 the largest categories of public-sector health spending were hospitals and physician services. The two fastest-growing categories of public-sector health spending were public health (6.2%) and other institutions (9.5%). Health accounted for about one-third of provincial governments' expenditures. The health care system relies heavily on primary care physicians (about 60% of physicians) as patients' first point of contact with the formal health system. Primary care physicians usually work in private offices in the community and enjoy a high degree of professional autonomy. Like specialists, they are paid by the provincial health insurance plans, mainly on a fee-for-service basis, although a few (less than 5%) have alternative billing (e.g., salary or capitation) arrangements with their provincial insurance plan (Fooks, 1999). Primary care physicians control access to specialists, other health providers, diagnostic testing, and drug prescriptions and are the system's gatekeepers. Medical care is publicly funded but privately delivered. Canadians needing medical care go to the doctor or clinic of their choice. A valid health insurance card is required to obtain insured health services without any copayments, deductibles, or ceilings on coverage in physicians' offices and in hospitals. Generally, care provided by other health professionals outside the hospital setting is not covered under the provincial plans. Provincial government-funded public health units are responsible for population health promotion and disease prevention. Although the role of public health units varies across provinces, inspection of food handling, some preventive care and health-promotion activities, and school health and immunization programs are usually included. Differing supplementary and additional health care benefits are found among provincial health insurance programs (Millar, 1999). Aside from dental surgery performed in hospitals and some preventive/ restorative health programs for children, dental care is not covered under public programs. Canadians often carry supplemental private health insurance, have employer-sponsored benefits, and/or pay out-of-pocket for dental care, prescription drugs, vision care, assistive devices, and the services of nonmedical health care providers outside the hospital sector.

PRESSURES FOR REFORM OF THE HEALTH CARE SYSTEM Over time, a gradual but steady decline occurred in the federal financial commitment to the provinces for their health care programs. Under the initial openended cost-sharing agreement between the federal and provincial governments, federal fiscal contributions kept pace with rising provincial health care costs.

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This agreement changed in 1977; federal per capita block grants (cash) and a transfer of tax points were linked to changes in the growth of the population and the GDP. This change made the federal government's financial contribution to provinces independent of increases in their health care spending. By the mid-1980s, the federal government anticipated the slowing of economic growth and was worried about its increasing deficit and debt load. It presented three consecutive budgets that limited and then, in 1990, froze federal transfers to the provinces (Fooks, 1999). In 1996 the federal government introduced a new block funding arrangement, the Canada Health and Social Transfer (CHST), which continued the federal policy of deindexing federal transfers to the provinces. Given these initiatives, the federal government's share of provincial health care expenditures declined from 38% in 1988 to 33% in 1994 and continued to decline until 1999. Because of federal cost-constraint measures during the late 1980s and the 1990s, provincial governments carried an increasingly heavier proportion of the insured health care costs, while in absolute terms, public-sector health care expenditures were rising at what many considered an alarming rate. Provincial governments also faced accumulated budget debt, and their economies were slowing down. The seriousness of the economic situation was highlighted in the media, where several governments, both federal and provincial were depicted as being in danger of having their international credit rating downgraded (Fooks, 1999). The Quebec referendum in 1995, which nearly resulted in a victory for the Separatist movement, also added to a general sense of economic instability. In this unfavorable economic context, provincial governments found that they had little option but to implement major fiscal, governance, and management reforms in their health care systems if they were to hold the line on or decrease decades of growth in public-sector health care spending. The need for economic restraint became the mantra of political leaders during the 1990s and overrode social rights arguments for increased public expenditures on social security programs. As a sign of the times, the language used to identify major problems and solutions in the health care system reflected sound business principles rather than a concept of social equity that had been the philosophical catalyst for developing public health insurance programs. The goals of provincial leaders were framed primarily in terms of balancing budgets and reducing both deficits and taxes.

RECENT HEALTH REFORMS General Patterns Health care reform in Canada has varied somewhat across the country because of the assignment of responsibility for health care management to the provinces. However, provincial governments have faced similar financial pressures for change (Hurley, Lomas, and Bhatia, 1994) and have adopted similar solutions

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(Angus, 1992). Starting in the mid 1980s, Canadian provinces established commissions to review their health care systems (e.g., Hyndman, 1989; LavoieRoux, 1989; Murray, 1990). Commissions reported that traditional governance structures and processes were outdated and that many medical interventions commonly used were of unproven efficacy. Poor coordination of care and care delivery based on historical precedent and provider interests rather than population health needs were described. Provincial governments, which historically acted largely as paymasters in the system, began to take a more active management and leadership role in their health care programs. The health care reforms initiated are described in the next section. Specific Initiatives Reduction in Acute-Care-Hospital Length of Stay and the Size of the Hospital Infrastructure During the 1980s, public expenditures for Canadian hospitals continued to increase while length of stay for patients decreased. This disparity was partially due to the rapid proliferation of new and often-costly drugs and diagnostic procedures; at the same time, many inpatient surgical treatments shifted to outpatient settings. According to Statistics Canada (1999), the rate at which Canadians stayed overnight in hospitals in 1996/97 fell for the 10th straight year to the lowest level since 1961, when such data were first collected. Administrative costs increased as hospitals had fewer active beds. Governments responded to this situation by reducing funding for hospitals and forcing their restructuring. They closed some hospitals, merged others (to share administrative costs and reduce duplication of services), and restructured hospital service delivery to make it less expensive. This resulted in pressures to keep patients from entering the system, to get them out quickly, and to retain only the sickest of patients. Governments also created incentives to move procedures out of hospitals into freestanding clinics, which left the door open for private, for-profit investment in the health care system (MacMillan and Barnes, 1992). Expansion of Nursing Homes and Other Chronic Care Facilities Many patients in acute-care hospitals are elderly and/or have chronic health problems that require ongoing care, albeit not 24-hour skilled nursing care. The lack of adequate nursing-home and other long-term-care-facility beds keeps them in the hospitals beyond the stage when less care is required, making them "bed blockers." Provinces have sought to expand the number of nursing homes and other long-term-care facilities that are less expensive to operate; yet their expansion has lagged behind the closure of hospitals and beds. Such facilities are licensed by provincial governments but may be run by municipal governments, nonprofit public and private organizations, or the for-profit private sector.

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Increasing Availability and Integration of Care in the Community Governments have pledged increased funding for community care and have promised better integration of community-based services. Patients discharged from hospitals more quickly require nursing, homemaking, and therapeutic services in their homes. Although how home care is implemented and integrated with other services varies across provinces, expenditures for home care doubled during the 1990s. Placing Greater Emphasis on Evidence of Effectiveness and. If Possible, Efficiency of Diagnostic Tests, Drugs, and Procedures The call for evidence to support the effectiveness and efficiency of medical care has increased. The Canadian Coordinating Office for Health Technology Assessment (CCOHTA) was created by the federal, provincial, and territorial ministers of health in 1989 with a mandate to provide advice and evidence on health technology. This private, nonprofit organization collects, analyzes, and disseminates information on the effectiveness and cost of technology and its impact on health. Expanded and strengthened during the 1990s, its mandate includes conducting and managing pharmaceutical-product economic assessments. CCOHTA plays a lead role in supporting linkages with provincial and international health technology and in developing clinical practice guidelines, working with other health care organizations. Changing the Scope of Practice for Health Professionals, Increasing Professional Accountability, and Legitimizing Other Types of Health Care Workers Provinces have reviewed the legislation that governs physicians and other health professionals to make them more accountable to society and to regulate emerging professions, such as midwifery, physiotherapy, and nurse practitioners. In defining scopes of professional practice, the number of acts defined as exclusive domains of a given health profession was limited to allow more crosstraining of workers and to open the door for nonprofessional workers to do many of the "generic caring and care-support" tasks done by health workers. Constraining Physician Incomes from Public Sources Most physicians are remunerated for their services on a fee-for-service basis through provincial health insurance. Overall changes in fees are negotiated between the provincial governments and provincial medical associations that represent physicians. Governments found that the costs of physician services regularly exceeded the negotiated overall increase in the fee schedule. Although the rising costs were partly due to population increases, changes in the number of physicians billing the insurance plan and in the total number and mix of services they provided were major cost drivers. To obtain greater fiscal control,

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governments first limited and then capped the overall percentage increase in total medical care expenditures (Hurley, Goldsmith, Lomas, and Kahn, 1996; Katz, Charles, Lomas, and Welch, 1997). As part of negotiated agreements between medical associations and governments, some services were cut (delisted) from public programs and deemed "not medically necessary." This move allowed physicians to offer these services through the private sector. Although the Canada Health Act imposes a financial penalty on provinces delisting "medically necessary" services, this term has never been defined. Thus it is hard to decide whether delisting specific medical services represents a violation of the principles of the Canada Health Act (Charles, Lomas, Giacomini, Bhatia, and Vincent, 1997). Other services also were limited in some way (by frequency of use, provider, site of care, or age of recipient). Provincial governments increasingly limited reimbursements for medical treatment provided outside of Canada. Capitation-based funding arrangements have been introduced as part of primary care reforms that are being evaluated in several provinces. Better Management of Physician-Supply Specialty Mix Measures to reduce the growth of physician supply were introduced through agreement among the provinces. Medical-school enrollment was cut by about 10% (Federal/Provincial/Territorial Ministers of Health of Canada, 1992). Immigration policies limiting the number of physicians from outside the country were more strictly enforced. Provinces decided to provide funding for only enough residency training slots to match the number of new medical graduates in a given year. These new constraints on postgraduate training affect the way physicians will be distributed among the various fields of medicine. Reform of Drug Pricing and the Volume of Drugs Dispensed through Provincial Drug Plans Provincial drug plans generally cover the elderly, the poor, and catastrophic drug costs (Willison, Grootendorst, and Hurley, 1998). Provinces experienced large growth in the cost of their public drug plans (Health Canada, 1997) and started to limit the drugs in the formulary to those of known effectiveness and to set guidelines for drug use (Detsky, 1993) in an attempt to control costs. Several provinces shifted costs to beneficiaries by introducing drug-plan deductibles and user fees. British Columbia introduced reference pricing, a costcontainment policy that restricts reimbursement of a cluster of therapeutically related but different drugs to the price of the lowest-cost drug in that category of drugs (Borsellino, 1998c). The federal government became directly involved in regulating the prices of patent medicines through the Patented Medicines Prices Review Board. Changes in Governance and Devolution of Responsibility to Regions or Local Communities Until recently, most provinces administered their health care systems centrally. Funding decisions were made at a provincial government level, with re-

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gional bodies advising on the needs of local areas and helping set priorities for new dollars flowing to the region. Improved governance has been sought through the devolution of more authority to the regional level for planning and, in many provinces, management and funding decisions. Nonmedical health delivery systems were regionalized in nine provinces. To date, devolved authorities in most provinces have tended to concentrate on institutions, mainly hospitals. Responsibility for physician remuneration and provincial drug-plan costs have not been devolved, although pressure is growing to transfer reimbursement of physician services to regional jurisdiction. Improved Health Services Information and Expansion of Research and Evaluation Capacity Governments have recognized that better information about the performance of the medical care system is needed if they or regional authorities are to effectively manage it. Provincial governments have supported the development of population health indicators that can be used to monitor service delivery and assess its impact on population health status. The federal government has indicated that it will attempt to tie health care funding to such performance measures. The lead role in the development of Canada's health information system was given to the Canadian Institute for Health Information (CIHI), a federally chartered but independent, not-for-profit organization. CIHI brings programs, functions, and activities from formerly separate, noninteracting groups together into one organizational entity. CIHI is charged with identifying health information needs and priorities and developing national standards for information collection and sets national standards for financial, statistical, and clinical data as well as for health informatics/telematics. Its mandate includes the production and dissemination of value-added analyses. Major new government investments occurred in policy-relevant health services research and in knowledge transfer. The Health Transition Fund was established by the federal government in 1997 to generate information on the organization, funding, and delivery of health services in four priority areas: home care, pharmacare, primary health care, and integrated service delivery systems. The fund enabled provinces to evaluate proposed innovations such as alternative models of health care delivery and funding (Rich, 1998a). Evaluation results will be shared with all provinces and territories. Overall Structural Change of the Canadian Health Care System The most recent round of reforms in the Canadian health care system reflects a "top-down" pattern of change. From the mid-1980s on, fiscal reforms at the federal level, culminating in the new CHST legislation (1996), put financial pressures on the next level down in the system, the provinces. They, in turn, reacted by putting financial pressures on health care stakeholders (e.g., physi-

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cians and hospitals). As noted earlier, provinces also responded by inserting a new regional level of authority between the provincial government and individual stakeholders. Although this was done in the name of democracy, this new authority provided provincial governments with a welcome buffer (Lomas, 1997). They no longer had to negotiate separately with each hospital over its annual budget; instead, the provinces provide a global budget to each regional authority and let them decide how to allocate funds across services within their region. Provincial governments thus removed themselves from highly contentious areas of decision making and pushed down to a lower jurisdictional level responsibility for many aspects of cost containment. STAKEHOLDER POSITIONS AND REACTIONS Typically, each group of stakeholders was most interested in the specific reforms that affected them the most. Whether they were supporters or detractors depended on how they perceived they would be affected. In some cases, provider groups supported specific components of the reform while resisting others. The Medical Profession The Canadian Medical Association (CMA) is a powerful lobby group with government directly and through its affiliated medical associations. The CMA was one of the most vocal and persistent defenders of the prereform status quo. This association argued that federal and provincial cost constraint measures were "the problem" with the Canadian health care system rather than "the solution," that the system was underfunded, and that both federal and provincial governments needed to add more money to the system. Controls on provincial medical care budgets, either negotiated or imposed by provincial governments, caused serious problems for provincial medical associations. Typically each medical association internally allocated fee schedules across medical specialties once the overall medical care budget had been set. In earlier years, this meant allocating fee increases; more recently, associations had to allocate fee decreases across medical groups. This proved to be a difficult and contentious task; a mechanism for allocating fee decreases proved elusive. The result was fragmentation and, in some cases, a reduced legitimacy for representing all of the medical association's members at the bargaining table with government. A strong and growing number of Canadian physicians support the private funding of medical care services, currently disallowed under the terms of the Canada Health Act. In annual meetings of the CMA, resolutions that would allow private funding for medical care have been defeated, but only narrowly. Provincial delisting activities, although infrequent in Canada to date, have generally been supported by medical associations because they provide an opportunity for physicians to set their own fees for services that are cut from the

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publicly funded programs. Government delisting activities have focused on both expensive and lower-cost medical services (e.g., removal of moles and in vitro fertilization for women who have partially blocked fallopian tubes). Many medical associations initially paid little attention to provincial devolution activities since reimbursement of physicians' services was not included as a responsibility of devolved regional authorities; physicians continue to be funded centrally by provincial governments. Recently, medical associations have become more proactive. Worried about the trend to allocate and manage resources at a regional level, they have developed models for the vertical integration of services within regions that are designed to be either physician led or dominated (Ontario Medical Association [OMA], 1997). Government recommendations to reduce the supply and alter the specialty mix of physicians have met with mixed reactions within the profession. Physicians have generally supported immigration policies to restrict the number of foreign physicians allowed to practice medicine in Canada. Other policies to reduce physician supply have been more contentious and are disputed by the CMA and Canadian medical schools. Recently published articles (Ryten, 1997; Ryten, Thurber, and Buske, 1998) suggest that medical training capacity was reduced too much and too late and that Canadians will suffer from a shortage of qualified physicians. The limits on numbers of postgraduate training slots for physicians and for given specialties also have their detractors within the medical education community. Detractors argue that primary care physicians often return to specialist training at a later point in their careers and that these physicians will either leave the country or the profession or limit their practices to narrower interests without obtaining the advanced training they need to perform well (Dauphinee, 1996). Between 1990 and 1996, an increasing number of physicians, particularly general and family physicians (GP/FPs), left Canada. This trend leveled off and decreased slightly in 1997 (Rich, 1998b). CIHI data indicate that the number of GP/FPs per 100,000 people in Canada dropped from 101 in 1993 to 93 in 1997 while the total number of specialists rose somewhat during this period. This growth in out-migration of primary care physicians followed limitations placed by provinces on where new and migrating (between provinces) physicians could practice. In some provinces, fees paid to physicians settling in "overserviced" areas were reduced (CMA, 1997a). Migration to the United States was also aided by recruiters who offered attractive financial packages to GP/FPs willing to relocate there to help solve the shortage of broadly trained primary care physicians needed to work in the growing number of managed-care settings. GP/ FPs formed 40% of the total of physicians leaving in 1993, compared with 54% in the next several years (CMA, 1997b). Disillusionment with managed care, U.S. style, is said to be part of the recent reversal of the trend. However, the number of Canadian communities with a primary care physician shortage has grown in recent years (Borsellino, 1999). Although major, prolonged strikes by Canadian physicians have been rare,

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possibly because of the adverse publicity they generated, other forms of protest are frequently used (Baer, 1997). Job actions, one- and two-day withdrawals of services (Borsellino, 1998a, Kent, 1998), and work slowdowns and stoppages have been reported in many provinces by groups of physicians dissatisfied with a particular policy (CMA, 1998; Baer, 1997; Walker, 1998a, 1998b).

Nurses Nurses were the professional group most affected by changes in the health care system, particularly by hospital restructuring. The changes implemented involved downsizing, outsourcing work, and redefining jobs to create roles for nonprofessional workers while reducing the complement of highly paid professional staff, especially nurses. More than 10,000 nurses lost their jobs in Ontario alone. Nurses' associations and unions protested the replacement of registered nurses with less trained generic workers, saying that this change has left hospitals with an inadequate supply of skilled care providers. The vast majority of the registered nurses in Canada are unionized, and the nurses' unions are supported by the union movement generally. Nurses' unions have argued that government cuts to hospitals, with little reinvestment in community services, have damaged the health care system. Nurses have advocated for a broader range of health care providers to be covered under the Canada Health Act (Canadian Nurses Association, 1984). They are concerned about the increasing role of private, for-profit health care agencies, particularly in the home-care and nursing-home sectors. For-profit agencies have expanded in the home nursing services market. The private, nonprofit agencies, whose work force is often unionized, have been undercut by the for-profit agencies that pay their workers less (Ontario Nurses Association [ONA], 1998) and may be branches of larger U.S. companies. In the hospital sector, nurses' wages were frozen or rolled back while their workloads increased as hospitals asked nurses to care for a greater number of more acutely ill patients who left the hospital more quickly. Nurses have sought wage increases to compensate for increasing workloads but have been frustrated by back-to-work legislation and imposed contracts. Nurses argue that money has not always been spent wisely in the health care system. Their unions criticize government for not listening to nurses and other health care workers who see the problems in the health care system as mainly caused by waste, duplication, unnecessary bureaucracy, inappropriate utilization, and lack of coordination. Nurses' organizations have proposed vertical integration of health services at the regional level (e.g., ONA, 1996). Under their model, nurses would enjoy similar working conditions anywhere in the integrated delivery system, and multidisciplinary teams of regulated health professionals would work together, with no provider group having the lead role.

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Hospitals Hospitals, which historically have been a major employer and player in the Canadian health care system, were less influential during the recent shifts and lost some of their previous clout within the health care system as this sector downsized. The Canadian Hospital Association (CHA) has positioned itself to continue to be a major player as power shifts from hospitals to a wider range of health care agencies and institutions. Their national association recently changed its name to the Canadian Healthcare Association and broadened its membership to include regional planning bodies in the provinces, long-termcare facilities, and home- and community-care agencies in addition to hospitals. It continues to lobby for improved funding of the system.

Home care Home-care services have grown rapidly in Canada since the beginning of the 1990s but still are unable to meet the needs created by shorter hospital stays. Many provincial health insurance plans only provide coverage for limited amounts of home care. Changing the site of service delivery from the hospital to the home has meant that many services delivered in the home by providers who are not physicians lie outside the jurisdiction of the Canada Health Act. Thus costs have been shifted to the patient. Copayments for home care can be charged. The services publicly provided may be limited and may not cover comprehensive care and specialized equipment needed during a patient's recovery at home. Often patients must turn to private insurance; public-sector funding enters the picture only after all other resources of the patient are depleted. Medications given in the hospital are "free" at the point of provision of service. Drugs prescribed for patients in the community may constitute an additional cost for patients and their families or to private health insurance plans that cover about 62% of the Canadian population with drug benefits (W. Mercer, 1997). Despite fiscal constraints on publicly funded home care, home-care agencies have seen caseloads grow beyond their budgets. Their mandate to care for acutely ill patients discharged from hospitals has led to redefinition of levels of care needed for the existing chronically ill or disabled clients whom they already served. Long-term-care clients have seen their services cut or terminated, forcing them to rely more on extended-family members and friends, to directly purchase needed services, or to give up their independence and enter a nursing home; but this group has been almost voiceless. The Canadian Home Care Association advocates for the inclusion of home care as an essential service under government-funded health systems. It argues that home-care services maintain people in their homes who would otherwise occupy more expensive nursing and hospital settings.

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Nursing Homes Who should provide nursing homes, homes for the aged, and other long-termcare facilities is an area of contention. Unions commissioned a study (Weintraub, 1995) that was highly critical of the quality of care provided to seniors in forprofit facilities. They argue that the for-profit motive, the hierarchical administrative structure, the narrow medical definition of what is quality care, and the disenfranchisement of residents and their caregivers from the decision-making process in these facilities lead to poor-quality care. Private, for-profit nursing and extended-care homes have been part of the Canadian health care system for many years, although religious groups, charitable organizations, and municipal governments also own such facilities. As the health care system realigns and the Canadian population ages, for-profit companies will likely play a greater role in nursing-home and long-term-care delivery. Nursing homes are regulated by provincial governments. Drug Companies A national pharmacare program with universal first-dollar coverage for medically necessary medications was recommended in 1997 (National Forum on Health, 1997). Major pharmaceutical firms (Merck-Frosst, 1997; GlaxoWellcome, 1998) responded with position papers. In addition, the Canadian Pharmaceutical Manufacturers' Association commissioned a study by a consulting firm on the cost impact of such a program (Palmer D'Angelo, 1997). A national conference on pharmacare yielded no changes as major stakeholders mainly enunciated or reaffirmed their positions. Provincial governments signaled that home care was a higher priority for them and also made clear that they did not wish to have the federal government talk them into "national" programs that they would have to finance. Many provinces have already raised or placed new copayments and restrictions on the limited plans that they administer in efforts to lower their spiraling costs. The pharmaceutical industry is happy to maintain the status quo. It continues to promote a patchwork of public and private drug insurance plans that leaves 12% of the population without any drug insurance and the remainder of the population facing increasing copayments or restrictions on drugs in the formulary. Women's and Consumers' Groups Concern is growing that moving care out of institutions and into the home, unless this move is buttressed by rapidly available, comprehensive, high-quality home-care services, will simply place additional burdens on women (Association Feminine d'Education et d'Action Sociale, 1998). Women now make up almost 50% of the Canadian work force. Cost shifting of care to women has been labeled as a potential problem by women's groups and consumer groups who

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have advocated that home care and pharmacare be part of national medicare coverage. The General Public The public has played a reactive rather than a proactive role in health care reform. When reforms were being initiated, Canadians, by and large, seemed to agree with politicians about the need to balance budgets and to hold the line on spending for social programs, but the cutbacks were larger than expected and, in some cases, were dramatic and rapid. As their consequences began to be felt, Canadians began to speak out. As well, newspapers featured articles about long waiting lists, patients who had died while waiting for a hospital bed or specialized surgery, and ambulances being turned away from some emergency departments because of insufficient resources and beds. Recent public opinion polls reflect some erosion of public confidence in the health care system. In February 1999, 6 out of 10 Canadians believed that the federal finance minister's cautiousness regarding the federal deficit was needlessly shortchanging funding to health care. The proportion of Canadians rating the health care system as fair/poor/very poor increased from 32% in 1998 to 44% in 1999, while 57% believed that the quality of health care services in their community had worsened. Underfunding was seen as the main problem in health care by 71% (Angus Reid Group, 1999). The majority (80%) believed that now that the federal government had eliminated its deficit, the time had come to restore the money that it had cut in health care transfers. An Outlier Province In Saskatchewan, a different interplay among home, nursing-home, and hospital care has occurred than in other jurisdictions. Although Saskatchewan closed some hospitals and restructured others to balance its budget, it invested in health services when other provinces were cutting back. It created a single entry point into the health care system staffed with placement coordinators. They are responsible for assessing individuals and deciding where a person is best cared for in the system (in a hospital, at home, in a rehabilitation facility, in a nursing home, or any combination of these). Quick-response teams work in emergency rooms to assess problems and get people appropriately placed. Although some copayment is involved in home care, sentiment is growing to remove it because the administrative costs make fee collection almost a losing proposition (Picard, 1999). This province avoided crises such as emergency-room overcrowding that became common elsewhere in Canada. RECENT REINVESTMENT IN HEALTH As of 1996, the proportion of total health care expenditures in Canada from the public sector was estimated at 69.9%, while private-sector funding was es-

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timated at 30.1%. Comparable figures for 1991 were 76.4% and 23.6%, respectively. The decreased proportion of public-sector funding (in current Canadian dollars) relative to private-sector funding (Health Canada, Policy and Consultation Branch [HCPCB], June 1997b, Table 3) has been attributed to the greater efficiency gains in the public sector. In 1996 total health spending in Canada (public and private, in current Canadian dollars) was about $2,510 per capita per year (HCPCB, June; 1997b, Table 2). In real total health expenditures, the annual percentage change showed a slight decrease in each of the years from 1993 to 1996 (HCPCB, June 1997b, Table 1). These changes made both the federal and provincial governments vulnerable to voters' concerns about the state of the health care system. A major Canadian newspaper commented, "By now, every provincial premier has been confronted by placard-waving doctors, nurses, patients and ordinary citizens protesting cutbacks to health care" (Little, 1999). As provincial governments and the federal government faced reelection, they put more money into health care (Little, 1999). For example, the Ontario government, which faced an election in 1999, announced money to hire almost 10,000 "new" nurses (nurses who had been laid off during restructuring of hospital services) (Boyle, 1999). Similarly, the September 2000 federalprovincial agreement to increase federal funding to health and social services by $21 billion over the next five years preceded a federal election. CIHI announced in October 2000 that funding for health care by the provinces had increased significantly during the past three years. The period of downsizing appears to be over. INTERNATIONAL PRESSURES AFFECTING CANADA Canada is a member of the North American Free Trade Agreement, and its economy continues to be aligned to those of the United States and Mexico. Free trade with the United States and the failure of major health care reform early in the Clinton administration likely also play roles in the increased attention to private-sector solutions. Conservative governments looked south of the border for ideas regarding health care reform. The U.S. government has sought to regulate private health care provision rather than directly fund health care except where market failure has been obvious (with the elderly and indigent). Large insurance companies and for-profit health care companies play a larger role. Major Canadian hospitals underwent U.S.-style restructuring based largely on consultation from U.S. companies. Increasingly, governments in Canada have chosen regulation of health care provision over direct funding of care. The concern about debt levels and deficit reduction, a major driver of the recent reforms, is stimulated by the globalization of financial markets, the rapid flow of capital across international boundaries, and particularly U.S. bond-rating services that control the cost of borrowing. The flow of primary care physicians into the United States, prompted by the need for primary care physicians in managed-care organizations, increased re-

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gional disparities in frontline physicians in Canada. Corporate restructuring and mergers of large international corporations also weakened the voices of labor unions, which have supported collectivist solutions. The increasing consolidation and control of the Canadian press by transnational conservative interests have also helped create concern among the average citizens that medical benefits that previously were available will not be available in the future and have suggested to them that private-sector solutions are needed. CONCLUSIONS "Free" (at the point of service) universal medical care has been at the heart of the social contract that Canadians have with their government and is the cornerstone of it. However, recent events have made middle-class Canadians more concerned that quality, timely medical care may not be available to them when they need it. The delisting of services from provincial health insurance schemes, increased copayments for drugs and other services, restrictions on services received outside the country, overcrowding of emergency rooms created by rapid cutbacks in operating budgets to acute-care hospitals without sufficient reinvestment in community-based services, and the almost constant threat of strikes or slowdowns in service delivery by physicians (not always in their province) have left Canadians feeling more vulnerable. Yet universal medicare is a cherished value among Canadians. Advocates of an integrated health care delivery system suggest that the efficiencies needed to sustain medicare are possible. Again, the government of Saskatchewan is leading the way in this direction. Whether the other provinces will follow this lead or chart their own paths is not known. However, the change to a fully integrated health care system may be more difficult than the changes made to date because it will affect powerful interest groups that have remained relatively unaffected by the changes already made. Physicians, pharmaceutical companies, private for-profit nursing-home and home-care agencies, and other private interests that have begun to carve out a role in health care delivery will be reluctant to move more toward a publicly funded, integrated system, which would likely curb private incomes, influence, or profits. As the 1990s have demonstrated, evolution in provincial health care systems is in large part shaped by the governments in power at the time and the way they seek an accommodation between federal and provincial interests in health care. Other influences include pressure from the major players in the health care system and the general state of the economy. International changes, and particularly Canada's close proximity to the United States, have also played a role, but a lesser one. NOTE 1. Whenever we refer to provinces, we also include the three territories that form part of Canada.

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REFERENCES Angus, Douglas E. A Great Canadian Prescription: Take Two Commissioned Studies and Call Me in the Morning. In Restructuring Canada's Health Services System: How Do We Get There From Herel edited by Raisa B. Deber and Gail G. Thompson pp. 49-62. Toronto: University of Toronto Press, 1992. Angus Reid Group. Press Release: Restore Healthcare Funding Taken from Provinces Full Majority Say (80%). February 6, 1999. Association Feminine d'Education et d'Action Sociale and Cote, D., Gagnon, E., Gilbert, C , Guberman, N., Saillant, F., Thivierge, N., and Tremblay, M. 1998. Who Will be Responsible for Providing Care? The Impact of the Shift to Ambulatory Care and of Social Economy Polices on Quebec Women. Released by the Status of Women Canada Research Directorate, http://www.swc-cfc.gc.ca/publish/research/ qwcare-e.html. Badgley, Robin, and Wolfe, Samuel. Doctors' Strike: Medical Care and Conflict in Saskatchewan. Toronto: Macmillan, 1967. Baer, Nicole. Despite Some PR Fallout, Proponents Say MD Walkouts Increase Awareness and May Improve Health Care. Canadian Medical Association Journal 157(9): 1268-71, 1997. Borsellino, Matt. Pharmaceutical Economics: Provinces Like Restricted Drug Formularies, but Do They Work? Medical Post 34:42 December 15, 1998a. Borsellino, Matt. BC Docs Plan More Office Closures. Medical Post 34:42, 1998b. Borsellino, Matt. Ont. MD Shortages Eroding Family Medicine Practice. Medical Post 35:1, April 1999. Boyle, T. Nursing Ranks to Be Restored. Toronto: Torstar News Service, March 15, 1999. Canada, House of Commons. Debates, 27th Parliament, First Session, July 12, 1966. Canada, House of Commons. The Canada Health Act (Bill C-3) Passed by the House of Commons. April, 32nd Parliament, 2nd Session, 32-33 Elizabeth II, 1984. Canada, House of Commons. Debates, 35th Parliament, First Session, April 27, 1995a. Canada, House of Commons. Debates, 35th Parliament, Final Session, June 1, 1995b. Canadian Medical Association. Financial and Geographic Barriers to Fee-for-Service Practice. Canadian Medical Association Journal 156:616, 1997a. Canadian Medical Association. Physicians Moving Abroad. Canadian Medical Association Journal 156:744, 1997b. Canadian Medical Association. Quebec Latest to Face Obstetricians' Anger. Canadian Medical Association Journal 158:160, 1998. Canadian Nurses Association. Brief to the House of Commons Standing Committee on Health, Welfare and Social Affairs, in Response to the Proposed Canada Health Act. Ottawa: Author, 1984. Charles, Catherine, and Badgley, Robin. Canadian National Health Insurance: Evolution and Unresolved Policy Issues. Pp. 115-50 in Health Care Systems in Transition: An International Perspective, edited by F.D. Powell and A.F. Wessen. Thousand Oaks, CA: Sage, 1999. Charles, Catherine, Lomas, Jonathan, Giacomini, Mita, Bhatia, Vandna, and Vincent, Victoria. Medical Necessity and Canadian Health Care Policy: Four Meanings and . . . a Funeral? Milbank Quarterly 75:365-94, 1997. Dauphinee, W.D. Changes in Career Plans during Medical Training and Practice: It's

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Time to Look Ahead and Act. Canadian Medical Association Journal 154:104952, 1996. Detsky, Alan. Guidelines for Economic Analysis of Pharmaceutical Products: A Draft Document for Ontario and Canada. Pharmacoeconomics 3:354-61, 1993. Federal/Provincial/Territorial Ministers of Health of Canada. Strategic Directions for Canadian Human Resource Management. Communique issued in Banff, Alberta, Canada, January 28, 1992. Fooks, Catherine. Will Power, Cost Control, and Health Reform in Canada, 1897-92. Pp. 151-72 in Health Care Systems in Transition: An International Perspective, edited by F.D. Powell and A.F. Wessen. Thousand Oaks, CA: Sage, 1999. Glaxo-Wellcome Incorporated. Partners in Health Care: Working Together to Build the Legacy: Our Response to the Final Report of the National Forum on Health, Canada Health Action: Building the legacy. Mississauga, Ontario: Author, 1998. Hall, Emmett. Canada's National-provincial Health Program for the 1980s: A Commitment for Renewal. Ottawa: Department of National Health and Welfare, 1980. Health Canada. Drug Costs in Canada. Submitted to the House of Commons Standing Committee on Industry for the Review of the Patent Act, Amendment Act, 1992. March 1997. Health Canada, Policy and Consultation Branch. Canada Health Act Annual Report, 1996-1997. Ottawa: Author, 1997a. Health Canada, Policy and Consultation Branch. National Health Expenditures in Canada, 1975-1996. Ottawa: Author, 1997b. Hurley, Jeremiah, Lomas, Jonathan, and Bhatia, Vandna. When Tinkering Is Not Enough: Provincial Reform to Manage Health Care Resources. Canadian Public Administration 37:490-514, 1996. Hurley, J., Goldsmith, J., Lomas, J., Khan, H., Vincent, V. "A Tale of Two Provinces: A Case Study of Physician Expenditure Caps as Financial Incentives," McMaster University Center for Health Economics and Policy Analysis, Working paper, 96-112, 1997. Hyndman, L.D. (Chair). The Rainbow Report: Our Vision for Health. Report of the Premier's Commission on Future Health Care for Albertans. Edmonton, 1989. Katz, Steven J., Charles, Catherine, Lomas, Jonathan, and Welch, H. Physician Relations in Canada: Shooting Inward as the Circle Closes. Journal of Health Politics, Policy and Law 75(3):365-94, 1997. Kent, Heather. Reduced Activity Days a Way of Life in BC. Canadian Medical Association Journal 159:913, 1998. Lavoie-Roux, T. Improving Health and Weil-Being in Quebec: Orientations. Quebec: Ministere de la Sante et des Services Sociaux, 1989. Little, Bruce. Hospitals Are Voter Hot Button. Globe and Mail, January 11, p. B5, 1999. Lomas, Jonathan. Devolving Authority for Health Care in Canada's Provinces: 4. Emerging Issues and Prospects. Canadian Medical Association Journal 156:817-23, 1997. Lomas, Jonathan, Woods, John, and Veenstra, Gerry. Devolving Authority for Health Care in Canada's Provinces: 1. An Introduction to the Issues. Canadian Medical Association Journal 156:371-77, 1997. MacMillan, Robert, and Barnes, Marsha. The Independent Health Facilities Act: A First for North America. Pp. 377-85 in Restructuring Canada's Health Services System: How Do We Get There From Here? edited by Raisa B. Deber and Gail G. Thompson. Toronto: University of Toronto Press, 1992.

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Medical Care Act of 1966, 14-15 Elizabeth II, Chapter 64, R.S.C., 1966. Mercer, William M. Overview of Private Sector Drug Plans: BackgrounddInformationon Prepared for the Conference on National Approaches to Pharmacare. Toronto: William M. Mercer, 1997. Merck-Frosst Incorporated. Position Statement: The National Forum on Health. Mississauga, Ontario: Author, 1997. Millar, Wayne, J. Disparities in Prescription Drug Insurance Coverage. Health Reports, 10(4): 11-31, Spring 1999. Murray, R.G. (Chair). Future Directions for Health Care in Saskatchewan: Report of the Commission on Directions in Health Care. Regina: Commission on Directions in Health Care, 1990. National Forum on Health. Canada Health Action: Building the Legacy. Ottawa, ON, Canada, 1997. Ontario Medical Association. Integrated Health Systems: Key Questions forrPhysicians:s: A Discussion Document.t.oronto: Author, 1997.97. Ontario Nurses Association. RN's Evolving Model for an Integrated Delivery System. Dialogue on Health Reform,,Summer 1996. Toronto: Author, 19966.. Ontario Nurses Association. Public Opposes Provincial Policies That Led to Loss of VON Nursing Services in Eastern Ontario, Says Ontario Nurses' Association. Press release. Ottawa: Local 42, Ontario Nurses' Association, December 3, 1998. Palmer D'Angelo Consulting Inc. National Pharmacare Cost Impact Study: A Report Commissioned by the Pharmaceutical Manufacturers Association of Canada. Ottawa: Author, September 1997. Picard, Andre. Behind Closed Doors: The Struggle over Home Care. Globe and Mail March 22, p. A8-A9, 1999. Rich, Pat. Primary Care on Trial: Upcoming Pilot Projects in Ontario Will Assess New Fee Codes, Patient Rostering. Medical Post 34(1 ):67, 1998a. Rich, Pat. Doctors Number steady. Medical Post 34(1): 104, 1998b. Ryten, Eva. Enrolment in MD Programs at Canadian Universities in 1996/7: Just How Much Downsizing Has Occurred? ACMC Forum 30(1 ):3, 1997. Ryten, Eva, Thurber, A.D., and Buske, Linda. The Class of 1989 and Physician Supply in Canada. Canadian Medical Association Journal 158:723-28, 1998. Statistics Canada. Hospital Utilization 1996/97. Health reports, 10(4):85-86, Spring 1999. Taylor, Malcolm G. The Canadian Health Care System 1974-1984. Pp. 3-39 in Medicare at Maturity Achievements, Lessons, and Challenges, edited by Robert. G. Evans and Gregory. L. Stoddart. Banff, Alberta: University of Calgary Press, 1986. Walker, Robert. Dispute Threatens Obstetrics in Alberta. Medical Post 34(1 ):66, 1998a. Walker, Robert. Alta: Rural MDs Close Offices for a Day in Fee Protest. Medical Post 34(2):40, 1998b. Weintraub, L.S. No Place like Home: A Discussion Paper about Living and Working in Ontario's Long-Term Care Facilities. Ontario Federation of Labour Health Research Project Working Paper Series No. 95-2. Don Mills, Ontario: Ontario Federation of Labour, 1995. Willison, Donald, Groodendorst, Paul, and Hurley, Jeremiah. Variation in Pharmacare Coverage across Canada. CHEPA Working Paper Series No. 98-8. Hamilton, Ontario: McMaster University, 1998.

Chapter 5

The United States: Live Free and Die? Albert F. Wessen The American health care system is exceptional. Compared to the systems of other developed countries, it tends to be an "outlier" in terms of both inputs and outputs to or from the system as well as in its structure. I argue that these distinctive characteristics derive from a set of sociocultural and ideological peculiarities of American society that Seymour Lipset and others have described as "American exceptionalism."1 Accordingly, it is likely that they will be significantly changed only as the "exceptional" features of American society are transformed. THE UNITED STATES AS AN OUTLIER Among the almost 200 independent nations in the world, the United States stands alone in many respects. As the acknowledged sole superpower following the fall of the Soviet Union, its economic, cultural, and political influence not only sets it apart from other nations but means that American ways and beliefs are influencing and modifying those of the rest of the world. As just one example, witness the worldwide pervasiveness of American movies and television. To a large degree, the phenomena of globalization are related to America's privileged outlier status. We might expect that the American health care system would also be an outlier, and as this chapter will show, that is to a large extent the case. This demonstration, however, requires placing the United States within a comparative frame of reference. The Organization for Economic Cooperation and Development (OECD) provides this framework because it has assembled a large comparative database for its 29 member states. These include those industrialized Western societies most similar to America.2

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Cost and Utilization of Services For at least a generation, a dominant concern of health policy makers throughout the world has been the issue of cost containment. Every system has been confronted with health care cost increases, which have surpassed the overall growth rate of the economy. Indeed, the recent spate of reforms that modified the health care systems of many developed countries has largely been a response to this rampant inflation.3 With respect to the costs of care, the United States has long been an outlier. Among the 29 OECD nations, it spends by far the most money to provide health care to its population. Thus in 1997 per capita health care expenditures in the United States were $3,925, and in 1999, $4,094.4 In 1997 the per capita expenditures of the United States were 2.3 times as great as the reported OECD median and 1.5 times as great as in the next-highest-spending country (Switzerland).5 In terms of the proportion of the gross domestic product spent on health, in 1997 the United States allocated 13.5% of its income to this sector, and by 2000 health expenses exceeded 14%, or approximately one-seventh of its national income. It is estimated that by 2008 this percentage will rise to 16.2%.6 Over time, the burden of health care costs as a proportion of the American national income has steadily increased; while in 1960 they it absorbed 5.2% of the GDP, by 1990 the percentage had more than doubled to 12.5%.7 Between 1990 and 1997, annual per capita expenditures for health in the United States increased by 40%, while the median for all OECD countries grew by 34%.8 In fact, the ratio of American per capita expenses to the OECD median was almost the same in 1960, 1990, and 1997. Thus while all the developed countries experienced cost pressures over the period, the United States remained the biggest spender. However, the relative American excess in spending for health care does not appear to be associated with the presence of greater utilization of health care resources, at least as measured by gross indices of hospital and physician use.9 In 1996 the United States had almost the same number of physicians per thousand persons as the OECD median (2.6 versus 2.8), as well as physician visits per capita (6.0 versus 5.9). Moreover, Americans used inpatient hospital facilities relatively less frequently than was the case in most OECD countries. Among the 29 OECD countries, the United States ranked 20th in the percentage of the population experiencing a hospital admission and 24th in the number of hospital days per capita.10 In terms of average length of stay in the hospital, the United States ranked 22nd among reporting OECD countries. For all three measures, the United States was below the OECD median. Yet despite the relatively low usage of hospitals by its population, Americans spend much more for these services. In 1996 hospital expenditures per day were $1,128, five times the median for 23 OECD countries reporting this datum ($227)."

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Research and Technology The outlier status of the United States with respect to its high rate of spending for health services can be partly explained by another way in which it is exceptional. America is the unchallenged leader in biomedical science and its application to patient care. It leads the world in the amount and quality of its medical research, and the quality of its medical education (especially at the postgraduate level) is unmatched. This leadership in biomedical science translates into highly specialized and intensive health care, especially for the acutely ill. It is marked by extensive use of high-technology diagnostic devices and laboratory tests as well as of innovative (and often-expensive) therapeutic techniques. American leadership in biomedical research can be measured in a number of ways. Among these are budgetary allocations for research and development, the extent of graduate and postgraduate training in science, the number of scientific publications, and the relative numbers of professional and technical personnel devoting their time to research. The National Science Foundation (NSF) has published extensive data on these points for science and engineering fields generally and provides the larger context within which American leadership in biomedicine may be understood.12 In 1998 total annual research and development expenditures in the United States were estimated at $227 billion, or 2.67 percent of the gross domestic product.13 Of this sum, the federal government provided about one-third, and the Department of Health and Human Services (mostly the National Institutes of Health [NIH]) accounted for 19 percent of federal funds, or $13.7 billion. In addition, private-sector-funded research and development for drugs and medicines amounted to $10 billion in 1997, and nonfederally funded academic research in life sciences accounted for an additional $5 billion in 1996.14 These figures suggest a total investment in life sciences of at least $28 billion per year.15 In 1997 the United States accounted for 43% of world research and development expenses, and this amount was slightly more than the combined expenses of the other G-7 nations. While defense-related expenses accounted for a major share of the American research budget, health research comprised 19% of all governmental research and development expenses.16 America has been the world's leading player in graduate education since World War II. In 1997 American universities awarded more than twice as many doctoral degrees as any other country.17 This number includes many students from abroad, especially from developing countries such as India and China. Moreover, substantial numbers of trainees from outside the United States choose to remain there after completing their education, giving rise to the problem of the "brain drain."18 American dominance in research and graduate education is also reflected in scholarly publication. In 1995-97, approximately 515,000 scientific and tech-

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nical articles were published. Clinical medicine accounted for 29% of these, and biomedical research an additional 15%. American authors accounted for 34% of articles included in Science Citation Index, more than three times the number published from any other country.19 Quantitatively, at least, American leadership in research and graduate education is clear, even though the trend is toward increased participation by both European and Asian countries as well as toward increased international collaboration. America's emphasis on biomedical science has heavily influenced the structure of its medical care system. It has led to the central role of the hospital— especially tertiary and teaching hospitals—and has been a major cause of the tendency toward increased specialization of caregivers. Above all, it has led to the proliferation and widespread use of a multitude of high-technology procedures and to the rapid and widespread diffusion of technological innovation. Moreover, American medical leadership has stimulated the diffusion of scientific medicine and technology throughout the world. International comparisons of four indices reported by the OECD provide insight into the differential use of technology in health care. Two diagnostic technologies, each of which has generated much attention in the medical care literature, may be a proxy for the use of a wide variety of technological innovations. In 1996 the United States had 26.8 CT scanners per million population, more than twice as many as the OECD median (11.9). With respect to the newer and more expensive MRI technology, the United States had 16.0 units per million population, more than five times the OECD median (2.8). Among OECD countries, only Japan had higher rates.20 Another indicator of the use of high technology in medicine is consumption of therapeutic drugs, which may be crudely measured by the rate of drug spending per capita. Again, the United States, averaging $344 per person, showed a substantially higher level of expenditure than the OECD median ($234).21 Finally, the use of modern medical technologies is associated with treatment of acutely or critically ill patients and involves a high level of intensity of care. A crude measure of the intensity of hospital care is the number of full-time employees per hospital bed. Again, the United States, with 3.9 employees per bed, twice the OECD median, leads all reporting nations on this measure.22 It is clear that its high degree of commitment to medical science and technology tends to differentiate the American system from those of other industrialized nations. This emphasis surely contributes to the high cost of health care. Because medical science has advanced so rapidly in recent years, it also has tended to foster rapid change in the system as a whole. Equity and Accessibility of Health Care Despite the costliness of its health care system, America is also distinguished by the fact that its population does not have full access to available services.

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More than 40 million Americans are currently said not to have health insurance coverage, and many more are thought to be underinsured. The norm for industrialized countries is for the government to provide universal health insurance for at least essential medical needs. In 1997, among the 29 OECD countries, only Mexico, Turkey, the Netherlands, Germany, and the United States failed in this respect. While 92% of Germans, 72% of Mexicans and Dutch, and 66% of Turks received governmentally sponsored health insurance, this was true of only 33% of the American population.23 While in every nation the attainment of the goal of universal health care coverage was achieved in a piecemeal fashion over a number of years, this process was aborted in the United States after the passage of the Medicare and Medicaid amendments in 1964. Of course, most Americans do have health insurance, usually of a fairly comprehensive nature and typically obtained from private insurers through their place of work. For many, the entire cost of their health care coverage is borne by the employer, although increasingly employees have been compelled to meet some or all of the costs of their insurance. Hence it is fair to say that for the majority of the population, health care is largely supported through private health care insurance. Most of the uninsured are unemployed, self-employed, or in transition from job to job or work for the minority of employers (usually small businesses) that do not provide insurance. The Medicare program provides insurance for the retired or disabled, and Medicaid offers health care coverage to those who have incomes below a poverty line or who are on welfare.24 Moreover, hospitals are required by law to provide care to anyone presenting with a condition requiring emergency intervention. It can thus be argued that despite incomplete health insurance coverage, the United States provides a safety net for those in medical need. What is unique about the American system is its reliance on nongovernmental financing for most health care insurance. At the same time, many persons experience problems of access to care. Health insurance frequently does not cover all of the costs of care. For example, mental health care has tended to be subject to numerous and often-unrealistic limitations on service provision. Dental care insurance, sold separately, is less available than medical care insurance and often fails to cover the costs of necessary care. The development of managed care has placed limitations both on choice of provider for many and on reimbursement for procedures that plan administrators feel are unwarranted. Some necessary forms of care are either not covered at all or require extensive cost sharing by patients; currently salient examples are the lack of coverage for pharmaceuticals under Medicare and the almost total reliance on out-of-pocket payments for long-term care by nonindigent patients. Although the health care systems of other nations also have restrictions on the provision of services, these tend to be the result of budgetary shortfalls (waiting lists, implicit rationing by clinicians, and so on) rather than gaps in the structure of health care coverage.

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Outcome Measures Despite its high expenditures and commitment to scientific and technological excellence, the United States is not a leader in overall measures of population health. American figures for life expectancy, both at birth and at age 65, are about at the OECD median for both men and women. With respect to infant mortality, which is considered the most sensitive of demographic predictors of a nation's health status, the American performance is worse. Its 1996 level was 34% higher than the OECD mean. Of the 29 OECD nations, only five—Hungary, South Korea, Mexico, Poland, and Turkey—had higher rates. Finally, 1995 estimates of the number of potential years of life lost per 100,000 life years gave similar results. American men lost 34% more life years compared to the OECD median, and for women the loss was 41% greater. American performance was worse than that of all but four or five nations, and except for New Zealand men and Portuguese women, these nations were either former iron-curtain nations or newly emerging from developing-country status.25 The World Health Organization has developed another useful measure of a nation's health attainment, the Disability Adjusted Life Expectancy (DALE) index.26 DALE provides a measure of the population's quality of life by estimating the number of years one might expect to live if one has a disability. DALE scores range from 5 to 12 years less than life expectancy at birth, with the smaller discrepancies concentrated among more affluent nations. For the United States, the 1997 DALE was 70.0 years for the population as a whole, 67.5 for men and 72.6 for women. Among the OECD nations, 18 had higher DALE scores and 10 had lower ones. Japan had the highest DALE estimate, 74.5 years for the population as a whole. Given these disappointing outcome statistics, it is not surprising that the World Health Organization ranked the United States as 72nd of 191 nations in Performance on Health Level. This index is an estimate of the degree to which a nation has attained the optimum level of health possible for a country of its economic level.27 The U.S. ranking was lower than that of any OECD country except New Zealand, Hungary, Poland, the Czech Republic, and South Korea. An index of Overall Performance also combined health attainment with measures of responsiveness to clients and fairness of financing. On this index, the U.S. ranked 37th; only the same five nations as well as Turkey—among OECD countries—ranked lower. However, the United States performed relatively well on the measures of responsiveness and fairness that enter into the index. The measure of responsiveness is based on data evaluating providers' behavior toward patients, promptness in giving service, level of amenities provided, and access to social support during care. On this measure, the United States ranked highest of all the 191 countries studied.28 The fairness measure combines estimates of the affordability of health care (the inverse of the degree to which a family's contributions exhaust its discretionary income), the extent to which the system pro-

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tects against health risks, and whether health insurance costs are regressive. On this measure, the United States tied with Fiji for 54th place among the nations. Its ranking was below 23 of the OECD nations, including all European countries except Portugal.29 The general conclusion to be drawn from these comparisons is that despite its ability to invest heavily in health care and its relative leadership in science and technology, the American system does not perform well on outcome measures. It ranks at or below the median of OECD nations on most indices. Moreover, it has failed to attain the potential for efficiency that might be expected of so well endowed a system. DISTINCTIVE CHARACTERISTICS OF THE AMERICAN SYSTEM An overall description of the American health care system is beyond the scope of this chapter.30 Rather, the following discussion will emphasize 10 ways in which its structure tends to differ from those of other modern industrialized societies. Market Orientation In general terms, the historical evolution of health care systems has seen them progress from a "cottage industry" of individual practitioners to a complex and largely standardized industrial system. In their earliest days, the systems largely depended upon exchange in local markets for inputs; church-related and voluntary charity afforded spotty protection to those who could not afford services. During the later years of the nineteenth century and after, however, health care services proliferated both in scope and distribution. Local markets were supplemented by regional and national markets. Governments increasingly played a major role in the areas of regulation, financing, and actual provision of care, thus modifying or diminishing the free play of market exchange. Odin Anderson (1989) has suggested that the degree to which market mechanisms have been modified or supplanted forms the basis for a continuum along which national systems can be compared. The United States stands at the pole of "market maximization," while the British National Health Service approximates the pole of "market minimization." With respect to financing care, it has been noted earlier that the United States provides government-sponsored health insurance to a smaller proportion of its population than do most other OECD nations. A quantitative measure of market maximization is the proportion of private expenditures as a percentage of total health care expenses. According to the World Health Organization, in 1997 the majority of American health expenditures came from private sources (55.9%).31 Only two OECD nations—Mexico and South Korea—reported higher proportions of private expenditures. Most of the rest were in the range of 10% to 30%,

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and the United Kingdom reported that only 3.7% of its expenditures came from the private sector. It is generally agreed that health care corresponds poorly to the ideal of a free competitive market, and that its distortions impose unfair conditions on many. For this reason and in order to assure reasonable quality of care to all, governments have tended to regulate the health care industry in numerous and comprehensive ways. In the United States, such regulation has historically been seen as the primary responsibility of the states, and it has often been spotty and laxly enforced. Although the federal government has been increasingly active in regulation since World War II, efforts to extend its role have been politically difficult. In fact, at least since the Reagan administration, the dominant political strategy has been deregulation in order that competition might thrive. Insofar as it has been politically practicable, actors in the American health care system have been allowed to "live free" within the framework of the market. The market, with its ethos of optimizing individual actors' goods, obviously emphasizes the profit motive. Since the role of charity and philanthropy in American health care has been in precipitous decline over the past half century,32 there has been an ever-increasing emphasis on the "bottom line." This emphasis has undoubtedly been an important driver of America's persistent inflation in health costs. Of all the factors that tend to distinguish the American health care system, its pronounced tendency toward market maximization is perhaps the most basic. Indeed, many of the trends to follow may in some sense be seen as corollaries or outcomes of this basic factor.

Privatization and For-Profit Ownership Even public hospitals and health facilities must operate within the framework of the market system. Yet to a large degree, American health care institutions have always been dominated by voluntary community-based organizations.33 By contrast, larger proportions of hospital beds in many OECD countries are publicly owned, and in nations with nationalized health care systems such as Britain or Sweden, public ownership is nearly universal. In the United States, the trend has been toward increased privatization. Its voluntary health insurers began as nonprofit community-based entities (e.g., Blue Cross and Blue Shield). Increasingly, for-profit commercial insurers have come to dominate the market, and even many Blue Cross organizations have shifted to for-profit status. Similarly, many erstwhile public hospitals have been acquired by the private sector, and for-profit hospitals increased from 47,000 general hospital beds in 1965 to 107,000 beds in 1999.34 It has also been argued that even those institutions that retain their nonprofit status behave as if they were for-profit organizations.35

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System Diversity and Complexity The progress of biomedical science has led to an ever-increasing range of health care interventions and to increasing differentiation and specialization of functions. Moreover, the market encourages entrepreneurial innovation and specialization as well. These forces, relatively unconstrained by the leveling and standardizing effects of bureaucratic regulation, have produced an increasingly and bewilderingly complicated health care system. By contrast, in systems where the market has been relatively minimized, the organizational template of health systems tends to be more standardized and linearly organized. If in the market there is no one a priori model for success, in bureaucratically dominated systems there is one right way—"according to rule." The arena of health care financing may provide a good example of the complexity of the American system. Instead of the single-payer system of financing found in countries such as Canada, Britain, and Sweden, in America there are a variety of payment mechanisms, and many communities find numerous payers in competition with one another. Providers may be reimbursed on a fee-forservice basis, by capitation, by a variety of prepayment mechanisms, or, on occasion, by salary or grant. Unlike the situation in most OECD countries, uniform fee schedules rarely exist to standardize the levels of reimbursement. Health insurance may be community rated or experience rated, offer indemnity payments or service benefits, or involve various rules for prepayment. It may be sold on a group or on an individual basis and may or may not involve a set of deductibles or copayments. A second tier of "reinsurers" provides protection against undue claims on payment agencies, and another level of organizations provides specialized services such as claims administration. In most communities a variety of different programs are in competition with one another, and providers are faced with the administrative complexity of dealing with a variety of payers and reimbursement systems.36 The variety of prepayment insurance organizations is itself bewildering. Health maintenance organizations—including staff model, network model, group model, and independent practice organizations—vie with preferred provider organizations, exclusive provider organizations, and point-of-service plans. Because of the many specialized types of care and the increasing need by many patients for a variety of concurrent services, some form of coordination is required. Considering also the complexity of the payment system, it is no wonder that a variety of integrated delivery systems have arisen. They aim to coordinate a network of organizations "which provide or arrange to provide a coordinated continuum of services to a defined population and to be held clinically and fiscally accountable for the outcomes and health status of the population serviced."37 Among such organizations are multigroup practices, management service organizations, provider service organizations, and physician-hospital organizations.

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The wide variety of organizational mechanisms in health care and the many competing agencies involved greatly increase the transaction costs of doing business for individual providers. This fact has led to a variety of responses that have further increased system complexity. So tangled are the many threads of health care organizations that some have argued that American health care can best be visualized as a "nonsystem." Fragmentation A related trend is that toward fragmentation of the system and concomitant redundancy. The increase of specialized activities and occupations gives rise to corresponding new organizations or subunits of organizations, each with its own specific focus and organizational boundaries. Absent countervailing integrative forces, the result is functional fragmentation. Functional units tend to compete with and have difficulty in cooperating with other units. The whole may tend to be lost in the plethora of parts. Moreover, given the freedom for entrepreneurial innovation—especially in times of affluence—the market fosters niche-seeking behavior in which units seek to capitalize on unmet marginal needs, thus augmenting the tendency toward fragmentation. Entrepreneurial enterprise also tends to create a number of competing and often-redundant organizational units. A telling example of the fragmentation process and its ineffective results comes from the field of technology assessment. Perry and Thamer have shown that compared to other countries, technology assessment in the United States is fragmented and decentralized.38 While in most European countries technology assessment is primarily a governmental function carried on by one or two agencies, in the United States it is largely in private hands. They identified no less than 53 assessment organizations, managed by insurance companies, hospitals, pharmaceutical or medical-device manufacturers, and professional organizations as well as by governmental agencies. The result, they say, is that in the United States the assessment process is fragmented, duplicative, and relatively ineffective. Decentralization and Variability of Local Systems A further result of market maximization has been a tendency toward decentralization, with many decisions made at the local-unit level. This may be seen as a potential strength of the American system. Since initiative is in the hands of local agents and entrepreneurs, health action can be tailored to meet the unique demands of each community. Market-minimized systems such as those of Britain have recurrently tried to reap the advantages of decentralization but often have found such efforts stymied by the power and rationalizing thrust of central administrators. On the other hand, the variability that goes with decentralization implies lack

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of uniformity within the larger system. This can lead to difficulties in portability of entitlements or frustrated expectations on the part of those who fail to find needed resources as they move from one community to another. Decentralization can also foster inequity. If each community makes decisions on resource use, poorer and more isolated communities may be at a disadvantage compared to more affluent ones. These in turn may tolerate redundant or unnecessary services. At the level of clinical practice, the lack of central coordination can lead to significant small-area variations in activities and outcomes.39

Corporatization and Managerialism By corporatization and managerialism I mean to suggest a trend toward the increased use of modern management methods and structures within the context of a largely private health care system. The tendency toward increased emphasis on rational management methods within administrative organizations is universal, but it is arguably manifested to the greatest extent within the United States. Several characteristics of this phenomenon are of interest with respect to their effects on the health care system. Increased Power of Managerial Personnel Modern managers, through their control of budgets and central position with respect to information control, have been able to exert increasing power in both public and private organizations. Within the health care field, this power has often been asserted at the expense of professional mandates. Physicians especially have complained about the loss of autonomy.40 Information Management Information management is a basic tool of administration. The advent of modern computers and extensive databases has made possible a great increase in the range of activities and actors over which managers can potentially exert control. Clearly, the United States has been the world leader in this respect. Emphasis on Organizational Goal Attainment and Rational Planning In principle, modern management focuses on the attainment of organizational goals, often spelled out in mission statements. It is held accountable for their attainment. Organizational activities are thus legitimated and evaluated in terms of their contribution to these ends. Theoretically, activities that do not contribute to these goals, whether "desirable" or not, are to give way to organizational objectives. Among other things, this emphasis may lead to heavy investment in data gathering, reporting systems, and other evaluative activities and thus to the proliferation of managerial personnel.

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Bureaucratic Controls Administered organizations are meant to follow the general pattern and rules of the bureaucratic model.41 This leads to a process of formalization of roles and activities within the organization—and often to antibureaucratic behavior on the part of lower echelons. It means also that managers tend to try to solve problems by altering the shape of their organization, changing the table of organization, or the like. As well, it may lead to the development of "virtual organizations" through which managers try to solve problems by forming associations of associations. What is unique to the American health care system is the degree to which the corporatization process develops within a plethora of nonpublic organizations. To the extent that it is successful, this process can only increase the power of these organizations and interest groups. Consolidation In recent years, the American health care system has been marked by a wave of mergers and acquisitions that have led to fewer and larger corporate entities within the system.42 Hospital mergers on both a local and regional/national scale have been a continuing trend for the past generation.43 The development of systems of caregiving institutions, especially hospitals, has progressed to the point where, by 1998, 43% of American community hospitals were reported to be part of a larger system.44 Consolidation has been sometimes motivated by the search for economies of scale. Perhaps more important have been the need for access to the large potential markets controlled by large employers and the possibility of easier access to capital. In its push for consolidation, the health sector simply mirrors an important trend in the nation's economy as a whole. Finally, it should be noted that the trend toward consolidation is a countervailing force to that toward decentralization. The trend toward consolidation in the health services is not limited to the United States. Witness, for example, the marked consolidation of sick funds in Germany and the dominance of two or three players in the health insurance market of the Netherlands. The fact that in many OECD countries the government plays a major role in financing and managing care means that in these countries the process of consolidation has already largely been completed. Particularism in Policy Formation It has already been noted that while in most OECD countries governmentally sponsored health insurance is universally available, in the United States it is offered only to particular categories within the population—those of retirement age, the totally disabled, those with end-stage renal disease, and the medically

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indigent. The fact that the United States has deliberately limited its governmentally sponsored health insurance to "residual" categories is but one example of an American tendency to make health policy decisions using particularistic rather than universalistic criteria. Thus health insurers have abandoned the universalistic criterion of community rating in favor of the particularistic one of experience rating. Similarly, policy discussion tends to focus on changing or remedying the situation of particular groups such as racial or ethnic minorities rather than on targeting policy changes to improve the situation of the population as a whole. In contrast, policy in other welfare states has stressed the entitlements of the entire population, appealing to the concept of solidarity, "which in health care elicits the willingness of the healthy to pay for the sick, the single for those with children, and the young for the old."45 In short, American health care policy favors a categorical approach, tending toward a "splitter" rather than a "lumper" mode of analysis. Managed Care and Limitations on Choice and Autonomy Managed care is the hallmark of the contemporary American health care system. The concept includes a variety of arrangements through which payers or insurers may intervene in the delivery of care to control the utilization and cost of services. Health maintenance organizations (HMOs) are a prime exemplar of managed care.46 An organizational response to the problem of cost inflation, managed care is clearly a derivative of several of the trends discussed earlier. A creation of the private sector, it relies on the informational, analytic, and bureaucratic skills of modern management to attain its ends, in the process applying particularistic criteria to define what is allowable clinical behavior. In its many forms, it has become pervasive in American health care. Managed care clearly has major consequences for actors in the health delivery system. For patients, a notable effect is restriction of choice. Many forms of managed care restrict the choice of provider to a given set of eligibles "in the network." Utilization management also imposes limitations on patients' ability to obtain desired procedures or amenities by refusing reimbursement for them. For providers, especially physicians, it directly attacks and limits cherished clinical autonomy, at the minimum establishing bureaucratic barriers to their freedom of action and sometimes overriding their clinical judgment. Its effects can unsettle provider-patient relationships and, through denial of reimbursement for procedures, can limit the provider's possibilities to earn. It is little wonder that physicians have complained loudly about managed care and that it is widely unpopular among the general public. On the other hand, managed care has clearly contributed to containing costs and has also fostered the rationalization of medical practice. Managed care is a distinctly American phenomenon, although it is regarded with much interest by policy makers in other societies. In the form of "managed competition," the concept was introduced in both Great Britain and Sweden

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during the reforms of the early 1990s.47 Similarly, techniques invented in the United States to control hospital costs were aggressively marketed to an interested European audience.48 European policy makers, while sometimes willing to experiment with American managed care and its techniques, have been chary of their adoption. They recoiled from its threat to their solidarist principles and found the prospect of real competition—and especially of allowing the exit of failed programs—intimidating. Thus managed care has made little headway there, or even in Canada, while becoming a standard feature of the American system. Rapid Change Throughout the last century, but especially in the last 25 years, the American health care system has been subject to extremely rapid change. This encompasses the rapid diffusion of fast-changing medical technologies; the emergence, merger, and consolidation of a plethora of institutions; and the development— and sometimes the demise—of new organizational forms. Most of these changes have derived from the innovativeness of entrepreneurs and managers in the private sector. Especially since the failure of the Clinton health plan, the federal government has contributed little to the changing health care scene. Moreover, when governmental policy has contributed to change, it has done so in small, incremental ways rather than by far-reaching reform.49 In contrast, reform in other OECD countries has largely emanated from governmental policy decisions and has frequently involved major changes in their systems. AMERICAN EXCEPTIONALISM AND THE HEALTH CARE SYSTEM Americans have always seen their country as exceptional.50 In many ways, the American polity has been defined in contrast to that of Europe with its feudal and monarchical heritage. In their rich and fertile land, far away from the oppressive atmosphere of the "old country," Americans have believed that it is their destiny to be different. One can hardly overemphasize the importance of America's natural resources in shaping its polity. With its diversity of climate, agricultural fertility, and mineral treasures, the land offered opportunity for mercantile and industrial development and prosperity. For more than two centuries, the seemingly boundless frontier allowed settlers to achieve goals of liberty and prosperity. This abundance of resources also made possible the emergence of the United States as a leader in world industry. Since two world wars caused the near exhaustion of competing industrialized nations, the last 50 years have seen America's relative wealth and economic hegemony validate its superpower status. America's fortunate situation has also attracted a continuous stream of immigration. The energy and diversity of its expanding population fostered the maximization of

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opportunities created by abundant resources and also made for a pluralistic polity. In short, America's exceptional circumstances provided the wealth that allowed its lavish health expenditures as well as its leadership in science and technology. But American exceptionalism also stems from its basic value system. Such values as individualism, equality of opportunity, and the Protestant ethic have been emphasized to a greater degree in the United States than elsewhere. They have heavily influenced enduring political attitudes that shape policy decisions. Among these are the following: • Distrust of government. Historically, distrust of government has especially been manifested in opposition to taxes and has been particularly directed against the federal government. • Voluntarism. Individuals and groups should act in terms of what they see as their best interests rather than because of obligations imposed from above. • Free enterprise. Entrepreneurialism is encouraged. Competition rather than regulation is seen as the preferred way to solve social problems in an open society. • Meritocracy. Individuals should be judged and rewarded in terms of their achievement rather than in terms of ascribed characteristics. Similarly, programs should be evaluated in this manner. Of course, these values and attitudes do not always inform enacted policy, yet they have clearly influenced the distinctive characteristics of the American health care system.

THE AMERICAN POLICY-MAKING PROCESS AND THE HEALTH CARE SYSTEM Finally, the distinctive aspects of the American health care system have been shaped by specific characteristics of the American policy-making process. The decisions stemming from this process resulted in what Carolyn Tuohy calls its "accidental logic." 51 Tuohy argues that major changes in a system usually occur only when there is a "window of opportunity" at which the conjuncture of perceived needs and possibilities allows radical institutional changes to occur. If these opportunities are not seized, only minor and incremental changes are feasible if, indeed, any policy decisions can be enacted. Thus unusual circumstances allowed Britain to found the National Health Service in 1948 and Canada to establish its program of national health insurance a few years later. However, either such opportunities did not arise in the United States or political miscalculation and timidity blocked their fulfillment.52 Whether or not one sees this formulation as an oversimplification, it is clear that except for the enactment of Medicare and Medicaid, federal legislation on the health care system has not resulted in major system changes. Rather, the "revolution" involved in the pri-

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vatization and consolidation of the system and the emergence of managed care took place within the private sector. Several specific characteristics of the American policy process help explain this: • The American federal system and its ideology of deference to states' rights have hindered action at the national level.53 • Concentrated interest groups such as the medical profession and the health industry have successfully lobbied against major legislative interventions.54 • The division of power between the executive and legislative branches, together with lax party discipline, has made enactment of executive policy initiatives difficult.55 Characteristics of the political process such as these augment the tendency of the values and attitudes described earlier to inhibit change. They also strongly support the distinctiveness of the American health care system. The system's strong market orientation and its associated characteristics have given its payers and providers unparalleled freedom of action. At the same time, despite America's leadership in science and technology and its lavish expenditure on health care, it performs poorly on measures of mortality and life expectancy when compared to its peers. The result is that the New Hampshire state motto "Live Free or Die" might in health care terms be rendered as "Live Free and Die." NOTES 1. See Lipset, 1996. 2. The OECD publishes a health care database, available on CD-ROM. This chapter uses its Health Data 98: A Comparative Analysis of 29 Countries (Paris: OECD, 1998) as a primary source for comparisons. Highlights of this database are provided in Anderson and Poullier, 1999. See also Haber, 1999. While most of the 29 OECD nations are industrialized countries with "very low child and adult mortality rates," a few are either former members of the Soviet bloc or are newly emerging industrial powers. Thus the World Health Organization classifies Mexico, Poland, South Korea, and Turkey as states with "low child and adult mortality" while Hungary is classified as having "low child mortality and high adult mortality." See WHO, 2000, chapter 2, and the list of member states by mortality stratum in the Statistical Annex. 3. Analysis of these reforms may be found, inter alia, in Powell and Wessen, 1999. For a general discussion of the context in which these reforms took place, see the chapters by Wessen, David Mechanic, and Mark Field in that volume (chapters 1-3). 4. Per capita expenditures, 1960-1997, are reported in Anderson and Poullier, 1999, Exhibit 1, p. 179. This table also gives data on the proportion of the GDP spent on the health sector. Data for 1998 are derived from Cowan et al., 1999, p. 168. 5. They were proportionately almost twice as high as in Canada and almost three times as high as in the United Kingdom. They were 15 times as high as in Turkey, which spent the least per capita of all the OECD countries.

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6. Smith etal., 1999, p. 211. 7. Anderson and Poullier, 1999, p. 179. 8. Rates of increases varied among the OECD countries. For example, in 1997 expenditures in Sweden were only 18% greater than in 1990 and in Canada the increase was only 23.5%. On the other hand, expenditures in Switzerland were 44% higher in 1997 than in 1990, and among the lowest-spending OECD countries, Turkey's 1997 expenditures were 52% higher in 1997 than in 1990, and Portugal saw an 83% increase. 9. Anderson and Poullier, 1999, Exhibits 3 and 5, p. 183 and p. 186. 10. Data for 1996. Countries reporting fewer per capita hospital days and a smaller proportion of persons experiencing hospital admissions tended to come from less developed countries (e.g., Mexico, Turkey) or Asian nations (Japan and Korea). Most European nations made more use of hospitals. 11. Anderson and Poullier, 1999, Exhibit 4, p. 185. The United States spent about twice as much per hospital day as did the next-highest spender, Denmark. 12. NSF, 2000. While this publication does not offer specific data on biomedicine, it does provide information on the status of life science research and training in relation to other scientific fields. 13. NSF, 2000, chapter 2. 14. Ibid. 15. Academic research and development expenses were especially heavily weighted toward the life sciences, which accounted for more than half of all funded academic research. NSF, 2000, chapter 6. 16. Ibid. While the United States and Western European nations tended to spend heavily on research in the life sciences, Eastern European and many Asian nations spent more heavily on the natural sciences and engineering. 17. Ibid., chapter 4. 18. In 1997, 26% of doctorates in science and engineering in the United States were foreign bom. On the other hand, universities in Europe have substantially increased their output of doctoral candidates in recent years, so that in 1997 they collectively awarded more degrees than did the United States. NSF, 2000, chapters 3 and 4. 19. NSF, 2000, chapter 6. 20. Anderson and Poullier, 1999, Exhibit 3, p. 183. 21. Ibid., Exhibit 5, p. 186. 22. Ibid., Exhibit 3, p. 183. 23. Ibid., Exhibit 2, p. 181. In the cases of both the Netherlands and Germany, those without governmentally sponsored health insurance were almost all able to purchase private insurance. 24. The federal government also provides health care to military personnel, to veterans, and to native Americans, and these programs make it a leading provider of medical care. 25. These statistics are derived from Anderson and Poullier, 1999, Exhibit 6, p. 189. 26. WHO, 2000, Annex Table 5. 27. WHO 2000, Chapter 2, Annex Table 10. The estimates for Performance on Health Level (DALE) are seen as a measure of the relative efficiency of health systems. The Index of Overall Performance is based on a weighted sum of the Performance on Health Level index and measures of responsiveness and fairness of financing. For description of how these indices are calculated, see WHO 2000, pp. 40^44 and Evans et al., 2000.

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Thus the index is an estimate of a health system's performance in relation to its potential for improvement. 28. WHO, 2000, Annex Table 6. 29. Ibid., Annex Table 7. Some of the poorer OECD nations ranked very low in the scale; Hungary ranked 105th, Mexico 144th, and Poland 150th. 30. Numerous texts provide a detailed description of the American system. See, for example, Shi and Singh, 2001. An indispensable resource for understanding the American system in terms of its historical development is Starr, 1982. 31. WHO, 2000, Annex Table 8. It might be noted that most developing countries shared this emphasis on private sources of health care expenditures. 32. The role of philanthropy in health care has been declining for many years. Blendon, 1973, indicates that while in 1929 philanthropic expenditures in the health field were 90% as great as federal government expenditures in this area, by 1973 they were only 16% as great. He thus stresses the role of philanthropy as increasingly targeted toward "niche" activities that public and private insurance does not or cannot cover. While the total dollar amount of health-related philanthropic dollars has vastly increased over the years, it was estimated by Ginzberg, 1991, that they accounted "for only 1% of health care operating costs and 5% of capital expenditures" in 1990. See also Charhut, 1984. 33. oinzberg, 1991, emphasizes the dominance of the not-for-profit sector in health affairs prior to World War II and suggests its continuing, if diminished, importance since that time. The continuing importance of not-for-profit (voluntary) ownership is shown by the following estimates. In 1946, voluntary ownership of general (community) hospitals accounted for 58% of the total, in 1974 for 57%, and in 1999 for 61%. In terms of proportion of beds controlled, not-for-profit ownership accounted for 64% in 1946, 70% in 1974, and 71% in 1999. These percentages were computed from data in AHA, 1975, Table 1, and AHA, 2001, pp. 50ff. 34. AHA, 1975, and AHA, 2001. 35. For a discussion of this issue, see Gray, 1991, chapters 4 and 5. 36. Hellander et al., 1994, estimated that in 1993 administrative costs took up 24.7% of the health care dollar. Similarly, Himmelstein et al., 1996, estimated that in 1968, administrative employees comprised 18% of all health care Full-time equivalents (FTEs) a proportion that increased to 27% in 1993. In 1983, in the United States, the proportion of health care costs devoted to administration was 60% higher than in Canada and 87% higher than in Great Britain (Woolhandler and Himmelstein, 1991). 37. Shi and Singh, 2001, p. 348. See also Shortell and Hull, 1996. 38. Perry and Thamer, 1997. 39. Wennberg and Gittelsohn, 1973, developed the analysis of "small-area variations" in clinical activities. It has especially been applied to variations in the frequency of surgical operations and hospital admission rates among localities. McPherson et al., 1982, found in a comparative study done in Norway, the United Kingdom, and the United States that such variations seemed largely independent of mode of health care organization or national setting. 40. See the extensive discussion in Hafferty and McKinlay, 1993. 41. The concept of bureaucracy was developed by Max Weber in the early twentieth century. See Weber, 1978, pp. 956-1005. It has engendered an enormous literature, both technical and popular. For a good summary of modern thinking about bureaucracy, see Blau and Meyer, 1987.

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42. On the importance of consolidations of managed-care organizations and providers in recent years, see Zelman, 1996, pp. 83-115. 43. Merger activities among hospitals peaked during the mid-1990s. Thus in 199496 nearly two in five nonfederal hospitals were involved in merger or acquisition activity (Japsen, 1996). By the end of the decade, merger activity had slowed markedly. 44. This percentage is derived from statistics reported in AHA, 2000, Table 3. Although the AHA has tracked the number of hospital systems only since 1993, the trend toward system development was well established before that time, as symbolized by the title change of the AHA's official journal from Hospitals to Hospitals and Health Networks in that year. Hospital systems may be organized on the basis of common ownership or linked together through affiliation or management agreements. As is the case of hospital ownership in general, hospital systems are mostly organizations of not-for-profit hospitals; nevertheless, while investor-owned systems account for only a sixth of the total, they include more than a third of all hospitals belonging to systems (AHA, 2001). 45. Altenstetter, 1999, p. 52. 46. See texts such as Shi and Singh, 2001, for basic explanations. Gray, 1991, is an invaluable resource on the background, methods, and consequences of the managed-care movement. 47. Alain Enthoven was especially influential in the thinking that led to the British "internal market" and similar experiments elsewhere. See Enthoven, 1985a and 1985b. 48. See Kimberly et al., 1993. 49. The latter point is stressed by Carolyn Tuohy, 1999. 50. The following discussion draws heavily on ideas summarized by Lipset, 1996. 51. Tuohy, 1999. See especially pp. 47-61, 71-88, and 127-61. 52. In the United States, political division thwarted Truman's effort to enact national health insurance in 1948, and the compromises that led to the enactment of the Medicare and Medicaid amendments in 1964 wasted pressures that might have resulted in universal coverage. Similarly, while the British were able to enact their "internal market" reforms in 1989-91, Clinton's lack of a strong mandate and political ineptitude led to failure of his 1993 reform plan. 53. While the states often do enact policy initiatives affecting the delivery of care, their lack of financial and administrative clout often prevents effective action. 54. Theodore Marmor discusses the role of interest groups in health policy, emphasizing the fact that the concentrated power of private interests tends to overwhelm the more diffuse interests of those promoting change. See Marmor, 1983. See also the comments by Rudolf Klein in Haggerty and McKinlay, 1993, p. 204. 55. Tuohy, 1999. While in a parliamentary system such as in Great Britain, government policy can usually be sure of legislative enactment without major change, in the United States congressional debate is often prolonged and subject to multiple and oftendisabling amendments.

REFERENCES Altenstetter, Christa. 1999. "From Solidarity to Market Competition?" In Powell and Wessen, 1999. American Hospital Association (AHA). 1975. AHA Guide to the Health Care Field. Chicago: American Hospital Association.

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American Hospital Association (AHA). 2000. Hospital Statistics 2000. Chicago, (American Hospital Association) Healthcare InfoSource. American Hospital Association (AHA). 2001. "Profile of Hospitals." Hospitals and Health Networks, 75(4):50ff., April. Anderson, G.F. and J.-P. Poullier. 1999. "Health Care Spending, Access and Outcome: Trends in Industrialized Countries." Health Affairs, 18:178-92, May-June. Anderson, Odin. 1989. The Health Service Continuum in Democratic States. Ann Arbor, MI: Health Administration Press. Blau, Peter, and Marshall Meyer. 1987. Bureaucracy in Modern Society. 3rd ed. New York: Random House. Blendon, Robert J. 1975. "The Changing Role of Private Philanthropy in Health Affairs." New England Journal of Medicine, 292:946-50. Charhut, Maureen. 1984. "Trends in Hospital Philanthropy." Hospitals, March 16, pp. 70-74. Cowan, C, H. Lazenby, A. Martin, P. McDonnell, A. Sensenig, L. Stiller, L. Whittle, K. Kotoua, M. Zezza, C. Donham, A. Long, and M. Stewart, 1999, "National Health Expenditures, 1998." Health Care Financing Review, 21(2): 165-210. Enthoven, Alain, 1985a. Reflections on the Management of the National Health Service. London: Nuffield Provincial Hospital Trust. Enthoven, Alain. 1985b. Theory and Practice of Managed Competition in Health Care Finance. Amsterdam: North-Holland. Evans, David B., A. Tandon, C. Murray, and J. Lauer, 2002. The Comparative Efficiency of National Health Systems in Producing Health: An Analysis of 191 Countries. GPE Discussion Paper Series, No. 29. Geneva, World Health Organization. Ginzberg, Eli. 1991. "Philanthropy and Nonprofit Organizations in U.S. Health Care: A Personal Retrospective." Inquiry, 28:179-86. Gray, Bradford, 1991. The Profit Motive and Patient Care: The Changing Accountability of Doctors and Hospitals. Cambridge, Harvard University Press. Haber, Manfred, 1999. "Health Expenditure Trends in OECD Countries, 1970-1997." Health Care Financing Review, 21(2):99-118. Hafferty, Frederic, and John McKinlay 1993. The Changing Medical Profession. New York: Oxford University Press. Hellander, I., D. Himmelstein, and S. Woolhandler. et al, 1994. "Health Care Paper Chase, 1993: The Cost to the Nation, the States, and the District of Columbia." International Journal of Health Services, 24(1): 1-9. Himmelstein, D.U., Lewontin, J., and Woolhandler, S. 1996. "Who Administers? Who Cares? Medical Administrative and Clinical Employment in the United States and Canada. American Journal of Public Health, 86:172-78. Japsen, Bruce. 1996. "Another Record Year for Deal-making Activity." Modern Healthcare, December 23, p. 37. Kimberly, J., G. de Pouvourville, and associates. 1993. The Migration of Managerial Innovation: Diagnosis-related Groups and Health Care Administration in Western Europe. San Francisco: Jossey-Bass. Lipset, Seymour. 1996. American Exceptionalism: A Double-edged Sword. New York: W.W. Norton. Marmor, Theodore. 1983. Political Analysis and American Medical Care. New York: Cambridge University Press. McPherson, K., Wennberg, J., Hovind, O., and Clifford, P. 1982. "Small-area Variations

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in the Use of Common Surgical Procedures: An International Comparison of New England, England, and Norway." New England Journal of Medicine, 307:131014. National Science Foundation. (NSF). 2000. Science and Engineering Indicators 2000. Washington, DC: National Science Foundation. Organization for Economic Cooperation and Development (OECD). 1998. Health Data 98: A Comparative Analysis of 29 Countries. Paris: Organization for Economic Cooperation and Development. Perry, Seymour, and Mac Thamer. 1997. "Health Technology Assessment: Decentralized and Fragmented in the US Compared to Other Countries." Health Policy, 40:17798. Powell, Francis D., and Albert F. Wessen, ed. 1999. Health Care Systems in Transition. Thousand Oaks, CA: Sage Publications. Reinhardt, Uwe. 1996. "The New Organization of Health Care Systems." In Altman, S.H. and U.E. Reinhardt, eds. Strategic Choices for a Changing Health Care System. Chicago: Health Administration Press. Shi, Leiyu, and Douglas A. Singh eds. 2001 Delivering Health Care in America: A Systems Approach, Gaithersburg, Md., Aspen Publishers. Smith, S., S. Heffler, S. Calfo, K. Clemens, M. Freeland, M. Seifert, A. Sensenig, and J. Stiller. 1999. "National Health Projections through 2008." Health Care Financing Review, 21 (2):211-237. Starr, Paul. 1982. The Social Transformation of American Medicine. New York: Basic Books. Tuohy, Carolyn. 1999. Accidental Logics: The Dynamics of Change in the Health Care Arena in the United States, Great Britain, and Canada. New York: Oxford University Press. Weber, Max. 1978. Economy and Society (trans. G. Roth and C. Wittich). Berkeley: University of California Press. Wennberg, J.E. and A. Gittelsohn. 1973. "Small Area Variations in Health Care Delivery." Science, 182:1102-8. Woolhandler, S. and D. Himmelstein. 1991. "The Deteriorating Administrative Efficiency of the U. S. Health Care System." New England Journal of Medicine, 324:125358. World Health Organization (WHO). 2000. World Health Report 2000. Geneva: World Health Organization. Zelman, Walter. 1996. The Changing Health Care Marketplace. San Francisco: JosseyBass.

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PART III

EASTERN EUROPE

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Chapter 6

Introducing Compulsory Health Insurance in Central Europe: Redirecting a Wheel? Stipe Oreskovic The Central European Free Trade Association (CEFTA) emerged in December 1992 as a free-trade association in the Central European region. It covers a territory of 593,000 square kilometers inhabited by a population of 71.2 million, located within geopolitical space between Germany and Russia. Most of the CEFTA countries are serious candidates for the full membership in the European Union after 2005 (Commission of European Communities, 1997). The Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia are full members of CEFTA, while Croatia is currently going through the procedure to become a member (Deppe and Oreskovic, 1996). In comparison with the EU, CEFTA is performing very favorably economically, having the fastest-growing GDPs in the European mainland and experiencing a positive growth after the slump in the 1990s. The compulsory health insurance scheme holds a special appeal for CEFTA members. That appeal was the result of historical circumstances (the AustroHungarian Empire) and the geopolitical influence of Germany and its Bismarckian health insurance system serving as a model (Oreskovic, 1997). The national health services of Western Europe were not accepted as models, although their designs are closer to the previously existing structures in Eastern Europe and would probably have made the first phase of change easier. All socialist countries—with the exception of Poland, which recently introduced a health insurance law—began in 1992-93 to reestablish or implement the previously nonexistent social-security-based, third-party financing of health care, with the provider being reimbursed by insurance schemes. The introduction of health insurance, independent of the state economy and financed through contributions from employees and employers as a percentage of the income of the insured, should change the previous paradigm of total public control over welfare. It is

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important to note that before the 1990 revolution the health care systems in one part of CEFTA were centrally managed state monopolies, state operated, tax funded, and designed upon the Semashko (Soviet) model (the Czech Republic, Hungary, the Slovak Republic, and Poland), while Croatia and Slovenia already had a payroll-deduction self-management version of a compulsory health insurance scheme. In contrast to Western Europe, the Eastern European health care systems were almost uniform, although not identical. Health care was modeled on the Soviet example. It involved a centrally planned provision of health care as a public good and a strongly hierarchical system of organization. Its public character, which excluded the representation of the interests of private industry, was its dominant principle. The state employed medical staff and banned or strongly limited private practice for physicians. The organization provided a weak medical profession, so there were no pressure groups in socialist countries that acted as single-minded representatives of a group to advance that group's cause. The idea was to provide free and generally accessible medical help for all and to guarantee the general and even development of health care institutions. These institutions were state owned, apart from a few exceptions, and the people who worked in them were employees of the state. Furthermore, health politics was considered an integral part of social policy, which had the organizational consequence that the health system's financial resources were administered in a communal insurance plan. A responsible and politically managed accounting system of cost bearers and types of cost did not exist. The health care system was thus forced into taking over services not directly related to the care of illness, such as looking after children in day nurseries and children's homes. What existed was a clear functional separation between primary, ambulatory, and hospital care. Primary care was divided into three main areas of medicine: general care, maternal and child care, preventive, and environmental (including occupational) care. Social policy was not seen as an addition to or compensation for economic policy but was closely interwoven with it. Characteristically, these health care systems were based on an extensive network of polyclinics within state-owned factories. Similarly, the place of work was the center of social politics. The management, planning, and organization of health protection rested on the ideas of "democratic centralism," and the administration of finance was the responsibility of unions. This brief sketch of important health care and social principles illustrates how closely health care systems and social systems were interwoven. At the beginning of the 1990s, health authorities in (Former Socialist Economies) FSE were looking to models from other countries that might help them solve great health care problems. The impetus for the general direction of health system reform was coming from several directions that all together have created some common reform patterns. The main factors influencing reforms in FSE countries were the following:

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• Reforms in society as a whole were a result of the breakup of socialism and the shift of economic structures and individual values from collectivism toward privatization and individualism. • The trend toward seeking a market or managed-market, solution (to embrace market reform as a way to improve health-sector efficiency) was stimulated by trends in a number of OECD countries. • Strategic decisions, financial support, and technical assistance, coming from international institutions made a great impact on the direction of reforms (Szalai and Orosz, 1992). • The decision to choose insurance-based financing of health care (Germany, Canada, France, the Netherlands) instead of choosing taxation (the United Kingdom and New Zealand) was in large part influenced by physicians' interests. Few researchers were advising that while the transition from a planned to a market economy requires adjustments in employment and pension benefits, it does not necessarily require modifications of the health care systems. Since 1989 there have been enormous changes in all aspects of health policy, and each of the FSE countries is facing similar challenges, but there are also some important differences arising from the legacy of previous policies, differences in the level of economic development, and differences in the current political situation. The general restructuring of politics and economics resulted in two main orientations toward transformation of the health care system: the separation of funding and service provision from the state and the separation of funding and service provision from each other. All socialist countries with the exception of Poland began in 1992/93 to establish social health insurance plans that were independent of the state economy and financed through contributions from employees and employers as a percentage of the income of the insured. The principle of cost repayment (reimbursement) was not accepted by any country as an adequate financial and guiding instrument. With the reorganization of financing and the development of new trade unions, the administration of social health care insurance was removed from the former unified trade union. The self-governing model presupposed functioning organizations of pressure groups, which were not present and could only be built up very slowly. The social health care system was reorganized almost exclusively by taking Western European insurance systems—mostly the German one—as models. National health services of Western Europe were not accepted as models, although their designs are closer to the previously existing structures in Eastern Europe and would probably have made change easier. One reason for choosing a social health insurance system rather than a national health service was that privatization of labor linked with a largely free choice of medical care was in accordance with the ideas of reform and was thought to be easier to achieve. Additionally, the geopolitical changes in Europe brought the united and economically strong Germany into a model position. However, the process of restructuring involved numerous problems such as the

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finance of these reforms, lack of technology to master the restructuring, dealing with the new regional changes (financial balance), and the lack of administrative experience (collecting contributions, possibilities of sanctions). The introduction of social health insurance had marked effects on the structure of the provision of health care. This was a precondition to make the health care system more attractive to private service providers—in this context, particularly outpatient care by private physicians' surgeries. For patients, the central point was the introduction of "free choice" of doctor. There was a dissolution of staterun doctors' surgeries as well as the regional doctors system and the simultaneous reduction of the polyclinics in parallel with the introduction of doctors in private practice, who as a rule are general practitioners. METHODS AND DATA SOURCES Cross-national comparative analysis was aimed at assessing the consequences of transition from the state organization of health care financing and delivery (Semashko model) to compulsory health insurance in CEFTA. Analysis was conducted for the transition period (1990-98) and for a group of countries belonging to the same geographical region and with similar historical backgrounds (most of the CEFTA members had the same type of health care organization between the two world wars and after World War II). Data were collected from the World Health Organization's Health for All Database, World Bank macroeconomic data, the OECD Health Database, and the final reports of the CEFTA Health Insurance Institutes. Data were used to compare the effects of a different pace and methodology for introduction of a compulsory health insurance scheme; implications of the transition process from the state-run Semashko-type services (Poland, the Czech Republic, Hungary, Slovakia) and self-managed health services (Croatia and Slovenia) to a Bismarckian type of health insurance; changes in health care financing; the role of the professional associations and work-force policy and investment policy; and equity, accessibility of health care, and patient behavior. RESULTS Aggressive Big-Bang Approach versus Stalled Market Reforms The process of restructuring health care systems presented policy makers with numerous problems, such as the financing of the reforms, lack of technology to master the restructuring, problems with the reorganization of the new states, changes in intersectoral organization (decentralization, power distribution, and financial balance), and the lack of specific administrative experience within health care settings (Table 6.1 shows priorities of Central European countries in the restructuring process; Table 6.2 shows the development of health insurance legislation in Central European countries). In such an environment, the Czech

Table 6.1 Priorities in the Introduction of Health Insurance in Central European Countries

Health Insurance reform priorities

Croatia

Czech Republic

Hungary

Poland

Slovakia

Slovenia

Privatization

4

4

3

3

4

3

Introduction of health insurance

Existed before 1990—New law in 1993

3

1

4

4

Existed before 1990—New law in 1992

Financing health care

3

4

4

4

4

4

Primary care

3

4

3

3

3

3

Health promotion

4

2

2

3

3

3

Professional training

2

2

3

4

3

3

Availability of affordable drugs

1

2

2

2

2

2

Health information system

4

4

3

3

4

2

1 = not relevant; 2 = low or no priority; 3 = priority but not urgent; 4 = very urgent. Source: Deppe, H., and S. Oresovic. 1996. "Back to Europe; Back to Bismarck." International Journal of Health Sciences 6: 777-803.

Table 6.2 Development of Health Insurance Legislation in Selected Central European Countries

Comments

Ratio: 50:50

Free choice

One central fund; /Additional private funds to be established in 2001

13.5%

Ratio: 67:33

Free choice

More than 20 funds

23.5%

Ratio: 19.5:4

Family doctor

1 sick fund with regional offices

Free choice

Tax based financing of health services

66:33

Free choice

1 central fund

50:50

Physician: Family doctor

1 central fund Several supplementary funds in 2000

Action

Croatia

1993: Law passed

16.0%

Czech Republic

1992: Law passed, 1993: Branch insurance law passed

Hungary

1992: Law passed; 1993: Sickness funds become selfgoverning; 1995: Law changed

Poland

1992: First proposals presented; 1993 :New proposals; 1994: Debate goes on; 1998: Final proposal

Slovakia

Action 1993: Law passed Action 1994: Debate on implementation

13.5%

Slovenia

1993: Law passed

12.8%

Source: Deppe and Oreskovic, 1996.

Employer/employee ratio of contribution

Choice of physician

Contribution rates (%)

Country

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Republic, Poland, and Hungary were the most aggressive in encouraging competition and free-market-based health system reform (at the beginning, Poland did not introduce a health insurance scheme). At the other side stands the Slovak Republic with stalled market reforms due to political uncertainty, which existed until the 1998 elections. What are the results of such a big-bang reform approach? Czech Republic and Slovak Republic The Czech and Slovak republics moved from a controlled socialist structure to an insurance-based, fee-for-service model in a short time. A Health Reform Task Force was established in late 1989 and produced recommendations that were adopted by the government in 1990. Health surveys, even before the end of the 1980s, reported a deterioration of efficiency and equipment in the health sector that had begun in the early 1970s. The health status indicators showed difficulty and sometimes failure in obtaining medical assistance (Albert, Bennett, and Bojar, 1992). The indices showed that citizens were sicker and dying sooner (Albert, Bennett, and Bojar, 1992; McKee, Bobak, Kalina, Bojan, and Enachescu, 1994). In the beginning of the reform process, the General Health Insurance Office was established under the 1991 General Health Insurance Act. The payment of hospitals and physicians on a fee-for-service basis in the Czech Republic was introduced in 1992. Membership was compulsory for all resident Czech citizens, and the contribution level was 13.5%. Several smaller funds existed, which were associated with specific employment sectors, such as banking, heavy industry, and parts of the public service; these smaller funds cover about 20% of the population. A compulsory insurance proposal was submitted to the Czech National Council early in 1991 and initiated in 1992. In January 1993, when the Czech and Slovak republics separated, the Czech Republic insurance system became autonomous, collecting premiums and disbursing payments without direct government involvement. The insurance system began operation in 1992 and became self-sufficient in 1993 (McKee et al., 1994). After separation, the General Health Insurance Company of the Czech Republic (Vseobecna Zdravotni Pojistovna or VZP), a publicly sponsored private firm, became the primary insurer, covering approximately 83% of the population (8.5 million persons). The remaining 1.8 million were covered by the 18 specialized sickness funds approved in January 1993 to insure employees of certain government agencies (e.g., police and the army), economic sectors (e.g., miners and bank employees), and large individual firms (e.g., Skoda-Volkswagen). Those who worked in an area covered by a specialized sickness fund could choose the industry-specific fund or the VZP and change carriers as often as every three months. This system quickly produced an unsustainable increase in the percentage of GDP spent on health. A fraction of the increase may be attributable to general inflation, which in one year increased from 5.2% to 9.4%. In 1991 the Czech Federation spent Kc 38 billion on health care; by 1993 expenditures were Kc

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58 billion—more than a 50% increase in two years (Kalman, Massaro and Nemec, 1994). This increase in spending required a substantial injection of additional funds, of which individual contributions were about 30% (McKee et al., 1994). Premiums were collected from 95% of employers and 60% of the selfemployed. This shortfall may be explained by the possibility that those holding two jobs were trying to avoid making payments based on incomes derived from the second or part-time position. The Slovak Republic achieved its independence in 1993 following the breakup of the Czech and Slovak federal republics. It had a population of 5.4 million with a GNP per capita of U.S. $3,700 in 1997. In fact, Slovakia registered one of the best growth performances in Central Europe between 1997 and 2000. After the initial shock of transformation, when GDP declined by 23% between 1990 and 1993, GDP growth rates have averaged a remarkable 6.2% per annum. In 1994 the recovery was led by a strong growth in exports. Investment replaced exports as the main source of output growth from 1995 to 1997 due in part to "tax holidays" associated with the privatization process and public investment programs. By 1997 fixed investment represented nearly 39% of GDP. Despite rapid growth rates, unemployment has remained stubbornly high at approximately 15% of the labor force. The government of Slovakia implemented a fiscal adjustment program that resulted in the general government fiscal balance going from an implicit deficit of 13% of GDP in 1992 to a small surplus in 1995. This was achieved primarily through expenditure cuts that involved cuts in the health sector. However, the fiscal balance began to deteriorate in 1996, when it fell to a modest deficit of 1.3% of GDP, and deteriorated further in 1997 to a deficit of 4.5% of GDP. Hungary Hungary, the second-largest country in Central Europe, had a population of just over 10 million in 1996. It had a GDP growth of 2.0% in constant prices, a GDP of U.S. $3,800 per capita, and a relatively high unemployment rate of 11%. The current concept of social security based on a solidarity principle was in place one century ago, developed along lines similar to those of Austria within the Austro-Hungarian Empire. After 1948 a centralized Soviet-type health care model was developed, consisting of three levels of care: physicians (primary), polyclinics, and hospital care. The Health Insurance Act, introduced in July 1992, formalized the separation of health insurance funds from the state budget and established a managing committee to be chosen by national election. The Health Insurance Fund pays for health services and sickness benefits and is underwritten by the government. Employees pay 4% and employers pay 23.5% of pretax salaries. In addition, employees pay 4% toward a solidarity fund, part of which goes toward contributions on behalf of the unemployed (Surjan, 1994). The act also established a network of family physicians and made possible the free choice of general practitioners and pediatricians. The official patient-

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physician relationship is verified through an insurance card that the patient presents to his or her doctor (Szalai and Orosz, 1992). The results of the new reimbursement system were not as expected and had many practical difficulties (Ackerman, 1994). In the Hungarian compulsory sickness insurance system, access is based not on the automatic right of citizens to health care, but on the right to insurance. Orosz has suggested that this is likely to leave out some of the most disadvantaged groups (Ackerman, 1994). In mid-1994 the Socialist Party defeated the Hungarian Democratic front. After the elections the Socialist government announced that health policy would shift from the liberal program of the previous government (intensive privatization, attempts to develop managed competition, competition between providers of health care). There was no clear evidence that improvement in the equalization of facilities and modernization of hospitals was achieved under the Socialist government before a liberal center-right-wing coalition came back to power in the autumn of 1998. In both the Czech Republic and Hungary, the government announced programs for closing or privatizing hospitals. In the Czech Republic, about 50% of doctors and 40% of clinics have been privatized. But in trying to put hospital management on a businesslike basis, the pendulum has swung too far, and doctors have been required to account for the cost of every item used in patient care, including bandages and syringes: scarce hospital computers are being used to perform a cost-accounting function (Smolen, 1992). It is important to note that Hungary has been increasing the proportion of GDP spent on health care each year since the introduction of the new system of health care, from 4.6% of GDP in 1989 to 6.0% in 1991 and to 6.4% in 1994. Such significant growth was expressed not only in the percentage of GDP spent on health but also in real terms (1989 = 100, 1994 = 109) and in parity purchasing power (PPP) (1989 = U.S. $134, 1994 = U.S. $250). Such trends affect the health care system, creating an imbalance between revenue and expenditure (at the end of 1995 of the 30 billion forints owed by the government to the health insurance fund, only 12 billion forints had been received). Companies were not paying their contribution to the health insurance fund due to internal debts, a problem for all CEFTA members at the end of the 1990s. These developments led to the introduction of a new health insurance law allowing the National Health Insurance Fund (OEP) to withhold reimbursement payments from those individuals who had not fully paid their contributions and to seize assets from those companies that were in arrears in their contributions. At the beginning of 1997, OEP started to set newly defined limits on the range of services that are covered and to place an upper limit on allowable expenditures for any services. Private health insurance schemes are legally permitted and are aimed at the higher-earning portion of the population. The new centerright governing coalition that took office in July 1998 following national elections expressed its intentions to continue the fiscal consolidation process and to continue to implement structural reforms in the public sector.

130

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Poland Poland is the largest of the CEFTA countries, with a population of 38.5 million and the largest total GDP. On a GDP per capita basis, Poland is far behind Slovenia, Croatia, the Czech Republic, and Hungary. Poland was the first country in Central and Eastern Europe to embrace radical economic transformation policies. Rejecting early attempts at a gradual approach, Poland's "shock therapy," after early difficulties, laid the basis for a sustained economic recovery starting in 1992. Whereas in the 1987-90 period health expenditures grew at an index of 17.8, in 1991-94 the growth rate was a negative 4.8. In the same period (1990-1993) Poland experienced a large decline in GDP growth of 17%. The health care system in Poland was characterized by central planning, lack of separation of the preventive function, and financing by the state (Wloch, 1993). Further reform of the Polish health care system was based on a document prepared as a result of the International Conference on Health Policy organized in Poland by the Ministry of Health and Social Welfare and cosponsored by the WHO Regional Office for Europe, the World Bank, and Project Hope (Wloch, 1993). The reasons for changing the system were primarily dissatisfaction with health care services, deterioration of health status indicators, and increasing social discomfort with the existing situation of health care services. To rebuild the system according to the appropriate structural changes, extensive work was begun in cooperation with the World Bank. Proposals were made to create a different and more effective health care system more responsive to local need. This new system would include separation of preventive and therapeutic functions, the provision of both public and private health insurance, and local determination of needs and services. Two years later, the state deliberately slowed the process of health reform, even though the Parliamentary Commission for Health recommended the immediate introduction of a health insurance system early in 1993. The Polish Parliament was dissolved in May 1993, resulting in further delay in the adoption of a health insurance system that was originally proposed in 1993 and postponed several times. Four years later, it was proposed again, albeit in a much-revised form that was scheduled to take effect in 1999. The plan called for the creation 11 regional funds, each with its own budget and each responsible for procuring health care for 2.5 to 5 million members. Employers contribute 9.5% of their gross wages or salaries, with 90% of the total revenue collected being distributed. Privatization started radically in 1994 after the government formed the National Investment Funds, the start of a mass privatization program. The scheme has been criticized as being bureaucratic and unfair to ordinary citizens since it involves only a limited number of companies (Hayo, 1997). In the health sector, there were diverse trends in privatization. Privatization of pharmacies started in 1989, but only 10% of polyclinics have been privatized. The Social Democratic government, which favored a national health service funded by the state and was wary of extensive privatization, lost the 1997 elections, facing public crit-

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icism because of recentralization of the facilities. Six years of continuous economic growth had helped to reduce social problems. Unemployment, officially nonexistent before 1990, rose rapidly with the recession of 1990-91, but fell from a high of 16% in 1994 to 10% in mid-1998. The fall in unemployment is reflected in the findings of a World Bank poverty assessment that estimates that the number of poor has decreased for the first time since the beginning of the transition. The Czech Republic, Poland, and Hungary have taken measures to reform the provision and the funding of their health care systems. Freedom of choice, a concept not previously considered in the health care system, is now becoming an important issue. Combined with market incentives, it has changed behaviors within the medical community and insurance companies. These policies weakened the referral system, since patients have direct access to the specialist of their choice. Ministers of health and finance in the new market-driven health care system no longer have control over the level of expenditure in insurance funds. The introduction of compulsory health insurance in the Czech Republic, Slovakia, and Hungary resulted in a substantial increase of health expenditures, structural deficits, insufficient transfers of funds for the nonpaying portions of the population, difficulties in risk adjustment and financial distribution between sickness funds, increasing burden of contributions—reaching in some cases as much as 60% of payroll—and, finally, increasing evasion of contributions during the period following the introduction of the new insurance system. Tradition versus Discontinuity: Croatia and Slovenia Croatia has a population estimated at 4.5 million, with a highly educated labor force of 1.6 million. The structure of output is similar to that of an industrial market economy, with services accounting for 60% of GDP, manufacturing 30%, and agriculture 10%. Imports and exports of goods and services are 104% of GDP, making Croatia one of the most open economies in Central Europe. In 1997 GNP per capita was U.S. $4,610. Health reform in Croatia is a part of the government's integral stabilization project of the financial system aimed at finding a way out of recession by restructuring the national economy. At the same time, the reform project is weighed down by severe conceptual/theoretical problems faced by all ex-socialist countries in their approach to health reforms, and by a difficult financial situation caused by war destruction and economic recession (Hebrang, 1994). The main idea was to implement a modern health care system that would better fit the conditions of a market economy and would reflect more closely the models of developed European countries. To achieve these goals, the "Bismarck" model characteristic of Germany and Austria was used as a frame for the new system (Oreskovic, 1995). The new Health Insurance Act and Health Care Law introduced a new compulsory health insurance scheme covering practically the entire population of the country. Health care services are financed by a mixed system of financing.

132

Eastern Europe

The main sources of financing are compulsory health insurance and funds in the budget earmarked for certain types of health care and certain groups of the population—those who cannot pay the health insurance contribution or whose above-average health expenditures cannot be covered by the application of solidarity principles in compulsory health insurance (children, pregnant women, persons over 65 years of age). In addition to these sources of financing, additional sources for financing health care are voluntary health insurance schemes, such as supplementary health insurance (private persons and insurance companies), funds from free contracting of supplementary health services above the entitlements of compulsory health insurance by companies or institutions for their employees (including better inpatient accommodation and partial participation in the cost of health services), and funds from contracts for compulsory forms of health care services that employers have to pay directly (preventive services for workers and health care in case of occupational diseases and accidents). Health insurance is operated by the Croatian Institute for Health Insurance (CIHI). In theory, all insurance payers have to make their payments for health care and other entitlements regularly and on time, while contracted health institutions and contracted private practitioners execute their contracted obligations for insured persons. Data on the total income of health institutions, the composition of sources of income, and expenditures of health institutions by purpose of expenditure (primary care, specialist-consultative services, hospital care, medicines and so on) and by items of expenditure (material expenditures, gross salaries) are used for follow-up of movements and structures of health expenditures. Private practice has a minor role in health care, and other forms of health expenditures financed by health insurance or by citizens out-of-pocket do not exceed a small percentage of total expenditures (less than 5% on the average) (Skupnjak, 1996). CIHI collected and allocated resources, insisting on regular payment of contributions; in case these were not paid, legal sanctions were applied, including nonprovision of health services (except in emergency cases). In the same way, if on the basis of determined rates it is not possible to cover expenses for provision of services included in the Plan and Program of Health Activities (also adopted by the Parliament on the basis of the government proposal), then the Republic of Croatia is obliged to cover the losses of CIHI from the government budget (Skupnjak, 1996). Before democratic elections in 1990, the socialist government of Croatia spent 8.6% of GDP on health care. In 1990, health expenditures represented 10.5% of GDP and in 1991 were up to 10.6% (Hebrang, 1994). That percentage was comparable to the percentage of GDP spent on health in Germany, the Netherlands, or France. Even during the war the total health expenditures remained high, and the health budget began starving for financial resources. The introduction of strict compliance with the rules of commercial operations in the collection of payments and other incomes and in payment for services was necessary. The entire health system was close to collapse as a result of a deficit

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of the health insurance system inherited from the socialist government (over DM 300 million) (McKee et al., 1994). While real per capita income declined in Croatia from U.S. $5,106 in 1990 to only $2,079 in 1992, the decline in health share of GDP did not follow such an extremely radical trend (the decrease was from 10.6% of GDP in 1991 to 8.5% of GDP in 1992) (Central Bureau of Statistics, 1997). The Croatian health reform approach to health services organization and financing resulted in the short term, compared to other transition economies, in a successful cost-containment policy and simultaneously improved the health status of the population even during the war hardships. A decision to further develop a "Bismarckian" social insurance system as an occupation-based system resulted from an increase in social spending exceeding the rate of GDP growth, limiting resources for structural reforms and essential infrastructure reconstruction. In October 1998, 10,000 Croatian enterprises were insolvent, with total overdue debt of $1.5 billion (about 10% of GDP). If these enterprises were forced to close under a forthcoming new bankruptcy law, 150,000 employees would join the current 240,000 unemployed and would greatly increase the already-high unemployment rate, conservatively estimated at 17.9% in January 1999 (World Bank, 1999). A significant increase of financial expenses was registered in 1996 despite the imposed restriction. Hospitals increased their financial expenses by 58.4% (38.9% over the imposed limit) and health centers by 45.5% (25.9% over the limit) (Turek, Skupnjak, and Euljak, 1997). Croatian firms were not paying their contributions for the insured employees, and the health insurance institute was in debt for U.S. $115 million (Glavina, 1997). At the beginning of 1999, the Croatian health financing system was faced with a severe financial crisis. Slovenia has a population of 2 million with a GNP per capita of $9,161 in 1997. It is the most prosperous country in Central and Eastern Europe. The Slovene economy is oriented toward services and manufacturing, with the services sector accounting for 60% of output and industry accounting for about 32% of output. Its economy is comparatively open, with exports representing 55% of GDP and imports 56% of GDP. The European Union (EU) is Slovenia's biggest trading partner, accounting for approximately 64% of its exports and 67% of its imports. In Slovenia health care reform started at the beginning of March 1992 when a new health care law was accepted. The reform process included introducing a national insurance scheme as opposed to budget financing, a new contract between providers and the national insurance plan, and a possibility of independent contracting with the national insurance plan (Ivab, 1995). Private practice and concessions to foreign investors were defined in a new law and reduced to social medicine, hygiene, pathoanatomy, epidemiology, and health ecology (Markota and Klemencic, 1997). On the fiscal front, the government followed a policy of fiscal prudence, maintaining the general government accounts virtually balanced since independence. The fiscal balance varied between a small surplus of 0.3% of GDP in 1996 and a slight deficit of 0.2% of GDP in 1994. Despite the government's fiscal

134

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prudence, social expenditures have increased. As a result, the general government fiscal deficit increased, reaching 1.1% of GDP in 1997. Although the percentage of GDP spent on health in Slovenia remained stable at 8.0%, between 1991 and 1998 there was actually a significant increase in real health expenditures (51.8%) due to the important growth of per capita GDP. Primary care physicians were capitated, while specialists were paid a fixed number of points for service, with the value of a point preset at the beginning of the period, as it is in the Netherlands. Because of the capitation model, primary caregivers have an incentive to refer and specialists have an incentive to accept referrals to increase their volume of services and income. The data show that the number of consultations per person per year increased suddenly after implementation of a new law, especially in general practice (Ivab, 1995; Markota and Klemencic, 1997). A possible explanation would be the fact that people had to visit their physicians in order to register with a specific primary health care physician. In 1998 the Health Insurance Institute of Slovenia introduced the health insurance card. In parallel with the distribution of the health insurance cards, health professional cards were also distributed to the doctors, medical nurses, pharmacists, and other authorized workers. Both cards demonstrate all their value and benefits in a doctor's surgery and reception room, where, with the aid of the health professional card, the medical nurse reads up-to-date data from the health insurance card without having to search through the health care booklet. Through implementation and evaluation of the health insurance card pilot project, the institute aims to establish a firm foundation for the introduction of the electronic health insurance card throughout Slovenia to provide the insured persons with a modern, easy-to-use, high-quality tool for their implementing of rights derived from health insurance and to enable introduction of cost-control mechanisms aimed at solving the problem of growing debt in the health insurance fund. Work-Force Policy and Expenditures The differences in health care expenditures between countries cannot be entirely attributed to differences in the financing of the national health system. In examinations of the determinants of health expenditures, a number of key elements have been identified that could affect comparisons between the countries: the salaries and benefits of health care employees (including the remuneration of doctors, nurses, and auxiliary staff), pharmaceutical expenditures, expenditures on medical and nonmedical supplies, maintenance, research, social mobilization, and capital expenditures (Oreskovic, 1997). Before 1990 the wages in the former socialist economies were below what can be called "efficiency wages." Under the former command economy, most employees in the so-called nonproductive sectors, where women predominated, received salaries that were less than the average industrial wage. Marxist theory was interpreted to mean that health care was a nonproductive and hence a nonpriority sector, chronically underfinanced. The salary of the newly qualified doc-

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tor in Hungary was less than 60% of the semiskilled wage; in Poland, health personnel, together with teachers, were at the bottom of the wages table, while in Romania a doctor might be paid less than a cloakroom attendant in a hotel. The low pay led to low morale, the request for money "under the table," and great absenteeism. As a result, the system in ex-socialist countries became thoroughly corrupt; physicians and nurses began to demand relatively large sums of money "under the table" for services that were supposedly free. The introduction of social health insurance had marked effects on the structure of health care provision. It was necessary to make the health care system more attractive to private service providers, for example, by introducing outpatient surgery by private doctors. For patients, the central change was the introduction of the free choice of doctor. There was a dissolution of state-run practices as well as the regional ambulatory system and a simultaneous reduction of polyclinics, parallel to the introduction of doctors in private practice, who as a rule were general practitioners. The intention was again to follow the German model, where ambulatory care physicians are reimbursed from health insurance funds on the basis of points per service. The value of a point is adjusted at the end of the period to constrain the aggregate reimbursement within a global budget set at the beginning of the period. Regional physician associations are responsible for paying providers. The associations monitor physician service volume and temper the tendency for physicians to increase service volume. The associations financially penalize physicians with service volumes well beyond the average if they cannot be explained by case mix. Some of these elements already have been introduced in the Czech Republic, Croatia, and Slovenia. CEFTA hospitals still operate under global budgets, and hospital physicians are usually employed on a salary basis. The introduction of social health insurance has not improved salaries of physicians and health personnel salaries as expected. Real spending for health sector personnel was related to the decline in expenditures for health, and it usually fell by as much as or more than total expenditures. At the same time, the number of health personnel on the public payroll did not change significantly, implying an erosion of real wages ("Economic Trends" 1997). Salaries of health personnel in Croatia have been decreasing as a percentage of GDP from 1990 onwards. During the 1990-95 period the mean expenditure on wages and salaries was about 25% of the total health care expenditures. That is the lowest percentage of a health budget dedicated to wages and salaries among CEFTA countries (the highest level was registered in Poland, 53% in 1994) (Deppe and Oreskovic, 1996). That does not mean that physician salaries in Croatia were the lowest when expressed in absolute figures because of the higher level of average salaries in Croatia compared to other CEFTA members (at the end of 1996 average salaries in the CEFTA countries expressed in U.S. dollars were $1,005 in Slovenia, $605 in Croatia, $569 in Hungary, $435 in the Czech Republic, and $404 in Poland; World Bank, 1997). The overall ratio between physicians' salaries and the average CEFTA salaries was 2:1 (Slovenia,

136

Eastern Europe

Czech Republic) and 1.5:1 (Croatia, Poland). In 1997 physicians' salaries in Croatia started to increase significantly and continued to grow until 1999, when the average basic specialist salary reached U.S. $700 (Business Central Europe, 1997). In the near future, it is possible to expect that wages and labor costs will increase, as was the case in Slovenia, the Czech Republic, and Poland after long-lasting physician strikes occurred demanding that health care wages should follow those of the rest of the economy. These inflationary wage pressures will have a major impact on system finances. What are the economic characteristics of physician strikes and protest actions emerging in the CEFTA? As physicians expected better working conditions and higher income, they pressured political institutions and the newly established governments to start the health care reforms and after the 1994 elections to increase salaries and improve working conditions. Investments in Health Care As the authorities struggle to provide a "living wage" for their employees, the resources available for nonwage expenditures dwindle and affect the quality of services. Funds for the construction of new facilities and the repair of existing ones and for the purchase of equipment and consumables, including vaccines, heating fuel, meals for patients, sanitary equipment, furniture, and so on, declined. The first objective of the staff was to improve pay rates, but physicians also fought for higher levels of public spending on the material base of health care, which had been grossly underfunded over many decades. Capital expenditures have declined in relative terms as a component of GDP in all countries of the CEFTA. In Croatia, the reduction of capital expenditure (buildings, equipment, vehicles) was radical during the 1987-98 period due to war events. In the period of crisis and the postwar period, Croatia spent less than 1% (0.7%) of the total health spending on these areas. CONCLUSION Countries in transition, confronted with the increased demand for health services, are seeking alternative methods for funding these services through a variety of methods, including user charges, private health insurance, community-based financing, and earmarked payroll and general taxation. CEFTA member countries opted for earmarked payroll-based social insurance schemes similar to the system of health care financing that existed before World War II and was a significant element of Central European civil society. Croatian and Slovenian health care services were financed through similar social health insurance even before the democratic elections in the 1990s, while Hungary and the Czech and Slovak republics switched radically from Semaskho to Bismarck. Poland "came on board" at the end of the 1990s. Recent developments in Central Europe are

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similar to changes that occurred in nineteenth-century Europe, when voluntary benefit funds were established by guilds, industries, and mutual societies. In return for paying a monthly sum, people received assistance in case of illness. Health insurance, then, was a social intervention attempting to solve the problem of unaffordable health care under an out-of-pocket payment system, but its capacity to make health care more affordable created a new problem. The solution of insurance fueled the problem of rising costs during the last two decades of the twentieth century. The German public health insurance system, which served as a model for CEFTA countries, has been the subject of two health reforms since 1989 and has amassed a deficit of at least DM 3.5 billion ($2.25 billion). The financial situation has become "extremely tense," and health insurance contributions need to be increased immediately from the present rate of 13% to 13.7%, with a possible further increase to 14.2% if the government cannot arrange immediate cost savings (Karcher, 1996). Most of the deficit is due to hospital and pharmaceutical costs. Stringent measures have also redressed the ailing French health insurance system following the announcement of a huge deficit in the health insurance branch of the social security system, which is about Fr 30 billion (Dorozynski, 1996). The growing deficit is largely due to slow economic growth and high unemployment. Similar losses are expected in the future in the German and French health insurance systems if unemployment rates and health costs continue to rise as they have during the mid-1990s. The same structural problems, but on a higher scale, are present in the CEFTA region: high unemployment rates, high expenditures on the hospital and pharmaceutical sectors, and strong exclusion from the labor market. Unemployment, lower real wages, and an increase in income inequality are a result of immense economic and enterprise restructuring in the region (Table 6.3). It took less than a year for the unemployment rate in Slovakia to shoot up from a nominal zero to more than 15%, and less than two years to do the same in Hungary and Poland. Rates have since then stabilized at lower levels but remain generally high throughout the region (Bodenheimer and Grumbach, 1994). Rising poverty together with huge and growing gaps in distribution of income cannot help but lead to the deterioriation of health status. Considerable social inequalities survive and seem to have increased since 1990 (Chinitz, 1995); the health care reforms have failed to address them. Inequities in financing and access to health care and increasing disparities in income (due to rising unemployment and changes in the distribution of income) continue to add to these inequities. Since health insurance in CEFTA countries is employment based, the unemployed, poor, chronically ill, or elderly will find it increasingly difficult to afford insurance coverage. In the future, it is possible that compulsory health insurance solutions will create three new and interrelated problems: (1) increased fees will lead to an increasing unaffordability for those with inadequate insurance or no insurance; (2) employment-based insurance will place those who are unemployed, retired, or working part-time at a disadvantage for the purchase of

Table 6.3 Economic Development, Income, Inequality, Unemployment, and Poverty in Central Europe

Country

Change in real per capita GDP 1989-1996

Unemployment rate, % 1998

Croatia

-32

17.9

Czech Republic

-18

5.0

Hungary

-15

Poland

Gini coefficient (annual), 1995

Monthly Health income per expenditures capita ($PPP), as percent of 1998 GDP, 1998 276

9.04

27

411

8.30

11.2

23

266

7.30

-12

10.4

28

213

4.40

Slovakia

-29

15.0

19

332

7.05

Slovenia

-21

12.2

25

481

7.86

Sources: Milanovic, B. 1997. "Income, Inequality, and Poverty during the Transition from Planned to Market Economy." World Bank Regional and Sectoral Studies. Washington, DC: World Bank. Oreskovic, S. 1995. "Health System Reorganisation in Croatia in Light of Major Reform Tendencies in OECD." Croatian Medical Journal. 36:47-54.

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insurance; and (3) competition inherent in an insurance market will encourage the practice of experience rating (Milanovic, 1997). The introduction of payroll-based health insurance in Central Europe has highlighted the need for better information about use of services, costs, and outcomes to determine what works in health care and to identify how the behavior of health professionals can be altered to ensure that practice is based on evidence. Bringing practice into line with demonstrable cost-effectiveness is a substantial task that will be costly and slow to show results, but it is part of a worldwide recognition that the knowledge base in health care is inadequate. These characteristics ensure that the population has access to high-quality health care, with a moderate wait for nonemergency care and effective cost control. To solve such problems, experience from CEFTA as well as other countries shows that even more intensive government financing will be required (Milanovic, 1997). In turn, government financing may fuel an even greater inflation in health care costs if it is not followed by quality control, quality assurance, and cost-containment mechanisms. The trend toward increasing finances of the health system from general revenue in Central and Eastern European countries merits closer examination. Recent options in most of the countries in the region are to lower labor costs by reducing the earmarked employer health tax and having the Ministry of Finance supply the lost revenues. This direction might save those who have led the introduction of health insurance from the wrath of taxpayers and will move health system budgeting from the position of an earmarked, guaranteed sum into the politics of the overall budgetary process. National health insurance will ultimately be underfunded as it is now in Croatia, Slovenia, and Hungary. Supplemental and private insurance policies, as well as out-of-pocket payments, will expand, and equity problems will be evident. The market-based reforms in the CEFTA region were not an end in themselves, but a potential means of improving equity, accessibility, and efficiency of the previously existing health care services. It is necessary to distinguish between, on the one hand, the need to claim a radical transition from an inefficient and bureaucratic previously existing system and, on the other hand, evidence of improved quality of health care. The latest reform is comparable to some other experiments in health care reforms: "incomplete at best, and ambiguous and uncertain at worst" (Maynard and Bloor, 1996). REFERENCES Ackerman, D. 1994. "Economic and Medical Directions in the Czech Republic and Hungary." American Journal of Surgery 167:246-49. Albert, A. Bennett, C , and Bojar, M. 1992. "Health Care in the Czech Republic." Journal of the American Medical Association 267:2461-66. Avah I. 1995. "Primary Health Care Reform in Slovenia: First Results." Social Science and Medicine 41:141-4. Bodenheimer, T., and Grumbach K. 1994. "A Clinical Approach: Paying for Health Care." Journal of the American Medical Association 272:634-639.

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Central Bureau of Statistics. 1997. Monthly Statistical Report, Republic of Croatia. No. 2. Zagreb. Chinitz, D. 1995. "Israel's Health Policy Breakthrough: The Politics of Reform and the Reform of Politics." Journal of Health Politics, Policy, and Law 20:909-32. Deppe, H , and Oreskovic, S. 1996. "Back to Europe: Back to Bismarck?" International Journal of Health Services 6:4:777-803. Dorozynski A. 1996. "Shock Treatment for French Health Insurance System." British Medical Journal 313:840. "Economic Trends." 1997. Business Central Europe 14:9. Europe 2000. 1997'. Brussels: Commission of European Communities. Glavina, D. 1997. "Monthly Drug Doses for Hospitals—New Intervention in Health Care System." Vecernji List, Zagreb, 7:3. Hayo, B. 1997. "Eastern European Public Opinion on Economic Issues: Privatization and Transformation." American Journal of Economics and Sociology 56:85-102. Hebrang, A. 1994. "Reorganization of the Croatian Health Care System." Croatian Medical Journal. 35:130-36. Kalman, I., Massaro, T., and Nemec, J. 1994. "Health System Reform in the Czech Republic: Policy Lessons from the Initial Experience of the General Health Insurance Company Caring for the Uninsured and Underinsured." Journal of the American Medical Association 271:1870-74. Kanavos, P. 1996. "An Analysis of Health Care Financing in Eastern European Economics in Transition: Issues for Health Policy." In R. Saltman and J. Figureras, eds., Open University Press. Karcher, H. 1996. "German Health Insurance System Faces New Deficits." British Medical Journal 312:74-75. Markota, M., and Klemencic, K. 1997. Evaluation of Transition Period in Health Care— Users Perspective in Selected Central European Countries and the Netherlands. Ljubljana: Institute of Public Health of Republic of Slovenia. Maynard, A., and Bloor, K. 1996. "Introducing a Market to the United Kingdom's National Health Service." New England Journal of Medicine 334:604-8. McKee, M., Bobak, M., Kalina, K., Bojan, B., and Enachescu, D. 1994. "Health Sector Reform in the Czech Republic, Hungary, and Romania." Croatian Medical Journal 35:238-44. Milanovic, B. 1997. Income, Inequality, and Poverty during the Transition from Planned to Market Economy. World Bank Regional and Sectoral Studies. Washington, DC: World Bank. Oreskovic, S. 1995. "Health System Reorganization in Croatia in Light of Major Reform Tendencies in OECD." Croatian Medical Journal. 36:47-54. Oreskovic, S. 1997. "The Second Europe: From Constitutional Loyalty to DM Patriotismmr A&T 1997:1:72-76. Skupnjak, B. 1996. "Health in Transition—Croatia." Smolen, M. 1992. "The Past and the Present of the Polish National Health Services." Polish Journal of Occupational Medicine and Environmental Health 5:1-11. Surjan, L. 1994. "First Experiences with the New Financing System and Health Care Plans." Orvosi Hetilap. 135:507-11. Szalai, J., and Orosz, E. 1992. "Social Policy in Hungary." In B. Deacon ed., The New Eastern Europe: Social Policy Past, Present, and Future. London: Sage Publications, 1992.

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Turek, S., Skupnjak, B., and Euljak, R. 1997. "Financial Expenditures and Their Monitoring." Proceeding of International Congress on Management in Health Care. Zagreb; 37-38. Wloch, T., 1993. "The Potential for Changing the Health Care System within the Current Polish Transformations." Public Health 107:437-39. World Bank. 1997. Croatia—Country Overview, http://www.worldbank.org/pics/pid/ hr8332.TXT

Chapter 7

The Reform That, Alas, Succeeded: The Case of Serbia Vuk Stambolovic According to the most widely accepted definition, the word "reform" implies improvement (for example, improvement of an institution, a procedure, or a behavior) through removing or leaving behind various imperfections, errors, or omissions. However, just like many other analogous meanings, this interpretation too is basically an expression of technological optimism and belief in continuous cumulative progress based on it. The word originates from Latin reformo (to transform) and has a neutral connotation. Consequently, a reform does not necessarily imply improvement because reform of an institution, behavior, or procedure can sometimes only make things worse. A typical example of reform that only made things worse is the reform of the Serbian national health system that was carried out in the past decade.1 However, that reform was never carried out according to standard principles in the first place. It was not preceded by a document with clearly formulated and coordinated goals of national health policy. The general public was never informed about the basic standards of its application, deadlines for the completion of different stages, and desired effects.2 Unlike reforms of national health systems in other transition countries in Eastern Europe that were carefully planned, the reform in Serbia was fully implemented. To make things even worse, all of it was done with unbearable lightness. THE BAD OLD SYSTEM The national health system that the subject of the successful reform in Serbia was part of the national health system of the Socialist Federative Republic of Yugoslavia.3 In effect, this was a specific hybrid, a strange combination that enabled the privileged party nomenklatura to manipulate (naturally, for its own

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benefit) both the structure offering the hope of having a democratic management and development and the proclaimed basic goals that were at the same time just and pragmatic. Structure Structurally, the Yugoslav national health system belonged to the so-called communal type. In essence, the system was a hybrid incorporating the principles of decentralization and self-management. Decentralization was very apparent in the traditional management structure, where competencies were strictly divided at the federal, republican, and municipal levels. Federal authorities were in charge of protecting the interests of the country as a whole in areas such as prevention of infectious diseases, trade in medications, environmental protection, sale, handling, and transport of radioactive and other dangerous substances, border sanitary inspections and the like. Republican bodies were responsible for health care legislation and health insurance, harmonization of health care development plans and economic and social development plans and policies, and supervision of health care institutions. Municipal authorities were in charge of establishing health care institutions and application of public health measures, such as vaccination. The self-management principle was based on a specific political and administrative structure that was formally autonomous. The basic units of the structure were established at the municipal level and, to a certain degree, the regional level. It was there that users and providers of health services decided about health care policy and their mutual relations, either directly or indirectly, through delegates in the assemblies of the self-management communities of interest. In principle, delegates made decisions without mediation of state administrative bodies concerning funds allocated for certain types of health care, uniform costs of certain medical services, responsibilities of users vis-a-vis the ways of using services, responsibilities of providers, and the like. Dominant Goals The establishment of the communal-type national health service in SFR Yugoslavia (based on the principles of decentralization and self-management) had nothing to do with attempts to promote democracy in this field. The selection of this particular type of structure and its subsequent application were under the dominant influence of a completely different ideological and political concept of establishing and developing a socialist system. As the official ideology, socialism was used as a value system for defining the overall social system in Yugoslavia, including its distributive mechanisms. Yugoslav socialism was of the eclectic type, modeled after a variety of sources from Saint-Simon to Lenin, Marx (both his early and late works), and Brezhnev, and with an impressive degree of pragmatism. All resources were distributed

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according to two main principles of social justice: to each according to results at work; and solidarity and mutual interest. In practice, the first principle took into account the aspirations of the more developed republics of the Yugoslav federation, while the second concept ensured the basic developmental needs of the undeveloped regions.4 The decentralization of the national health system made it possible to apply both principles. Self-management was a political goal directed at making Yugoslav socialism different and more authentic than the types of socialism practiced in the Soviet Union and other Soviet-bloc countries. The idea behind self-management was to enable Yugoslavs to directly participate in the management of social affairs, including health care. In addition to decentralization and the principle of "mutual exchange of labor" embodied in the so-called self-management communities of interest, the principle of self-management implied a series of other specific institutional solutions ranging from the so-called social ownership of the means of production5 (including health care institutions) to the so-called workers' councils composed of delegates of employees. Workers' councils were specific management bodies in charge of a variety of fields, including the appointment of managers of health institutions. Dominant Actors Given the communal system of organization, decentralization that enabled local authorities to have a say in decision making, and self-management that made it possible for every member of the community to take part in the process directly or indirectly, it would be logical to expect that dominant actors of the health care system would come from local communities themselves, as the authentic representatives of users and providers of health care. However, the proclaimed chief social goal in Yugoslavia (preservation and development of socialism) always had a hidden agenda behind it: the domination of the socialist nomenklatura and its preservation and development. Consequently, the dominant actors in the health care system were the representatives of the party nomenklatura. Notwithstanding the self-management rhetoric, high-ranking party officials held high positions in the traditional management structure of the state apparatus, and lesser aparatchiks were in charge of the highly diversified self-management network. Therefore, in the traditional management structure of the health care system, the dominant actors were aparatchiks who, even when they had a medical background, were more politicians than doctors. In the self-management segment of the system, the dominant actors were medical professionals who were mostly experienced practitioners, but obedient amateurs in politics. Thus self-management and direct participation of users in the management of the health care system were advocated by many, but in practice there were no dominant actors who grew from the system itself and its social practice. In most cases, the overall result was simulation.

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Regulation Despite the high degree of decentralization and the self-management structure, the regulation of the Yugoslav health care system and control of its functioning were basically in the hands of its dominant actors. They controlled the system either directly or through manipulation. It has to be admitted that medical professionals, who were largely involved in various representative bodies, were in a position to promote the particular interests of their profession. This was especially true of the self-management segment of the system. However, at the end of the day, the interest of the party nomenklatura prevailed, because the system was dominated by the traditional management structure and because medical professionals in important positions in self-management bodies were selected on the grounds of party suitability. The domination of the party nomenklatura was thus doubly ensured: through party authority in the traditional management system and through professional authority in the self-management structure. This did not serve, however, the interests of patients, other users of health care, and providers and medical professionals. The Yugoslav party nomenklatura did its best to ignore any conflicts in the system. Sometimes, though, it resorted to reforms as a method of regulation. In SFR Yugoslavia, reforms were frequently in use. In the 45 years of Yugoslav socialism, there were about 60 reforms (Letica, 1989, 273-78) in all walks of life, from the economy to education. In practice, however, reforms boiled down to a specific form of repressive tolerance. Each of them did grant some of the demands of those who were not satisfied with the previous system, and each gave hope that there would at least be a slight change of the system, but none challenged the dominant role of the nomenklatura. This was particularly true of the eight reforms of the health care system, whose final outcome was always just a change in the structure.

Results The basic concept of the hybrid system created from two polarized constituent elements (structure and proclaimed goals, on the one hand, and dominant actors and regulation, on the other) was equity.6 Accordingly, health care institutions were socially owned, and their services were accessible to all through the national medical insurance system, which, in addition, covered pharmaceuticals and lost income while sick, and gave absolute priority to primary health care. As part of this orientation, primary care physicians were given the position of gatekeepers. In addition, there were no voluntary health insurance and no extra billings, except insignificant "participation" for drugs. There were no "cost shifting" and no official reductions either in medical benefits or in public sources of medical care. There were no moves toward "regulated competition" and no thinking

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about "bed blockers" either. Private medical services were a negligible exception. On the other side, however, there was an assembly of completely contradictory elements. First, there was a gap between the rhetoric of success and achievement and the actual state of affairs in health care; for example, Yugoslavia lagged some 10 years behind in the application of new medical technologies and knowledge, with a tendency of further deterioration (Lackovic, Buneta, Relja, and Cecuk, 1987). Second, funding was insufficient, since health care was low on the priority list; the key priority for the Yugoslav party nomenklatura was investment in the military sector; so health care funding continually slid down to between 3.9% and 4.8% of the GNP in the self-management system (Stambolovic, 1989).7 Last, medical specialists typically dominated; in 1986 Yugoslavia had 4,893 general practitioners, 10,722 specialists, and 2,625 doctors who were undergoing specialist training {Annual Statistics, 1990). The health care system thus rolled on with all its highly divergent constituent elements and demands, such as a continuous rise in the incidence of cardio vascular diseases in highly developed regions and high infant mortality rates in underdeveloped regions.8 Financial resources were inadequate, and this in turn resulted in the lack of professional satisfaction and motivation among medical staff.9 A glimpse of hope, though, appeared in the country's openness to the rest of the world and professional contacts that doctors from the best medical institutions had with their colleagues abroad. A HEGEMONIC PROJECT The reform of the health care system in Serbia was, of course, just a part of a broader hegemonic project. At the outset, the project could be described as national in character because the Serbian party nomenklatura, which commissioned and designed it and simultaneously forced its implementation, based its legitimacy on what the party referred to as a solution for the Serbian national question. This national hegemonic project was not only isolated, but led to isolation of Serbia and its citizens as well. Logically, the Serbian party nomenklatura felt perfectly comfortable with isolation for two main reasons. First, any link with global hegemonic systems and multilateral organizations (like the World Bank and the IMF), as well as international economic treaties (like the WTO or the European Community) would mean conforming to rules that would limit or at least channel the power of the nomenklatura. On the other hand, any link to the rest of the world was seen as a threat by the Serbian party nomenklatura because of the wave that swept its Eastern European counterparts one by one at the end of the 1980s. Thus, after a party coup in the autumn of 1987, the conservative wing of the League of Communists of Serbia took power, and isolation became the cornerstone of the Serbian national and all other policies. The road to isolation was paved by forcing Serbian society into deep psychosocial regression.

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The Social Component The social component of regression led to isolation through three dominant stages. In all three stages the Serbian party nomenklatura's chief weapon for instigating regression was to disrupt the work of institutions. Instead of being the foundation of political order, institutions were gradually transformed to a mere guise for propaganda or to transmission belts of the ruling elite, whose power was absolute. During the first stage, from 1987 to 1990, which was characterized by flaring of nationalist passions and their incorporation into state ideology, all institutions that made Yugoslavia a decentralized federal state were destroyed, along with the ones that made Serbia function as a three-part decentralized federal unit.10 The political program behind the destruction, which had acquired proportions of plebiscite and suppressed all roots of democratic reform, including the principles of self-government, could boil down to the following slogan: "One Nation, One Country, One Leader." In the second stage, from 1991 to 1995, during which wars for territories in Croatia and Bosnia were waged under the pretext of protecting national interests, the destruction hit institutions such as banks and big economic companies and infrastructure, which in the process of modernization of SFR Yugoslavia had been developed to a degree that offered some stability to its citizens.11 During the third stage, from 1996 to 1999, the period following defeat in the Bosnian war, which was characterized by the need of the newly formed elite to continue looting the rest of the country, the focus of destruction was on institutions important for preserving the basic system of values—independent media, the judiciary, and universities.12 The Psychological Component The psychological component of regression led to isolation through specific forms of mass manipulation. The basic form of manipulation that the Serbian party nomenklatura used to mesmerize a vast segment of the population could perhaps best be described as instigation to nationalism. Nationalism was a very attractive bait. The reasons why nationalism was so effective are easy to explain: primarily because the structure of personality dominant in Serbia (with the characteristic domination of collectivism, anti-individualism, authoritarianism, and traditionalism)13 easily fitted into the value orientation of nationalism (Hofstede, 1994; Golubovic, 1995). A second explanation is that nationalism provided significant symbolic compensation for the broadest groups of the population. It gave Serbs a fantasy of belonging to "the heavenly people," which meant that Serbs not only had special virtues, but special rights as well.14 On the other hand, nationalism created a whole spectrum of national enemies that could be blamed for the lack of opportunities for exercising special rights and for the absence of

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results that are expected from a nation of special virtues. Nationalism thus destroyed the thin layer of modernization and in many areas imposed tribal values, standards, and relations. T H E MAFIA While the masses homogenized by nationalism were imbued with nationalistic goals contained in the slogan "One Nation, One Country, One Leader" that took the country from one war to another and from one defeat to another, the Serbian party nomenklatura was too busy searching for the best ways to meet its selfish goals and seize both social resources and the social product. This finally transformed the nomenklatura into a political and business structure with all the characteristics of the Mafia, namely: • There is a boss who, like capo di tutti capi, manages the interests of different groups (families) responsible for individual business segments in which the boss's representatives have complete power (as long as they are loyal and obedient). • Power over territories does not correspond to administrative borders, but depends on power-sharing relations.15 • There are various ways of making big money outside business standards and procedures. • Members of the structure are above the law and can never be punished, either because they consider themselves to be untouchable or because of "the lack of evidence." • There is a strict code of silence that makes the whole huge organization appear conflict free. • Occasionally, more or less prominent members of the structure are murdered, and motives and perpetrators remain unknown to the outside world. Serbia, accordingly, regressed to a territory organized according to the Mafia principles, where the chief principle of arbitration is the jungle law, where the main rule of conduct reads, "I like it, or I don't like it," and where violence is the guiding principle of any relation. Under these circumstances, it was logical to see a complete fusion of the spheres of state and capital and their subsequent privatization. The process was characterized by the following elements: • Political helplessness, which was especially strongly felt by people outside the Mafia structure • A widening gap between social groups and a creation of a bipolar society, with a small number of extremely rich people and a vast majority living at or below the poverty line • Pauperization and gradual disappearance of the middle class and its influence • Low wages, job insecurity, and the consequent negligible role of trade unions

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• Homogenization of the population around collective goals and complete abandonment of the needs and interests of individuals • An enforced value system, with serious moral, social, and economic consequences for all those who refuse to accept it Under this kind of rule, Serbia was transformed into an insane society (Fromm, 1975: 384). This meant a society that broke off dialogue with the outside world, lived in its own private world full of self-delusions, was overwhelmed with overestimated ideas of its own value, and held the paranoid belief that the entire world is plotting against it. This psychological and social profile was in force when Serbia declared war on NATO in March 1999. THE NATIONAL HEALTH CARE SYSTEM If a health care system implies a specific organization whose primary role is to meet the demands of individuals and the community by using the achievements of modern medicine and corresponding regulations and conventions, then we can say that such a system does not exist in the territory that is today referred to as Serbia. What exists there are ruins posing officially as a health care system. Unable to meet the demands, these ruins function in a chaotic and sporadic way. The ruling Mafia, of course, finds such a system perfectly suitable because, depending on the situation, it can use it as a leverage and a decoration. It is quite understandable that an efficient instrumentation of a system requires that its true face remain hidden, and various forms of pressure and stimulation are used for that purpose. Consequently, the ruins of the health care system in Serbia have been used as a base for developing a broad simulation system with the following characteristics: • High government officials and experts in charge of the health system pretend to be busy organizing the system. • Doctors and medical staff pretend to render medical treatment according to professional standards. • Patients and their families pretend not to see what is going on. Throughout this period, only one public and formal act of reform (perhaps it would be better to describe it as a forceful intervention) was carried out: a new health care law was adopted in 1992 to comply with the new republican constitution from 1990. 16 All other endeavors implementing the reform and shaping its results unfolded unofficially and outside formal procedures (although the Mafia fully controlled these processes too) to suit the needs and values of the hegemonic project. The health care law provided a formal framework for disregarding the procedure, but its authors repeatedly claimed during its promotion that it had actually helped restore a uniform health care system. In effect, the health care system was handed over to the ruling Mafia.

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The restoration of a uniform health care system in reality meant strict centralization.17 In other words, the Ministry of Health took complete control of health institutions, medical professionals, and even medical knowledge. All health care institutions were declared state property, and their directors became government officials with no power of making independent decisions.18 The Ministry of Health began to prescribe not only the types of specialization and subspecialization, but also the ways of selecting candidates and their training and specialist exams. The centralization drive went so far that the law even gave the ministry the powers to define and adopt programs for upgrading knowledge.19 Such a centralized system prevented any attempt at autonomous behavior based on ego identity. All participants in the process were practically reduced to playing roles defined in advance.

METHODOLOGY OF DESTRUCTION The informal methodology used for the destruction of the health care system in Serbia was based on two phenomena, typical for all Mafia dealings: first, taking away the money, and second, taking away the power. The money disappeared rather quickly, and that in turn led to the collapse of the medical insurance system. The power was seized by undermining the very institution of medicine. The direct causes of the collapse of the medical insurance system included the drastic impoverishment of the economy (in 1989, when the downfall began, the GNP per capita amounted to U.S. $2,384; after 1993, according to the official statistics, it oscillated between U.S. $931 and $1,282); a system of privileges that enabled a selected few among the users (for example, big metalworking companies operating at a considerable loss) to stop paying contributions for medical services, and a selected few among the providers to take all the money they needed from the depleted health care funds; and the constant thirst for money of the Mafia structure. At the beginning, the money was spent on the war, then on setting up a strong police force equipped and trained like an army,20 and then on filling in the gaps in the budget, in which health care was treated as a category of minor importance. The direct causes of the undermining of the very institution of medicine, include the shortage of basic medicines and medical supplies and technological backwardness of medical equipment,21 and the lowering of professional standards of doctors and their disregard for the principles of independence and responsibility. Independent decision making and operation disappeared when doctors, both individually and as a group, accepted giving priority to the interests of the ruling Mafia instead of to the interests of their own profession. As for responsibility, the decisive factor in its disappearance was that medical professionals abandoned the professional code of ethics and replaced it with the Mafia system of values, in which key standards and ethics of the medical profession

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(responsibility toward the health of individual patients and the health of the entire community) became unimportant.22 A third phenomenon is the spreading of Eichmannism among health professionals, that is, the spreading of the heartless, mechanical, and abstract functioning of doctors deprived of the ability to think and to act individually and deprived of the courage to resist. At best, this kind of behavior led to professional cynicism, resignation, and the belief that nothing could be done to put things right.23 SUPPORTING PILLARS In addition to satisfying the demands of the Mafia, the health care system of Serbia, ruined by a successful reform, had to meet at least some of the demands of the community and individual users. Notwithstanding the simulation (by which the true nature of the system became opaque) and inertia (for the most part based on efforts of some health care professionals to maintain at least some professional standards), the substitutive operation of the ruined system was made possible by supporting pillars whose role was to help the ruined system function as a surrogate and to prevent any attempt at its radical reconstruction and restitution. The supporting elements could be classified into three mutually connected groups: (1) measures enabling the system to function by lowering the standard of medical services; (2) measures through which additional resources were provided through various forms of extortion and robbery; and (3) what can be generally described as corruption. Lowering of Professional Standards Like all other institutions of modernity, medicine basically resembles a production line where a strictly structured activity unfolds between input and output. In order to make a "final product" out of "raw material" in medicine, all elements of the production line must be in their place and operate smoothly. To translate this into practice, medical staff, medications and medical supplies, laboratories, medical equipment, and various other elements that make up a medical environment should be in their place and function smoothly. Reducing Serbia's health care system to ruins in reality meant that each of these elements operated erratically. In order to keep the production line moving, an important part of the reform was to ensure the functioning of the system at lower levels. This was primarily achieved by lowering professional standards, which in turn helped support in several ways the ruins to which the health care system was reduced. Standard therapeutic protocols and procedures in rendering medical aid were abandoned in what could perhaps be described as "creative adjustment" but that in reality boiled down to various patching-up techniques. Furthermore, medicines produced in some Asian countries were used. Since they did not meet

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Yugoslav standards, they could not be properly registered.24 The intensity of rendering services was reduced, which meant that the top and most expensive health care institutions received instructions to delay all treatment, surgical and otherwise, that could not be categorized as urgent. This particularly affected seriously and chronically ill patients. Last, "surgical production units" were temporarily closed, not only in small-town hospitals but also in the elite medical centers in Belgrade. Robbery The next group of supporting elements for what was left of the health care system and for preventing its total collapse could best be described as a combination of robbery and extortion. These measures were applied against all three key target groups: medical professionals, suppliers, and patients, including their families. In the case of medical professionals, the method was not original since it was successfully practiced in other remnants of the system, from education to the judiciary, and it always worked miracles. The secret was to pay wages irregularly and with a big delay. The standard procedure involved paying just one part of the salary with a delay of one or two months, while payment of other benefits was totally ignored. The situation was made even more difficult by continuous inflation and overburdening of medical staff, especially in primary care institutions. Payments due to pharmaceutical companies and other producers were simply translated into debts. When debts accumulated, and suppliers became reluctant to continue providing supplies, the Health Insurance Fund threatened to stop cooperating with them unless they wrote off one-quarter of the total debt. The majority of suppliers accepted this blackmail, but the biggest supplier and creditor did not. Since no agreement was reached on the payment of $180 million owed to this company, the Serbian Agency for the Evaluation of Assets decided to change the company's ownership structure. It ruled that the American partner would no longer own 75% of the shares, but only 35%. Under the same decision, the government of Serbia increased its shares from 25% to 65% and became the majority owner.25 The worst cases of extortion were applied against patients and their families. Although patients were medically insured, they were forced to pay for medical services, and this was done in three ways. When the first method (which could be categorized as medical because it concerned the purchase of drugs and medical supplies for, for example, surgery) was applied, patients were openly told that they would have to buy supplies or medicines or pay compensation to the medical institution in which they sought treatment.26 The second method was based on manipulative patient recruitment. Patients were told (openly or cryptically) that the same doctors could treat them much better in private clinics. Of course, in private clinics all services were very expensive.27 The third method

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(one that is not medical in nature) could be described as implicit extortion, which made it no less compulsory. A specific tradition was developed to bring hospitalized family members and friends food from home. However, what started with food transformed into the need to bring a series of other items as well, for example, bed sheets.28 Corruption The third type of supporting element, which is perhaps the most important for keeping the remnants of the Serbian health care system together and making it appear to be a system that still functions, is corruption. For this purpose, corruption has developed into two separate but mutually complementary modalities. The first type is classical corruption that is used as a shortcut to help ensure the best possible medical care under the circumstances. This type of corruption is extremely widespread in Serbian medical institutions. According to a poll conducted by the Argument Agency (a group of sociologists engaged in the research of social issues) in 1997, 86% of those interviewed said that they knew that corruption existed in Serbian medical institutions. Of that number, 14.5% said that they had had personal experience with corruption, and 25% said that they knew someone who had had such an experience. Naturally, when patients resort to bribing, they do so in the belief that their health depends on an institution whose professional and moral standards are extremely low, and this cannot be described as socially dubious behavior. Rather, it is frequently a desperate attempt to become visible and to single out one's suffering in order to gain a more favorable status. The tragedy, however, is that bribing has become a regular practice everywhere in Serbia where medical treatment is vital. Since everybody is bribing, everybody is getting the same old treatment. Consequently, something quite different has become a problem—howmuch money to offer. If not money, should one offer something else in return, like gifts or special services? This, however, no longer has anything to do with getting special treatment, but with not offending doctors or nurses by offering them less than they think they deserve. The second method of corruption, which is also extremely widespread, is to corrupt with power. This type of corruption penetrates much deeper than the other method. In a society with a dense network of the Mafia, a society ruled by jungle law, the most valuable possession is power. It is then quite logical that many medical professionals are very keen to respond to calls from big and small Mafia bosses. Since the supply is bigger than the demand, doctors, particularly those from the elite institutions, come very cheap. They are more than eager to do all kinds of dirty work (from express promotion of Mafia proteges to various services concerning the removal of unsuitable opponents) for a small share of power. Of course, as in any Mafia structure, the task of doctors on the Mafia payroll

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is to keep order in the territory or social segment they control and obey instructions from their bosses. In order to keep order and maintain power, Mafia lackeys of this type try to keep the remnants of the health care system functioning at all costs, even if it means abandoning the basic values and standards of the medical profession. They also make it impossible for anyone outside the structure to gain a real insight into what is going on behind the curtains.29 They all abide by the unwritten Mafia code of conduct, an assembly of rules (not visible, save for punishments and rewards) that could be best described as total obedience and silence. Owing to the high efficiency of this code and the eagerness of those who apply it, very little is known about the true situation in what is presented in Serbia as the health care system, the conditions under which patients receive medical treatment, or the consequences of this type of treatment. EVOLUTION The Serbian hegemonic project and the reform of the health care system can also be described as a serious cultural and social regression; towards a "premodern" way of life. That regression came at the time when the world en masse was moving into "modernity," a culture based on the Cartesian paradigm in which human relations are regulated not by arbitrary violence but by an institutional network. Generally speaking, the pre-modern regression of the Serbian society came as a result of internal conditions, processes, and interests. However, at least part of the escape from modernity, as well as part of devastation of budding institutional culture, resulted from the growing transparency of negative sides of modernity. That is to say, modernity is no longer an absolute norm. It has become clear that achieving modernity does not imply the "end of history." Consequently, in many social domains, including health care, we are witnessing a challenge to basic principles of modernity. Moreover, persistent demands are heralding the opening of a new cultural era: the era of human rights. In the case of present day Serbia, which in many aspects still belongs to the pre-modern era, it is necessary to take a turn towards the values and standards of modernity. In health care, just like in any other field, this primarily means rebuilding medical institutions in two senses: (1) increasing complexity by keeping a distance from dominant interests (in this case, interests of ruling mafia); (2) diversification of interests directly expressed within health care, and simultaneous protection of these interests, i.e. protecting the health of community and of sick individuals, while at the same time protecting the interests of the medical profession. Notwithstanding its many benefits, this type of transformation would understandably imply many negative elements of modernization of health care.30 However, modernization of Serbia's health care system does not necessarily mean that serious blunders and shortcomings of modernity would develop to their extreme values, which would in turn mean extreme instrumentalization of both users and providers of health care.

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Serbia can avoid these extremes if its medical institution pays attention to the initiated global transformation of health care in the sense of revisionary or constructive postmodernism. 31 Revisionary or constructive postmodernism rejects scientism—in which the data of the modern natural sciences are alone allowed to contribute to the construction of our worldview—and involves a new unity of scientific, ethical, aesthetic and religious intuitions (Griffin, 1990), That includes development of a health care system that is not relying solely on mechanical postulates. This further implies that the health sector should be based on the confirmation of three validity claims, rather than on just one. Namely, instead of relying exclusively on external truth (or objectivity as science sees it), it should also rely on rightness and sincerity as the basic characteristics of additional aspects of truth. Rightness should be incorporated in the system to replace the dictate of technology. In the domain of health care, this would mean that "therapeutic" relations should no longer be based on technological coordination, but on values stemming from universal cultural wisdom. In that way inter-subjective relations based on mutual respect could develop. Sincerity should take the place of the dictates of roles. That implies adding a dimension of individuality and subjectivity as the condition sine qua non of mutual understanding. The integration of objectivity, individuality and cultural wisdom would in practice represent the integration of three basic models of organizing health care: 1. The professional model, which focuses on objectivity 2. The market model in which accent is on individuality 3. The community model, which places emphasis on rightness Of course, the evolution of health care towards that type of integration is not so a easy choice. On the other side, the choosing of stagnation is always leading to regression. The current state of affairs in the health care system of Serbia is, at least to a certain degree, a good indication of how important that choice might be.

NOTES 1. As agreed with the editor, this chapter basically relies on the concepts contained in A.C. Twaddle (1996), "Health System Reforms: Toward a Framework for International Comparisons," Social Science and Medicine, 43:5:637-54. 2. In 1997 a team of experts was organized by Yugoslav United Left (YUL), the political party that was controlling the health care system, to make the blueprint for the new health care reform. However, it appeared soon that this blueprint was only a new propaganda move, similar to previous propaganda projects called, for example, "Fast Railways" or "New Oil Wells," that were supposed to distract the population from dif-

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ficult life conditions. The point is that the alleged health care reform never went further than the blueprint, which was lavishly promoted. 3. SFR Yugoslavia, which broke up in a series of miniwars at the start of the 1990s, was a federation of six equal republics and two constituent autonomous provinces, with a population of about 22 million. 4. SFR Yugoslavia was a country whose parts were not equally developed. The biggest differences existed between the Socialist Republic of Slovenia and the Socialist Autonomous Province of Kosovo and Metohija. According to the statistics for 1986 and 1987, the GNP per capita in Slovenia was U.S. $4,399, as opposed to U.S. $645 in Kosovo. The illiteracy rate in Slovenia was 0.8% and in Kosovo 17.6%. Unemployment figures were 1.6% and 34.3% respectively, and population growth rate 3.1% and 24.4%. 5. Social ownership was used to describe an assembly of common goods managed by selected representatives of society or one of its relevant segments. 6. "Results" describes the situation established by two laws. One was "The Law about Health Insurance and Compulsory Ways of Health Care," which was introduced in 1970 and slightly changed in 1974, and the other was "The Law on Health Care" introduced in 1979. 7. This was below 5% or the recommended minimum that is, according to the World Health Organization indicators, necessary for socially and economically productive life. 8. In developed Vojvodina, for example, the incidence of death caused by cardiovascular diseases per 100,000 inhabitants in 1981 was 688; in 1986, the figure rose to 739; in Kosovo and Macedonia, the two regions with the poorest economic indicators, the figures were 185 and 157, respectively. The infant mortality rate in Kosovo and Metohija in 1981 was 62.9 per 1,000 births, as compared to 56.1 in 1986. The figures for Vojvodina were 17.5 and 16.5, respectively. 9. In 1986, for example, 4.6% of the GNP or U.S. $86 per capita was allocated for health services. 10. Serbia's provinces of Vojvodina and Kosovo and Metohija were also constituent elements of the Yugoslav federation and had considerable self-government powers. 11. Banks became totally dependent on the ruling Mafia and denied any responsibility for private deposits. Similarly, market mechanisms ceased to exist because all deals were made outside the market through high-ranking mediators. 12. One of the laws adopted in this period gave judges the right to impose drastic fines on media companies and journalists in a summary procedure. A similar law placed universities under complete control of the state. It is now the minister of education, for example, who appoints deans and professors. The judiciary is controlled by appointing loyal and obedient presidents of various legal institutions and by extending their powers. 13. Hoftstede established the chief traits of the Serbian social character as subordination to authority, a high degree of collectivism, and intolerance toward everything that is different. According to a study conducted by Zagorka Golubovic and her team, 74% of those polled believe that obedience and respect for authority are the chief virtues that children should learn, 78% maintain that the state should resolve social problems, and 75% say that they do not question the authority of their leader. 14. "The heavenly people" was the common claim emphasizing that Serbs were people with special values, attitudes, and destiny. 15. At the end of the 1990s, for example, the Mafia had absolute control in Vojvodina and central Serbia. The influence was somewhat limited in Kosovo because of the rival local Albanian groups, who developed a parallel society in the province. In Montenegro,

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after the election victory of the party that urges modernization, the Serbian Mafia's appetite had to be considerably lessened. The loss was compensated by considerable influence in the Bosnian Serb Republic. Also, there have always been aspirations toward some parts of Macedonia following the loss of interest spheres in Eastern Slavonia and Croatia. 16. Slight changes were introduced in 1993 and 1996. 17. Unlike the previous law, the new law stripped municipal authorities of any decision-making powers, left vague the role of citizens in the decision-making process concerning health care policy and its implementation, and just formally mentioned that primary health care should have priority, but did not elaborate. 18. The new law made directors of health institutions totally dependent on the Ministry of Health in operative terms, but gave them complete control over their staff. It is logical, then, that only politically suitable persons were appointed to such positions. At present, this means that almost all directors of medical institutions, from hospitals to community health centers, belong to the Yugoslav United Left (YUL), a party with leftist rhetoric whose officials are believed to be among the richest people in the country. 19. The Mafia originating from the Serbian party nomenklatura also used the University Law in order to take over control of the health care system. Under the new University Law, all university professors, including professors in the Faculty of Medicine, are appointed by the minister of education. 20. According to unofficial sources, there is one policeman for every 70-80 inhabitants of Serbia. 21. Drugs used for the treatment of psychiatric patients can serve as an excellent example here. According to the Manual of Clinical Psychopharmacology written by V.R. Paunovic (Belgrade, 1996), a total of 10 antipsychotic drugs are registered in Yugoslavia, in comparison to 59 in Western Europe and the United States. The situation used to be even worse. Three registered drugs (Perazini dimalonas, Pericyazinum, and Droperidolum) were unavailable. One of them (Clozapinium) was too expensive to be available in hospitals, so that patients or members of their families had to buy it themselves. Three drugs (Levomepromazini mabas, Fluphenazini hydrochloridum, and Sulpiridum) were available only in the form of injections. Haloperidolum was not available in a prolonged effect form. Only two drugs (Chloropromazini hydrochlorium and Thioridazini Hydrochloridum) were available in all therapeutically suitable forms. 22. A very good illustration of violation of professional code of ethics for the benefit of the Mafia was the behavior of the Clinical Center of Serbia (the main and the best institution in the country), which during the big protest against the rigging of local elections in the winter of 1996 and 1997 tried to cover up the death of one protestor injured in the demonstrations. Another proof that the Mafia code had precedence over the professional code is that on that same occasion a large number of people injured during the protest did not dare seek medical help, fearing that the doctors would report them to the police. 23. The absence of any reaction to the disintegration of Serbia's health care system best testifies to the dominant Eichmannism (a term first introduced into social theory by American sociologist Edgar Friedenberg) of Serbian doctors. Since the biggest medical institutions and professional organizations remained silent, three independent medical organizations had to be founded: the Committee for the Defense of Democracy at the Medical Faculty in Belgrade, the Association of Free Doctors, and the Independent Doctors and Pharmacists Union. The Committee for the Defense of Democracy has a dozen

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members (the Medical Faculty employs about 750 doctors). The Association of Free Doctors has about 50 members, including the majority of members of the Independent Doctors and Pharmacists Union. There are about 20,000 doctors in Serbia. 24. According to media reports and complaints by domestic pharmaceutical companies, top Health Ministry officials were heavily implicated in private deals for importing these types of medicines. 25. The company in question is ICN Galenika, until recently owned by ICN Pharmaceuticals from Costa Mesa, California. The details about the seizure were published in a special supplement of the daily Nasa Borba (Our Struggle) on 8 February 1999. 26. Before being hospitalized for surgery, for example, patients receive a list of supplies that they should bring with them. The author of this chapter personally saw in December 1997 two lists of drugs and supplies that a family of a boy suffering from leukemia had to purchase. The total sum was 370,000 dinars, which at that time equaled more than 100,000 German marks. The average salary at the time was 186 German marks. The second bill, amounting to 120,000 dinars, was given to the parents after they somehow managed to raise the first sum with the help of a group of sponsors. 27. Under the law on privatization that was used by Mafia to acquire vast holdings, many private clinics were opened. In these clinics, most notable experts from state institutions were engaged as consultants. 28. According to a public joke, Serbian hospitals were unique in that patients had to bring their beds with them. 29. The entire health care system is in the hands of the Yugoslav United Left (YUL). The members of that party, whose president is the wife of the Yugoslav president Slobodan Milosevic, include the minister of health, the director of the Health Insurance Fund, the deans of the medical faculties in Belgrade and Novi Sad, and the directors of almost all medical institutions, from the Clinical Center of Serbia to provincial hospitals. 30. The negative elements of modernization are best reflected in their characteristic attitude toward human rights. Various institutions, including medical institutions, protect human rights from external factors, but they are not very efficient when these same rights should be protected internally. 31. Two important elements show that the transformation of health care, in the sense of reconstructive postModernity, has already begun. One is medical pluralism and the fact that the so-called scientific medicine is no longer the only acceptable therapeutic orientation and that in many highly developed countries a series of other therapeutic practices and medical systems better known as alternative medicine are used simultaneously; the other element concerns growing acceptance and development of the concept of patients' rights, which is derived from awareness that, just like any other institution, medicine has failed to protect people who are turning to it for help from itself and its selfish interests.

REFERENCES Annual Statistics of SFRY. 1990. Belgrade. Fromm, E. 1975. The Anatomy of Human Destructiveness. Greenwich, CT: Fawcett Publications. Golubovic, Z. 1995. "Tradicionalizam i autoritarnost kao prepreke za razvoj civilnog drustva u Srbiji" (Traditionalism and authoritarianism as obstacles to the devel-

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opment of civil society in Serbia). In V. Pavlovic, ed., Potisnuto civilno drustvo (Suppressed civil society). Beograd: Eko Centar, pp. 51-70. Griffin R.D., ed. 1990. Sacred Interconnections. Albany: State University of New York Press. Hofstede, G.H. 1994. "Images of Europe." The Netherlands Journal of Social Science 30:63-82. Lackovic, Z., Buneta, Z. Relja, M., and Cecuk, L.J. 1987. "Medicinske znanosti Jugoslavije" (Medical Science in Yugoslavia)—Odnos uvjeta i rezultata (Relationship between conditions and results) Ljecnicki Vijesnik, 109:49-56. Letica, S. 1989. Zdravstena politika u doba krize (Health policy at times of crises). Zagreb: Naprijed. Stambolovic, V. 1989. "Vojni troskovi i narodno zdravlje" (Military expenditures and health of the population). Socioloski Pregled, 23:2-3; 137-143. Stambolovic V. 1996. "Human Rights and Health within the Dominant Paradigm." Social Science and Medicine, 42:3:301-3.

Chapter 8

The Inelasticity of Institutional Patterns: An Impediment to Health Care Reform in Post-Communist Russia Mark G. Field The collapse of the Soviet Union at the end of 1991 provided Russia with an opportunity, among other things, to drastically reform its once-touted but ailing and underfunded health care service, generally known as Soviet socialized medicine (Tretiakov, 1944; Vinogradov and Strashun, 1947), or the Semashko system. Nikolai Semashko, an exile companion of Lenin, was a physician, the first commissar of health protection in the new Soviet regime, and the patron saint of Soviet socialized medicine. Semashko laid down the major principles of the provision of health care to the population (Sigerist, 1937, 1947), principles that remained, with one major exception, the basic guidelines for Soviet health care until the downfall of the Communist regime in December 1991 (Field, 1957, 1967). We shall outline these principles later. The transition from socialized medicine to a scheme generally known as obligatory insurance medicine with an orientation to the efficiencies of the market, in a situation that was politically and economically difficult and unstable, is an instinctive case of the resilience of institutional memory. It illustrates the difficulties and pitfalls attending changes in policy, in this case health policy. As a rule, such change can never proceed on a clean state, de novo, but must necessarily utilize available human and other resources, and particularly institutions and mentalities inherited from the past. Possibly radical institutional change can take place more easily in a revolutionary situation where "anything goes" and it is possible to innovate on a large scale with little initial effective resistance. The breakdown of the Soviet Union was not a violent revolution but rather an astonishingly smooth transition that left in place many of the Soviet patterns and practices, fueled by the persistence of ideology and popular expectations shaped under the previous regime. Thus the attempt to shape an "antimodel" to its health care system shows the problematic nature of that aspiration

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and the resulting mix of old and new structures in an unsteady equilibrium. But to understand that process, it is imperative to understand the previous arrangement, that is, the "legacy" or the platform that served as a springboard to the new, post-Soviet scheme and simultaneously as a powerful brake to the reform process. SOVIET SOCIALIZED MEDICINE For many years, until about the 1960s, Soviet socialized medicine occupied a privileged position as one of the few redeeming aspects of an otherwise-bleak totalitarian society; it stood as the crown jewel of the welfare aspects of the Soviet state, the equivalent of the claim that Mussolini made the trains run on time as a justification, if not an exoneration, of the seamier aspects of Italian fascism. Socialized medicine thus provided the essential "but" to critiques of the Soviet totalitarian state. In 1999 an English great-grandmother, a Mrs. Melita Norwood, confessed to having spied for the Soviet Union by passing atomic and nuclear secrets for more than 40 years. Her rationale was that she wanted to protect the Soviet Union because it had granted, among other things, the benefits of health care to the entire population (Hoge, 1999). Historically, we should note for the record, the Soviet Union was the first country in the world to make a constitutional guarantee of a universal, though not necessarily equal, entitlement to free medical care to the entire population at the expense of society (i.e., the state). The plethora of euphemisms that epitomize lifetime health security is proof enough of the emotional and ideological appeal of that entitlement, whether we talk of care from birth to death, from the prenatal to the postmortem, from the cradle to the grave, or even from the sperm to the worm or the womb to the tomb. This benefit was a great asset to Soviet propaganda at home since it depicted capitalism as a system where poor people died because they could not afford the fees of physicians or the costs of hospital care. Abroad, it attracted the sympathy of many (including Mrs. Norwood) who saw the Soviet Union as an image of the future, as a society that cared for the well-being of the entire population, and, as noted earlier, that more than counterbalanced the alleged "excesses" of totalitarianism, often dismissed with the bromide that one cannot make an omelet without breaking eggs. By removing the cash nexus between patient and provider, socialized medicine promised that holy grail of free health care for all. The implementation of this right, in the nature of the case, became a public function, particularly in the absence of a private sector in Soviet society. Thus, by definition, the provision and the financing of health care became a responsibility of society (i.e., the state) and not, for example, part of an insurance or indemnity scheme in which those who needed medical attention would seek such care, and the cost would be reimbursed either to the individual or the provider. Soviet socialized medicine meant that the polity itself was in the business of providing health and allied services to the people by recruiting, training, deploying, and paying (by salary)

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physicians and allied personnel to provide the entire gamut of health services to the population. The physicians and nurses and others in the health field thus became state employees or, as some would put it, medical bureaucrats. The "profession" of medicine, if by this we mean a "liberal" occupation and a corporate body or association endowed with a certain degree of legitimacy and autonomy and thus capable of articulating its views both in the legislature and in public to defend its interests and those it serves, had no place in the Soviet totalitarian scheme. It would have been a source of independent power that was anathema to the Communist Party, always jealous of its monopoly of power (Field, 1960). As state employees, most doctors as a rule received a very low income (about 70% of the general level of workers), did not enjoy much prestige, and as a heavily feminized group suffered from the general discrimination common in a sexist society. Most of the prestigious and better-remunerated positions in the medical bureaucracy and in clinical and research institutions remained, on the whole, a male preserve. In the entire Soviet period, only one woman, Maria D. Kovrigina, served as health minister (under Khrushchev). The contours of socialized medicine are generally well known, and only a few salient features will be highlighted. It was, as pointed out earlier, state or public medicine, that is, a public service that had no provision for private activities or initiative, charity, or religious support. The basic constitutional article on health protection, as stated in the last Soviet constitution (1977), was that "citizens of the USSR have the right to health protection. This right is insured by the development and improvement of safety and hygiene in industry, in carrying broad prophylactic measures; by measures to improve the environment; by special care for the health of the youth, including the prohibition of child labor, and by developing research to prevent and reduce the incidence of disease and ensure citizens a long and active life" (Article 42 of the 1977 constitution). The constitution of the new Russian Federation reiterates the right of all citizens to free health protection, but with the proviso that such care be financed from a variety of sources rather than exclusively by the state. However, the basic premise and promise of universal entitlement remains and is stated as follows: "Every citizen of the Russian Federation has the right to free medical assistance in the governmental system of health protection. The government undertakes measures aimed at the development of state, municipal, and private system of health protection, as well as the medical insurance of citizens" (Article 55 of the 1992 constitution). Note that this formulation also refers to a private sector (a departure from Soviet times) and to medical assistance as well as "health protection." This is a literal translation of the Russian expression zdravookhranenie, a formulation that does not make much of a distinction between preventive or public health and clinical or curative services. The Ministry of Health in Russian is the Ministry of Health Protection rather than the Ministry of Health or Public Health, as the term is conventionally translated in the West. This is a combination of two words, zdravo, meaning health, and okhranenie, which means either protection or maintenance and reflects rather well a duality

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already visible in Greek and Roman mythology. Aesculapius, the god of medicine, had two quarrelsome daughters, Hygeia and Panacea. Hygeia was the goddess of good health habits and thus of prevention; Panacea, her sister, was the goddess of cures. Although they began as equals, eventually the demand for Panacea's ministrations grew so much as to exceed her capacity to heal every one (Smith, 1994). Soviet socialized medicine, at least in the first decade under the leadership of Semashko, the first commissar of health protection (appointed in 1918), was meant to redress the imbalance. In the early days of Soviet socialized medicine, the emphasis was on prevention, premised particularly on the idea that society itself was the major etiologic factor in illness, an idea derived to a large extent from the German hygienists of the nineteenth century and the Marxists, particularly Engels and his important book The Condition of the Working Class in England (Engels, 1958), published in the middle of that century. The general assumption was that the advent of socialistic society would permit the elimination of most sources of pathology and mortality arising from social and economic conditions such as poverty, poor diets, unhygienic conditions, and substandard housing. But at the end of the 1920s, when Stalin launched his ambitious five-year plans for industrialization, militarization, and the collectivization of agriculture, the emphasis shifted from prophylactics to the clinics. The purpose of Stalin's policy was to make the Soviet Union self-sufficient and the bastion of socialism in a hostile capitalistic world (since the worldwide revolution anticipated by the Marxists had not yet taken place). The "nationalization of socialism" meant that the defense, if not the survival, of socialism was linked to the fate of the Soviet Union. In health care, the emphasis shifted from Hygeia to Panacea and remained so until the collapse of the Soviet regime and into the post-Soviet period. Semashko had been dismissed from his post at the end of the 1920s. Ideologically and practically it became impossible for the Soviet Union to maintain the claim that the major cause of illness was living and working conditions, since the launching of a major industrialization drive without borrowing significant capital from a presumably hostile capitalist world led to the impoverishment and exploitation of the population, urban and rural, through enforced savings at the expense of living conditions and reproduced the same conditions excoriated by Engels and Marx. Panacea, aimed primarily at maintaining the working and fighting capacities of the population, became the mother of what amounted to a national health maintenance organization. Critics have suggested in the post-Soviet period that the ministry should have been renamed the Ministry of Medicine. There were, in addition, two other characteristics of socialized medicine that must be noted as part of the background: • Health policy was tightly integrated within the framework of national planning, the five-year plans, as part of the development of the Soviet system as a whole. Since the government (or more specifically the Communist Party) controlled the flow of financial resources to the health service, it could determine its priority in the national scheme.

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• The health system became highly centralized, managed by the Ministry of Health Promotion USSR in Moscow and operating through counterpart ministries in the constituent republics and down to the lowest local administrative levels. The minister, always a physician, was a member of the cabinet (the Council of Ministers) and the chief health official in the country, responsible for the health of the nation. The ministerial administration developed into a large bureaucratic, hierarchical, and fairly unwieldy organization. The provision of health care became stratified, reflecting with a high degree of precision the position of the individual in society, as will be shown later.

Access to Health Care One of the distinctive features of Soviet socialized medicine was that in principle, everyone was assigned to a medical facility, not as a result of personal choice, but as a function of residence, occupation, or rank. Organizationally, the general population was served by two structures of medical facilities: the Territorial or Residential and the Departmental or Occupational networks, including the "closed" facilities, of which more later. In the Territorial or Residential Network, which served the great majority of the population, the home address determined the outpatient polyclinic to which the individual and his family were assigned. This polyclinic was the major portal of entry into the health care system. For this purpose, the population was divided into catchment areas known as medical districts of about 40,000 persons (10,000 children and adolescents and 30,000 adults), though the numbers might vary. The physical size of the districts depended on population density, being quite small in the cities, where the density was very high, and very large in the countryside, where it was very low. The district was thus not primarily a geographical area but an administrative-medical one. It was in turn subdivided into microdistricts of about 4,000 persons (1,000 children, 3,000 adults), each of which was served by two or three physicians, terapevti (therapists), preferably including a pediatrician, plus a nurse and other support personnel. The district polyclinic was essentially an outpatient facility, the initial portal of entry into health care, the point of first contact. In the countryside, where distances were great and the roads often impassable in the spring and the fall, the polyclinic might include a small complement of about 10 beds. Each polyclinic also included a group of specialists, each one of whom was responsible for more than one microdistrict. Every polyclinic was also affiliated with hospitals (which served several medical districts) to which patients could be referred. There were, in addition, specialized outpatient dispensaries for specific conditions or population groups (for prenatal care, tuberculosis, cancer, nervous diseases, and certain occupational groups considered at risk, coal miners or adolescents, for example). The territorial or residential principle meant that each individual knew precisely where to turn for initial medical attention. In that scheme, patient and physician were automatically assigned to each other, so there was little or no choice. More latitude, however, was available in choos-

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ing a specialist. Physicians saw patients at the polyclinic for about half of their working day and made house calls for the other half. Clinic consultations were usually limited to a few minutes (often less than 10), and half of the time was consumed by paperwork. Dr. G. Ivanov in a letter to Izvestiia in 1986 complained that he was so pressed for time that he had to make diagnoses and prescribe treatment as speedily as a "jet pilot in aerial combat" (Ivanov, 1986). Another doctor reported that she went through her appointments without looking up at her patients. Her work load was 36 patients in four hours, thus seven minutes per patient (including the paperwork already mentioned) (Paikin and Silina, 1978; Tomashevskii, 1986). The Occupational or Departmental Network encompassed a variety of health care systems, access to which was determined either by occupation or rank rather than residence. Industrial enterprises often had their own medical facilities (the Occupational Network); the larger the enterprise, the more comprehensive these facilities. In factories and plants, the physician in charge of the workers or employees in a department or shop was thus the equivalent of the microdistrict physician, so that in theory the individual had a choice between a residential or occupational physician and polyclinic. The Departmental Network encompassed the members of certain administrations or ministries (such as the Ministry of the Interior or Foreign Affairs, the armed forces, or the Railways Administration) as well as such organizations as the Academy of Sciences, or even the employees of large department stores. These networks were thus not available to the general population, hence their denomination as "closed." There was also a whole range of closed facilities reserved for the members of the different elites, particularly cultural (like the Bolshoi Theater in Moscow) but especially political, culminating in the hospitals, clinics, and rest homes of the Kremlin (called the Kremlinovka) where the highest officials (and their families) had access to the best medical care, equipment, and buildings available in the country. In some instances, patients could also be sent abroad for treatment, and specimens might be shipped to Finland for laboratory work. These often-palatial facilities, the equivalent of private hospitals and clinics in the West, were considered perquisites of rank and thus part of "socialized medicine" and therefore were financed from the budgetary allocations to health protection. The closed networks employed a disproportionate amount of personnel and financial resources available for health care at the expense of the territorial networks, which suffered shortages of all sorts. In a country that boasted more doctors and hospital beds per capita than anywhere else in the world, ordinary people received minimal assistance, with long waits and poorly equipped hospitals. In 1987, for example, about half of all doctors in Moscow worked in special or closed polyclinics or hospitals (Borich, 1987). It was estimated by Christopher Davis in 1979 that about 0.1% of the population received superlative care (in Soviet terms); 25% received relatively high-quality care in departmental and capital-cities facilities. Another 24% received acceptable services in medium-city and industrial systems, and about half of the population received

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poor or substandard care in the countryside and low-density areas (Davis, 1979). As seems to be the case universally, the elites knew how to take care of themselves and displayed a Marie Antoinettish insouciance for the others. The assumption that Soviet socialized medicine was one large, uniform system for the provision of health services to the population is belied by its fragmented and unequal nature. On the other hand, the idea of free care at the time of service as a responsibility and an obligation of the state (or society) as a basic principle remained solidly anchored in the minds of the population during and after the dissolution of the Soviet Union, and the violation of that principle was a source of disaffection both before the collapse and particularly afterward. Achievements In spite of these strictures, the Soviet Union achieved remarkable progress in decreasing mortality, particularly infant mortality to about 10% of its prerevolutionary figure, increasing life expectancy (which more than doubled in the years of the Soviet regime), stemming epidemics, and increasing exponentially the number of physicians and hospital beds, though they were often of poor or indifferent quality. We must also note that this achievement was not exclusively the result of health care (McKinlay, et al., 1989). According to the World Health Organization, health care accounts for only 10% to 15% of the variance in affecting morbidity and mortality, the balance resulting from such factors as environmental pollution, occupational risks, style of life, economic level, genetics, and the food supply, among other things (Rimashevskaia, 1993; Preker and Feachem, 1995). Still, Soviet socialized medicine received a great deal of the credit for such progress, and probably justifiably so. Yet the rosy picture just depicted began to fade in the mid-1960s with a sudden and quite unexpected rise in infant mortality (Davis and Feshbach, 1980; Field, 1986). Infant mortality, defined as the number of infants born alive who die within a year of their birth (and expressed for comparative purposes as a rate of deaths per 1,000 live births), is considered a proxy index not only of mortality but also of living conditions and well-being as well as medical care. This rise was followed by an increase in overall mortality, particularly male, and in the 1970s by an embargo reminiscent of the Stalin days on the publication of most vital statistics (on the grounds of national security) (Garrett, 1997), a sure index of the existence of a problem. In 1983, eight years before the collapse, Roland Pressat stated in an article on the increase in mortality, "One has never seen, in time of peace, a regression of health conditions (as . . . measured by mortality) on such a scale" (Pressat, 1983). Other commentators expressed also their astonishment at the unexpected rise of mortality in a period of peace and in the absence either of a famine or severe epidemics (Field, 2000). But was it really peacetime? One might argue that this was, in fact, wartime, albeit a cold war. The trigger for the intensification of that war was probably the Cuban episode (1962), which was viewed by the Soviets as a demonstration of Soviet military

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and nuclear inferiority and a national humiliation. After the dismissal of Khrushchev, the architect of the Cuban policy (1964), the decision was taken by the succeeding administration to match or even surpass the United States in military and nuclear power, and this with a gross national product only a fraction of that of its main adversary, leading to the classical conflict between guns and butter. Thus, in Sheehan's words, "The Soviets' humiliation in the Cuban missile crisis was to goad them into a full-fledged nuclear buildup" (Sheehan, 1989:592). Slobodan Vitanovic has pointed out that "it would be a great error to think that the Third World War has been avoided. It took place and it was long. The particularity of that war was that it was political, ideological, and first of all economic. . . . there were no combats, but if the weapons were not for this time utilized, they were constantly being produced, and military expenditures have surpassed those of all preceding wars. . . . if [that war] has been political, ideological, and . . . economic, victory, or, seen from the other side, capitulation, was of the same type" (Vitanovic, 1993). The increased Soviet emphasis on defense spending meant that the guns won and the butter (read, the population's welfare) lost. It had been Khrushchev's intention to improve the standard of living (in housing and agriculture in particular) (Khrushchev, 2001) and to downsize defense outlays.1 His successors, beginning with Brezhnev, adopted a different policy. If from 1952 to 1959, according to recent CIA estimates, the annual increase in the defense budget was of the order of 0.4%, from 1960 to 1969 that figure jumped to 5.7% annually, a 14-fold increase (Firth and Noreen, 1998: Figure 5.2, p. 102). Estimates of the percentage of GDP spent on national defense in the Soviet Union range of 20% or more. When Gorbachev came to power in 1985, he reported that he did not realize "the true scale of militarization of the country. .. . although the leaders of the military-industrial complex opposed it, we published these data. . . . Military expenditures were not 16% of the state budget. . . but 40%. . . . it was not 6% but 20% of the Gross National Product" (Gorbachev, 1995: 277). If to this one adds an inefficient economy, the era of stagnation, and the corruption that characterized the Brezhnev regime and its successors, it then becomes understandable that the percentage of the gross national product that went to health care declined from a respectable 6-6.5% in the 1960s (in line with what Western countries spent then) to 2% or 3% or perhaps even less at the time of the collapse in 1991. Not only did the funding for health care decrease drastically, but we can assume that the general standard of living also did and accounted, in part, for the rise in mortality. The burden of armaments on the well-being of a population has been called "buying death with taxes" (Sidel, 1981). In other words, money spent on weapons is not available in the civilian sector for the welfare of the people (Woolhandler and Himmelstein, 1985), or, more metaphorically, weapons kill those who forge them. This is particularly true of relatively poor countries, and Russia was also relatively poor. The 1998 Nobel laureate in economics, Amartya Sen, expressed this in the

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following way: "Fiscal conservatism should be the nightmare of the militarist, not the school teacher or the hospital nurse" (cited by Bernstein, 1999, p. B6). In fact, in the 1980s food rationing, reminiscent and symbolic of wartime, reappeared in many Soviet cities (Latsis, 1996). 2 There is little doubt that these elements contributed to a drastic decline in well-being and health, a decline that was exacerbated by the collapse of the Soviet regime and the traumas and difficulties that followed in the period of transition from a Communist regime to a neoliberal market economy (Field, Kotz, and Bukhman, 2000). The only exception to the downward slide in the vital statistics was the result of Gorbachev's successful antialcohol campaign in the mid-1980s, carried out with all the brutal strength that the Soviet regime could muster (destroyed warehouses, jailing of illegal sellers, raising the price of vodka, uprooting vineyards, and so on) (Avdeev, Blum, and Zakharov, 1996) and conservatively estimated to have saved half a million lives and probably more (Vishnevskii, 1997, cited in Garrett, 2000:136). But for a variety of economic and political reasons, that campaign was abandoned in 1988, leading to a resumption of high alcohol consumption with the usual sequelae of alcohol poisonings, cirrhosis of the liver, and alcoholrelated violence and traffic accidents. A 550% increase in alcohol psychosis was registered between 1989 and 1993 (Vishnevskii, 1997).

THE NEED FOR REFORMING SOCIALIZED MEDICINE It had already become clear in the years that preceded the collapse that the health care system needed fundamental reorganization to remedy many of the problems and defects that had become part and parcel of Soviet socialized medicine and its failure to deliver what it was expected to do. 3 There were some experiments to introduce changes, to alter the nature of incentives, and to foster some kind of competition, but these attempts did not amount to much, and most of them fell by the wayside in the aftermath of the collapse of the regime. Among the major issues, the following were the most glaring, not listed necessarily in their order of importance: • Health care was generally granted a low priority in the Soviet scheme, since it was regarded as a nonproductive sector of the economy that cost money but did not produce "tangible goods" of industrial or military significance. • Consequently, health care was underfunded, particularly beginning in the 1960s with the rise in defense expenditures. Funding was provided according to what one Soviet critic (Chazov, 1987, 1990) called "the residual principle": after all the other items had been attended to, whatever was left went to health, and this was very little. The financing from the state budget facilitated the "raiding" of funds earmarked for health for other purposes. • The health system operated, like industry, along quantitative indices of "gross output," with little regard to the quality of care, whether in the outpatient or hospital sector, often leading to what has been dubbed "lethal free medical care" (Remnick, 1994).

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• As a result, there were a series of perverse incentives, both in the remuneration of health personnel, such as fixed salaries for physicians regardless of their performance, and in funding hospitals (the more beds there were, the greater the reimbursement). • The health care system was overcentralized, with a top-down command structure, an inability to cope with new situations and conditions, lack of flexibility in dealing with local and regional conditions, bureaucratization, and inertia, as well as an inability to innovate, combined with subservience to Moscow and isolation for over 50 years from world trends in medicine. • There was an inability to cope with new conditions caused by the epidemiological transition from infectious to chronic diseases after World War II (due to a large extent to the introduction of antibiotics), such as cancer, cardiovascular problems, and diabetes. The new morbidity and mortality profiles were less amenable to the mass (and often-drastic) approaches that had characterized Soviet health policies and had been successful in controlling or eliminating infectious diseases (such as the forcible or mandatory removal of patients to hospitals for long periods of time). • There was an emphasis on specialization (in training and in clinical practice) at the expense of general practice, and a stress on hospitalization rather than outpatient treatment. Thus polyclinic physicians often functioned more as dispatchers than clinicians. • The system was plagued by perennial shortages of equipment, supplies, and particularly pharmaceuticals (including insulin) as well as by dependence on Eastern European producers and the undercapitalization of domestic production. • Health education, that is, the promotion of healthy lifestyles (exercise, diet, smoking cessation, and so on) and of personal responsibility for one's health, was neglected as a result of paternalism and dependence on the state. In other words, as Garrett stated it, individuals were unable "to imagine that their own behaviors—drinking, smoking, driving while inebriated—were key to their health" (Garrett, 2000, p. 186). • General corruption, widespread inefficiency, and "under-the-table" payments or "envelope passing medicine" made the constitutionally promised free care often a sick joke. • The health care system was labor intensive (thus relatively cheap) rather than capital extensive (relatively expensive). Health personnel were often overworked and poorly paid, leading (as already noted) to the significance of "under-the-table" payments and an exodus of such personnel (particularly nurses) to more lucrative occupations. The Search for Change and Reform and the Heavy Legacy of the Past The search for a radical change began with the move from the state budget as the major source of funding health care to the concepts of health insurance, decentralization, devolution of decision making, competition, and the introduction of some market mechanisms. Actually there was a move toward reform afoot already in Soviet times, at least in the Russian Soviet Federated Socialist Republic (the largest and tone-setting republic) when it passed legislation to create a system of obligatory medical insurance six months before the end of the Soviet regime. The major purpose of the law was to generate more funds

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for health care by removing it from the budget. It also incorporated features that it was hoped would enhance both competition and the establishment of market mechanisms to increase efficiency. This legislation remained mostly a dead letter until 1993, when it was revived and made into law. The basic feature, in line with decentralization, was to establish in each of the 89 regions of the Russian Federation off-budget quasi-governmental obligatory medical insurance funds. These funds, in turn, would finance private insurance companies that would compete for the business of patients and would monitor health services for quality. The law also established a separation of the provider of health services from the funder, a separation that was absent in the Soviet scheme, in which it was the Ministry of Health that organized and provided health services and funded them directly, thus making them largely insensitive to patients' complaints. In addition, the regional funds would be largely independent of the Ministry of Health and thus capable of making their own decisions and responding more adequately to local conditions. This meant that the ministry lost a great deal of its clout (which it has been struggling to regain ever since, particularly as the insurance system faltered). The Obligatory Medical Insurance Each regional insurance fund was to be funded by a levy or a tax of 3.6% of the salary fund of every enterprise in the region. Of that amount, 3.4% would remain in the region, and 0.2% would be directed to a Federal Insurance Fund that would use that amount to equalize health resources among the different regions (Twigg, 1998, 2000a). It was generally recognized that 3.6% was insufficient to meet the needs of health care and that at least 9% would be required, but that proved politically impossible. The other problem was that the levy covered only to the employed or working population, whereas about 60% of the total population was not gainfully employed (children, housewives, the elderly, pensioners, the disabled, and so on). They would be covered, in principle, by contributions to the insurance funds from the budgets of regional (or municipal) authorities, calculated on a capitation basis and depending on a variety of demographic and other factors. The distinctive point of the scheme was that, contrary to most insurance schemes, the employees were not asked to make a matching contribution to that of the enterprise (unless one argues that the tax or levy from the salary fund is money that otherwise would have been available as part of the employee's pay). The evidence, so far, suggests that the insurance scheme has not worked very well both because of general problems during the period of transition (Shishkin, 1999) and because of patterns inherited from the past. In addition, the formation of private insurance companies has been slow, and in many regions, such companies simply do not exist or went under during the economic meltdown of August 1998, so that the fund became the insurer (without competition). Moreover, in some areas, the insurance companies have simply carved out specific

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territorial areas, thus replicating the structure existing in the Soviet regime, without competition. More serious is the fact that the raiding of health insurance funds for other than health purposes, something that off-budget financing was supposed to eliminate, has also taken place. There are several reasons for this. One is that the local and regional governments, having realized that a new source for funding health services had been created (the obligatory insurance funds), in some instances concluded that they need not fund the required amounts, thereby negating the idea that the insurance funds would be supplemental to budgetary allocations rather than substitutive. During the Chechnia war in 1994, some of the health funds were appropriated to pay for the war. A second problem has been that in an economy where many activities proceed by barter, it is sometimes difficult, if not impossible, for a firm to make its contributions in monetary terms. Ingenious arrangements have been reported: for example, a coal mine might pay its contribution in coal, which the insurance fund would then allocate to medical institutions (Twigg, 1997). Large discrepancies have also been reported in the funds available in the different regions, in the range of four to six times more in some regions. For example, the amounts of money available in the Moscow region were several times larger than in the North Caucasus or the Central Black Earth areas. Physicians working in state institutions, as in the past, continue to be paid on rigid salary scales, so that the more competent and better-qualified physicians tend to be overworked but earn as much, or rather as little, as their other colleagues. According to a recent article by Carey Goldberg and Sophia Kishovsky (2000) entitled "Russia's Doctors Are Beggars at Work, Paupers at Home" (New York Times, 2000), most physicians are paid a pittance, often after long delays. Some of them, with reluctance, have to beg patients for money or attempt to move into private practice. Hospitals continue to tend to increase hospital beds and to keep patients for longer periods than in any other country, particularly since this increases their income, as was the case in the Soviet period, with the difference that the funding comes from a different source. As was often the case earlier, patients going to the hospitals must provide items supposedly to be supplied free of charge by the hospital (supplies, pharmaceuticals, bedding, food, and so on). More and more patients are expected and required to provide copayments for medical services. In the past, these were tolerated, although they were formally illegal. At the present time, these have in fact become accepted practice. The Persistence of Institutional Memory At every step of the way, the reform in the Russian health system has been hobbled not only by the economic difficulties of the transition period but also by the patterns and the mentalities inherited from the recent past and largely resistant to change, what Friedman has called the "tyranny of the status quo" (Friedman, 2001, p. 19). As pointed out by an American observer, "The money from Moscow may be gone, but the network designed by the Soviet Govern-

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ment—grand, cumbersome, repetitive and blind to the perverse and often baffling economics of medicine—still lives on" (Specter, 1998). Not only is the oversupply of hospital beds mentioned earlier (130 beds per 10,000 as against less than 40 in the United States) still in place, but the amazing part is that clinical practices have also shown such resistance to change; these practices are often wasteful and obsolete but remain in place as in the past. This extends to bizarre and outmoded conceptions about the transmission of disease, an unfounded fear of the use of vaccinations in children, and quackery taken seriously (Garrett, 1997, p. 175). Even the washing of hands is sometimes not taken seriously (Garrett, 2000, p. 239), a problem of great import, particularly in the light of the unavailability or shortage of rubber gloves. An example is the treatment of tuberculosis, a major health problem, which is treated by long periods of hospitalization that, according to the World Health Organization, cost five times more than using drugs on an outpatient basis. In the city of Tomsk, there are 88 hospitals for half a million inhabitants, more than in Boston. Twelve hospitals treat only tuberculosis patients, including one for children with a staff of 134, a school, and several buildings that never treated more than 20 patients at a time in 1997. Hospitals, according to Sheiman (1997), still receive their budgets from the central government whether or not they are needed or even used. In that same city of Tomsk, one heart center is only open five days a week. "Don't have a heart attack on the weekend," counsels the chief physician of the Tomsk Institute of Cardiology (Specter, 1998). As in the past, patients continue to be directed to inpatient facilities when outpatient treatment would be better and would shield the individual from long waits and hospital infection. There is a proliferation of specialists and a lack of generalists. Indeed, there are about 100 recognized specialties, including the "physician enema therapist," found in health spas. Finally, the introduction of insurance has created new actors, such as the directors of the obligatory medical insurance funds, and a turf war between them and the Ministry of Health, eager to recover its earlier monopoly and power and arguing for the elimination of these funds, perhaps with some justification. An insurance system can only operate in a market economy that is strongly regulated by the state. At a time of general anarchy and the criminalization of the economy, the legal and other supports for an insurance scheme are largely absent, and insurance is, after all, only a funding mechanism, not a health care system The lack of the training of general practitioners or family physicians that was characteristic of the Soviet period perpetuates the emphasis on the more costly and often more hazardous hospitalization of patients. The average hospital stay is about 16-17 days, about the longest in the world. More and more patients are expected and required to provide copayments for medical services. In the past these were tolerated although formerly illegal. At present time these have become in fact accepted practice. At the same time, different kinds of obstacles make the development of private practice problematic. Some would argue, however, that private practice in fact already exists (and existed in Soviet times) as patients feel obligated to pay money "under the table" to practitioners and other

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health workers. Thus it is reported that rooms in Moscow's public hospitals are available only for a side payment of $200-300, that nurses require "installment" payments of $2-4 daily to ensure that they do not "forget" patients, and that doctors frequently ignore or intentionally misdiagnose serious conditions until a "fistful of dollars" prods them to become "more attentive" to the need for appropriate treatment or surgery (Twigg, 2000). The increased "commodification" of health services has led to the polarization of the population between a small and affluent group that can afford the best available in Russia and abroad in private facilities and a large number of those who cannot pay for medical care, either privately or even in state institutions where payments are increasingly demanded. It has been noted that "Russian health care has collapsed in the last decade, along with Russian health" (Wines, 2000a, pp. 1, 12), leading to "the most astonishing collapse in public health ever witnessed in peace time in the industrialized time" (Garrett, 2000, p. 122). According to one estimate, at least 20,000 cancer patients die annually because they cannot afford medicines, and by another estimate, 200,000 diabetics are unable to get insulin although the government guarantees a free supply: local and regional governments cannot afford to buy it (Wines and Zuger, 2000, pp. 1, 8). According to Wines and Zuger, "Since 1990, Russia has decentralized its health bureaucracy, then tried to recentralize it; thrown the door open to private health insurers, then moved to close it; free medicine to those who needed it, then limited . . . [it] . . . to the neediest. Eight different health ministers have tried to run the system during the last ten years" (2000, p. 8). This and many other aspects of the health crisis in effect render the constitutional promise of entitlement a chimera. THE INELASTICITY OF INSTITUTIONAL MEMORY: THE SCLEROTIC CONUNDRUM At every step of the way, the reform in the Russian health system has been hobbled not only by the economic difficulties of the transition period but also by the sclerotic patterns and mentalities inherited from the recent past and largely resistant to change. Not only does the oversupply of hospital beds mentioned earlier continue, but many clinical practices are wasteful, obsolete, and often of no therapeutic value if not iatrogenically harmful. These remain as in the past and continue to exhibit amazing life expectancy. This is particularly true of the handling of tuberculosis, mentioned earlier, which has staged an ominous comeback in the decade since the fall of the regime (Portaels, Rigouts, and Bastian, 1999). Sporadic treatment, often interrupted by the lack of money to buy the necessary drugs, has led, among other things, to an increase in the incidence of multiple drug-resistant strains that are difficult to treat and often incurable (Zuger, 2000; Farmer, 1999a, 1999b). The situation is particularly dire in jails, where individuals are frequently held for very long periods before trial, so that incarceration in very crowded cells is almost a guarantee of infection, given the ease of transmission of the disease. As prisoners are released, they spread infection in the community. The tuberculosis epidemic poses problems

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not only for Russia but for Western Europe and the rest of the world because of its highly infectious nature and the modern means of travel and communications. In addition, a series of other diseases have emerged or reemerged. Among the former, there is an explosive growth of AIDS facilitated by the widespread use of drugs and the sharing of needles. Among the latter, such conditions as cholera, diphtheria, hepatitis B and C, typhus, typhoid fever, polio, syphilis, measles, whooping cough, and even malaria have surged in the years following the collapse of the Soviet Union. This resistance to change and to reform may be due, among other causes, to years of isolation from the mainstreams of modern medical practice and also to a kind of xenophobic and nationalistic irritation at being told what to do by allegedly well-meaning foreigners, experts to be sure, but whose prescriptions were inappropriate and given in almost complete ignorance of the nature of the Russian and Soviet background (Cohen, 2000; Wedel, 1998). These experts often tried to impose their views and practices on a system and a situation that simply could not absorb or sustain them (Burger, Field, and Twigg, 1998). To this one must add the feeling of wounded national pride. "I thought humanitarian aid came without strings attached," says a doctor who runs the largest national tuberculosis center in Moscow and is the voice of the conservative medical establishment; "Who are these people to tell us how to treat our citizens?" (Specter, 1998, pp. Al, A6). There is further a distrust (if not paranoia) of foreign aid. Those who are the recipients of such aid often cannot conceive of or admit the idea of disinterested or charitable action and frequently assume ulterior motives such as making a profit or eventually exploiting Russia. Thus a Russian nurse told Vassily Aksyonov, an emigre Russian writer now living in the United States, "Americans provide us with a month of training and accommodation. . . . it is extremely useful for us, but I wonder what profit they would get as a result of this exchange. What are they doing it for?" ( Aksyonov, 1994, p. A23). A Russian tuberculosis expert stated, "People talk of reform all the time in Russia. But nobody wants it. Reform is one of the dirtiest words in the country" (Specter, 1998). There are, of course, exceptions, for example, in the region of Samara, where health reform has been, on the whole, successful, with an emphasis on primary care given by general practitioners and a deemphasis on hospitalization (Raison, 1998), in Karelia, Moscow city, and Kemerovo (Twigg, 1998b, 2000), and in the city of Dubna, where cooperation between a midwestern American city and Dubna proved that under the proper circumstances a health care system can be turned around (Wines, 2000b, pp. 1, 10). But these are exceptions and not the rule. The case of Russia is perhaps far from unique and provides an interesting illustration of a reform that is out of synch with the developments in the transition period. In addition to a phenomenon that is universal (the difficulties associated with change and reform), one must factor in the particularistic and unique elements derived from the Soviet/Russian past that add a fascinating but complicating cultural and historical dimension to the equation and have led to

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a situation best described by a Russian neologism, katastroika.4 the words ofs of a Harvard economic advisor who had succeeded in several countries in turning around faltering economies but who failed in Russia, "Russia is different." (Aksyonov, 1994, p. A23) NOTES 1. Khrushchev also intended to reduce the Soviet armed forces from 2.5 million men to half a million and to stop the production of tanks and other offensive weapons. 2. Latsis refers to the introduction of ration cards in many areas of the Soviet Union at that time. 3. For two brief Western reports, see Prager, 1987, p. 28, and D'Anastasio, 1987, pp. 1, 27. 4. The expression was coined by A. Zinoviev; see Ellman, 1994, ref. 1. p. 325. REFERENCES Aksyonov, Vassily. 1994. "My Search for Russia's Revolution." New York Times, November 22, p. A23. Avdeev, Alexander, Alain Blum, and Serge Zakharov. 1996. "La mortalite en Russie a-telle vraiment augmente entre 1991 et 1995?" Dossiers et Recherches, 51, March, p. 36-112. Bernstein, Richard. 1999. "How Freedom Pays Off in Economic Weil-Being," New York Times, September 20, p. B6. Borich, T. 1987. "For a Limited Circle: Polemical Remarks on Special Polyclinics and Special Hospitals." Current Digest of the Soviet Press, 39(32): 21. Burger, Edward J., Mark G. Field, and Judyth L. Twigg. 1998. "From Assurance to Insurance in Russian Health Care: The Problematic Transition." American Journal of Public Health, 88(5):755-58, May. Chazov, Evguenii I. 1987. "The Physician on the Threshold of the Third Millennium," (in Russian). Literaturnaia gazeta, April 29, p. 11. (Available in English, Current Digest of the Soviet Press, 39, 1-4, June 19, 1987.) Chazov, Evguenii I. 1990. "In Search of the New, Obstacles on the Way" (in Russian). Meditsinskaia Gazeta, February 16, 1990, p. 1. Cohen, Stephen F. 2000. Failed Crusade: America and the Tragedy of Post-Communist Russia. New York: W.W. Norton. D'Anastasio, Mark. 1987. "Red Medicine: Soviet Health System, Despite Early Claims, Is Riddled by Failures." Wall Street Journal, August 18, pp. 1, 27. Davis, Christopher. 1979. The Economics of the Soviet Health System: An Analytical and Historical Study, 1921-1978. Doctoral dissertation in economics, Cambridge University. Davis, Christopher, and Murray Feshbach. 1980. Rising Infant Mortality in the USSR in the 1970's, Washington, DC: U.S. Department of Commerce, June. Ellman, Michael. 1994. "The Increase in Death and Disease under 'Katastroika.' " Cambridge Journal of Economics, 18:329-55. Engels, F. 1958. The Condition of the Working Class in England. Translated and edited by W.O. Henderson and W.H. Chaloner. Stanford, CA: Stanford University Press.

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Farmer, Paul. 1999a. "Pathologies of Power: Rethinking Health and Human Rights," American Journal of Public Health, 89, (10): 1486-96. Farmer, P.E., A.S. Kononets, S.E. Borigov, A. Goldfarb, and M. McKee. 1999b. "Recrudescent Tuberculosis in the Russian Federation." In The Global Impact of Drug-Resistant Tuberculosis (Boston: Harvard Medical School) pp. 41-83. Field, Mark G. 1957. Doctor and Patient in Soviet Russia. Cambridge, MA: Harvard University Press. Field, Mark G. 1960. "Medical Organization and the Medical Profession." In Cyril E. Black, ed., The Transformation of Russian Society. Cambridge, MA: Harvard University Press, pp. 540-52. Field, Mark G. 1967. Soviet Socialized Medicine: An Introduction New York: Free Press. Field, Mark G. 1986. "Soviet Infant Mortality: A Mystery Story." In D.B. Jelliffe and E.F.P. Jelliffe, eds., Advances in International Maternal and Child Health, Oxford: Clarendon Press, pp. 25-65. Field, Mark G. 2000. "The Health and Demographic Crisis in Post-Soviet Russia: A Two Phase Development." In Mark G. Field and Judyth L. Twigg, eds., Russia's Torn Safety Nets: Health and Social Welfare during the Transition. New York: St. Martin's Press, p. 11-42. Field, Mark G., David M. Kotz, and Gene Bukhman. 2000. "Neoliberal Economic Policy, 'State Desertion,' and the Russian Health Crisis." In Jim Yong Kim, Joyce V. Millen, Alec Irwin, and John Gershman, eds., Dying for Growth: Global Inequality and the Health of the Poor. Monroe, ME: Common Courage Press, 2000, pp.154-73. Firth, Noel E., and James E. Noreen. 1998. Soviet Defense Spending: A History of CIA Estimates, 1950-1990. College Station: Texas A&M University Press. Friedman, Milton. 2001. "How to Cure Health Care." Public Interest, No. 142, Winter, pp. 3-30. Garrett, Laurie. 1997. "Crumbled Empire, Shattered Health." Newsday, October 26. Garrett, Laurie. 2000. Betrayal of Trust: The Collapse of Global Public Health, New York: Hyperion. Godbeng, C. and Kishovsky, S. 2000. "Russia's Doctors are Beggars at Work, Paupers at Home," New York Times, 16 December, pp. Al, A7. Gorbachev, Mikhail. 1995. Memoirs. London: Bantam Books. Hoge, Warren. 1999. "The Great-Grandmother Comes in from the Cold." New York Times, September 13, A4. Ivanov, G. 1986. "Speaking Frankly" (in Russian). Ivestiia, February 7, p. 3. Khrushchev, Sergei. 2001. "The Thwarted Promise of the 13 Days." New York Times, February 4, p. WK 17. Latsis, Otto. 1996. "Conversation Overheard in Voronezh" (in Russian). Izvestiia, May 14, p. 5. McKinlay, John B., S. McKinlay, and R. Beuglehole. 1989. "A Review of the Evidence Concerning the Impact of Medical Measures on Recent Mortality and Morbidity in the United States." International Journal of Health Services, 19:181-208. Paikin, A., and G. Silina. 1978. "The District Physician" (in Russian). Literaturnaia gazeta, September 17. Portaels, F., L. Rigouts, and I. Bastian. 1999. "Addressing Multidrug-resistant Tuberculosis in Penitentiary Hospitals and in the General Population of the Former

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Soviet Union." International Journal of Tuberculosis and Lung Disease, 3(7): 582-88. Prager, K.M. 1987. "Soviet Health Care's Critical Condition." Wall Street Journal, January 29, 1987, p. 28. Preker, Alexander S., and Richard G.A. Feachem. 1995. Market Mechanisms and the Health Sector in Central and Eastern Europe," World Bank Technical Paper, No. 293. Washington, DC: World Bank. Pressat, Roland. 1983. "Une evolution anachronique: la hausse de la mortalite en Union sovietique." Concours Medical, 21 May, pp. 105-21. Raison, Christophe. 1998. "Regionalisation et crise sanitaire en Russie." Revue d'Etudes Comparatives Est-Ouest, 29(3):207-39. Remnick, David. 1994. "Getting Russia Right." New York Review of Books, September 22, p. 24. Rimashevskaia, Natalia. 1993. "The Individual's Health Is the Health of Society." Sociological Research, May-June 1993, pp. 28-34. Sheehan, Neil. 1989. A Bright Shining Lie: John Paul Vann and America in Vietnam. New York: Vintage Books. Sheiman, Igor. 1997. "From Beveridge to Bismarck: Health Finance in the Russian Federation." In G. Scheiber, ed., Innovations in Health Care Financing, World Bank Discussion Paper No. 365. Washington, DC: World Bank, 1997, pp. 65-76. Shishkin, Sergei. 1999. "Problems of Transition from Tax-based System of Health Care Financing to Mandatory Health Insurance Model in Russia." Croatian Medical Journal, 40:195-201. Sidel, Victor W. 1981. "Buying Death with Taxes: The Impact of the Arms Race on Health Care." in R. Adams and S. Cullen, eds., The Final Epidemic. Chicago: University of Chicago Press, pp. 40^14. Sigerist, Henry E. 1937. Socialized Medicine in the Soviet Union. New York: W.W. Norton. Sigerist, Henry E. 1947. Medicine and Health in the Soviet Union. New York: Citadel Press. Smith, David R. 1999. "Porches, Politics, and Public Health," American Journal of Public Health, 84(5):725-26. Specter, Michael. 1998. "Citadel of Russia's Wasteful Health System." New York Times, February 4, pp. Al and A6. Tomashevskii, Iu. 1986. "Paper Fever" (in Russian). Izvestiia, January 7. p. 5. Tretiakov, A.F. 1944. The Protection of the Peoples' Health in the RSFSR (in Russian). Moscow: OGIZ. Twigg, Judyth L. 1997. "Russian Health Care in Critical Condition." Transitions, 4, No. (3):56-61. Twigg, Judyth L. 1998a. "Balancing the State and the Market: Russia's Adoption of Obligatory Medical Insurance." Europe-Asia Studies, 50(4):583-602. Twigg, Judyth L. 1998b. "Balancing the State and the Market: Russia's Adoption of Obligatory Medical Insurance," East-Asia Studies, Vol. 50, 4, pp. 583-602. Twigg, Judyth L. 2000a. "Russian Health Care in Crisis." Report: Kennan Institute for Advanced Russian Studies, 18(4). Twigg, Judyth L. 2000b. "Unfulfilled Hopes: The Struggle to Reform Russian Health Care and Its Financing." In Mark G. Field and Judyth L. Twigg, editors, Russia's

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Torn Safety Nets: Health and Social Welfare during the Transition. New York: St. Martin's Press, pp. 43-64. Vinogradov, N.A., and I.D. Strashun. 1947. Health Protection of the Workers in the Soviet Union (in Russian). Moscow: Gos. Izdateltsvo Med. Literatury, Medgiz. Vishnevskii, A.G., ed. 1997. Population of Russia. Moscow: Institute of Prognostics and Center for Demography and Human Ecology. Vitanovic, Slobodan. 1993. "La politique de la culture et les transformations dans le monde actuel." Paper presented at the General Assembly of the Societe Europeenne de Culture, Venice, Italy. Wedel, Janine. 1998. Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998. New York: St. Martin's Press. Wines, Michael. 2000a. "Capitalism Comes to Russian Health Care." New York Times, December 22, pp. 1, 12. Wines, Michael. 2000b. "A Fit City Offers Russia a Self-Help Model." New York Times, December 31, pp. 1, 10. Wines, Michael, and Abigail Zuger. 2000. "In Russia, the 111 and Infirm Include Health Care Itself." New York Times, December 4, pp. 1, 8. Woolhandler, Stephanie, and David Himmelstein. 1985. "Militarism and Mortality: An International Analysis of Arms Spending and Infant Death Rates." Lancet, June 15, pp. 1375-78. Zuger, Abigail. 2000. "Russia Has Few Weapons as Infectious Diseases Surge." New York Times, December 5, pp. Dl, D9.

PART IV

THE MIDDLE EAST

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Chapter 9

Modernization and Health Reform in Saudi Arabia Eugene B. Gallagher Modernization as a concept came into play in the 1960s and has remained important both theoretically and empirically. Berger's version of modernization theory provides an apt conceptual vehicle within which to situate medical/health care and health reform (Berger, Berger and Kellner, 1973). In Berger's view, modernization is a transformation of human consciousness that depends upon two processes: technological production and bureaucracy. Both are reflected in modern health/medical care. "Technological production" in medicine is, of course, different from technological production for consumer goods such as computers and clothes, yet in both instances production depends upon the application of knowledge about the natural world. Medicine has in recent decades become extremely "technological" in that it incorporates increasingly sophisticated knowledge about human biology to produce new vaccines, new pharmaceuticals, and new forms of surgery and anesthesia. All the new knowledge and techniques stand in some degree of contrast with the more constant features of patients—their vulnerability and distress over being ill—and the physician's endeavor to deal with the patient on human as well as technological terms. (This will be elaborated later in a consideration of what Twaddle 1996 calls the "alienation crisis.") In "new" nations such as Saudi Arabia, the acquisition and impress of medical technology become a dramatic icon of rapid progress in a society that in other respects is traditional and even "traditionalizing." Bureaucratization is less conspicuous but is nonetheless widely and deeply present in modern medical care. It is seen in the rational, often-hierarchical organization of resources and personnel, the categorization of knowledge, and the establishment of sequences, priorities, and modes of accountability that are essential for production of services, particularly large-scale production, as in

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hospitals and clinics. The processes of bureaucratization were evident in industrial production and political administration well before they became evident in medicine. TRADITIONALIZATION Saudi Arabia is not merely a traditional, conservative society, of which there are many in the third world. It is also "traditionalizing" in its energetic and vigilant stance against social, political, and cultural changes that have occurred widely—if not always easily—throughout the world. Nevertheless, it is also clear that Saudi Arabia is squarely in the camp of modernization when it comes to the wide use of technology, especially in its petroleum industry. The tension between new and old can be grasped in the following assertion by Bakr Abdullah Bakr, dean of the University of Petroleum and Minerals: "Some countries have sacrificed the soul of their culture in order to acquire the tools of Western technology. We want the tools but not at the price of annihilating our religion (Islam) and cultural values" (Reynolds 1980, p. 2). HEALTH PROGRESS Saudi Arabia offers a picture of spectacular progress in health care over the past three decades. Although many nations have seen sizable growth in their health care systems, probably no other nation of large geographic expanse and population has, in comparable time, achieved so much on a broad national scale, with a relatively high level of care made available to virtually all segments of the population. The number of primary health centers, dispensaries, and clinics rose from 599 in 1971 to 2,700 in 1996. The number of physicians and dentists (combined) rose, in the same period, from 1,316 to 30,544; for nurses, the corresponding figures are 3,355 and 61,214. For hospitals, the figures are 75 and 290; and for hospital beds, they are 9,837 and 42,625. The Saudi picture of progress is worth careful study; beyond study, it is an example to which many nations, especially developing nations, might aspire. It is instructive to study Saudi health care for another, very different reason, having to do with its administration and financing. From this second vantage point, the health care system must be seen within the very conservative matrix of the political structure and culture of the nation. POLITICAL AND SOCIAL PERSPECTIVES Saudi Arabia has been governed by the house, or extended family, of al-Saud since 1927 when it was unified under Abdul Aziz Al Saud and was first recognized as a national entity by Great Britain. The Kingdom of Saudi Arabia, although it was a relatively new nation in the scale of historical time, took its place among the small and dwindling category of contemporary monarchies.

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Saudi Arabia belongs to a particular subset of monarchies that lack formal, visible organs of representative government. The monarch in the United Kingdom, the Netherlands, Thailand, and Japan is titular, ceremonial, and symbolic of national solidarity, but one does not look to him or her for the formulation and implementation of law. The Saudi monarchy (currently the king is Fahd Bin Abdul Aziz al-Saud) is ceremonial but political and executive also. In this respect, it resembles the political leadership of neighboring Arab-Muslim nations—Kuwait, Bahrein, Qatar, the United Arab Emirates, and Oman. There are other features of contemporary government not to be found in the Saudi polity. Benignly, Saudi citizens pay no taxes. Instead, the government— that is, the monarchy plus the sizable bureaucratic apparatus that it has established—"supports itself" by drawing upon oil and natural-gas revenues, which are virtually the entire source of the immense wealth of the desert kingdom. The same source of revenue forms the financial base that undergirds the very considerable array of services that it provides for the Saudi citizenry. Saudi Arabia is an autocratic welfare state. Less benignly, from the standpoint of democratic government, there is no open political process in Saudi Arabia—no political parties, no candidates for office, and no elections. The mass media, print and electronic, are either owned or controlled by the government. There is censorship of foreign or domestic information that might jeopardize the stability of the society or question the legitimacy of the government. The media do carry, however, news and discussion of local and national issues that do not touch upon sensitive issues. According to Simons (1998, p. 20), "Saudi newspapers are allowed to publish news in sensitive areas, but only when the presentation of such items has been approved by the government-owned Saudi Press Agency or by a senior government official." In Saudi Arabia, the democratic institutions found in Western and other industrial nations are disparaged as being corrupt and ineffective in practice—the conduct of elections in particular comes in for criticism. Democratic institutions are rejected in principle. The Saudi regime believes that it is endowed with an unmediated, intuitive grasp of national sentiments and aspirations. The Saudis can point to their many marital linkages to other tribes and to their long history of political involvement on the Arabian peninsula both inside and outside national boundaries. So far as the actual workings of government are concerned, it is claimed that monarchical arbitrariness or absolutism is held in check by a council of ministers. As prime minister, the king is advised by the council, whose members he appoints. He is advised also by the Consultative Council, established in 1992 and appointed by him. As a rough approximation of a Saudi parliament, the Consultative Council is composed of leading male members of traditional and tribal groups in the kingdom. An avenue also exists for individual complaints and grievances. A recent official publication states, "All Saudis have the right

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of direct petition to the monarch, provincial governors and other officials, who receive them during regular public audiences" {Saudi Arabia 2000, p. 24). Limitations and barriers to public discussion make it difficult to report on health care reform in Saudi Arabia. However, the quantitative data presented earlier, and other figures to follow, appear to be trustworthy. They make it clear that the health care system has undergone a tremendous expansion in physical facilities, professional personnel, and volume of services rendered to the public. This is a form of change that must be reckoned as positive in its impact upon the populace. It is, of course, difficult to disentangle the share of progress in health status—the decline in infant, child, and adult mortality and the increase in life expectancy—due to health/medical care as distinct from better diet, a more healthful and safer environment, and other favorable contingencies that have come about in recent decades. In the absence of information that allocates credit accurately to the various sources, it seems reasonable to suppose that some appreciable credit should go to formal medical care and intervention as a source of the general improvement in health status. It is more difficult to identify specific reform elements in the general evolution of the Saudi health care system. In the narrowest sense, "reform" means the correction or elimination of faults, errors, and excesses. "Health reform" would then mean the elimination of flaws in a health care system and the corresponding deployment of a more effective, better-balanced, more appropriate array of means or resources to maximize health status. Sheer change or expansion does not necessarily qualify as reform. The creation and management of any health care system are in part value-neutral, apolitical matter of deploying technical and personnel resources as the means of achieving health. However, they are also political processes in which judgments, opinions, and priorities become contested among individuals and groups. For this reason, health care reform cannot be a simple correction of error but is, instead, a value-laden political process with results that reflect struggle and compromise. Health care reform emerges out of debate and dialectic between forces for the status quo and other forces, not always unified, for structural change. In open political systems, these tendencies become palpable through the direct contention of claims and counterclaims. Even in the limiting case where there is an all-powerful party or sovereign that can invariably work its will against opposition, it is nonetheless possible to conceive of an underlying political process. In societies such as Saudi Arabia that have an opaque, monolithic political structure, one can still construct a plausible account of goals, proposals, and agendas in the domain of health care. Severe constraints upon political discussion suppress the expression of dissent and thus serve to maintain the existing power structure. The key elements of the power structure on a national level are the al-Saud family, as seen earlier, and also Islam, with a special emphasis upon the Sunni-Wahhabi doctrines that contrast sharply with the Shia version of Islam that dominates in Iran. The alSaud family legitimates its rule by vigorously portraying itself as the defender

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of Islam. The monarch himself has in recent years assumed the title "Custodian of the Two Holy Mosques" (in Mecca and Medina). The al-Saud regime also lays great emphasis on its role in facilitating the massive annual pilgrimage of the Muslim faithful from all over the world to Mecca. Political dissent is muffled primarily to preserve power, but there is another force at work—a cultural aesthetic that fosters dignity, decorum, and unity. From his extensive study of Arab culture and history, the Hungarian anthropologist Raphael Patai argues that there is "an Arab tendency to take a polarized view of man and the world," which leads Arabs into frequent divisiveness and conflict with each other as well as outsiders (Patai 1976, p. 156). The "dignity aesthetic" functions, within Arab society, as a counterpoise or social defense against its conflict proneness. This section has set forth political and social features of Saudi Arabia that must be understood in order to understand its health care system. The next section presents situational facts that indicate why future developments in Saudi health care may move it on a track somewhat different from the sheer quantitative expansion that has dominated the last three decades. However, the emphasis must fall upon the possibility of reform, rather than its probability or certainty. Perhaps the Saudi system cannot effect basic change in its administrative-financial-professional framework because, despite the huge expansion, it suffers from structural inertia. Given enough financial largesse, it can continue to expand; short of that, it can go into a steady-state equilibrium mode; and under financial duress, it can contract—but under any of these three contingencies, it would not alter its basic shape. The lack of opportunity for debate and open political process can, it is conjectured, serve as a damper on "structural imagination" and a brake on actual reform. As will be seen, an intense focus for reform lies in the goal of "Saudization," which can be clearly formulated and envisioned but which, as will be seen, is very unlikely to occur within the foreseeable future. Demographic Pressures on the Health Care System According to Dr. Mohammed Mufti in his Healthcare Development Strategies in the Kingdom of Saudi Arabia (Mufti 2000), the annual rate of population increase in Saudi Arabia from 1991 to 1997 averaged 3.6%. This is an extremely high rate; the comparable figure stands at 1.0% for China (the world's most populous nation), 0.1% for Italy, - 0 . 3 % for Hungary, and 0.9% for the United States (WHO 2000). At 3.6%, Saudi Arabia will in 20 years double its present population of 22 million to 44 million. Its growth rate is propelled not only by a high fertility rate but also by a declining overall mortality rate, especially for infants and children. The nation is well along the path of the epidemiologic transition (Omran 1971; Allman 1980). Table 9-1, drawn from Mufti's book (Mufti 2000, p. 3), presents figures on demography, urbanization, and literacy in Saudi Arabia. In situating the nation

Table 9.1 Population Characteristics in Saudi Arabia, 1991-97

Indicators

Population Size Mid-1997 (Millions) Average Annual Population Growth (%) Life Expectancy at Birth (Years) Total Fertility Rate (Births per Woman of Childbearing Age) Population 60 Years or Older (% of Total) Crude Birth Rate (per 1,000 Population) Crude Death Rate (per 1,000 Population) Urban Population (% of Total Population) Adult Literacy Rate (% of Total) Male Adult Literacy Rate (% of Total Males) Female Adult Literacy Rate (% of Total Females)

Value

Year

20.3

1997 1991-97 1997 1997 1996 1996 1996 1997 1995 1995 1995

3.6 71 5.9 4.4 35 5 79 63 69 50

Sources: The World Bank; World Development Indicators 1998; World Health Organization; Demographic and Health Indicators for Countries of Eastern Mediterranean 1996; Saudi Ministry of Health, Annual Health Report 1996; Mufti 2000, p. 3.

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on a scale of general progress or development, the economic dimension is also important. Saudi Arabia falls within the category of developing or preindustrial countries, most of which are poor or very poor. It is, however, in the fortunate position of being a prosperous developing nation, similar to other Gulf Arab states such as Kuwait and the United Arab Emirates. The WHO World Health Report (1998) and the New York Times Almanac (1999) show that Saudi Arabia's gross domestic product per capita is $10,300. The comparable figures for Jordan (population 5.7 million) and Yemen (population 16.3 million)—two relatively poor Arab developing nations—are, respectively, $4,800 and $2,300. Two other petroleum-prosperous Arab developing nations, Kuwait (population 1.7 million, per capita income $22,300) and the United Arab Emirates (population 2.3 million, per capita income $24,000), are wealthier than Saudi Arabia, but they have much smaller populations and geographic size. It is instructive to recall two figures presented in the beginning and to view them in a new perspective that points to demographic pressure. Saudi hospital beds totaled 9,837 in 1971 and 42,625 in 1996. The number of hospital beds per 1,000 population was 1.6 in 1971 and 2.3 in 1996. Thus the number of beds in 1996 was 433% of the 1971 number (42,625/9,837), but beds per capita in 1996 were only 144% of the 1971 number (2.3/1.6). Beds per capita can be thought of as an approximate measure of bed availability to the population. The figures then show that even as new beds (and new hospitals also) were added to the supply of beds, the actual availability of beds dropped. Various explanations can account for this—for example, that increasingly complex procedures for a given diagnosis required a longer hospitalization whereas earlier procedures had been done on an outpatient or a shorter inpatient basis (e.g., if an increase occurred in delivery by cesarean section). However, the strongest explanation is probably the simplest; it points to the very large population increase that occurred over the same period of time (1971-96). Though hospital beds increased, the population increased faster. Even in the absence of acute shortages of personnel or resources in the Saudi health system, it is nonetheless evident that there are increasing pressures on the system. Mufti's report (Mufti 2000, p. 119) shows (Table A6, "Financial Appropriation of Ministry of Health in Relation to Government Budget 19901997") that over an eight-year period starting in 1990 total health outlays increased by 39% in 1996 but then fell sharply afterward. By 1997 the outlay stood at 97% of the 1990 baseline. Given the interim population increase, the 1997 figure signifies a substantial reduction in the per capita allocation. Thus the stage is set for Saudi health policy discussion and for formulation of reform efforts, even if it is cloistered due to the nature of the governmental process.

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Health Reform Target: Efficiency and Cost Containment There are many ways in which health care systems can be evaluated. One approach looks at the "three Es" of health care: effectiveness, equity, and efficiency (Twaddle 1996). These are relatively distinct from one another, and although they are not particularly easy to operationalize, each can be applied to an entire health care system, rather than a particular category or feature. Effectiveness means the extent to which the system promotes and achieves a high standard of health in the population. This criterion can be operationalized by looking at parameters such as morbidity, mortality (especially infant, child, and other "premature" mortality), and health-related quality of life (Albrecht and Fitzpatrick 1994). As noted earlier, the health of an individual or a population is affected only in part by health care received. Nevertheless, it is meaningful to think of the contribution that health care makes. Equity refers to evenness in population access to health care—"seeing that all those in need have access to effective services" (Twaddle 1996, p. 641). An equitable system is "one-tier," while a system with two (or more) tiers inevitably provides more access and service to one tier than the other. Efficiency can best be thought of in terms of input and output: for a given investment or input of resources (including manpower), what is the output? How can the ratio of output to input be increased? Where input is monetarized, the efficiency concept can be phrased as "value for money." An inefficient system is said to be wasteful, due variously to duplication of services, lack of coordination of input components, high overhead and administrative costs, failure to maintain supplies and equipment properly, or other reasons. The Saudi system can scarcely be criticized on grounds of equity or effectiveness. Concerning equity, it is well resourced for primary, secondary, and tertiary levels of curative care and also for prevention in the face of geographic expanse and socioeconomic variation. One might wonder whether there is uniformly equal access to the most sophisticated forms of technological treatment (al-Khader 1999) offered at the renowned King Faisal Specialist Hospital or at the four university teaching hospitals—two in Riyadh, one in Jeddah, and one in al-Khobar—but it can be confidently said that there are no impediments to access at the many health centers, polyclinics, and community hospitals widely distributed throughout the kingdom. Concerning effectiveness, the general health progress of the society as noted earlier can be taken as evidence that health status is improving and that major health goals are being achieved. One very specific and very important index of effectiveness is the rapid decrease in the incidence of vaccine-preventable diseases—diphtheria, polio, whooping cough, measles, and tuberculosis (Mufti 2000, Figure 4, p. 111). Even the shift from infectious to chronic degenerative diseases can be taken as an indication—an ironic indication, to be sure—that progress is occurring. In his 1999 article in the Saudi Medical Journal, "A Need for Managed Care

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in Saudi Arabia," Mufti criticized Saudi health care for inefficient use of resources and recommended the principle of managed care, in its various forms, as a solution. Specific indications of inefficiency include the following: 1. "There is very minimal control of utilization in all sectors and this is said to have led to abuse and over utilization in the public sector." 2. "The availability of highly specialized and expensive medical equipment in most Saudi hospitals makes the use of highly specialized procedures for minor problems the preferred option for health professionals, with no less encouragement from patients." 3. "Public sector health professionals are reimbursed on a salary basis—which is a reimbursement method that has little or no incentives to control cost. Public sector health professionals are in no financial risk of losing money in the event of inefficient use of resources. The lack of financial incentives for physicians and other professionals, the lack of cost-consciousness, and the tendency on the part of physicians to want to do everything possible for the patients, leads to excessive use of resources in situations where benefits are at best marginal." 4. "Administrators of non-profit health facilities such as the public sector hospital directors . . . are said to be motivated by prestige, and seek to provide higher quality care than consumers would be willing to pay for." Not all of Mufti's criticisms indicate inefficiency in the strict sense in which it was defined earlier. Take, for example, the first-recourse use of nuclear magnetic resonance (NMR) imaging to investigate a patient's complaint of headache. This amounts to "use of highly specialized procedures for minor problems"; although it seems extravagant, it might occasionally put the physician on the track of a brain tumor more quickly and cheaply than primary care maneuvers. Further, if the NMR device is regarded as a piece of already-acquired but underutilized stock, it might be important to use it more frequently—from an accounting or "system" perspective—in order to make it "pay for itself." A piece of expensive, underutilized equipment may well illustrate Mufti's observation about the prestige motivations of hospital directors. The incentives, constraints, and budgetary practices that face hospital directors are no doubt powerful but complex in Saudi Arabia, as elsewhere. It may be difficult to increase efficiency without cutting back on the scope of quality care. Mufti recommends the introduction of managed care and HMOs as the solution to inefficiencies in the delivery of Saudi health care. HMO financing typically requires prepayment for services and the creation of an insurance-type capitalized fund from which providers are reimbursed. The general concept of managed care puts physicians and other providers under a scheme of decisional discipline including features such as utilization review and preauthorization for expensive procedures. HMO financing also reimburses providers neither on a salary basis nor on a "pass-through" fee-for-service basis but on other bases that provide incentives or imperatives for judicious, economical provision of serv-

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ices. The creation of such funding and reimbursement patterns would represent a radical departure from prevailing practice in Saudi Arabia. Managed care has proven successful in reducing health care expenditures in other countries that have had more varied experience and evolution in health care financing and organization than has Saudi Arabia. Much of the economy achieved elsewhere has come about by reducing the rate of hospitalization. Against the economies achieved, one must also lay out the complaints made by both patients and physicians about HMO denial of authorization for treatment that, at least in retrospect, would have been beneficial to the patient (Anders 1996). Mufti envisions a Saudi managed-care plan in which patients would prepay for themselves and their families. It is not clear how payment by patients themselves would jibe with the existing system of direct provision of services by the government. The expectation of Saudi citizens for free health care from the government is as firmly entrenched a tradition as is that of "no taxes." Of course, expectations can be changed and precedents overturned, although this could be done more smoothly if there were representative political processes. For managed care to be implemented, it would not be necessary for the patient to pay from his or her own income. Like many employers in the United States, the Saudi government could undertake payment on the patient's behalf to an HMO corporation; according then to Mufti's anticipations, the government would become more the "prudent purchaser" and less the direct provider. Other observers and health policy experts beside Mufti are concerned with the financing and efficiency of Saudi health care. In an editorial, Middle Eastern Executive Reports (MEER) argues for compulsory medical insurance {MEER 1997). MEER is a medium for the private expatriate companies that have made enormous investments in the lucrative Saudi marketplace. Thus when MEER's eye is cast upon Saudi insurance potential, it is equally cast upon profit opportunities. It focuses also on the prospect that, given the explosive population growth, the government will eventually be unable to shoulder fiscal responsibility for medical care. Under its plan there would be two phases of insurance coverage. Under the first phase, only expatriates and their dependents would be enrolled; since all expatriates in the kingdom are there as employees of either the government or private employers, the first phase would be accomplished not by the individual expatriate but by his or her employer. In the second phase, Saudi nationals would be required to carry similar coverage.

Health Reform Target: "Saudization" "Saudization" is a proposed reform by which expatriate health professionals (physicians and other categories) in Saudi Arabia would be replaced by Saudi nationals. It is important to lay out the political context and cultural climate from which Saudization emerges as a reform target. Medical sociologists maintain that a nation's health care system cannot be viewed as a self-sufficient entity

.

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detached from its national and societal matrix. This axiom applies with special force in the Saudi case. In thinking about expatriate physicians in Saudi Arabia (as in the other Arab Gulf states), it is important to realize that physicians (and other health providers) are, along with engineers and scientists, a highly mobile, globally distributed work force. Thousands of physicians work in countries other than their homelands and other than the countries where they received their training. It is estimated that approximately 20% of currently practicing physicians in the United States obtained their medical degrees in foreign medical schools (this includes a small number of American citizens who obtained degrees abroad). The comparable figure for Great Britain is 30%. Other factors such as physician competence being equal, most people would no doubt prefer to have physicians who are citizens and members of their society on grounds of cultural/linguistic compatibility. Nevertheless, so long as foreign-born and foreign-trained physicians can establish their qualifications and their competence, no further issue is made of their expatriate origin and status. Health policy is not shaped around the goal of "nationalizing" or purifying the cadre of practicing physicians, nor does it become a focus for health care reform. It is thus an unusual position for Saudi Arabia to take in setting "Saudization" as an objective. It is not a unique position, however—other wealthy Gulf Arab nations such as Kuwait and the United Arab Emirates take the same stance. There is another factor at work in addition to the cultural-compatibility factor: in relatively "new" nations such as Saudi Arabia, to train national youth as physicians becomes a source of pride and a way of joining the modern world that is recognized in the court of international opinion. The modernization effect is further enhanced by the fact that it is no longer necessary for Saudis to go abroad for undergraduate medical training; although some Saudi medical aspirants still choose to study abroad, Saudi Arabia now produces its own doctors through the four faculties of medicine (customarily designated as "faculties of medicine" rather than "colleges of medicine" or "medical schools"). Yet another factor is important in looking at Saudi health care policy and reform: as a high-prestige, modern, scientific profession, medicine is a very desirable field of employment, career, and professional endeavor for the practitioner. In addition to the raison d'etre of medicine—helping the patient—the doctor also "helps himself" (or herself) by engaging in work that, in all modern societies, is highly, almost reverently esteemed. Doctors also "do well while doing good"—they receive substantial material reward for their work. Thus medicine constitutes both a positive challenge and a bright career prospect for Saudi youth—an outlet for their energy, intellect, and idealism that benefits patients, local communities, and the society as a whole. The picture of medical opportunity also has a strategic gender aspect. Saudi Arabian practices take a more conservative view of the female role than most Arab-Muslim countries. Indeed, Saudi Arabia is reputed to be the most restrictive and rigid Arab-Muslim society except perhaps for Yemen (the Afghan

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Taliban are still more restrictive, but they are not Arab). Surprising though it may seem, a patriarchal society such as Saudi Arabia requires female physicians. The logic of social restrictions on the female role means that women and children should be seen by female professionals. Thus in the segregated structure of Saudi higher education there are many female students. Medicine, along with nursing, teaching, and social work, is among the few professions open to women, and it is the most prestigious (it is reported that Saudi "lady doctors" command a higher marriage dowry because of their medical qualification). Thus opening medicine to women is a strategic but unacknowledged channel for the talent and aspiration of young Saudi women who are not content to be limited to the customary conventions of the female role. If the health care system of Saudi Arabia were on a much smaller scale— say, 100 hospitals and 1,000 physicians—there would be no policy issue and no reform effort pointed toward Saudization. The available supply of Saudi physicians, male and female, would suffice to meet all medical personnel requirements. The call for Saudization arises as an obvious, yet unintended and highly undesired, consequence of the decision to build an extensive health care system. Building on a much smaller scale would permit all the positive benefits enumerated earlier (of having an indigenously trained cadre of physicians) without the discomfort or cultural threat posed by the thousands of expatriates who are needed more than they are wanted. To plumb the general significance of this condition for Saudi Arabia, it must be pointed out that it is not only health personnel who are imported into the kingdom but also engineers, computer programmers, architects, teachers, horticulturists, airline pilots, and, at lower levels of skill, secretaries, clerks, truck drivers, road workers, construction workers, and many other kinds of workers. Estimates of the proportion of expatriates in the population range from 20% to 30%. To deal specifically with the Saudization of health personnel, how many expatriate physicians would have to be replaced by Saudis if the maximum goal of 100% Saudi were to be achieved? (The same question can be raised concerning nurses and allied health personnel.) Table 9.2 gives the answer. At present, the only source of incoming Saudi physicians lies in the four medical colleges, which together graduate 400 physicians annually. On this basis, the foregoing question can be refined. Of the 1996 total of 30,544 physicians, 17.4% were Saudi (or 5,315) and 82.6% (or 25,229) were expatriate. Assuming that a steady state prevails and that every year 400 new Saudis enter the picture and that none leave, how long would it take to replace all the expatriates? The answer is 63 years. The arithmetic is accurate, but it is unrealistic to expect that events will actually converge to that point of "ultimate reform" in 63 years. Similar reservations apply to Saudization of the nursing force. As for allied health personnel, there is at present a larger relative share of Saudis, so the replacement of the non-Saudis would not take as long. The focus here falls upon

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Table 9.2 Physicians, Nurses, and Allied Health Staff in Saudi Arabia, 1996 Employers Ministry of Health Number Percent Saudi Other Government Number Percent Saudi Private Number Percent Saudi Total Number Percent Saudi

Physicians (D

Nurses

%

%

Allied Health (2)

%

15,266

50.0 17.1

34.947

57.1 22.1

20,250

59.1 50.7

6,796

22.2 36.6

15,679

25.6 14.7

10,014

29.2 28.7

8,482

27.8 2.7

10,588

17.3 0.9

4,013

11.7 3.1

30,544

100 17.4

61,214

100 16.5

34,277

100 35.8

(1) Includes Dentists (2) Includes Pharmacists Source: Ministry of Health, Annual Health Report, 1996; Mufti 2000, p. 35.

the physician component because it is the most strategic category of health personnel. An intersectoral planning committee within the Saudi Ministry of Health has called for a massive expansion of the rate of graduation of new Saudi doctors. Under the plan of this committee, "The Saudization target to be achieved by the year 2025 would be 40% based on a physician/population ratio of 600 persons per physician. Achieving this target would require increasing the annual number of medical school graduates from the current 400 to 1,560 by establishing seven new schools of medicine or branches of the existing . . . schools. Projections also took into account Saudis studying medicine abroad and qualified non-Saudis granted the Saudi nationality" (Mufti 2000, p. 39). Such a massive expansion of physician output involves more than increased financing; it also requires cooperation between two government ministries. The Ministry of Health has operational responsibility for meeting the health care needs of the citizenry through its own health centers and hospitals as well as a supervisory/advisory role for the private health sector (which provides 18% of health services but employs about 28% of the physicians). The other ministry of concern is the Ministry of Higher Education, which supervises and provides budgets for the medical-school faculties as well as other organs of higher education. The faculties of Saudi medical schools are, not surprisingly, strongly expatriate in their composition. They are mindful, indeed jealous, of what they regard as their responsibility for producing medical graduates whose training, knowledge, and expertise meet a very high international medical standard. They will not easily acquiesce to pressure for mass production of doctors and indeed have largely ignored it in the past. Their position comes

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less from an elitist devotion to quality over quantity than from a sense that as a new and still-modernizing country, Saudi Arabia needs to proceed cautiously. Additional Rationales for the Saudization Reform The most widely discussed rationale for Saudization is the notion of cultural compatibility. According to Mufti (2000, p. 38), "A nation dependent on other nationals for such a vital activity as health care is highly vulnerable to outside influence." Within that general concept, several more specific advantages can be mentioned. First, Saudi physicians are felt to be more committed to, and identified with, Saudi patients than are expatriate physicians. This expectation has not been confirmed, but it seems plausible. It would have a particular bearing upon the primary care medicine that occurs at health centers. In that setting, some attention is paid to health maintenance, prevention of ill-health, and health education. Dr. Zohair Sebai, an academic family physician, writes: "In many instances the expectation of an expatriate physician working in a foreign country such as Saudi Arabia is to establish himself financially before he returns back home. Nothing wrong with that, but the problem comes when he considers his stay in the country as a transient stage, which does not require him to identify himself with the people or with their problems" (Sebai 1981, p. 128). Second, most expatriate physicians remain in Saudi Arabia for only three to five years. Continuity of care with all patients is desirable, but steady long-term contact with chronic-disease and elderly patients is especially so. Again, it has not been documented that Saudi physicians offer more long-term contact, but at least the possibility exists. Third, Saudi physicians can be expected to take more interest in policy and issues in health care delivery than expatriates (Mufti 2000)—they are more concerned, that is, about efficient use of resources, extension of treatment to "hard-to-reach" populations, and related issues. One specific source of inefficiency would be substantially reduced if medicine were exclusively a Saudi domain, namely, waste due to non-Saudi physicians who order expensive, highly specialized equipment/supplies and then leave their Saudi employment for other scenes. Typically, other physicians do not understand how to use the equipment or do not value it, and it languishes. CONCLUDING NOTE Twaddle (1996) identifies two major crises or fault lines in modern medicine as it has evolved over the past 40 years. One is the "fiscal crisis." It reflects the fact that in every nation, regardless of its political complexion and the structure of its health services, not enough money is available for all the health services that would be beneficial to the population (to say nothing of other "wasteful" services that are medically futile or enormously expensive while providing only slight benefit to the patient). The fiscal crisis is continuously aggravated by the

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clinical application of new medical discoveries. Taken by itself, the fiscal crisis is simply one of "not enough money," but it fringes on issues of equity. If not everyone who would benefit from a heart transplant can receive one, who then will get it, who will not, and why? The fiscal crisis has broad-scale, macrolevel significance, but it also has social and moral resonance at the clinical, individual level. The second crisis Twaddle calls the "crisis of alienation." It is cultural and social, with no particular relation to economics or scarcity. It arises from the fact that biomedicine has become very sophisticated and esoteric in its knowledge, and so has medical practice. Although so-called informed consent is routinely sought from patients for many procedures, the fact is that the average patient, even if he or she is well educated, is not prepared to comprehend the ramifications and subtleties, immediate and long-term, of many diagnoses and treatments. Even if the patient trusts the physician, he or she may be unable to trust "the system." Alienation encompasses the patient's failure to understand and to autonomously control what is happening to him or her. It also encompasses the realm of "medical uncertainty." The physician himself (or herself) is emotionally and cognitively uncertain how to proceed. This is bound to debouch onto the patient's appraisal of his or her medical situation. Of the two forms of crisis, the fiscal crisis is the more open and "objective," even though contesting interests and parties may dispute facts and solutions. The crisis of alienation, though widespread, is "subjective." It occurs piecemeal, one patient at a time, but the accumulation of first-person revelations in the media and interpersonal discourse gives concerted voice to, and articulates the dissatisfaction, puzzlement, powerlessness, and vulnerability of, patients. Both these crises exist in Saudi health care. There is a cost crunch and fiscal constraint. Oil revenues—virtually the sole source of public wealth—increased during the 1970s, then leveled off during the 1980s and 1990s, and currently appear once again headed for an increase. It is doubtful that the current levels of health care provision can be sustained in the face of the burgeoning population. Posing further strain on the carrying capacity of the health system is the looming increase in the elderly population, which currently stands at 3.5% age 65 and older. The alienation crisis has a distinctive meaning and impact because of two special features of Saudi culture, namely, (1) the substantial level of illiteracy in the population and (2) the sizable number of expatriates in the ranks of health professionals and in the population at large. Table 9.1 shows that 37% of the adults in Saudi Arabia are illiterate. While this figure is being rapidly lowered through the near universality of primary schooling, one cannot easily discern the effect of the existing illiteracy upon medical alienation. Perhaps educated adults, seeing more and knowing more, are in general more rather than less alienated in their feelings about medical care. Given the generally autocratic values of the country and the narrow expressive latitude given to the print and electronic media, the tones of alienation are latent,

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except in one dimension that this chapter has addressed at length. Some 80% of all health professional personnel are non-Saudi; it is an accented health reform priority to reduce dependence upon foreign nationals because of "different cultural values" (Mufti 2000, p. 37) that are felt to prevail among foreigners. Although the ideology and priority of Saudization have been sharply formulated, the prospect for its achievement lies far off in the future. Perhaps it should be called a "health reform dream." By the time it is realized, Saudi Arabia and the rest of the world will have changed so much that it may no longer be relevant.

REFERENCES Albrecht, Gary L., and Ray Fitzpatrick. 1994. "A Sociological Perspective on Healthrelated Quality of Life." Advances in Medical Sociology, Vol. 5, pp. 1-23. Allman, James. 1980. 'The Demographic Transition in the Middle East and North Africa." International Journal of Middle East Studies, Vol. 12, pp. 277-301. Anders, George. 1996. Health against Wealth: HMOs and the Breakdown of Medical Trust. Boston: Houghton Mifflin. Berger, Peter, Brigitte Berger, and Hansfried Kellner. 1973. The Homeless Mind. New York: Random House. Gallagher, Eugene B., and C. Maureen Searle. 1985. "Health Services and the Political Culture of Saudi Arabia." Social Science and Medicine, Vol. 21, No. 3, pp. 251— 62. al-Khader, Abdullah A. 1999. "Cadaveric Renal Transplantation in the Kingdom of Saudi Arabia." Nephrology, Dialysis, Transplantation, Vol. 14, pp. 846-850. Middle Eastern Executive Reports {MEER). 1997 (December). "End of Free Health Care? Saudis Prepare Draft Proposal To Require Medical Insurance." Mufti, Mohammed H. 1999. "A Need for Managed Care in Saudi Arabia." Saudi Medical Journal, Vol. 21, No. 4, pp. 321-323. Mufti, Mohammed Hassan S. 2000. Healthcare Development Strategies in the Kingdom of Saudi Arabia. New York: Kluwer Academic/Plenum Publishers. New York Times Almanac. 1999. New York: Penguin. Omran, Abdel R. 1971. "The Epidemiologic Transition." Milbank Memorial Fund Quarterly, 491: 4, Part 1, pp. 509-38. Patai, Raphael. 1976. The Arab Mind. New York: Charles Scribner's Sons. Reynolds, Barry. 1980 (January-February). "Their Fathers' Sons." Aramco World Magazine, pp. 2-11. Saudi Arabia. 2000 (Summer). Publication of the Information Office of the Royal Embassy of Saudi Arabia, Washington, DC. Vol. 17, No. 2. Sebai, Zohair. 1981. The Health of the Family in a Changing Arabia: A Case Study in Primary Health Care. Jeddah, Saudi Arabia: Tihama Press. Simons, Geoff. 1998. Saudi Arabia: The Shape of a Client Feudalism. New York: St. Martin's Press. Twaddle, Andrew C. 1996. "Health System Reforms—Toward a Framework for International Comparisons." Social Science and Medicine, Vol. 43, No. 5, pp. 63754.

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World Health Organization. 1998. The World Health Report 1998: Life in the 21st Century: A Vision for All. Geneva, Switzerland: World Health Organization. World Health Organization. 2000. The World Health Report 2000: Health Systems: Improving Performance. Geneva, Switzerland: World Health Organization.

Chapter 10

Health Care Reform in Israel Revital Gross and Ofra Anson Like many other countries, Israel carried out health care reforms in recent years. The reforms are spelled out in the National Health Insurance (NHI) law, which was approved by Israel's parliament in June 1994, and implemented in January 1995. According to senior health policy makers, the main goals of the law were to achieve universal health insurance coverage; to promote greater equity; to define a universal benefits package; to increase the freedom of choice between the different providers of health care; to stabilize the system financially; to improve quality of care; and to free the Ministry of Health from operational responsibilities (Gross et al., 1998). Unlike most developed countries (Twaddle, 1996), the Israeli reforms were unique in seeking equity and quality of care as well as financial viability of the health care system. In this chapter we will analyze Israel's health system prior to reform and the changes that followed NHI implementation. We will show that the main thrust of the law was not a "market" reform aimed at increasing competition, but the opposite—increased regulation of the sick funds in order to achieve the law's stated goals. We will then examine how the reforms relate to international socioeconomic developments and to economic and political processes and interests within Israeli society. THE ISRAELI SOCIETY: SOME BACKGROUND In order to understand the Israeli health care system, it is important to note a number of historical, cultural, economic, and political features and processes of the state that influenced both the nature of the system prior to reform and the reform itself. The most distinguishing features are Israel's small size (about six million residents in 1998) and the heterogeneity of its population. Jewish

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immigration to the area has been an ongoing process since the late nineteenth century (1882), one of the main issues of conflict with the Arab population and the British Mandate authorities. A formal open-door policy granting citizenship to all Jewish immigrants, offering them special programs to ease the absorption process, was applied upon independence in 1948. A recent example of this policy is the absorption of 800,000 immigrants from the former Soviet Union since 1989, increasing Israel's population by some 15%. Israel also has a large minority (19%) of Arab citizens. The Israeli Arab population is characterized by lower levels of education than the Jewish population, a more traditional community structure, and a comparatively underdeveloped health and welfare infrastructure, especially in rural areas (Shuval, 1992). The roots of the institutional structure of the State of Israel can be found in the period preceding independence. During the time of the British Mandate, the Jewish population was a semiautonomous community that provided its members with basic services: education, welfare, employment, land development, and health care. Several political parties sought to maximize their influence and control over the community and its resources and, through these, on the shape of the future state. The provision of health care services was viewed as an essential channel for gaining such influence. It was then that the tradition of politically linked sick funds began (Shuval, 1991). Israel's largest sick fund, Kupat Holim Clalit (KHC), was founded in 1920 by the General Federation of Labor (GFL, also known as the Histadrut), the leading trade union of the time. Similarly, the Revisionist Party founded its own trade union and sick fund, Leumit, in 1933. The Liberal Party founded the Mercazit sick fund in 1936; in 1974 it merged with the Amamit sick fund, which had been established in 1931 for farmers by the Hadassah Medical Organization, becoming the Meuhedet sick fund. The Maccabi sick fund was established in the 1940s by physician organizations seeking to ease unemployment among physicians who immigrated from Germany following the Nazi takeover (Halevi, 1979). GFL was politically linked to the Labor Party, Israel's most powerful party from the prestate period until 1977. It perceived itself as a pivotal player in the nation-building process rather than a trade union. It thus developed infrastructure institutions such as a bank, a school system, building companies, cultural institutions, and health services provided through KHC. GFL's socialist and nationbuilding ideology influenced KHC's service-provision mode, which was characterized by a nationwide network of comprehensive and egalitarian services. During the early decades of statehood, GFL's ownership of KHC provided both parties with substantial power and resources (Shuval, 1991). Israel's Ministry of Health (MOH) also has roots in the prestate period, having taken over the role of the British Mandatory Department of Health. It continues this earlier pattern, combining the functions of administration and coordination with responsibility for delivering health care services and running hospitals.

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MOH's dual function was strengthened during the initial years of mass immigration (1948-53), when it was compelled to meet the urgent health care needs of a quickly growing population (Shuval, 1991). Israel is a welfare state, in which the government is responsible for assuring a minimum income and basic education, as well as housing, health, and social services. A social security system provides financial benefits for the aged, widowed, unemployed, and disabled and in cases of illness and injuries in return for obligatory payment collected as a percentage of income (Doron and Kramer, 1991). Israel's expenditures for social services comprise 23% of the GDP. The share of social services in the government budget increased from 31.7% in 1980 to 52.8% in 1998 (Weinblatt et al., 1999). THE HEALTH CARE SYSTEM PRIOR TO NHI At the end of 1994, over 95% of Israel's population was covered by voluntary comprehensive health insurance offered by four private, not-for-profit sick funds. Coverage included curative and preventive community care as well as acute hospital care. Sick-fund members paid income-linked membership dues; the very poor and newly arrived immigrants were insured by the government. Israel has a very good primary care infrastructure, including 1,300 KHC primary care clinics providing curative care and about 1,000 MOH mother-child health centers providing preventive care. These facilities are dispersed even in small villages. Secondary care is provided by sick-fund specialty clinics, independent physicians, or hospital outpatient clinics. In 1993, Israel had 2.43 general hospital beds per 1,000 population (WHO, 1996). Prior to the reform (1993), 40% of the hospital beds were for general care, 36% were for long-term geriatric care, 22% were for mental health, and 2% were for rehabilitation. Most of the general hospitals are owned by MOH (36% of the acute-care beds) and KHC (30% of the acute-care beds). Other acute-care hospital beds in Israel are owned by not-for-profit organizations such as Hadassah and by private owners (Central Bureau of Statistics, 1995a). The structure and service provision of the Israeli sick funds resemble the model of health maintenance organizations in the United States. Services are delivered at the sick funds' own facilities or through contracted providers. Prior to NHI, the sick funds were entitled to selectively enroll members, set and collect their membership fees, and define their own benefits package. Competition among sick funds was the mechanism that was expected to assure efficiency, as well as the quality of care. However, as we will explain in the following section, competition actually had a detrimental effect on the system and necessitated the reforms. KHC was organizationally tied to GFL, the labor federation representing most of Israel's work force; GFL members automatically became members of KHC and vice versa. As GFL wanted to increase the number of its members, it objected to any policy of cream skimming and required KHC to accept all applicants indiscriminately.

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Traditionally, KHC has dominated the sick-fund market (86.2% in 1984) and, through its ties to GFL and the Labor Party, had strong influence on the national health policy and decision making. However, during the 1980s, government coalitions were dominated by the right-wing Likud Party, and the government financial support in KHC declined, weakening both KHC and the GFL (Chinitz, 1994). During the late 1980s and early 1990s, KHC's market share consistently declined, while the share of the other three sick funds increased. The latter's regulations enabled them to selectively recruit young and healthy members. As a consequence, KHC was left with a relatively high proportion of elderly, poor, and chronically ill. By 1994 KHC's market share had declined to 64%. However, 13.1% of its members were over age 65, compared with 9.5% in the total population and with 4.8% of Maccabi and 4.2% of Meuhedet members. Similarly, 15.7% of KHC members were chronically ill, compared to 8.5% in Maccabi and 6.3% in Meuhedet (Rosen and Steiner, 1996). As mentioned, MOH is a major provider of inpatient services (including 55% of psychiatric beds and 14% of long-term beds), public health services, and ambulatory psychiatric care. Its extensive involvement in direct care provision has limited its ability to perform its ministerial roles and has led it to focus on services operation rather than on system planning and regulation. Furthermore, prior to NHI, MOH had no legal authority to regulate sick funds or oversee their activities. Traditionally, MOH was headed by marginal members of the government's coalition parties and played a secondary role in the formulation of health policy (Yishai, 1982). It shared decision-making power with the dominant and influential KHC, on one hand, and with the Ministry of Finance (MOF), a powerful and prestigious office, on the other (State of Israel, 1990). MOF allocates state funding to all ministries and has to approve all MOH decisions that have budgetary implications, such as payment rates to hospitals and salary agreements. These factors hindered MOH efforts to take a leading role in defining national health policy, resulting in lack of overall policy and manpower planning, poor technological regulation, inconsistent sick-fund regulation, and inadequate resources for the provision of preventive care and health education (State of Israel, 1990; Rosen, 1991). Israel has one of the highest physician-to-population ratios in the world, 4.7 per 1,000 population in 1997 (Ministry of Health, 1998), the result of the opendoor and employment policies. Nearly all Israeli physicians are members of the Israeli Medical Association (IMA), which operates both as a professional association and as a trade union, coordinating the collective working agreements and bargaining on behalf of its members (Harrison, 1993). Other health professionals, such as nurses, administrative workers, and technicians, are also organized in strong, militant trade unions that do not hesitate to strike over wage and working conditions. All these unions are linked to GFL, which traditionally backs and supports their claims. Elite members of IMA exercise considerable influence over national policy

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on professional training, licensing, and standards of care. Thus Israeli physicians have successfully resisted any effort for lay monitoring and control over professional performance. Health professionals have traditionally maintained professional autonomy, keeping administrators and politicians from interfering with clinical decision making. However, as most are salaried employees of the sick funds and hospitals, this autonomy sometimes has been restricted by organizational policy and regulations. For example, sick funds expect physicians to refer patients to secondary sick-fund facilities and prescribe only those medications that are included in the sick-fund benefits package. Private medical care and insurance are a rapidly growing sector in Israel and occupy a much larger proportion of the total health expenditure than in many European countries. In 1994, 50% of Israel's national health care expenditure was financed by households through both sick-fund membership fees (23%) and out-of-pocket payments (27%), compared to 39% overall in 1985 (State of Israel, 1990). The private health insurance market is growing particularly rapidly. Between 1986 and 1993, revenues from health premiums grew by 50%, and between 1993 and 1995, they increased by an additional 30%. In 1995, 17% of Israel's residents had private insurance, compared to 13% in 1990. Moreover, in 1995 about 40% of the population held supplemental insurance policies that were offered by the sick funds (Gross and Brammli, 1996). In 1994 the government budget covered 27% of the national health expenditure; 22% was funded by employers (parallel tax), 21% was covered by sickfund membership fees, and 25% came from payments for services and medicines (including out-of-pocket payments and copayments in sick funds). During the last decade, the government contribution to health expenditures declined, the share of membership fees increased, and out-of-pocket payments remained unchanged (MOH, 1998). Data from Central Bureau of Statistics family expenditure surveys indicate that between 1986/87 and 1992/93, household health expenditures rose by nearly 50% in real terms, compared with a 9% increase in the total consumption expenditure. Expenditures on private medical services grew by 25%, and payments to sick funds grew by 91% in real terms (Berg et al., 1995). Dental care, provided primarily by private dentists in return for out-of-pocket payments and private insurance, is the major component of private health care expenses. In 1993 there were 1.3 dentists per 1,000 population in Israel (WHO, 1996). While most physicians were salaried workers in the public sector, employed by MOH or one of the sick funds, they were allowed to maintain private practices in private facilities. However, there was evidence of illegal (black) medicine in which patients paid individual physicians for health care provided at public facilities (Lachman and Noy, 1992).

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STATE COMMISSION OF INQUIRY RECOMMENDATIONS FOR HEALTH CARE REFORM In 1988, due to a deepening crisis in health care finance, labor relations, and quality of service (e.g., long waiting lists for elective procedures and consumer dissatisfaction), the Israeli government appointed a state commission of inquiry into the functioning of the health system (Chernichovsky and Chinitz, 1995). Several factors contributed to the ambience of crisis at that time, the main one being the financial instability of KHC, which by 1994 had accumulated a deficit of about $1.5 billion. Leumit also had deficits, albeit smaller than KHC's, while Maccabi and Meuhedet were financially stable. This was attributed in part to more efficient management and to the sociodemographic characteristics of the population covered by Maccabi and Meuhedet, the two sick funds not associated with labor unions. While all sick funds collected similar premiums, KHC, owned by GFL, had to transfer 25-30% of its membership revenues to the labor federation. As a result, KHC had lower income to meet the greater medical needs of its members. Since KHC insured about two-thirds of the population, its instability jeopardized the entire health system. Other problems included labor unrest and repetitive strikes by the various organizations representing health professionals, and the public's dissatisfaction with the system. The media reported cases of people paying privately for expensive services and seeking donations for organ transplants and other treatments abroad. There were long waiting lists for surgical procedures such as cardiac bypass and a shortage of medication in KHC pharmacies. Another issue was the constraints of free choice of sick fund, since Maccabi and Meuhedet, which both provided a higher quality of care than KHC, practiced a cream-skimming policy and all GFL employees (including those in business and industry) were automatically insured in KHC. This two-tiered system increased public dissatisfaction and led to a widespread sense of inequality. In a survey conducted in 1993, some 12% of the respondents reported that their membership application had been denied by a sick fund, and 37% of KHC members believed that the other sick funds provided better services (Rosen et al., 1995). The state commission of inquiry into the health system published its findings in the form of a 464-page majority report and a 249-page minority report in August 1990, after hearing public testimony from 148 witnesses and reviewing professional literature and official documents. The recommendations of the majority, which called for sweeping reforms of the system, were adopted by the minister of health (Rosen, 1991). Among other recommendations, the majority report called for implementation of a national health insurance law that would regulate the competition between the sick funds and the financial basis of the health system. The commission also recommended that hospitals be transformed into competing, self-financed, nonprofit legal entities with authority over manpower, development, acquisitions, and daily management. It also recommended

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allowing highly regulated private practice of medicine within the public hospitals. In addition, it called for a reorganization of MOH, reducing its involvement in service delivery and thus strengthening policy-making, planning, and monitoring functions. To date, reform of the hospital sector and MOH has been incremental. Several government hospitals have gradually received enhanced authority for day-to-day decision making, being encouraged to negotiate contracts with the sick funds, but they are also obliged to submit business plans justifying their budgets. They are still dependent on prospective government budgets rather than on the sale of services and have not been granted autonomy to negotiate wage agreements with their employees. In short, their operating model resembles that of other government-owned corporations and not the intended separate legal entities (Shirom, 1995; Shirom et al, 1997). Gradual changes have also taken place in the structure and the functioning of MOH. New units were established to monitor the sick funds' operations and quality of care, for technological assessment, and for the collection of healthrelated information. However, MOH is still responsible for hospital operation, preventive medicine, long-term care, and psychiatric services (Shirom, 1995; Gross et al., 1999). The recommended legislation of national health insurance, however, was enacted and implemented much more quickly and completely. In June 1994, after seven decades of failing attempts to decree such legislation (Yishai, 1982; Chinitz, 1996), the parliament approved the NHI law, which came into effect in January 1995. In the following sections, we will analyze the changes that have taken place in the Israeli health care system since NHI and discuss the factors that enabled its implementation. We will also comment briefly on reasons for the slow implementation of the two other reforms that were recommended by the commission of inquiry.

ANALYSIS OF THE CHANGES IN THE HEALTH CARE SYSTEM SINCE IMPLEMENTATION OF NHI NHI ordained compulsory health insurance for all citizens or permanent residents of Israel at a sick fund of their choice and forbade sick funds to practice any form of member selection. The law stipulates government responsibility for health care and the corresponding obligation of citizens and permanent residents to register with a sick fund. Each adult pays a health tax (4.8% of his or her monthly income) that replaces sick-fund membership fees. These revenues are collected by the National Insurance Institute (Nil) and, combined with government contributions, are distributed by the Nil to the sick funds according to an age-adjusted capitation formula. The law therefore eliminates incentives for sick funds to enroll the wealthy, the young, and the healthy and increases the link

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between the resources allocation to the sick funds and the health needs of their members. NHI determines the content of the benefits package that the sick funds are obliged to provide. Formerly, sick funds were able to define their own benefits packages, leading to both variation in coverage and ambiguity of members' rights. The benefits package under the law is more comprehensive than before because it includes psychiatric and geriatric care, as well as preventive services provided formerly by the government. At the same time, the package reflects the services provided by KHC in 1993, which were limited compared with those provided by the other sick funds, thus reducing the scope of services for part of the population. The sick funds are also allowed to offer supplemental coverage for services not included in the basic benefits basket required by the law. Finally, NHI mandates a break in the link between KHC and GFL by forbidding sick-fund enrollment on the basis of membership in another organization. It also forbids the transfer of funds from sick funds to other, non-health-related organizations (Gross et al., 1998). NHI includes mechanisms for updating its provisions. The minister of health and minister of finance may add services to the basic benefits package, providing that a budgetary coverage can be found. The removal of services, on the other hand, requires parliamentary approval. In addition, the overall health budget is to be linked to a special health expenditure index, which is to be periodically adjusted for demographic changes. Under NHI, MOF and MOH share responsibility for monitoring the financial performance of the sick funds, while MOH is responsible for maintaining the quality of service. Sick funds are required to provide all the relevant information requested by government regulators. The law grants the minister of finance a senior role in health system decision making. For example, together with the minister of health, the minister of finance has a mandate to define the rate at which the funding level for national health insurance should be updated from one year to the next. It seems that the Israeli health care reform sought to provide incentives for "healthy" competition between the sick funds (i.e., competition that is not based on cream skimming) along with a regulatory framework for containing costs. Previously, the budget of a sick fund was determined by the income of its members; currently, though the health tax is still income linked, the allocation to the sick funds is based on a use-adjusted capitation formula. This mechanism provides the sick funds with an incentive to recruit the elderly, deflates the incentive to avoid the poor, and enhances their ability to meet their members' health needs, increasing both equity and financial stability. The standardization of the basic benefits package directs the competition to focus on the quality of care, while freedom of movement among sick funds is intended to increase quality and responsiveness to patient needs (Gross et al., 1998). The NHI law includes several cost-containment mechanisms. The obligation

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to find budgetary coverage for any expansion of the basic benefits package and the annual budgetary update according to population growth and demographic change have already been mentioned. In addition, changing the rate of budgetary growth requires the approval of the minister of finance and the minister of health, who are allowed to add further parameters, such as advances in technology. Closer MOF and MOH regulation of sick funds is another mechanism aimed at ensuring that budgetary frameworks are maintained.

INTERNATIONAL INFLUENCES ON ISRAELI HEALTH CARE REFORM The Israeli health care reform is unrelated to any hegemonic economic agent or international agreements. Nevertheless, it cannot be fully understood apart from global processes and the social and political developments taking place in other industrialized societies (Shuval and Anson, 2000). The very same processes that compelled a reevaluation of the welfare state and its underlying ideologies in many Western countries were also present in Israel. The rising costs of health and welfare exceeded levels of economic development, and there was less willingness to shoulder the heavy tax burden necessary to maintain extensive, universally oriented, public services. In Israel, heavy taxation has been blamed for economic stagnation, and many economists supported tax reductions under the assumption that an increase in free income will encourage investment. As in other postindustrial societies, the provision of public services in Israel has been described as wasteful, inefficient, impersonal, dehumanizing, and alienated. Cost containment, accountability, competition, and pluralism became key concepts, magic bullets for the ills of all publicly provided welfare services, including health care. It was assumed that privatization and competition would overcome inefficiency and consumer dissatisfaction, and free choice of care provider would enhance competition, quality of care, and provider-consumer relationships. The specific reform proposals were influenced by similar acts taken in other countries. The recommendation to regulate competition among sick funds was influenced by British and Dutch views on managed competition and quasimarkets. The recommendation to transform hospitals into competing autonomous legal entities resembled the hospital reform in Britain and its establishment of trusts (Gross and Harrison, 2001). The recommended reorganization of MOH stemmed from the desire for increased ministerial functioning in planning, information gathering, and control, as is the practice in countries where MOH leads the health policy decision making. ECONOMIC AND POLITICAL PROCESSES INFLUENCING REFORM EFFORTS Israeli health care reform was influenced and shaped primarily by internal, societywide processes and by the interests of leading stakeholders in the health

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care system. From the early days, health services have been an important aspect of the political power struggle in Israel. Sick funds were established and merged in response to the political interests of their parent organizations, and not just according to the population's health needs or the sick funds' economic difficulties (Shwartz, 1997). The political organizations wished to shape social and cultural services—the foundations of the services of the future State of Israel— in congruence with their ideology. Service provision, including health care, soon became a mechanism used by political organizations to gain control over members and to attract new ones in an effort to influence the developmental direction of the emerging nation. The best-developed and organized sick fund in Israel was KHC. The threeway link that developed between KHC, GFL and the Labor Party during the prestate period was further strengthened after independence. This triangular link was very beneficial to the organizations involved. Labor, the leading party in government, saw in KHC an efficient mechanism for the recruitment of new members for GFL, an important infrastructural party organization. KHC could recruit new immigrants, many of whom were refugees with no clear political preference, to GFL. This process increased enrollment in the Labor Party, which was in power until 1977. It also ensured the financial basis for KHC, which never successfully balanced its budget. It was in the interest of all other parties in the Israeli political system to break this three-way link. Attempts to reform the health care system began soon after independence, with public committees being established almost every three years beginning in 1950 in order to suggest ways to ease the financial burden posed by KHC on the public budget, improve quality of care, and increase the level of satisfaction among consumers and providers (Yishai, 1982). Almost all the reforms suggested were based on the premise that Israeli society was responsible for the health of its citizens and for health care provision; that universal national health insurance should thus be implemented; that MOH should be released from direct care provision; and that KHC should be detached from GFL. However, as long as the Labor Party was in power, it was able to prevent such reforms. GFL, whose senior members occupied positions of power in the Labor Party, opposed reform for fear of massive defections by those maintaining GFL membership solely to enjoy the health services provided by KHC. Indeed, within one year of NHI, GFL lost 75% of its members and was confronted with a severe financial crisis. NHI became possible after social and political change both in Israeli society in general and in the Labor Party. The Yom Kippur War of 1973 accelerated a process in which accepted social values, structures, and organizations were questioned and reevaluated. One result of these processes was the victory of the Revisionist-Liberal coalition in the general elections of 1977, after which KHC could no longer count on the government's automatic support. The loss of the 1977 elections enabled a group of younger Labor Party members to openly express their objection toward the ties linking the party, GFL,

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and KHC. They cited three main arguments (Zabag, 1996): First, KHC had failed to provide services at the level of other sick funds because 30% of its membership fees were allocated to the activities of GFL. Second, consumer dissatisfaction had led better-off members to leave KHC and GFL, thus weakening GFL's political power. Finally, the need to supplement the KHC budget interfered with GFL's main role as a union safeguarding work conditions. For example, when Labor was in the opposition, GFL was forced to accept wage compromises in return for government funding for KHC. The 1992 elections brought Labor back to power, and a prominent member of the younger generation, Haim Ramon, was appointed health minister. Ramon opposed the KHC-GFL link and supported the legislation of national health insurance, as had been recommended by the commission of inquiry. With the backing of the prime minister, he prepared NHI legislation, which included provisions severing the link between KHC and GFL. The coalition supported NHI, though this led to conflicts between supporters and opponents of GFL within the party. (Although the Likud Party was in the opposition, it also supported NHI.) Ramon exerted pressure on GFL by withholding financial support for KHC. In order to abolish GFL opposition to NHI, he ultimately resigned from the government and, in 1994, ran for secretary-general of GFL at the head of a new party advocating NHI-based reforms and the separation of GFL from KHC, reestablishing it as a pure labor union. Ramon won the election, terminating 70 years of Labor Party control of GFL. As secretary-general, he led efforts to establish pro-NHI policy within GFL, and to sever the link with KHC (Chinitz, 1996). Thus political power struggles on both the macro level of the Israeli political institution and the micro level of the Labor Party made NHI possible. However, hospital-sector and MOH reforms did not enjoy similar political support. Ehud Olmert, the Likud minister of health in 1990, had begun to implement the commission of inquiry's recommendation to convert hospitals to independent trusts. This included a change in the status of hospital workers from government to trust employees, which led to massive opposition from GFL and individual worker unions, which successfully halted the effort by going to court. Hospital and MOH reforms had no political appeal and therefore were not an issue in the 1992 elections. In addition, they failed to attract wide public support and were perceived as being merely administrative in nature. This may partly explain the slow and incremental implementation of these reforms.

INTERESTS OF HEALTH SYSTEM ACTORS SPONSORING OR RESISTING REFORM EFFORTS The interests of the main stakeholders in the health care system influenced the system's ability to implement reform and affected its content.

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The Sick Funds The country's four sick funds were most affected by the changes in the health system. They had, however, conflicting interests. KHC was the most established and developed sick fund and had several reasons to favor the reforms. First, until the mid-1980s, KHC had maintained its market share, insuring over 80% of the population. However, by the late 1980s, its market share declined from 82% in 1984 to 76% in 1989. By the end of 1992, when NHI was being finalized, only 72% of the population was insured by KHC (this figure further declined to 62% by 1995, when the NHI was implemented). As a result, by 1992 KHC's share of government allocations had declined from 77.0% in 1989 to 73.1% (Rosen and Nevo, 1996). Second, any reform that would compensate KHC for the social, demographic, and economic characteristics of its membership and limit cream skimming by the other sick funds was in KHC's interest, for it was obligated to insure all members of GFL, regardless of age or economic or health status, while its competitors were free to select their members. This policy meant that the elderly, chronically ill, unemployed, and less educated, as well as people from large families, were all overrepresented in KHC, while younger people, professionals, and those from smaller families were overrepresented in the other sick funds, mainly in Maccabi and Meuhedet. As a result, KHC had the smallest per capita revenues, 14% to 39% lower than its competitors after adjusting for age as a proxy for health needs (Rosen and Nevo, 1996). Any financial arrangement that would compensate sick funds for the uneven distribution of their members' sociodemographic characteristics would thus favor KHC. It should be noted that the commission of inquiry recommended a revenue formula based on age, chronic conditions, and the provision of health services in Israel's periphery, all of which would work to the benefit of KHC and the detriment of the other sick funds. Finally, KHC supported any reform that would ensure a permanent flow of fixed revenues, on the one hand, and define the basket of services, on the other. For almost five decades, from the time of the British Mandate until the Labor Party lost the general elections in 1977, KHC could rely on emergency public funding. With Labor out of power, KHC could no longer rely on such public subsidies and had to continue developing and improving its services in an effort to prevent its better-paying members from leaving. Reforms that ensured revenues similar to those of the other sick funds, on the one hand, and a definition of basic obligations, on the other, would enable KHC to compete with the other sick funds under similar conditions. It was for these very reasons that the smaller sick funds opposed the NHI reform. Revenues allocated by a capitation formula based on the sociodemographic characteristics of their memberships meant a serious reduction in income. Indeed, under the current capitation formula, which takes into account

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only the age distribution of those covered, KHC's income in 1997 was 17-27% higher than that of the other three sick funds (Shuval and Anson, 2000). Because of the reduction in income, together wdth the prohibition on member selection, the three sick funds discovered that they could no longer successfully compete with KHC nor afford to provide services at pre-NHI levels. Thus, whereas KHC's market share declined by 10%, from 72% to 62%, between 1992 and 1995, it declined by just 3% from 1995 to 1997. All four sick funds were concerned with the possibility of losing autonomy due to increased government involvement and control. While premium collection previously allowed them to maintain organizational power and flexibility in development and the provision of care under conditions of minimal accountability, NHI left them with marginal managerial control over both revenues and services and defined their budget and obligations through detailed legislation. The sick funds were to compete with one another in order to increase their share in the insurance market, yet the premium (health tax) was now being set by legislation, medicine and hospitalization costs were being controlled by MOH, and physical and service development was now subject to MOH approval. All four sick funds were anxious about becoming government contractors for the provision of health services. Regarding hospital autonomy, KHC appeared apprehensive about competition that would raise hospital volumes, encourage what it believed were unnecessary new services, and increase hospital-sector expenditures. Some of the smaller sick funds were already used to benefiting from competition over price discounts at margin. In any event, all of the sick funds complained that wage increases, unnecessary services, and rising hospital costs were burdening them financially. All of the sick funds supported MOH reorganization, especially the demand that it relinquish its role as provider, feeling that MOH-owned hospitals received favorable treatment in policy decisions (e.g., hospitalization rates). All four sick funds complained that MOH officials paid scant attention to policy making, adding new technologies to the benefits package being an outstanding example. However, they opposed MOH attempts to tighten control over sick funds and acquire information on their operations.

The Ministry of Finance The primary interest of MOF has been cost containment. During most of the 1980s, Israel's national health expenditure was 7.0% of the GNP. A continuous increase of 0.3% a year was observed between 1988 and 1994. By 1993, when preparations for reform reached the decisive stage, the national health expenditure had reached 8.2% of the GNP, and it was 8.8% in 1994, the year before NHFs implementation. Between 1984 and 1994, the per capita expenditure on health, in terms of GDP purchasing-power parity, increased by 65%, from $742 to $1,221 (Ministry of Health, 1998). As in other developed countries, the rising

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costs of medical care in Israel were the result of population aging and extensive use of the newest, most expensive diagnostic and therapeutic technology. MOF opposed NHI legislation because it guaranteed legal entitlement to an already-broad benefits package that could continuously be widened. This translated into a financial commitment by the government to fund the system at a level that was at least as high as when the law took effect, and subject to a special health expenditure index. MOF feared that if NHI were to be implemented, budgetary control of the health sector would be out of its hands, while it would retain responsibility for funding the system. MOF also feared that legislation would weaken GFL, its partner in wage negotiations, and lead to an overall loss of control over the employees' wages. On the other hand, financing the health system from the general MOF budgets would strengthen ministry control over the sick funds and the health system. This would enable it to gain more control over the national health expenditure, both directly and indirectly, through budget-reconciliation bills, which were being used with increasing frequency by MOF to regulate the activities of all welfare, education, and health authorities. MOF also favored centralized collection of health revenues by Nil on the grounds that this would eliminate inefficiencies and the duplication of fee collection by sick funds. Indirectly, the reforms empowered MOF with control over accelerating health care costs through MOH annual budget. One example of this control is the mechanism for updating the basic basket of services, including the purchasing and implementation of new technologies. The reform entrusted decision making in this area to MOF and MOH, hoping for better planning and coordination and more efficient equipment use. Moreover, new therapies could be added to the basic basket of services only if they were recommended by an advisory committee chaired by the minister of health, and only if the necessary financial resources could be found within the existing budget. Nevertheless, during parliamentary debate over NHI, MOF officials opposed the legislation. MOF was traditionally in favor of hospital autonomy from the standpoint of efficient hospital management. As economists, MOF officials believed that instituting competition among hospitals would lead to efficiency, as well as improvements in quality. However, MOF policy since 1995 has failed to encourage hospital autonomy, probably out of concern that hospitals competing for income from sick funds would increase the volume of services, leading to a rise in sickfund expenditures and a national health budget deficit. Therefore, since 1995 MOF has been implementing a new arrangement for restricting hospitalization costs to sick funds by capping hospital income growth. For example, 1995 hospital income was capped to a growth level of 2% in real terms, unrelated to changes in the volume of sick-fund activity.

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The Ministry of Health As already mentioned, an important aspect of Israel's health reform was to terminate the dual, and often-conflicting, role of MOH as the ministry for planning, supervising, and coordinating the health care system, on the one hand, and a direct health care provider, on the other. Yet the proposed changes affected conflicting vested interests within MOH itself. Traditionally, MOH was considered a marginal government ministry, often awarded to one of the small parties belonging to the government coalition or to a relatively peripheral personality in the ruling party (Shuval, 1992). When the Labor Party was in power, policy decisions were made by the joint elite of KHC, GFL, and Labor, largely ignoring MOH. Disagreements and disputes between KHC and MOH were usually settled in favor of the former. Some MOH departments thus saw in the reforms a golden opportunity to increase the ministry's influence and power over the health system, including KHC and the Israeli Medical Association. MOH branches involved in the direct provision of health care, however, had vested interests in maintaining the system, and the ministry showed little enthusiasm for hospital-sector reform. Most of MOH budget covers the provision of direct health services (62% in 1997). Divesting these services would thus strip MOH of most of its resources, and MOH officials would lose the power derived from the direct management of hospitals with large budgets. There was also serious concern in MOH over mother and child care, especially concerning the risk of a decline in the extremely high level of infant immunizations. It has been argued that if preventive health is transferred to the sick funds, curative services will be given priority (Palty, 1996). Therefore MOH opposed this element of the NHI law. Regarding the recommendation for organizational change in MOH structure and functioning, there were mixed feelings. On the one hand, MOH officials wished to strengthen their capacity for policy making, planning, and health system regulation, while on the other, as in every organization, they were suspicious of and resistant to change. It is therefore not surprising that MOH reorganization has proceeded slowly, and that changes have been only incremental. The Medical Professions Traditionally, physicians were dissatisfied with salaries and working conditions, as were other health professionals. In the early 1990s there were frequent strikes in the health sector, which contributed to pressures for reform. Initially, the medical professions opposed the conversion of hospitals to trusts, fearing that this would affect their rights. Eventually, hospital physicians came to support reforms in the hospital sector and abstained from opposing NHI in return for generous salary increases. They also expected that regulated private practice would be introduced after public hospitals gained autonomy. Nurses continued to oppose the hospital reform, as did GFL, which represented administrative and

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technical workers in the health sector. These trade unions, in fact, have jeopardized hospital reform, their actions leading to incremental change and added hospital authority without changing terms of employment (Shirom, 1997). The medical professions did not show strong opposition to NHI, which was not expected to affect them directly. Hospital Directors Hospital directors' interests concerning reform were expressed primarily in the hospital sector. Large tertiary hospitals looked forward to reform because they expected to succeed in the new competitive environment. Smaller hospitals in the periphery were concerned about losing clientele and revenues. Not all hospitals were ready for independent management or salary negotiations. Regarding MOH reorganization, all looked forward to increased freedom in dayto-day hospital operation. MODIFICATIONS TO NHI AFTER IMPLEMENTATION (199598) Health care reform in Israel, as in other countries, is an ongoing process. Modifications are being made continuously, and what was planned is not always implemented. Modifications thus have been made in the original NHI law. They have been introduced mainly by MOF and approved by the parliament in a special legislative process known as the Budgetary Reconciliation Bill, which is an appendix to the annual budget that is linked to budgetary legislation. The modifications have been aimed at installing mechanisms designed to achieve cost containment and overcome deficits accumulating in the system since 1996 (Bin-Nun, 1999). They can be roughly classified into tighter regulation of the sick funds and changes promoting competition as a tool for efficiency (Gross et al., 1999). Tighter regulation can be seen in the provisions of the 1997 bill, which included the elimination of the 5% parallel tax collected by the Nil and its replacement with direct government funding, increasing MOF control of the overall funding level and allocation. The 1997 bill also empowered the government to oversee and regulate sick funds through the appointment of external comptrollers for sick funds with deficits and through the requirement for MOF and MOH approval for sick-fund development projects. The 1998 bill included further restrictive provisions for sick funds, stipulating that member applications for sick-fund transfers be submitted via postal banks and not sickfund offices. It also imposed ceilings on sick-fund advertising expenditures and, in order to avoid duplication, limited the number of sick funds operating facilities in the same small settlements. The 1998 bill also allowed sick funds to collect differential copayments for physician visits and medication. This reinstated competition regarding prices, which was not called for under NHI, and provided additional private funding

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for sick funds. Another provision allowed sick funds to add features to the basic basket of services, reinstating competition regarding benefits. Finally, it allowed sick funds to offer supplemental insurance packages, introducing the potential for further competition in benefits and providing yet another additional private funding source for sick-fund activities. It should be noted that budget-reconciliation bills also include directives aimed at assisting sick funds in the reduction of expenditures. For example, capping has placed ceilings on sick-fund payments to hospitals, and arrangements have been made to increase competition in the prescription market, both of which are expected to reduce prices. These changes, too, express MOF policy of restricting expenditures in the health system. STAKEHOLDER INTERESTS AFFECTING NHI MODIFICATIONS As previously mentioned, MOF traditionally opposed NHI, as it threatened the ministry's budgetary control of the health system. Therefore, it initiated modifications giving government more control and restricting government funding. At the same time, MOF economists believe in competition through market mechanisms that promote both efficiency and quality. Therefore, since 1995 MOF has introduced a number of NHI modifications reinstating competition concerning prices and the benefits package. During deliberations on the MOF-initiated budget-reconciliation bills, a broad coalition of health-sector policy makers opposed modifications that MOF suggested as part of its policy of fiscal restraint. The coalition included the sick funds, MOH, parliamentarians oriented toward social policy, GFL, and consumer groups. Opposition centered on MOF attempts to level additional, postNHI fees and taxes on the public; its resistance to updating the benefits package; and its refusal to adjust the formula used to update the health budget in light of population aging and technological advances. All four sick funds opposed suggestions for increased regulation that would restrict their autonomy and increase their dependence on government. They did, however, support modifications aimed at increasing the level of finance. KHC, whose market share was deteriorating, opposed modifications aimed at increasing competition and supported those that would inhibit it. Based on past experience, KHC feared that increased competition would result in a further loss of market share. In addition, KHC claimed that competition leads to the unnecessary duplication of services and an increase in advertising expenses, which would increase its deficit. The three smaller sick funds, whose market share has been consistently growing, supported competition-oriented modifications that would allow them to further increase their market share. On the other hand, they realized that competition involves increased expenses in marketing and advertising and in the development of services to attract new insurees, whom they sought to avoid.

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Being responsible for operating the health system in general and government hospitals in particular, MOH had an interest in allocating sufficient funds to enable the system to run smoothly and allow sick funds to pay their debts to hospitals. Therefore, it, too, opposed MOF budgetary restrictions. Also, as senior MOH officials are physicians who identify with requests for additional resources necessary to cover the population's growing health needs as well as advances in technology, the ministry supported those modifications that would increase overall funding of the system and opposed cost-containment policies. In addition, MOH supported amendments that increased its control over the operation of the health system and opposed those that empowered MOF or increased competition. MOH feared that increased competition would lead to increased costs and the unnecessary duplication of services, as well as a reversion to cream skimming by sick funds and the resulting insuree inequalities (Gross and Harrison, 2001). CONCLUSIONS In many respects, the Israeli reform was similar to the processes that occurred in Western Europe. At the same time, it was the struggle for political power on both the macro level of Israel's political system and the micro level of the Labor Party that finally enabled NHI legislation after many years of failed attempts. The institutional structure and the interests of key stakeholders in the health care system shaped the details of NHI, as well as later modifications. Stakeholder interests can also explain the slow pace of implementation of the elements of reform concerning the hospital sector and MOH. As in Western Europe, one major goal of the reform in Israel was cost containment, yet the mechanisms to achieve this goal were unique in the marginal role left for competition in the health services market. The NHI law and the later modifications deepened government regulations and control over the sick funds' activities and their budget usage (limiting the sum allocated to advertising is one example). Market mechanisms remained as additional means for enhancing the sick funds' efficiency and quality of service. A similar paradox can be found in the reform of the hospital system. The gradual expansion of hospitals' autonomy and the encouragement of interhospital competition were accompanied by price regulation and budget and programs control. Hospitals' budgets and planned activities need ministerial approval, and the ''capping" system, by which hospitalization charges are fixed, impairs their ability to compete among themselves. These measures, however, appear to have been successful in achieving cost containment, at least in the short run. The national health expenditure has declined since the implementation of the reforms, from 8.8% of the GNP in 1994 to 8.6% in 1995 and 8.3% for 1998 (Ministry of Health, 2001). At the same time, one major problem remains unsolved, endangering long-term cost containment. In the past, MOF has not succeeded in controlling the salaries of health

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workers, particularly due to the demands of the powerful and militant medical and nursing unions. Moreover, the dramatic 1994 increase in physicians' salaries, which spearheaded salary raises for all health workers and increased the 1994 national health expenditure (Akstein et al., 1997), occurred during a massive wave of immigration from the former Soviet Union that almost doubled the number of working physicians in Israel. Based both on this and the long history of industrial unrest in Israel's health care sector, it appears that cost containment will not be achieved as long as there is no mechanism for regulating manpower recruitment and the conditions of employment for employees of the health care system. Another unique feature of the Israeli reform is the emphasis on quality of care. Judging by consumers' satisfaction, quality of service indeed improved. Nevertheless, the decline in the national expenditure for health raises the question regarding which aspects of care actually improved. If the increases in the national expenditure during the early 1990s were indeed the result of wage increases, and if wages did not decline, and if all four sick funds continuously declare that the resources allocated to them are not sufficient for providing the required services, where do the savings come from? It is possible that while the service aspect of health care did improve, the quality of the clinical aspect of care stagnated or even declined.

REFERENCES Akstein, Zvi, Glazer, Yaakov, and Perlman, Menahem. 1997. The Israeli Health Care System: Trends and Predictions. Tel-Aviv: Applied Economics Ltd. (Hebrew). Berg, Ayelet, Rosen, Bruce, and Ofer, Gur. 1995. Changes in Household Expenditure on Health between 1986/7 and 1992/3. Jerusalem: JDC-Brookdale Institute (Hebrew with English abstract). Bin-Nun, Gabi. 1999. "Cost and Sources of the Basket of Services of the National Health Insurance Law." Social Security 54:35-52 (Hebrew with English abstract). Central Bureau of Statistics. 1995a. Statistical Abstract of Israel, 1995. Jerusalem: State of Israel. Central Bureau of Statistics. 1995b. Use of Health Services Survey, January-March 1993: Hospitalizations and Health Insurance. Publication No. 1001. Jerusalem: Central of Bureau of Statistics. Chernichovsky, Dov, and Chinitz, David. 1995. "The Political Economy of Health System Reform in Israel." Health Economics A:\21-\X. Chinitz, David. 1994. "Reforming the Israeli Health Care Market." Social Science and Medicine 39(10): 1447-57. Chinitz, David. 1996. "Israel's Health Policy Breakthrough: The Politics of Reform and the Reform of Politics." Journal of Health Politics, Policy and Law 20:909-32. Doron, Abraham, and Kramer, Ralph M. 1991. The Welfare State in Israel: The Evolution of Social Security Policy and Practice. Boulden, CO: Westview Press. Gross, Revital, and Brammli, Shuli. 1996. Supplemental and Commercial Health Insurance in Israel. Jerusalem: JDC-Brookdale Institute (Hebrew with English abstract).

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Gross, Revital, and Harrison, Michael. (2001). "Implementing Managed Competition in Israel." Social Science and Medicine 52(8): 1219-31. Gross, Revital, Rosen, Bruce, and Chinitz, David. 1998. "Evaluating the Israeli Health Care Reform: Strategies, Challenges and Lessons." Health Policy 45:99-117. Gross, Revital, Rosen, Bruce, and Shirom, Arie. 1999. "The Health Care System Following the Implementation of the National Health Insurance Law." Social Security 54:11-34 (Hebrew with English abstract). HacoHen, Debora. 1994. Immigrants in Storm (Olim Beseiara). Jerusalem: Izhak BenZvi Memorial (Hebrew). Halevi, H.S. 1979. "The Pluralistic Organization of the Health Services in Israel." Social Security 17:5-50 (Hebrew). Harrison, Michael. 1993. "Medical Dominance or proletarianization: Evidence from Israel." Research in the Sociology of Health Care 10:73-96. Lachman, Ran, and Noy, Shlomo. 1992. "Black" Medical Services in Israel: Perceptions and Implications. Tel Aviv: Golda Meir Institute (Hebrew with English abstract). Ministry of Health. 1996. Health in Israel. Jerusalem: Ministry of Health, December. Ministry of Health. 1998. Health in Israel. Jerusalem: Ministry of Health, December. Ministry of Health. 2001. International Comparisons of Health Systems: OECD Countries and Israel, Jerusalem: Ministry of Health. Palty, Hay a. 1996. "National Health Insurance Law Implications for Preventive Mother and Child Care Services." Social Security 47:80-103 (Hebrew). Rosen, Bruce. 1991. The Netanyahu Commission Report: Background, Contents, and Initial Reactions. Jerusalem: JDC-Brookdale Institute. Rosen, Bruce, Cohen, Marc, Berg, Ayelet, and Nevo, Yaakov. 1995. Consumer Behavior in the Sick Fund Market. Jerusalem: JDC-Brookdale Institute (Hebrew with English abstract). Rosen, Bruce, and Nevo, Yaakov. 1996. Sick Fund Revenues, Expenditures, and Utilization Patterns: A Comparative Analysis. Jerusalem: JDC-Brookdale Institute (Hebrew with English abstract). Rosen, Bruce, and Steiner, Revue. 1996. Recent Trends in Sick Fund Market Shares. Jerusalem: JDC-Brookdale Institute (Hebrew with English abstract). Shirom, Arie. 1995. "The Israeli Health Care Reform: A Study of an Evolutionary Major Change." International Journal of Health Planning and Management 10:5-22. Shirom, A., Egoz, N., Bin Nun, G., Michael, D., Michel, Z., and Chernichowsky, D. 1997. Reform of Public Hospitals in Israel: Evaluation of Developments and Policy Options. Jerusalem: Center for Social Policy in Israel (Hebrew). Shuval, Judith T. 1991. "Political Processes in Health Care: A Case Study of Israel." Research in the Sociology of Health Care 9:279-304. Shuval, Judith T. 1992. Social Dimensions of Health: The Case of Israel. Westport, CT: Praeger. Shuval, Judith T., and Anson, Ofra. (2000) Social Structure and Health in Israel. Jerusalem: Magnes Hebrew University Press (Hebrew). Shwartz, Shifra. 1997. The General Sick Fund. (Kupat Holim Clalit). Beer-Sheva: BenGurion University Press. State of Israel. 1990. Report: The State Commission of Inquiry into the Operation and Efficiency of the Health Care System in Israel. Vol. 1, The Majority Opinion; vol. 2, The Minority Opinion. Jerusalem: State of Israel.

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Twaddle, Andrew C. 1996. "Health System Reforms—Toward a Framework for International Comparisons." Social Science and Medicine 43(5):637-54. Weinblat, Jimmy, Katan, Joseph, Blanket, Joel, Blass, Nahum, Nachshon-Sharon, Dalit, Kop, Jacob. 1999. "The Social Services and Their Development." In Jacob Kop (ed.), Distribution of Resources to Social Sendees 1998. Jerusalem: Center for Research on Social Policy in Israel (Hebrew). World Health Organization. 1996. Highlights on Health in Israel. Copenhagen: WHO. Yishei, Yael. 1982. "Politics and Medicine: The Case of Israeli National Health Insurance." Social Science and Medicine 16:285-91. Zabag, Shlomoh. 1996. Otzmot Bemaiaracha. Tel-Aviv: Hakibutz Hameiuhad (Hebrew).

PARTY

LATIN AMERICA

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Chapter 11

Health Care Reform in Argentina Susana Belmartino SOCIOPOLITICAL CONTEXT OF THE REFORM The 1990s witnessed sweeping changes in Argentina. The transformations that took place may be differently appraised, depending on whether emphasis is placed on the chapter of successes or on the manifestations of exclusion, violence, and social disintegration that make up the list of as-yet-unresolved questions. Few Argentines, however, would be unaware that in these years Argentina overcame some problems that had affected its economic and social development over four decades: political instability, unsatisfactory economic growth, inadequate insertion in world markets, permanent fiscal deficit, unresolved social conflicts, feeble legitimacy of democratic institutions, and serious limitations on the regulatory capacity of the state apparatus. The 1980s brought about the reconstruction of democratic institutions. Not until the 1990s did the country achieve the recovery of an economy beset by grave distortions of the production apparatus, crushing foreign debt, recurring fiscal crisis, and lack of investments. From 1991 on, the scene changed rapidly: the economy stabilized, the gross national product and productivity grew steadily, and foreign investments facilitated the modernization of the productive apparatus and export growth. The process of economic growth was favored by economic-integration agreements concluded with Brazil, Uruguay, and Paraguay, which gave rise to the regional bloc denominated Mercosur. The turning point in economic policy was clearly marked by the launching in 1991 of a program known as the Convertibility Plan, which included directives for state and institution reform, privatization of public enterprises, and liberalization of the economy, with the backing of international financial institutions, particularly the World Bank.

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Nevertheless, the successes achieved were not sufficient to settle the grievous social debt generated by the country in the years of instability and deterioration of its productive capability. On the contrary, this debt increased during the 1990s as a consequence of the economic concentration resulting from the process of change and was translated into urban poverty and marginalization, child malnutrition and school desertion, unemployment, breakup of social ties, and the growing threat of the installation of a dual society. The health care reform process took place in this scenario of simultaneous expansion of wealth and of marginalization. However, the transformation of the health care institutions was not only a response to this emergence of new needs; it also had to take account of the consequences of the depletion of the earlier health care organization model, the unresolved conflicts in the interior of the political system, and the scant capability for imposing new rules of the game that characterized the state organisms in charge of sectoral control and regulation. THE HEALTH CARE SERVICES SYSTEM BEFORE THE 1980S The health care services system whose reform is analyzed in this chapter grew in the 1940s as a consequence of the transformations that at the international level led to the emergence of the welfare states. Like other Latin American countries, the Argentine state expanded its social policies but, also like them, did not succeed in consolidating a social citizenship with universal characteristics. The idea of a regulated citizenship, elaborated by Guilherme Dos Santos (1987) for the Brazilian case, can also be applied to Argentina. It denotes a scenario where social rights are not guaranteed universally to all the citizens, but are partially recognized for some categories of individuals by decisions that emanate from the state. This is the condition that best expresses entitlement to receive health care coverage as it was recognized in Argentina in the 1940s: certain trade unions, those with closer ties to the state apparatus or possessing greater leverage by their position in key areas of the productive apparatus, acquired the right to manage sickness funds that benefited from compulsory contributions by employers and employees and from considerable state subsidies; the rest of the working salaried population and self-employed or unemployed persons received health care through participation in mutual-aid institutions or applied to the public services, which were considerably expanded between 1946 and 1952 (Belmartino et al., 1991). In those years, corresponding to the first presidency of General Juan Peron— promoter of a genuine social revolution in Argentina and founder of the Partido Justicialista, identified since then with his person and leadership—the foundations were laid of the health care services system that would gradually consolidate during the following decades and would experience crisis beginning in the

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1980s. Two expressions have been used by different analysts to characterize that system: fragmentation and heterogeneity. The first alludes to the multiplicity of institutions, and the second refers to different organizational modalities, availability of resources, and conditions of efficacy and efficiency. There was, on the one hand, the public subsystem, dedicated to the care of the destitute population and traditionally divided into three jurisdictions: national, provincial, and municipal. On the second hand, the sickness funds intended to give coverage to different segments of the working population, known generally as obras sociale s, were to be managed by the trade unions, each controlling very different organizational forms and resources according to the place it held in the productive apparatus. The ties between obras sociales and trade unions, created in the years of the rise of Peronism and which it has not yet been possible to undo, signified for these sickness funds a destiny associated with the ups and downs of the political system. The resources thus acquired constituted one of the material foundations of the trade unions' power and were very frequently utilized as assets for bargaining with the government for the resolution of extrasectoral conflicts in the labor or political areas. From this situation, in part, stems the scant capability of the state apparatus to regulate the system and the failure of all attempts to unify resources to obtain an adequate risk pool, make solidarity effective among the entirety of the working population, and give equal coverage to the totality of the system's beneficiaries. If the trade unions became one of the poles of power inside the health social security system, the professional corporations managed since the 1960s to set themselves up as their counterparts in negotiations for their beneficiaries' care. The Confederacion General del Trabajo (CGT), the Confederacion General de Clmicas y Sanatorios (CONFECLISA), and the Confederacion Medica Argentina (COMRA) since 19701 have constituted an alliance that has its internal contradictions, but in fact has consolidated as a decided defender of the system and of the power relationships existing within it. In an earlier work I characterized this alliance as a corporative pact, since the main regulator of the system is agreement between corporations, with weak state intervention (Belmartino, 1995). The institution of this alliance was the result of a historical process characterized by confrontation between the obras sociales and the professional organizations that began toward the end of the 1950s and laid the foundations of the future power relationships within the sector. From this time on, the obras sociales began to act preferably as financers of services, relinquishing the policy of installing hospitals and ambulatory clinics of their own, with professionals remunerated by wages, that had been characteristic in the 1940s and 1950s. The professional corporations, organized in locally based associations, provincial federations, and a national confederation, in their turn obtained conditions'of supply oligopoly, taking charge of the services provided by their members and management of the respective contracts. Together with their oligarchic control

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of services supply, the professional corporations imposed a practice modality in accordance with the liberal tradition in medical practice: freedom to choose the physician on the part of the patient, prescribing freedom on the part of the professional, fee-for-service remuneration, and noninterference by laymen in matters concerning health care. The obras sociales' organizational model underwent a first period, covering the greater part of the 1970s, of expansion of coverage and improved access to health care for their beneficiaries. At the same time, their inpatient care facilities grew in some measure, favored by state policies that encouraged association between obras sociales for the installation of shared services. Nevertheless, the largest growth in ambulatory and inpatient care facilities and the greatest incorporation of complex technology was in the private sector under contract, particularly in regions with greater socioeconomic development. In economically more dynamic regions, the articulation between the obras sociales and the private sector provided services to the working population and a large part of the middle classes of businessmen, functionaries, and professionals; the public subsystem provided its services free to the population outside the labor market, who inhabited the peripheral urban areas and shanty towns, characterized by nonavailability of adequate infrastructures, that began to dot the urban landscape. There was also a larger presence of the public subsystem in the less developed regions. This brief description accounts for the first of the limitations of the health services model: its inability to expand and provide egalitarian coverage to growing percentages of the population. A second limitation concerns shortcomings in the care provided that, as already noted, were related to the numbers of beneficiaries per obra social and the amounts of their contributions. Coverage insufficiency, manifested by copayments at the time of applying for care, hindered access for those in the lower-income population and obliged them to use the public hospitals, making their condition equal to that of the destitute population. This internal heterogeneity in a theoretically solidarist system was closely related to the organization of the system on the basis of the beneficiaries' line of work. The contributions of employers and employees were channeled to the obra social of the respective trade union, firm, or activity. This gave rise to the existence of a large number of institutions and acted to the detriment of building up an adequate risk pool in each of them; in practice, beneficiaries and resources were concentrated in a relatively small numbers, thus undermining the financial feasibility of a large part of the remaining ones. At the present time, out of a total of 281 institutions, 30 obras sociales account for 73% of the total number of beneficiaries and 75% of the contributions (Tafani, 1997). Not only do the numbers of beneficiaries vary between obras sociales, but also the average incomes per beneficiary are noticeably different. This situation is difficult to illustrate due to the lack of systematic information concerning the whole and the distortion of values under conditions of high inflation. With these limitations in mind, some partial references can yet be given, for example, the infor-

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mation supplied in the report presented by the Fundacion de Investigaciones Economicas Latinoamericana (FIEL) at the Seventh Convention of the Asociacion de Bancos Argentinos (ADEBA). In a sample of 24 obras sociales, the range of income per beneficiary was distributed between two poles: insurance personnel in 1990 rated $560 per beneficiary per year and sugar-industry workers in the province of Tucuman only $12.70 per beneficiary per year (FIEL, 1991). Along with this panorama of internal differentiation, it is necessary to point out also the failure of the mechanisms intended to compensate for it. The resources of the Fondo Solidario de Redistribution (managed by ANSSAL, the state agency in charge of governing the system), consisting of 9.0% of the total contributions, were originally intended to be used for leveling out this type of imbalance. Nevertheless, the extreme politicization of the system transformed it into one more differentiating element, and the subsidies distributed by the Fondo were utilized as resources for co-opting or rewarding political clienteles. As a consequence, great differences exist in the extent of the coverage provided, expressed through health care expenditure. The care provided is fundamentally curative, with highly specialized services—incorporation of technology is not always in accordance with the demand profile—and great development of inpatient care facilities. The obras sociales have in general not participated in shaping the health care system; they have confined themselves to operating as financing entities of services supplied by the market, and their only limitation is availability of resources. Neither have the obras sociales developed mechanisms for control or supervision, or information systems capable of detecting practices incompatible with the goals of efficacy, efficiency, opportunity, and comprehensiveness of care and equal access, which had been defined as founding values of the system. The hospitals and health centers of the public subsystem are financed with funds from the state budget and are managed by the national, provincial, and municipal governments. The public hospital is a fundamental part of the services system, since it provides assistance to the destitute population with no coverage or insufficient coverage, subsidizes the obras sociales by providing services to their beneficiaries without a financial return, and, occasionally, caters to the demands of social sectors possessing greater economic capability, but attracted by the prestige of the professional staff or of the institution in regard to activities of prevention, diagnostics, and treatment. It is also in charge of an essential part of the sanitary emergencies system and performs the function of training human resources at the graduate and postgraduate levels. Nevertheless, the public subsystem nowadays presents conditions that considerably limit its ability to respond to the health needs of the population requiring its services: it faces serious deterioration of its structure and inefficiency in its management; in most cases it is subject to administrative centralization by the provincial health jurisdictions; it exhibits rigidity in its personnel policies and in labor relations; it lacks an adequate incentives regime; and it has not developed adequate information services for decision making and management con-

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trol. It has important shortcomings in infrastructure and equipment maintenance and a management system unequal to the magnitude and complexity of its organizations of a political or vote-procuring kind (Argentina, Ministerio de Salud y Action Social, 1994). MANIFESTATIONS OF DEPLETION OF THE SYSTEM IN THE 1980S At the level of generality befitting the purpose and dimensions of this volume, it can be affirmed that the description of the impact of the crisis of the 1980s on Argentine society is in line with the generalized diagnoses for Latin America: a sharp fall in production levels, acceleration of inflationary processes, drastic reduction of economic activity, and unemployment. Foreign indebtedness and the need to generate increasing surpluses in the trade balance in order to meet that obligation at the same time created social consequences of greater exclusion, impoverishment of the middle sectors, and an alarming increase in conditions of extreme poverty. In consequence, the processes of economic recovery and fiscal adjustment account for the conflicting conditions in which the recovery of democratic institutions took place. The aspiration to a greater democratic opening-up of political institutions became conflictive when one considers the social costs of the recovery process. State modernization reinforced socially exclusive aspects of the economic policy—personnel reduction was a priority instrument in the quest for greater efficiency in its apparatus (Acufia, 1994). The description of this scenario cannot omit recognition of transformation processes. The new model of society that would take hold in the future originated in a multiplicity of spaces: the productive apparatus, international commercial relations, political institutions, social organizations, the state apparatus, culture, and individual and collective representations (Garcia Delgado, 1994). The consolidation of new economic and financial groups of local capital, the development of industrial specialties making intensive use of natural resources, and the redefinition of modes of insertion in international commerce, particularly as they affected the profile of exports, constitute the more obvious aspects of the new dynamics introduced in economic activity. To this might be added important mutations in the labor market, trade-union activity, and production of certain public services (Cetrangolo et al., 1994; Feldman, 1991; Beccaria and Lopez, 1994; Neffa, 1993; Beccaria, 1992). The accumulation model was transformed, enhancing the features of concentration and exclusion that also characterized the preceding stage of development as a consequence of the substitution of imports. The social consequences of that process of restructuring the economy were not compensated by the social activity of the state, which had been severely curtailed (Dieguez et al., 1990). Nor was the manifest diminution of the state's activity as provider of public goods, such as education or health, compensated by any increase in the efficacy of its

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regulatory function seeking to attenuate the conditions of inequity (Barbeito and Lo Vuolo, 1992). The mediations between these general processes and the health services system were concentrated fundamentally in the following: reduction of public health expenditure; changes in the labor market implying contraction of the economically active population and, within the latter, of the fraction holding formal stable wage-earning jobs and consequently contributing to the health care institutions; reduction of mean wages, coupled with a polarization of wages and income that fundamentally affected the middle sectors; expansion of the sectors below the poverty threshold and emergence of the subgroup known as "new poor" (Minujin et al, 1993); weakening of the corporative organizations related to the health sector, which was associated with growing diversification of interests and strategies as a result of the economic reconversion processes; an increase in inflation percentages; intensification of the distributive struggle in the health care market, conducive to increases in prices of goods and services to levels not corresponding to parallel increases in production costs; and deficiencies in the fiscal activity of the state that encouraged tax evasion. The incidence of the factors mentioned played an important part in the explanation of the financial crisis faced by the obras sociales during the decade. That crisis was due in the first place to a palpable diminution of their overall resources. A second element to be considered is the disadjustment that occurred as a consequence of the increase in facilities of the services system, stimulated by the earlier expansive stage and by the incentives to be found in the health care model (feefor-service payment, free choice of physician, access to the services system at any level of complexity and specialization, prescription freedom). When the total number of beneficiaries decreases and costs increase due to higher prices, services overprovision, and/or overbilling, a situation arises of oversupply in relation to the paying capability of demand (Bascolo and Belmartino, 1995). Hand in hand with the financial crisis, a crisis was also discernible in the values sustaining the system. The defense of the multiple model, with a plurality of financer and provider institutions, was traditionally based on the virtues of a labor market open to all professionals and institutions with different levels of complexity, reinforcement of intermediate institutions, and confidence in the possibility to correct deficiencies conducive to unequal access to care. Nevertheless, the expectations of future integration and greater equity were given the lie by conditions of growing exclusion. Other elements hinting at a breakup of the principles underlying the system were related to individual and group attitudes on the part of health care providers. First was the practice of exacting from the patient an additional payment "plus" at the time of providing care that began to develop in the early 1980s. Generalization of this new barrier to egalitarian access was justified by the decrease in professionals' incomes and the resulting dissatisfaction. To this was added the attitude of certain groups of specialists (such as urologists and anesthetists in some provinces) who elected to sever any type of contractual rela-

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tionship with the obras sociales, obliging them to directly reimburse the expenditures made by their beneficiaries. Actually, both the "plus" and the refusal of the members of some critical specialties to continue operating according to the rules of the system were merely indicators of the distributive struggle that was generalized in the interior of the health care system under contract with the obras sociales in the mid-1980s. After this description, it is understandable that neoliberal criticism took hold so easily on public opinion and on a large part of intellectual circles interested in the workings of the services system. Inefficiency in service management, waste in the handling of resources, and funneling of funds by trade-union leaders toward needs having little to do with the provision of care to beneficiaries can hardly be represented as an "ideological recourse" of individuals desirous of privatizing the financing sources. On the contrary, they were part of the daily experience of many agents and users of the system. This experience, coupled with the hard facts associated with the reduction of resources and the simultaneous increase in unsatisfied needs, signaled the depletion of the organizational model as it had consolidated in the previous decades. The new rules of the game originating as part of the transformations of the 1990s oriented the reform strategies. The 1980s continued to show an image in which the dominant features were insufficiency in resources and technical deterioration, as well as deterioration of buildings and facilities. The situation worsened because informal labor and unemployment, on the one hand, and the financial crisis of the obras sociales, on the other, contributed to multiply the population in the health care system's charge. This greater demand in numbers of people catered to occurred in years witnessing the emergence of AIDS, the reappearance of supposedly eradicated pathologies such as measles and cholera, an increase in juvenile and family violence, and the blooming of all types of addictions. On their side, the private health insurance associations, known in Argentina as prepaid health organizations, began to develop in the late 1960s but maintained a limited presence in the services system until the early 1980s. After this point their importance grew, the numbers of their clients increasing by a percentage of the higher-income population dissatisfied with the coverage afforded by the obras sociales. These organizations, which supplemented or replaced the compulsory insurance coverage, were organized by professional groups or private hospitals, some of which became quite large relative to the population in their domain. JURIDICAL AND POLITICAL FRAMEWORK OF HEALTH CARE REFORM Scenario in Which the Reform Took Place The "lost years" of the 1980 decade had in Argentina a dramatic outcome: the hyperinflation of 1989-90—likened in its magnitude and consequences to

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the German experience of the 1920s—deeply shook the relationships and identities built up among the citizens and paved the way for reforms exceeding the framework of the health services. The recovery of the democratic institutions nevertheless commenced at the same moment in which their permanence seemed seriously threatened. The main instruments of the transformation of the workings of the Argentine sociopolitical system were the State Reform Law and the Economic Emergency Law that were approved in 1989 as part of the agreement that brought about the transfer of government from President Raul Alfonsm to President Carlos Menem before the due date. The goals of attaining monetary stability and economic growth were reached only in 1991. In March of that year, the Convertibility Plan was adopted, profoundly transforming the conditions of economic activity. Production and productivity underwent an important increase between 1991 and 1994, with an average growth of the gross internal product of 7.7%. The initial stimulus caused by the increase in consumption resulted later in the growth of investments and exports. The privatization of the state enterprises went hand in hand with that process. Diagnosis and Juridical Framework of Health Care Reform The first measure taken by the Ministry of the Economy, which assumed leadership of the transformation process, was aimed at making the resources assigned to the social security system more transparent (they had been collected independently, up to this point, by each obra social), as well as the numbers of their beneficiaries, to facilitate evasion control. Decree No. 2.284/91 for deregulation of the economy established in Article 85 the creation of a Sistema Unico de Seguridad Social (SUSS) (Unified Social Security System) and established the Contribution Unica de Seguridad Social (CUSS) (Unified Social Security Contribution) that unified contributions to the provisional system and contributions for financing the health care services. The percentage destined for this purpose was later remitted to the respective obra social. In 1993 advances were made in reform policy seeking to solve two aspects around which centered the critical diagnosis of the operation of the obras sociales. The first referred to the obligation imposed on every worker to channel his compulsory insurance contributions to the obra social associated with the respective trade union. In the view of the proponents of reform, through this mechanism a "captive" population was set up, and thus no incentives existed for improving the quality or quantity of the services supplied, or for organizing a more efficient management of available resources. According to this diagnosis, it was considered that the generation of a certain degree of competition by beneficiaries among the various organizations could, on the one hand, stimulate greater efficiency in coverage management and, on the other, bring about a concentration into large institutions capable of generating an adequate risk pool. A second critical component upon which it was intended to take action was the growing proportion of obras sociales beneficiaries who had to apply for care

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to the public subsystem's services. This circumstance was the basis of the idea of setting up mechanisms allowing the hospitals and health centers to charge obras sociales for these services and so incorporate new resources to alleviate their condition of underfinancing and deterioration. Decree No. 9 of 1993 sanctioned the foundations of the reform. In the first place, it established free choice of obra social among the system's beneficiaries. Those entitled would be able to make their choice between different institutions and to change their affiliation thereafter once every year. Progress was also made in the reform of relations between obras sociales and providers of services by establishing contracting freedom between financers and providers, without fixed fees or tariffs, thereby making price competition possible among health care suppliers. Last, it was established that the obras sociales would pay for the services demanded by their beneficiaries from public hospitals. This disposition was completed by decree 578 of the same year, which regulated the functioning of the "self-managing hospital" within the public subsystem. Nevertheless, the dispositions were not evenly followed: free choice by obras sociales beneficiaries was implemented only in 1997; the organization of selfmanaged hospitals in the public subsystem encountered limited acceptance and was only applied as an experiment in some institutions without producing significant changes in the financing mechanisms of that subsystem; the disposition concerning contracting freedom between obras sociales and private providers, on the contrary, arrived to sanction a de facto situation already in existence that had set in motion the most significant changes in the subsystem of services financing and provision. I shall describe this process later. Effectiveness of State Reform Action and the Underlying Political Conflict The paradox of the Argentine reform resides in the fact that state action directed to that goal turned out to be not very effective, and yet a reform took place; a change in the relationships constitutive of the services system occurred from the early 1990s. Was this the expected reform? Did the changes effected correspond to the objectives declared by the functionaries who designed the legislation approved between 1991 and 1994? Has there been a modification in the power relationships around health care financing and provision so as to stimulate competition founded on quality and price that is liable to increase the population's access to health services? How far has the demander of health care, who never felt himself truly a citizen, managed to assume his place as a consumer? I shall leave these questions unanswered for the moment while I describe the strategies evolved by the actors, old and new, to defend their respective projects for reconstructing the power relationships within the health services system. One of the components of the reform proposal—deregulation of affiliation to the obras sociales—was obstructed by the firm opposition of CGT. The tradeunion leaders resorted to appeals to solidarity to defend retaining control of

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resources that constituted an important source of economic and political power. On the other hand, among the arguments wielded by the trade unions was the fear that the system organized on a solidarist basis might find itself reduced to managing the contributions from the beneficiaries with the least resources if the door was opened to competition with private prepaid companies able to attract the adherence of the higher-income bracket within the beneficiary population. The periodic recurrence of the deregulation decrees—one every two years, 1991, 1993, 1995—was related to cycles of concurrence and opposition between the government and the labor leaders. On not a few occasions, the continued existence of a relatively closed obras sociales system was conceded in exchange for the acceptance of other measures that the conductors of the economy deemed more important for the advancement of their transformation project, for instance, the reform of labor relations. The ideological and political conflict raging over the reform was expressed in the contents of two decrees of 1995, Nos. 292/95 and 492/95, which included resolutions originating in two rival reform projects, backed respectively by CGT and the World Bank, thus evincing a situation of unstable equilibrium. The Reform Proposal Backed by the World Bank The objectives of the reform proposal backed by the World Bank were as follows: • To introduce competition in the financial market, avoiding risk selection • To reassign the resources of the Fondo Solidario de Redistribution strictly on the basis of the beneficiaries' incomes and risks • To develop an effective regulatory framework • To develop insurance institutions that would promote competition, transparency, and accountability, so as to protect consumers' rights • To provide financial and technical assistance to the obras sociales and PAMP in order to raise their efficiency, improve their balances, and comply with the new norms and regulations The policy recommended by the World Bank was intended to achieve • financial cleansing of the system; • knowledge of the resources collected by each obra social; • definition of a basic package of health services; • the compilation of lists of entitled beneficiaries and adherents, including sufficient information to estimate risk and establish the dimension of the portfolios of beneficiaries that would make it possible to guarantee basic coverage to all; • the application of redistributive mechanisms in the interior of the system for guaranteeing a minimum contribution to all the entitled beneficiaries, regardless of their labor situation; and

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• freedom on the part of the beneficiaries to choose the organization toward which they would prefer to channel their contributions. The Project Backed by CGT Faced with the threat implicit in deregulation of the obras sociales and the likelihood of an eventual opening up of competition for social security beneficiaries to prepaid care institutions, CGT adopted a defensive position. The central labor institution's proposal centered around minimum modification of the status quo: the existing institutional structure and its autonomy were to be retained without developing competition among obras sociales or submitting to World Bank directives, in exchange for the promise to introduce a strategy for rationalizing expenditure. The first point of the adaptation plan proposed by CGT concerned the definition of a Programa Medico Obligatorio (PMO) (Compulsory Health Program) that all the obras sociales would be obliged to provide to their beneficiaries. In cases in which it was impracticable to apply to the beneficiaries of an obra social the coverage defined in PMO due to excessive managing costs, inefficiency in services provision, or some other cause, ANSSAL would be empowered to promote fusion with another one. The Fondo Solidario de Redistribution would be in charge of leveling out the average income of the obras sociales for the purpose of placing them all in equal conditions to finance PMO. It would also finance the reorganization process—personnel rationalization, renegotiations of contracts with providers, revamping of equipment and facilities, and cancellation of outstanding debts—through loans repayable in 48 months, with 18 months' grace.

The Decisions of the State As mentioned earlier, two decrees sanctioned in 1995 established some of the measures proposed by CGT and the World Bank. Decree No. 292/95 established a guarantee for all the obras sociales of a minimum contribution per entitled beneficiary, fixed at 30 pesos. In all the cases in which the contribution was below that figure, the redistribution fund would grant a subsidy to make up the difference. Another provision for putting the system in order was the elimination of multiple coverages by establishing the channeling of contributions to a single obra social in the case of beneficiaries holding more than one job. Decree No. 492/95, on its part, was aimed at setting up a mechanism conducive to the definition of the package of services that each obra social must provide to its beneficiaries. To this end, it established a commission, designated by the Ministerio de Salud y Action Social and the Confederacion General del Trabajo, charged with establishing PMO and the regulations necessary for its application.

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Old Actors Reformulate Their Market Strategies As already noted, Decree No. 9/93 established contracting freedom for agreements between obras sociales and service providers and forbade the former to enter into such contracts with the professional organizations that had traditionally represented supply in the previous contracting modality. The decree did not really introduce changes in the condition of the health market; it only confirmed changes that were already taking place. The strategies set in motion by financers and providers to overcome the financial crisis of the system were expressed in the first place as a conflict within the professional organizations—in particular, the one containing the private hospitals—and resulted in institutional transformations, changes in contracting forms between supply and demand for services, changes in the organization and control of work procedures, and the introduction of new remuneration modalities to direct providers. This conflict broke out within the professional organizations when the institutions better able to control their costs abandoned the protective umbrella of corporative oligopoly and entered into open competition with their peers for contracts with the obras sociales. The new contracting modalities, identified as risk contracts, abandoned the generalized practice of fee-for-service remuneration and were based instead on the obligation to provide comprehensive services to a given population on the basis of a per capita payment. This change in the rules of the game with the financing institutions affected at different levels the relationship between direct providers and professional organizations: (1) the resulting risk of services provision would cease to affect the obras sociales and would be transferred to the providers; (2) the organizations entering such contracts would cease to uphold the corporative obligation to guarantee a work market open on equal conditions for all their members and would be transformed instead into enterprises responding to incentives associated with expenditure reduction through capitation management; consequently, the reduction in the numbers of suppliers was perceived as a strategic component of the efficiency of that management; (3) entering into such contracts would oblige the organization representing supply to have sufficient services available to provide integral care at the different levels of care. This last condition would affect the independent professional associations that did not control inpatient care facilities and complex diagnostic and treatment technology. DYNAMICS OF REFORM In the earlier contracting modality, the obra social took responsibility for reimbursing providers for the entirety of the services provided to their beneficiaries according to the values per service agreed with ANSSAL. In the new risk contracts, the obligation of the financing institution was limited to a per capita payment, that is, a monthly advance payment per beneficiary, freely stipulated by the contracting parties; the risk resulting from the distribution of these

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values among the direct providers of care services fell to the organization representing supply that entered the contract. The incentive to oversupply and overprovision services associated with fee-for-service payment became an incentive for expenditure control through the reduction of the number of practices and the localization of health care at levels of less complexity and specialization. The obras sociales with larger numbers of beneficiaries were better placed for negotiating these contracts, since they could offer their counterparts important amounts, transferred beforehand, even though the capitated value might be moderate or low. Changes in Supply In considering the adaptation of the institutions to the new market conditions, it is necessary to identify the emergence of new enterprises and new forms of relationships between providers. In the first place, we must mention among the new enterprises the organization of services management organizations, which operate under two fundamental modalities: (1) they negotiate with the obras sociales for new capitated contracts and subcontract for services provision with direct providers; (2) they take charge of the management of contracts between obras sociales and direct providers. At the same time, the providers' organizational modalities multiply, either in contracting directly with the obras sociales or in taking charge of service provision for associations or organizations holding risk contracts. Thus comes about the formation of uniones transitorias de empresas (UTEs) (temporary unions of enterprises), provider networks, or provider associations that are in charge of the direct provision of the respective services. The new modality of capitated payment has a double effect. It enables the obras sociales to manage their resources better, transferring the risk of overutilization, oversupply, and overbilling to the networks, UTEs, or management organizations. At the same time, it modifies the incentives incorporated in the services reimbursement modalities by replacing fee-for-service payment with a fixed monthly sum paid by the obra social for the care of its beneficiaries. This reimbursement mechanism changes the profit expectations of the agents in charge of services supply: it is no longer a matter of increasing income by expanding facilities and increasing the quantity and complexity of the services provided, but of managing care provision so as not to exceed the ceiling set to total expenditure by the existence of a predetermined amount of financial resources (Belmartino and Bloch, 1998). An additional complexity exists, however, in the way in which the market is structured in Argentina: the remuneration of the direct providers continues to be made on the basis of fee-for-service or per diem payments; simplified forms of diagnosis related groups (DRGs) are also included such as payment per module, utilized for the reimbursement of certain inpatient practices. For this reason, the terms of the agreement between the organization holding the contract with the financing organization and the direct providers, as regards the assignation

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of risk when the reimbursement for services falls short in many cases determine the feasibility of the agreement. This situation adds another element of instability to the system. The main task of the managers of a network or services management association is to reconvert the amount obtained in the form of capitation to fees for services or modules to be utilized to pay for the services actually provided. The interest of the organizations responsible for management is focused on restricting practices to a level indispensable for the recovery of the patient, whereas the interest of the direct providers responds, as always, to the stimulus of the equation more practices equals greater profit. Information checks on the prescriptive practices of each provider, multiplication of audits, reduction of fees in the event of ascertaining prescriptive practices in excess of historical rates, and assignation of quotas per hospital or per specialty—all these and other innovative management strategies are not always sufficient to guarantee that expenditures will be suited to the amounts received as capitation. Changes on the Demand Side: Diversification of Adaptive Strategies on the Part of the Obras Sociales The unity exhibited by CGT in its dealings with the government and the political backing given by the central labor organization to the proposal to keep control of the system in the hands of the trade unions do not exhaust the strategies set afoot by the obras sociales to retain or increase their capability to attract beneficiaries. For many of them, this implies walking a double path: on the one hand, they negotiate with the government for the maintenance of the status quo; on the other, they prepare for future competition in case the deregulation policy lasts. An important number of obras sociales opted for inclusion in the World Bank's Reconversion Program, benefiting by access to credits; others established links through agreements or associations with private enterprises dedicated to services management or even with possible competitors such as prepaid health care entities for the purpose of updating their management capability. The Present Juncture The defeat of the incumbent party in the partial elections of October 1997 and President Menem's decision to run for a third term in 1999 ushered in a new stage of political conflict, displacing consideration of state reform, budgetary balance and the improvement of health and education. In the field of health care, negotiations between the government and stakeholders intensified around the issue of allowing beneficiaries of obras sociales to channel coverage through prepaid health care associations. The inability of the government to create a consensus on a framework for the system was manifest in (1) legislative paralysis, impeding parliamentary consideration of several

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laws, including the regulation of health associations, and (2) conflict between the ministries of Labor and Social Security and Health, on the one hand, and the executive on the other, over the scope and timing of deregulation of obras sociales. The paralysis of decision making has continued under President De la Rua, who took office in December 1999. It opened a new period for free choice of enrollment in health coverage institutions (obras sociales and pre-paid health care associations) as of January 1, 2001. Some of these associations have gone to court and gotten favorable decisions that have slowed or blocked reforms. Once again, government paralysis and a financial crisis have stymied reform. CONCLUSION At this point I must return to the questions already put forth about the scope of the reform and its appropriateness to attain the objectives proclaimed by the government to give a basis for the decisions taken since 1991. In order to attempt an answer, it is necessary to define the starting point from which to compare what was proposed with what was actually achieved. First, the proponents of health care reform did not envision a reform with a universalistic orientation. There was not in this case a preoccupation with equity, comprehensiveness in care, or egalitarian access. The reformers of the 1990s had more limited objectives in view, such as putting order in the system in order to utilize existing resources more efficiently, retaining the solidarist features that would make it possible to build up sickness funds with adequate risk pools, maintaining the cross-subsidy system inside these groups to avoid adverse selection, guaranteeing a minimum coverage to the entire population, and promoting competition between insurers for coverage demand and between providers for contracting for services provision. It is also the case, though this is less recognized, that the reformers did not trust leaving the regulation of the system in the hands of the market. True, the option for competition was represented as a strategy for rationalizing the obras sociales' coverage and the relations between them and the direct providers. The approach of the team initiating the reform from the Ministry of the Economy was to regulate the system from a market viewpoint, but at the same time to take into account the specific features of the health market that made corrective action by the state indispensable (Giordano, 1993). This regulatory activity was to center around some key points: contributions would continue to be compulsory, the solidarist principle would be put into effect to make possible the coverage of the population with fewer resources, a basic package of services would be defined and guaranteed to all beneficiaries, and control would be kept over compliance with regulations regarding both economic solvency and the quality of the service supplied by the financing entities. Recognition of the existence of market shortcomings in the health insurance system did not go hand in hand, however, with an equivalent preoccupation

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regarding health care supply, and this was a serious limitation to the chosen approach. The assumption guiding the reform in this area was that competition between providers, defined by quality and price, would guarantee adequate value for money in the use of the system's resources. The state's action would be limited in this case to accreditation and categorization of the care services. Also, not enough attention was paid to the limitations faced by the consumer trying to make adequately informed choices in the health care market. The difference between goals and realizations resides, in my opinion, in the particular way in which competition was established. Let us examine this hypothesis in detail. The first arbiter of the system's cost and quality would have been in theory the beneficiary who was given the liberty to choose the organization to which he would trust the management of his contributions. However, there were delays in implementing freedom of choice, and when these were finally resolved, the implementation was not accompanied by information permitting a reasoned choice. Not only did the beneficiary not have at his disposal sufficient information on the effective coverage supplied by the different obras sociales, but he also suffered the bombardment of a campaign intended to discourage him by warning him that in the new obra social that he chose he would only have the right to receive the Programa Medico Obligatorio. A second possible evaluator of the competitive conditions in service supply would be the obras sociales or insurance entities exercising their roles as buyers. If the system's logic had followed the orientation of management efficiency that its reformers sought to introduce, the obras sociales would have evolved systems for follow-up and evaluation of their contracts with direct providers. They would have been stimulated to do so, since on that would depend the conservation and attraction of an important number of beneficiaries. They would possess information on service-utilization standards on the basis of these contracts, they would surely have established some system of cost accounting, and they would perform periodic evaluations of patients' satisfaction with the care received. None of this has happened, since contracts between obras sociales and providers are not established on the basis of considerations of quality and price of the services supplied. Competition for such contracts, which continue to be a substantial work source for physicians, clinics, and private hospitals, was established on the basis of other considerations, related in general to ties between leaders of the various institutions involved, established during the previous model and based on different types of loyalties. Market relations combined in these cases with institutional relations and histories of preexisting alliances, obligations, and clienteles. The relationships regulating this market stimulated a type of competition different from that predominating in the purchase and sale of other types of goods and services. They also operated as a regulating instance of the system thus established, generating and reproducing their own rules of the game in a manner complementary to that of the state or of the professional organizations.

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One last question addressed in this chapter shall be: what alternative regulating mechanisms of the services system were set up on the basis of the deregulation policy when the latter weakened the rules of the game of the corporative pact? In this regard, some tentative answers could be offered. First, a partial devaluation of the regulating locus may take place from the macro level to lower (meso and micro) levels. A weakening of corporative regulation may take place with the professional corporations ceasing to carry weight in ANSSAL's decisions, while CGT retains its ascendancy in some measure through direct and indirect influences. It would be possible to verify a parallel strengthening of regulation as a result of negotiations between old actors and newcomers in the sector. In this instance, it would be necessary to determine the relative weight of alliances and clientele ties versus market structures as inducers of managerial decisions. A significant quota of professional self-regulation may persist, expressed in control of the physician-patient relationship and resistance to abdicating the autonomy associated with prescribing freedom; the state authority's regulating capability may continue to be irregular and ineffective, weakened by the fragmentation of its apparatus and its scant governing power on the private interests of its various clienteles. The democratic regulating mechanism based on citizen participation— that in other countries is expressed through consumer organizations or through the mediating influence of political parties and parliamentary activity—would continue to be practically nonexistent. The articulation of these diverse regulating mechanisms operating at the meso and micro levels in a fragmented system has resulted in an increase of the preexisting heterogeneity. As in the previous model, this heterogeneity results in deficient allocation of available resources and in widening differences in access to health care between sectors of beneficiaries. The objectives not met are to equalize the situation of beneficiaries at the base of the system, protect the population with less resources, make contracting of an insurance plan a matter for individual decision, and stimulate cost reduction and increase allocative and productive efficiency through competition among its agents. In consequence, the health services system does not function as one of the mechanisms for compensating for inequalities originating at the level of the productive apparatus and distribution of income. The internal stratification constitutes one more exclusion mechanism, a consequence at the same time of the financial crisis and the strategies set up to overcome it. The policy of limiting the functions of the state and trusting to the rules of the market in order to discourage individual and corporative strategies obstructing the attainment of the social objectives assigned to the system has also proven impotent. This impotence resides fundamentally in the insufficiency of the regulating activity that has remained in the hands of the state apparatus. The internal dynamics of the health services system has not managed, despite the magnitude and significance of the changes it has undergone, to shake off its ties with forces originating in the socio-political conflict at the macro level.

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NOTES 1. In this year Law No. 18.610 was sanctioned, which extended the obras sociales system to the whole working population and placed in the hands of the respective trade unions the management of the resources originating in contributions by employers and employees. It also established a state organism with administrative and control functions, the Instituto National de Obras Sociales (INOS). In 1988 the regime of Law No. 18.610 was replaced by that of No. 23.660, which did not substantially modify the system's structure; INOS in turn was replaced by the Administration National del Seguro de Salud (ANSSAL). 2. The PAMI, Programa do Atencion Integral (Comprehensive Health Care Program) is an obra social with a mandate to cover health care for retired persons. It has a large number of beneficiaries and is one of the leaders in resources per capita. It is in serious financial difficulty because of tampering from the government, leading to inefficiency, being forced to absorb a government clientele, and corruption.

REFERENCES Acuna, C. 1994. "Politics and Economics in the Argentina of the Nineties." In W. Smith, C. Acuna, and E. Gamarra, eds., Democracy, Markets, and Structural Reform in Contemporary Latin America. New Brunswick, NJ: Transaction. Argentina, Ministerio de Salud y Action Social. 1994. Proyecto de Reforma del Sector Salud: Diagnostico. Mimeo. Buenos Aires. Barbeito, A.C, and Lo Vuolo, R.M. 1992. La modernization excluyente: Transformacion economica y estado de bienestar en Argentina. Buenos Aires: UNICEF/CIEP/ LOSADA. Bascolo, E., and Belmartino, S. 1995. "Proceso de reconversion del sector salud en los anos noventa." IV Jornadas Internacionales de Economia de la Salud: Equidad, eficiencia y calidad: el desafio de los modelos de salud. Buenos Aires: Asociacion de Economia de la Salud, 145-64. Beccaria, L. 1992. "Reestructuracion, empleos, y salarios en la Argentina." Estudios del Trabajo 3:3-56. Beccaria, L., and Lopez, N. 1994. "Reconversion productiva y empleo en Argentina." Estudios del Trabajo 7:67-90. Belmartino, S. 1995. "Transformaciones internas al sector salud: La ruptura del pacto corporativo." Desarrollo Economico 35, 137:83-103. Belmartino, S., and Bloch, C. 1998. "Desregulacion/privatizacion: La relation entre financiacion y provision de servicios en la reforma de la seguridad social medica en Argentina." Cuadernos Medico Sociales 73:61-80. Belmartino, S., Bloch, C, Carnino, M.I., and Persello, A.V. 1991. Fundamentos historicos de la construccion de relaciones de poder en el sector salud. Buenos Aires: De. OPS/OMS Representation Argentina. Cetrangolo, O., et al. 1992. Desregulacion y salud: Un analisis de la reforma de la seguridad social. Buenos Aires: Fundacion Union Industrial Argentina. Dieguez, H.O. Cetrongolo, and J. Katz. 1990. El gasto publico en el sector salud. Vol. 4 of El gasto publico social. Buenos Aires: Instituto Torcuato Di Telia. Dos Santos, W.G. 1987. Cidadania e justicia: A politica socal na ordem brasileira. Rio de Janeiro: Editora Campus.

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Feldman, S. 1991. "Tendencias de la sindicalizacion en Argentina." Estudios del Trabajo 2:79-110. Fundacion de Investigaciones Economicas Ladnoamericanas (FIEL). (1991). El sistema de obras sociales en Argentina: Diagnostico y propuesta de reforma. Buenos Aires: Asociacion de Bancos Argentinos. Garcia Delgado, D. 1994. Estado y sociedad: La nueva relacion a partir del cambio estructural. Buenos Aires: Tesis Grupo Editorial NORMA. Giordano, O. 1993. "La desregulacion y el rol del estado." Medicina y Sociedad 16(4): 2-10. Minujin, A., et al. 1993. Cuesta abajo: Los nuevos pobres: Efectos de la crisis en la sociedad argentina. Buenos Aires: UNICEF/LOSADA. Neffa, J.C. 1993. "Transformaciones del proceso de trabajo y de la relacion salarial en el marco de un nuevo paradigma productivo." Estudios del Trabajo 5:57-82. Tafani, R. 1997. Privatizacion subcobertura y reforma competitiva en salud. Rio Cuarto: Universidad National de Rio Cuarto.

Chapter 12

The Unbearable Homogeneity of Reform: The Mexican Health Care System Reform Luis Duran-Arenas, Malaquias Lopez-Cervantes, Octavio Gomez-Dantes, and Sandra Sosa-Rubi Mexico is a country in transition, which seems to be a dominating trend in most of the countries of the world. On the political side, Mexico has just completed a democratic process that resulted in the first president elected from an opposition party since 1929. On the economic side, the people of this country have the feeling that the end of the economic crisis that lasted 15 years is close. Finally, on the social side, the challenge of an unequal and polarized society has to be faced. In this regard, the health area is one of the main arenas of inequality.1 This context adds complexity to the present and the future of the health system in Mexico, which in the past has never been well defined. In all the different classifications of health systems that we have used, the Mexican system is always somewhere in the undefined category. For example, the system is composed of a public-private mix in financing and delivery of health care services. It cannot be easily classified as a professional, democratic, or market system because it has a combination of elements of the three ideal types. This will be discussed in more detail in the origins and history section. Mexico has a population of approximately 98 million, the second largest in Latin America. While 75% of its inhabitants already live in urban areas, some 12% still live in approximately 140,000 scattered small communities. According to the World Bank classification, Mexico is a "middle-income country," with a GNP per capita in 1999 of $4,410 (World Bank, 2000). In demographic terms, Mexico's population is still growing, but the growth rate is slowing down, life expectancy is increasing, and the elderly population is gaining importance (Table 12.1). From the epidemiological point of view, Mexico is facing complex challenges. In general terms, common infections have been controlled, but chronic diseases and injuries are increasing in frequency (Table 12.2). The country is also facing emerging problems, like AIDS and the diverse health effects of environmental pollution, and reemerging infections,

Latin America

242 Table 12.1 Basic Health Indicators in Mexico, 1998-99 Indicator Population (millions) (1999) Overall fertility rate (1999) Life expectancy at birth • Men (1998) • Women (1998) Infant mortality rate (1997) % GNP spent on health (1999) Health expenditure (billions of dollars) Hospital beds per 1,000 inhabitants Physicians per 1,000 inhabitants

98.1* 2.48* 70.7* 77* 31** 4.7*** 11.7** •t

a****

1.32****

Sources: * Figures for 1999 from: Consejo Nacional de Poblacion, Situation Demogrdfica de Mexico, Mexico, D.F.: Secretaria de Gobernacion, 1999. **World Bank, World Development Report. 1998. New York: Oxford University Press, 1999. **^Organisation for Economic Co-operation and Development, OECD Health Data, 1999. ****Secretana de Salud (SSA). Anuario Estadistico 1995. Mexico, D.F.: SSA, 1996.

such as dengue and cholera, all of which compete for the scarce resources available to the national health system. As we will argue later, the health care system in Mexico has not been organized to respond to these conditions. It is mainly oriented toward curative care, especially toward acute care. At the more macro level, the Mexican health care system is made up of three basic components. The first includes those governmental organizations providing services for the uninsured population, principally the rural and urban poor. The main institutions involved are the Ministry of Health (Secretaria de Salud [SSA]), the National Institutes of Health, the IMSSSolidarity Program, the health services of the Federal District, and an agency in charge of family welfare (Desarrollo Integral de la Familia [DIP]). The second and largest component, social security, is comprised mainly of an institute covering workers in the formal private sector of the economy (Instituto Mexicano del Seguro Social [IMSS]). In addition, there are a number of separate organizations for federal civil servants, some local government employees, the armed forces, and the employees of the national oil company. The third component, the private sector, is made up of an unorganized myriad of health care providers working in hospitals, ambulatory clinics, offices, and folkmedicine units on a for-profit basis. In this chapter the main features of the Mexican health care system are described. We begin with a general description of the development of the system: its origins and recent history and the main characteristics of its principal institutions and the medical profession. We then discuss the main features of the current health care system, including a policy analysis view, an analysis of the economics of the system, and the most salient features of the Mexican health

Mexican Health Care System Reform Table 12.2 Main Causes of Death in Mexico, 1997 Deaths per 100,000 people 1. Cardiovascular diseases 2. Accidents and Violence 3. Cancer 4. Diabetes mellitus 5. Cerebrovascular diseases 6. Chronic liver diseases 7. Pneumonia and influenza 8. Perinatal ailments 9. Nutrition deficiencies 10. Intestinal infectious diseases

68.6 53.9 52.6 38.0 25.3 23.1 22.0 19.1 10.4 6.4

Source: Secretaria de Salud, Mortalidad 1998 (Mexico, D.F.: SSA, 1999). system reform. Finally, the chapter ends with a set of theoretical speculations about the future of the health care system in Mexico. THE DEVELOPMENT OF THE MEXICAN HEALTH CARE SYSTEM The Mexican health care system developed and evolved under the sponsorship of the state.2 Although it cannot be defined at any time as a democratic system, in the 1930s, when the system was initially organized, it resembled that form. This is one of the main features to have in mind in comparing the Mexican system with other health care systems. To assess the development of the Mexican health care system, we will focus on the relationship of the system with the state in the past and nowadays, its organization, and the relationship between the state and the development of the health professions (particularly the medical profession) in the country. During the colonial period (1521-1821), medical care and indigent care were carried out mainly by the Catholic church; however, some communities also provided care sponsored by the viceregal government or by private entrepreneurs.3 The Christian ideology of helping one's neighbor and giving charity to the poor led to the creation of nursing homes, hospitals, and houses for the care of the needy (Figure 12.1). After the achievement of independence in 1821, the Christian concept of charity was replaced nominally, but never substantially, by the liberal idea of public welfare. This meant that the state would conduct some philanthropic medical care activities, chiefly through the hospital, but without a legislative mandate to carry them out. As in previous years, private solo practice was dominant. Private assistance was still provided, but was less important than during colonial times. After a few years, medical care and assistance were neglected and for more than

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Figure 12.1 The Evolution of the Mexican Health Care System

five decades did not receive attention from the state. In the last 20 years of the nineteenth century and the first decade of the twentieth, under the dictatorship of Porfirio Diaz (overthrown by the Revolution of 1910 to 1917), sanitation and welfare programs were reactivated, but on the same inadequate basis. The new regimes, after the Revolution, did not change the organization and institutions of health and public welfare; private assistance went on much as before. In the 1930s, during the Lazaro Cardenas administration (1934-40), the

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concept of welfare experienced significant changes and became "social assistance" as a compulsory activity of the state. This implied the end of the philanthropic state, and the idea of health care as a right of the entire population began to be discussed. As a consequence, the Secretaria de Asistencia Publica (Ministry of Public Assistance) was created in 1937. The theoretical purpose of this institution was to deliver medical care to the whole population, a goal that has not been fulfilled up to the present time. Another public organization, the Departamento de Salubridad (Department of Sanitation), dealt with problems of epidemics, sewage, potable water, and basic

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sanitation. In the early 1940s the Departamento de Salubridad and the Secretaria de Asistencia Publica merged to form a new institution, the Secretaria de Salubridad y Asistencia (Ministry of Sanitation and Assistance), which has since played the role of a ministry of health. Traditionally concentrated in the cities, the health and medical care services started, during the late 1930s, to be extended to the rural areas. The Cardenas administration stressed a policy of coverage of the peasants through a branch of the Secretaria de Asistencia Publica, the Servicios Medicosanitarios Ejidales (Medical and Sanitary Services for the Peasants), which administered the social service required of medical students in their last year. The Servicios Medico-sanitarios Ejidales became, in 1941, the Servicios Rurales Cooperativos, which in the late 1950s changed its name to Servicios Coordinados de Salud Publica en los Estados. This is a federal agency, part of the Secretaria de Salubridad y Asistencia, but it combines the federal and state levels of decision making. It is concerned with the administration of ambulatory care facilities in the rural areas as well as the organization of some public hospitals in the various states and is in charge of the public health services in every state. In the 1940s, Mexico changed its model of economic development. The former economy, based on the export of raw materials, became increasingly industrialized. This change and the protectionism of the state with regard to industrial capital had a corresponding effect in the health field. The public resources devoted to health care were concentrated on the production of qualified manpower. At the same time, the unionized industrial workers formulated demands for medical care that were recognized very soon by the ruling class. As a consequence, the Instituto Mexicano del Seguro Social (Mexican Institute of Social Security) was created in 1943. This agency was organized to provide medical care in its own facilities with salaried personnel to the most organized and productive sector of the working people of Mexico: the industrial workers of the cities. It was also in charge of the pension funds for industrial workers. More than 15 years later the story was repeated for government workers. In 1960, the Instituto de Seguridad y Servicios Sociales para los Trabajadores del Estados (ISSSTE) (Institute of Social Security and Services for State Workers) was created, with the obligation of providing medical care to government workers. Similar and separate medical care programs were provided for the railroad workers, the oil workers, the electrical workers, and others. The enormous number of public institutions related to health care was further increased during the 1960s with the emergence of the Instituto Nacional de Proteccion a la Infancia (National Institute for the Protection of Infancy), which also provided medical care. This institution merged with another public organization, the Institucion Mexicana de Asistencia a la Ninez (Mexican Institution for Childhood Care), created in 1970 to deliver maternal and child health care. The new organization that now includes these two is the Sistema Nacional para el Desarrollo Integral de la Familia (National System for Comprehensive Family Development), created in 1977. The basic trends just presented resulted in a multiplicity of institutions that

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characterize the Mexican health care system up to the present time. But to have a complete picture of the present situation, it must be noted that private individual and group practice is the way in which a minority of the population— individuals with a high socioeconomic status—receive medical care. In the 1980s a new reformist effort attempted to solve the accumulated problem of disorderly expansion in medical care in both the public and the private sector. The origin of this initiative was the creation of a transitory planning body called the National Health Services Coordination during President Jose LopezPortillo's administration (1976-82). A prestigious physician, Dr. Guillermo Soboron, was named the director of the Coordination, and he set a team to work on the creation of a national health system. This new system would address the internal divisions in the health care sector, as well as the problem of lack of access to health care (Brachet, 1999). The aims of the reform were to integrate the health sector and to position the secretary of health as the indisputable head of the sector. This modernization effort was faced with resistance from the Mexican Social Security Institute, as well as the main unions in the country. Nevertheless, the 1982-88 period was critical for the present structure of the health care system; it set the legal foundation for the current reform, in particular the legal recognition of the private sector as a health-sector component. As this implies, until recently the state had absolute control over the health care sector. This was done through the medical services of social security institutions and the Ministry of Health (SSA). Thus the state contracted most of the physicians active in the medical labor market thanks to the corporatist nature of the Mexican state and its success in co-opting the medical elite into the public health care institutions. During the 1988-94 presidential period there was a strong effort in different sectors of the economy to reduce the role of the state, and the result was the erosion of the Mexican corporatist state. Although the effects were felt more in the political spectrum, creating power vacuums and an identity crisis in the Mexican government, they also had an impact on health care policy. Finally, since 1993 there has been a movement sponsored by international agencies to privatize the public health care institutions with the aim of creating a "pluralistic" system similar to the one found in the United States. We will discuss in greater detail the particular features of this strategy in the section on reform of the health care system. INSTITUTIONAL DEVELOPMENT Power and prestige in Mexican medicine are related to three aspects: first, the level of complexity of health care that is delivered by each health care institution; second, the financial, material, and human resources available to the institution; and finally, the segment of the population that forms the constituency of the institution. Using these three criteria, it is relatively easy to rank-order the health care institutions in the country (Duran, 1996).

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As was stated earlier, there are three main sectors in the Mexican health care system: social security institutions, the Ministry of Health (SSA), and the private sector. The first group includes a rainbow of health care institutions that offer services to different groups; the major actor in the social security sector is the Mexican Institute of Social Security (IMSS). All these institutions are concentrated on the delivery of curative services, mostly through hospital systems in the country. The IMSS is the most powerful, and its services cover between 30% and 40% of the general population in Mexico. Its influence is reflected by the fact that 57.5% of all hospital birth deliveries in the country are cared for at IMSS hospitals, and this organization has under salary almost 35% of the Mexican physicians (Secretaria de Salud, 1993; National Health Survey, 1994). The second most important social security institution is the Institute of Social Security and Services for State Workers (ISSSTE). This is a smaller institution that shares the same orientation toward curative health care, but provides health care to all Mexican bureaucrats working for the government. It covers almost 10% of the Mexican population and is funded by the state, with resources 1.5 times those of the Ministry of Health. The rest of the social security institutions are well endowed and provide health care for smaller but important groups in the Mexican economy (e.g., the oil workers and the military). On the other hand, the Ministry of Health is currently focused on preventive services, although as recently as 1995 it had a whole network of 250 hospitals, most of them understaffed and undersupplied. Now, under decentralization, the state or municipal health services in theory should cover all the population that is not covered by the social security institutions or by the private sector (between 50% and 60% of the population). However, its capacity and the level of use of the population is considerably lower (e.g., only 29.4% of the hospital birth deliveries are carried out by state health services, Secretaria de Salud, 1994). Finally, the private sector is composed of a myriad of different types of health care units. Its real capacity is unknown, and there are no good estimates of the population covered by it. However, in the national health survey of 1994, 23.1% of the people enrolled in social security institutions reported a private provider as their usual source of care, as compared with 46.6% of the people without social security coverage. Although this component is quite heterogeneous, generally the population regards the few hospitals (72) that have a high level of complexity as highly prestigious. As is reflected in the national health survey, most Mexicans, independently of social class, prefer to be attended in a privatesector facility (especially the ones with high complexity) than in an SSA or even in a social security institution facility. THE MEDICAL PROFESSION Our focus on the medical profession is organized into two components. A review of the medical profession's organization will be presented, emphasizing the lack of a professional representative body, as well as the process of certi-

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fication and recertification of physicians. Then an analysis of the medical labor market will be presented. First of all, it is important to recognize that the medical profession in Mexico has to be separated into at least two broad groups: the elite and the rank-andfile physicians. The first group, with close links to the Mexican economic elite, successfully formed a strong front (although it is rather small, less than 2,000 physicians at present) and negotiated with the state the development of national institutes and research centers to reproduce its ranks. On the other hand, the rank and file (currently around 158,000), largely neglected, are characterized as detached from research interests. They do not subscribe to Mexican medical journals, are apolitical, and in general do not participate in the debate over health policy (Cleaves, 1987, p. 35). The lot of each group has been completely different since the early beginnings of the Mexican medical profession. However, for both groups, state intervention was a key factor in their development and consolidation as a professional group. Medical-Profession Organization In Mexico the medical profession has maintained its importance among all the original liberal professions. In fact, it was the most prestigious profession according to a study carried out by Cleaves on the professions in Mexico (1987). The medical profession in Mexico developed in the shadow of the state because of the great number of political conflicts and wars that drained the Mexican economy during the nineteenth and twentieth centuries. These conflicts took place in the period from 1810, when Mexico started its war for independence, until 1917, when the final battles of the Mexican Revolution took place. We have to consider the strong influence of the state principally in the creation of social security institutions in 1943 and the 1960s. These institutions created a major shift in the organization of the medical profession by introducing a scheme of salaried physicians. The physicians initially opposed this development, but the powerful social security institutions, with the help of the government, overcame the loosely organized medical resistance. However, the medical elite managed to have a great deal of power within the system, basically by accepting a co-optation process. At the present time, only the elite have a representative body, the National Academy of Medicine. However, even though the academy is in charge of the specialty-training credentialing process as well as the reaccreditation of medical specialties, we can say that the academy only represents its members. In the words of a past president of the academy, Dr. Ignacio Chavez, Jr., "The academy is only used as a forum during presidential elections and then it is put to rest for five years." Physician Unions At the rank-and-file level, the state has been highly successful not only in determining the success of the medical profession but also in constraining its power. The first known attempt at organization was the creation of the Asocia-

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cfon Nacional Medica (National Medical Association), rejected by the government in 1961. This association represented an important group of physicians in the country who were united as a consequence of the expansion of the social security institutions. In 1965, for the first time, some sectors of the medical profession tried to create a formula to defend their collective interests. This effort was defeated by the state using both co-optation mechanisms and naked force. It is important to recognize that this movement and the following ones were organized by interns and residents of the public health care institutions in the country, and their demands were centered on salary increases and better conditions for medical training. The first strike took place in 1965 in Mexico City, sponsored by the the Asociacion Mexicana de Medicos Residentes e Internos (Association of Medical Residents and Interns), representing most of the interns and residents of the main hospitals in Mexico City (Pozas-Horcasitas, 1993). The last movement of interns and residents, in 1995, was also managed with the same approach and received the same benefits as previous movements (small salary increases and fringe benefits such as uniforms). Professional Certification and Recertification Finally, two forms of certification limiting entry of physicians into the medical labor market reinforced state control over the medical profession. They were (1) the registration of all physicians in the general registry of professions and (2) the certification of specialized physicians by hospitals and university programs. The first form of certification is compulsory for any physician who wants to practice general medicine. It is obtained through a bureaucratic procedure that requires that the physician be approved by a medical school and have completed a year of hospital internship and a year of social service in public medical services. The second, a real stratification measure, requires the applicant to have registered for general medicine and to pass the national residency examination. This is a national examination in all medicine fields that all physicians who want to follow specialty training must take and pass. Every year more than 10,000 applicants take the examination, but only 20% of them are approved and accepted in a residency program in the public-sector hospitals (both in social security institutions and in the SSA). In general, those who pass the exam are rewarded with prestige and income, while the rest try every year to access specialty training or are left in less desirable positions in the medical profession. With regard to recertification, in the last 10 years the National Academy of Medicine and the Mexican Academy of Surgery have taken the lead, and the Ministry of Health has granted them powers to recertify specialty-trained physicians. However, they only reach around 42,424 of the estimated 70,000 physicians with a specialty in the country (Frenk, Duran, et al., 1996; Espinosa de los Reyes, 1997).

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The Medical Labor Market In Mexico, the medical labor market has developed under the sponsorship of the state. Therefore, physicians and in general all the health care providers are located close to the public health facilities built by the state. In fact, this has generated a particular arrangement where the physicians work for public health care delivery organizations in the morning, and in the afternoon they have their private offices nearby. As a result, the market has a very peculiar structure; there is a clear surplus of physicians and other health care providers in urban areas, while there is a shortage of human resources in rural areas. This unbalanced market is even more problematic if it is recognized that the training of the health care providers on many occasions does not match the demand of the health care delivery organizations, creating the need to retrain the physicians and other health care providers.

THE CURRENT MEXICAN HEALTH CARE SYSTEM To have a clearer understanding of the nature and main features of the current Mexican health care system, we will present next a comparison of Canada, the United States, and Mexico.4 This analysis shows an important set of differences across these three Nations (Frenk et al., 1994). In Table 12.3 we present the main features of the health care systems in the three countries. Differences appear for most of the indicators, including physician power and public participation in health care. These differences can be summarized in seven types of imbalances: • Imbalances in the health situation (Mexico is the worst) • Imbalances in resources (Mexico is the weakest) • Imbalances in infrastructure (Mexico has the lowest number of hospital beds per capita of the three countries) • Imbalances in the regulation of health services (Mexico has good laws, but poor enforcement) • Imbalances in the main forms of financing (Mexican finance schemes are basically public and centralized) • Imbalances in the forms of private-sector health participation (Mexico's private sector is fragmented and largely unstudied and uncontrolled) • Imbalances in the power of the patient (almost zero in Mexico)

Imbalances in the Health Situation There is a clear differential between the United States, Canada, and Mexico. Mexico is facing what has been labeled a protracted epidemiological transition, characterized by the simultaneous presence of contagious and chronic diseases as the main causes of death. This is compounded by the fact that Mexico is a

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America

Table 12.3 Main Features of the Health Systems in Mexico, Canada, and the United States Item Regulation Registration of facilities Certification of units Technology evaluation Cost control Private fee control Certification of Schools Certification of Degrees Continuing education Validation of licenses Practicing requirements: General Medicine Specialty Professional Association powers Financing Main Financial Source Local Financing Social Security Private Insurance Schemes

Low,

Medium,

Canada

United States

+ + + + + + +

-H-+

+++ +++

+++ +++ +-H-

-H-+ -H-

Voluntary National

Compulsory Provincial

Recertification State

Registration Certificate

License Certificate

License Certificate

+

+-H-

4-H-

Public

Public

Private

+ ++ +

Provision of health care Coverage Main type of services Facilities ownership Institutional organization Decentralization Freedom of choice Ability to use Key:

Mexico

Incomplete Curative Public Fragmented

+ + +

+++ +++ ++

+++ -H+

+

Universal Curative Public & Private Integrated

+++ ++ ++

+ +++ +++

+++ ++ +++

Incomplete Curative Private Fragmented -H-+ +++ -H-H

-+ High.

heterogeneous country with higher development in the north and lower development in the south. This generates a great deal of variation of health conditions, as well as inequality of the resources devoted to health care. Imbalances in Resources Health care manpower in Mexico follows a similar pattern to the distribution of resources in the country as a whole. There are great geographical variations in resources. In the north of the country and in urban areas there is a surplus of physicians, while in the south and in rural areas there are shortages. Imbalances in Infrastructure A similar situation is found in the area of infrastructure, compounded by the fact that Mexico has been in an economic crisis of some sort during the last 18 years. This has resulted in large inequalities in both access to infrastructure and the distribution of hospital beds and medical technology. In general terms, they mirror the concentration of manpower in urban areas.

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253

Imbalances in the Regulation of Health Services Most physicians believe that Mexican laws are very well written and not enforced at all. Things are worse than that. The Mexican constitution and the regulations and norms that support it are old and have been patched and amended during the last century. The final result is a set of norms and regulations for things that are irrelevant, and at the same time there is a lack of regulation in the main areas of concern, such as medical malpractice and regulation of private systems of health care delivery. One consequence is that public health care organizations are swamped by senseless regulations that make them slow to react to problems and inefficient. The result is the worst combination, associating an inefficient public sector and an uncontrolled private sector. Imbalances in the Main Forms of Financing Financing of health services is imbalanced in two ways. First, the level of public health care financing in Mexico is still one of the lowest in middle-income countries and the developed world, reaching only $219 per capita, while in the United Kingdom the level is $2,000 per capita and in the United States almost $4,000 (Suarez et al, 1994; OPS-OMS, 1996; WHO, 2000). Second, the financing mechanisms are biased, favoring the urban industrial workers and leaving all the urban and rural poor population basically unprotected. At the same time, private insurance of health services is relatively small (it covers approximately 3.5% of the Mexican population). Imbalances in the Forms of Private-Sector Health Participation Traditionally the Mexican health care system has been characterized by a public-private mix. In fact, it is a custom for physicians to work in the mornings in public organizations and in the afternoons in their private offices and private hospitals. Currently, that scheme is changing, since there is a strong effort by international organizations to push the private sector to organize along the lines of managed care. It is too early to assess the possible effects of these changes; it suffices to say that in the past five years the private sector has experienced a considerable expansion, as well as a process of horizontal integration. There are at least three hospital chains in the country, while 10 years ago all the private hospitals were either physician-owned or independent, mostly charitable institutions. Imbalances in the Power of the Patient It is only recently that the patient has had a means to address problems with physicians and health care organizations. The Medical Arbitration Commission was formed in 1996 under a wave of complaints about the performance of public and private health care organizations. The commission is an instance of nego-

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tiation whose objective is to solve disputes before they can get into court. Aside from this and the help of the Human Rights Commission, patients are basically unprotected. However, as we will see in this chapter, under the reform of the Mexican Institute of Social Security (IMSS), there will be a specific component intended to increase freedom of choice of health care providers. THE ECONOMICS OF THE SYSTEM Revenue for public institutions in Mexico is drawn from three sources: (1) the federal budget, which is used to provide care to the uninsured population; (2) employees and federal contributions, which finance social security benefits for civil servants; and (3) employees and employers in the private sector and a federal subsidy for the social security institute covering private-sector workers (IMSS).3 Overall, Mexico spends around 5% of its GDP on health care. According to the secretary of the Treasury, in 1998, the most recent year with reliable and available information, public health expenditures amounted to 2.3% of GDP. According to the Mexican Foundation for Health, in 19986 less than half of the total health expenditures were public (2.3% of GDP) and the rest private (3.0% of GDP) (Table 12.4) (Cruz et al., 1994; FUNSALUD, 2000).7 Total per capita expenditure in 1994 reached U.S. $219.00, twice the average amount for the whole Latin American region (U.S. $103-133) (Suarez et al., 1994; OPS-OMS, 1996; Mexican Foundation for Health, 1997). Public expenditure in health has had a very erratic evolution in the last 15 years. In the period 1980-95, as a percentage of GDP, this expenditure never exceeded the percentage reached in 1982, a record high of 3.6%, including resources devoted to pension funds, and presented sharp decreases immediately following the years of economic crisis, 1983 and 1995 (Secretaria de Salud, 1993). A very high proportion of public expenditure in health is concentrated in social security agencies. In the period 1987-94, 79% of public expenditure in health was devoted to social security agencies and the remaining 21% to those agencies caring for the noninsured, around 50% of the national population. This effect was observed also in 1998 and 1999, as is shown in Table 12.5. In terms of type of care, public expenditure has traditionally favored curative care. In the period 1992-97, 57.2% of total public expenditures were concentrated in personal health care activities, while only 3.8% were devoted to preventive care (Figure 12.2). Private expenditure—for which there is little historical information—in Mexico represents more than 50% of the total health expenditure (3.0% of GDP in 1998) (Table 12.4). However, we do not have a clear indication of how and for what it is spent, although a big part goes to drugs, mostly over the counter.8 A large proportion of private physicians' payments is made directly by the patients, and there is little but growing voluntary medical insurance (3.5% of total health expenditure in 1999). Its potential for expansion is concentrated in

Mexican

Health

Care

Syst

Table 12.4 Public and Private Health Expenditures in Mexico, 1992-1998 Concept

Total Expenditure (million current dollars)

%GDP

Public Expenditure 1992 1993 1994 1995 1996 1997 1998

9,211 9,732 10,946 5,313 6,649 8,762 9,265

2.6 2.5 2.6 2.2 2.1 2.2 2.3

Private Expenditure (high estimate) 1992/e 1993/e 1994/e 1995/e 1996/e 1997/e 1998/e

9,565 12,846 16,419 7,487 8,865 11,550 12,085

2.7 3.3 3.9 3.1 2.8 2.9 3.0

18,776 22,578 27,365 12,800 15,514 20,312 21,350

5.3 5.8 6.5 5.4 4.9 5.1

Total (high estimate) 1992/e 1993/e 1994/e 1995/e 1996/e 1997/e

11998/e

5.3

Sources: Fundacion Mexicana para la Salud (FUNSALUD), Cuentas Nationales de Salud. Mexico, D.F.: FUNSALUD, 1997, 2000; Secretaria de Hacienda, Presupuesto de Egresos de la Federation. Cuenta Hacienda Publica, Mexico, D.F.: Secretaria de Hacienda, 1995-1998.

the upper middle class, which represents around 10% ofthe national population, around 10 million Mexicans.

THE HEALTH SYSTEM REFORM Reform is probably the most frequently cited and discussed concept in the health care systems literature. The discussions are broad and general, from the reasons to carry out a reform and the discussion of the meaning of the reform to discussions about how to carry out a reform in developing countries. In general, interest has been centered on the definition of the content of reform and less on the process of implementation of the reform. The implications in terms of changes in the requirements of health facilities and human resources have been only superficially addressed, and more in a theoretical way than in the operation of the health care services. While an argument about lack of quality has been used extensively to call

Latin

256

America

Table 12.5 Distribution of Health Expenditures by Type of Agency in Mexico, 1994-99 Type of agency

1994

1998

1999

%

%

%

71

Social security agencies

79

70

Agencies for the non-Insured

21

30

29

Total

100

100

100

Sources: Fundacion Mexicana para la Salud (FUNSALUD), Cuentas Rationales de Salud. Mexico, D.F.: FUNSALUD, 1997, 2000; Secretaria de Hacienda, Presupuesto de Egresos de la Federation. Cuenta Hacienda Publica, Mexico, D.F.: Secretaria de Hacienda, 1995-1998.

for the reform of the health care system, the proposals advanced do not directly include an idea of how quality can be improved. In particular, assessment of the types and qualifications of the human resources needed to carry out the changes in the health care system, as well as the changes in the processes and work structures necessary to assure at least a basic level of quality in the health care services, are not discussed. Even though anyone who talks about reform will agree that the concept of reform includes implicitly the notion of change, there has not been, until recently, an analysis that uses the framework of organizational change as a way to address the reform process. We think that this is an appropriate theoretical framework for understanding the real meaning of reform as well as assessing the intended and unintended consequences of the organizational changes associated with it. The objective is to use a conceptual framework that enables us to move from content analysis to the analysis of the reform processes, as well as the implications of such changes for the management of health services. In the reflections that are presented in the following sections, we will implicitly use this framework to assess health care reform in Mexico.

General Characteristics of the Reform in Mexico In 1984 a general health law was approved to establish a national health system including three basic types of institutions: public institutions oriented to take care of the needs of the uninsured population (35% of the total population); social security institutions and social services, which in theory cover 59% of the total population; and private services, which are estimated to cover 6% of the population. As was presented in the expenditures section there is a nonequitable distribution of health expenditures; it is estimated that 5% of GDP is spent on health, but still there are millions of Mexicans without access to pri-

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257

Figure 12.2 Distribution of Public Health Expenditures by Program in Mexico, 1997

Sources: Secretaria de Salud, Boletines de Information y Estadistica nos. 11-17. Mexico, D.F.: SSA, 1998; Secretaria de Salud, Presupuesto por programa. Mexico, D.F.: SSA, 1997; Banco de Mexico, Informes Anuales del Banco de Mexico. Mexico, D.F.: Banco de Mexico, 1998.

mary, secondary, and tertiary health care (Secretaria de Salud, 1995; WHO, 2000). The National Development Plan 1995-2000 was launched with the mission to improve the quality of, and accessibility to, health-care through an important health sector reform. The objectives of the health-sector reform included: (1) establishing a set of instruments that promote quality and efficiency in the health services; (2) increasing social security coverage by facilitating the affiliation of the nonsalaried population and those from the informal economy; (3) completing and strengthening the health decentralization process of the health services for the uninsured population; and (4) extending coverage for the uninsured population in urban and rural marginal areas with extreme poverty (Secretaria de Salud, 1996b). The first action to be taken by the Ministry of Health was to complete the decentralization process initiated in 1987. This strategy was based on the allocation of resources using a formula that incorporates mortality and poverty indicators. To this end, a number of health agencies were created in all states that are accountable to the state government, but have technical autonomy for financial management and health care delivery. For the uninsured population, it is proposed to continue with the programs intended to increase coverage, particularly in poor areas, through the delivery of a basic package of public health measures that were developed through political consensus in the Ministry of Health (Table 12.6). At IMSS, the initial 1995 reform established two major points of controversy.

Latin America

258 Table 12.6 Basic Package of Interventions in Mexico, 1999 Interventions 1.

Family Health and Hygiene

2.

Family Planning

3.

Birth Delivery

4.

Nutritional and Children Growth Surveillance

5.

Immunizations

6.

Home Diarrhea! Management

7.

Family Antiparasitic Treatment

8. Acute Respiratory Disease Management 9.

Prevention and Control of Pulmonary Tuberculosis

10. Prevention and Control of Diabetes Mellitus and High Blood Pressure 11. Prevention of Accidents and Early Management of Injuries 12. Community Participation for Self Health Care 13. Prevention and Control of Cervical Cancer

Source: Secretaria de Salud, Paquete Bdsico de Senicios

de Salud, Mexico, D.F.: SSA, 1999.

First, it proposed an extension of the fee-reversal system. The old system enabled firms to receive back the fees paid to IMSS so that the firms could take care of their workers' health care needs through their own medical facilities. The proposal was directed to open this system to any firm that wanted to assume responsibility for the health care needs of its workers, whether or not it had medical facilities. The second issue was an extension of outsourcing agreements, which in the past had been limited to day-care centers, to all types of services provided by IMSS to its enrollees. The idea was to open the possibility to outsource the direct provision of health care services, including ambulatory and hospital care. This initiative was fought by the IMSS workers' union and other unions in the country. The final result was a compromise along the following lines: a new family insurance scheme will be introduced in order to reduce the cost for both the employee and the employer, as well as for nonsalaried workers who can be enrolled under this scheme (at an annual fee of approximately $162). It is expected that the scheme will enable the social security system to increase the coverage of the population employed in the informal sector of the economy. A reduction in the fee paid by employers to IMSS, as well as an increase in the government payments, was accepted. This was done as an incentive to create employment, as well as to increase the enrollment of employees by the employers. A new modernization strategy for IMSS was launched based on a new model of organization of medical areas of decentralized management (AMGDs). In this way a total of 139 areas, each covering between 150,000 and 250,000 enrollees,

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259

were created. These medical areas can be thought of as the seed for managedcare development at IMSS. Last, for those sectors of the population that can pay health insurance, a new system of managed-care organizations {instituciones de seguros especializadas en salud, ISES) will be supported so that a market can be developed in order to offer freedom of choice to users. It is assumed that with the freedom of the user to select a managed-care plan as well as to select a family physician, there will be an increase in the efficiency of the entire social security system. This is based on the expectation that many of the social security system enrollees will eventually opt for the new managed-care-organization plans, and through this competition, efficiency and quality will improve. The Mexican health care reform presented in the National Development Plan 1995-2000 follows closely the set of components recommended by the World Bank for developing countries. The World Bank measures include the following components: (1) the introduction of managed-market mechanisms (marketization); (2) reduction of the size of the public sector; (3) utilization of user charges; (4) the use of cost-effective packages of services; and (5) privatization (Cassels, 1995).

Current Situation of Health Care Reform The program of reform in the Ministry of Health was reduced to the implementation of the extended-coverage package and the implementation of financial decentralization to the states. The package was a strategy based on the integration of brigades that visited rural and marginal areas of the country, with a variable periodicity (every two weeks or once per month), and delivered a health package of 13 interventions (Table 12.6). The interventions were basically preventive primary health care actions. The ministry has claimed that the program is a success and that it has reduced the number of people without access to primary health care from 10,000,000 in 1995 to only 500,000 in the year 2000 (Sixth presidential report, 2000). On the other hand, the critics consider the program insufficient, highly dependent on the availability of international funds, and grossly incomplete, since the communities are visited only once a month and the services provided are not a solution to the local health problems. As is frequently the case, the truth lies between these two poles. The package has indeed increased coverage in the targeted populations, but only for a limited set of interventions. At the same time, these populations still lack access to secondary and tertiary care, which is mainly limited to urban areas. The reform at IMSS followed a different pattern. It started by separating the pension funds from the health insurance program; this was done quickly at the beginning of President Ernesto Zedillo's government in 1995. Thereafter the process of reform has been systematically slow and managed in secrecy. In the first four years of Zedillo's presidential period (1995-98), the reform was limited

260

Latin America

to a regionalization process, breaking the highly centralized structure of IMSS into seven geographical regions. In the last two years an acceleration of the process of reform included the creation of 139 medical areas of decentralized management (AMGDs). These were created along the lines of managed-care organizations; however, they are still owned and managed by IMSS. In 2000 the major instruments and plans for the consolidation of the AMGDs were developed, with the expectation that they will be fully implemented in the year 2001. Given this situation, there are a number of issues that should be considered in the analysis and discussion of health reform in Mexico. These issues should respond to the particular characteristics of the country that make the application of a recipe difficult, cumbersome, and maybe wrong. We will discuss them in detail in the next section. KEY ISSUES IN THE FUTURE TRANSFORMATION OF THE MEXICAN HEALTH CARE SYSTEM Managing the Health Services with Social Responsibility It is important to recognize, as Donabedian does in his seminal work on the quality of medical care, that physicians work under a different social contract from the one that regulates industrial work and business transactions (1980). On the one hand, they are responsible for the well-being of their patients, and on the other hand, they are under more and more pressure to assume responsibility for societal well-being. In many of the current health care organizations, physicians face a demand from the patients to solve their individual health problems, while at the same time they face the need to achieve equity in the distribution of the benefits of health care, a balance between cost, quality, and access. This situation can be extended to other health professionals who provide direct health services. The challenge is then to train both the direct providers and the health care managers under a social-responsibility orientation. It is important to keep the fiduciary role of the health provider, but in general in developing countries, we cannot aspire to have a system in which there are no limits to the provider's imagination, and all the technology and resources can be applied to a given patient without restrictions. Market Competition on the Basis of Price and Quality In any market, state regulation is an important factor; there is no doubt that in the case of health care reform, the conditions and limitations set by the state will be critical in the definition of new forms of organization, financing, and delivery of health services. In general, there is the conception among many theoreticians of health care reform that there should be incentives to increase productivity, quality, and efficiency for the health care delivery organizations in the market. However, it is not clear what mechanisms work and how, and in

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which way the state can assure that they are applied. In other words, how much should the market control the system, and what should be the role of the state and other representative bodies, such as the congress and the senate? One of the desirable effects of the regulation of competition among health care organizations could be the modification of the bases of competition in the market so that they compete not only on the basis of price, but also on the basis of quality. This is something that has to be discussed carefully, especially if the model advanced by international agencies is applied. Planned markets are attractive but difficult, and there are many different ways to implement a strategy of this kind. For example, if a country decides to establish a single financing system with a private health care market, it can be expected that each of the organizations will attract more patients if it offers a more comprehensive package of services and better quality in the services delivered. A completely different set of incentives will be in place if the decision is to have a multiple financing system, resulting in a more unregulated market, where quality can be sacrificed in the search for economic gains. There are many reasons for considering the need for quality improvement under health care reform. The challenge seems to be to revive the interest in quality at a time when cost containment and efficiency seem to be dominant in the system. Changes in the Health Care Labor Market According to experts in organizational change, one of the main aspects to consider in the initiation and the institutionalization of organizational change is the definition of the attributes of the change. For this reason, in the rest of this section we will concentrate on the principal characteristics of the change proposed under the health care reform sponsored by international donor agencies. First, the disturbances in the health care labor market in Mexico9 can be derived from the lack of consideration of the general characteristics of the structure of the Mexican society and the great social and economic differences across regions, states (provinces), and communities. This can be repeated under the current health care reform if the market changes proposed are not adjusted to take account of these differences. There are already examples in many countries that have experienced problems in the reform process with unexpected results, as well as the inability to achieve their original goals. This has been witnessed in developed countries as well as in countries with relatively recent applications of health care reform packages (Hsiao, 1994). An old example may illustrate these types of problems. In 1975 Rushing carried out an analysis of the different strategies to improve the distribution of physicians in the United States. The following are the main reasons why these initiatives were not successful (Rushing, 1975): • Programs that are focused exclusively on changes within the health delivery organizations have limited effects.

262

Latin America

• The enactment of state laws or the implementation of government administrative actions is not enough to solve the maldistribution of human resources. • An important limitation is that in most initiatives the social and economic context is neglected. • Finally, there is a lack of adequate and sufficient training and information that the physicians receive, in particular about the kind of interventions necessary in disadvantaged communities. In a similar fashion, but 20 years later, Hsiao concluded an analysis of the introduction of market initiatives in developing countries (marketization) that this approach has not achieved the expected result (1994). For example, Chile embraced an intense reform around the introduction of HMO-like organizations (Instituciones de Seguros de Atencion Previcional en Salud [ISAPRES]) oriented to achieve universal coverage. However, the result after more than 10 years is a segmented market. On the one hand, there is a system of limited coverage but good quality (between 15 and 20% of the population is covered), oriented to take care of the needs of a low-health-risk population. On the other hand, the rest, mainly a high-health-risk population, receive health care from a system with a lower quality and a limited package of benefits. Hsiao further argues that a similar pattern can be found in the cases of Singapore, South Korea and the Philippines (1994). Second, it is important to take into account the capacity of the managers of the health care organizations under the new arrangements of the health care reform. For example, Tichy argued that when organizational change is under way, "Successful managers of change will at times be political builders of coalitions, power brokers, and influence manipulators coping with the political cycle. At other times they will be solving problems rationally or relying on scientific data and principles to cope with the technical style. Or they may be active as molders of values and ideals" (1982, 186). If we apply this dictum of the management of change to the case of the health care reform in Mexico, it will be necessary that health care managers, both in the public and the private sector, change their traditional perspective and world view. This includes an objective assessment of their role in the health care organizations, as well as a corresponding shift in their professional training and practice. In these two aspects, the consideration of the values that drive the health care system is critical to offer the possibility to reform the health care system in a way that guarantees more efficiency and quality, but without a loss in equity. Here we would like to return to an idea presented in the introduction. The health care system in Mexico has been deformed since its creation. It has not been organized to respond to the dominant health conditions in the population; it is mainly oriented toward curative care and in particular toward acute care. The real challenge is not only to secure that the reform takes into account the particularities of Mexico—to avoid the easy adoption of an international recipe—but to reform the system in such a way that we can get rid of the defor-

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mities at the same time that we reach for solidarity in health and health as a right and responsibility of all of us (Bustelo, 1999).

NOTES 1. The authors of this chapter acknowledge the support of IDRC (International Development Research Center) in its preparation through the support of the project "Macroeconomic Adjustment Policies, Health Sector Reform, and the Effects on Access to Utilization and Quality of Health Care in Mexico". 2. In our conception, the state is a relatively autonomous totality of complex organizations. By historically comparing variations in the modalities of state intervention in medical care, we may begin to understand the mechanisms through which state action affects the institutionalization of goal attainment in the sphere of social life. 3. This historical description of the Mexican health care system follows the framework applied by Lopez-Acufia to study the development of the health services in Mexico (1979). We have built upon his review and updated it to the present day. 4. The original comparison was carried out by the technical secretariat of the Working Group on the North American Free Trade Agreement and Medicine of the National Academy of Medicine of Mexico. 5. Under the new social security structure implemented in the last two years, private firms will be allowed to replace compulsory state social security services with private plans for their employees. Though the details of this new policy remain under debate, it is likely that the Mexican government will only allow Mexican firms to contract for the private health care services provided by managed-care organizations. Many policy makers support this policy in the belief that such organizations deliver more efficient, higherquality services than other private health care financing and delivery systems. 6. This is the last year for which we have estimates of private health expenditures, and therefore total health expenditures. 7. The estimation of private expenses includes all kinds of health-related expenses, including over-the-counter drugs. Therefore, there should be an overestimation of private expenses. 8. In Mexican drugstores, a prescription is required only for neurological drugs, so there is a lack of control in the use of any other type of drugs (antibiotics, analgesics, and so on). 9. Namely, the social inequality in the geographical distribution of health care human resources.

REFERENCES Brachet, V. 1999. La reforma de los sistemas de salud y prevision social en Mexico, 1982-1999. Manuscript. Bustelo E.S. 1999. Salud y ciudadania. Manuscript. Cassels, A. 1995. "Health Sector Reform: Key Issues in Less Developed Countries." Journal of International Development 7(3):329-347. Cleaves P.S. 1987. Professions and the State: The Mexican Case. Tucson: University of Arizona Press. Cruz, C , Alvarez, F., Frenk, J., Knaul, F., Valdes C , and Ramirez, R. 1994. Las Cuentas

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Nacionales de Salud y el financiamiento de los servicios. Documentos para el Andlisis y la Convergencia 1. Mexico, D.F.: Fundacion Mexicana para la Salud. Donabedian, A. 1980. The Definition of Quality and Approaches to Its Assessment. Ann Arbor, MI: Health Administration Press, pp. 1-6. Duran, L. 1996. Determinants of Professional Status of Physicians in Urban Areas of Mexico. Doctoral dissertation, University of Michigan. Espinosa de los Reyes, V.M. 1997. "Los colegios medicos y los colegios de especializacion: Interacciones y fronteras." Gaceta Medica de Mexico 133(6):503-509. Frenk, J., Duran L., Garcia, C , Vazques, A., Ramirez, C. 1996. "El mercado de trabajo Medico." In J.R. Dela Fuente and R. Rodriguez-Carranza (eds.) La education medica en Mexico. Mexico: Editorial Siglo XXI-UNAM. Frenk, J., Gomez-Dantes, O., Cruz, C , Freeman, P. 1994. The North American Free Trade Agreement and Medical Services. 2nd ed. Mexico City: National Academy of Medicine. Fundacion Mexicana para la Salud. 2000. Estimaciones de gasto en salud. Documento Mimeo. Hernandez, S.R., and Kaluzny, A.D. 1994. "Organizational Innovation and Change." In S.M. Shortell and A.D. Kaluzny (eds.), Health Care Management: Organization, Design, and Behavior. 3rd ed. Albany, NY: Delmar Publishers. Hsiao, W. 1994. "Marketization: The Illusory Magic Pill." Health Economics Vol 3:351— 357. Lopez-Acuna, D. 1979. La salud desigual en Mexico. Mexico: Siglo XXI Editores. Office of The Presidency of the Mexican Republic. 2000. "Sixth presidential report." Mexico, D.F.: Presidency of the Mexican Republic. Panamerican Health Organization. World Health Organization (PAHO-WHO). 1996, "Programa de Analisis de la Situacion de Salud, Division de Salud y Desarrollo Humano. Situacion de salud en las Americas." In Indicadores bdsicos 1995. Washington, DC: PAHO-WHO. Pozas-Horcasitas, R. 1993. La democracia en bianco: El movimiento medico en Mexico, 1964-1965. Mexico: Editorial Siglo XXI-UNAM. Rushing, W.A. 1975. Community, Physicians, and Inequality. Lexington, MA: Lexington Books. Secretaria de Salud. 1993. Boletin de Information Estadistica. Mexico, D.F.: SSA. Secretaria de Salud. 1994. Encuesta Nacional de Salud II. Mexico, D.F.: Secretaria de Salud. Secretaria de Salud. 1996a. Anuario Estadistico 1995. Direccion General de Estadistica e Informatica. Secretaria de Salud. 1996. Plan National de Reforma del Sector Salud. Mexico, D.F. Secretaria de Salud. Suarez, R., Henderson, P., Barillas, E., and Vieira C. 1994. "Gasto social y financiamiento del sector salud en America Latina y el Caribe." In Desafios para la decada de los noventa. Washington, DC: OPS-OMS. Tichy, N.M. 1982. "Organizational Cycles and Change Management in Health Care Organizations." In N. Margulies and J. Adams (eds.), Organizational Development in Health Care Organizations. Reading, MA: Addison-Wesley, pp. 169-192. World Bank. 1993. World Development Report 1993: Investing in Health. New York: Oxford University Press. World Bank. 2000. World Development Report 1999. New York: Oxford University Press.

PART VI

ASIA AND OCEANIA

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Chapter 13

Health-Sector Reform: The Indian Experience Rama V. Baru Health-sector reform in both developed and developing countries is essentially a phenomenon of the 1980s and the 1990s and is rooted in the neoliberal agenda that sought to transfer responsibilities from the public to the private sector. Many of the ideas of health-sector reform were dictated by concerns regarding rising costs of medical care in both developed and developing countries. The key ingredients of the reform process include the cutting back of public expenditure, selective state intervention, and a greater role for markets in providing curative services. Over the last decade, the health-sector reform agenda has become a worldwide phenomenon, and the package of reforms is similar across several developing countries. Thus health-sector reform has focused on the improvement of financial efficiency rather than concern itself with questions of effectiveness, equity, or long-term sustainability. Any analysis of health sector reform has to be conceptualized within the sociopolitical changes that have occurred globally, especially after the collapse of the Soviet Union. Until the late 1970s, which can be broadly demarcated as the Fordist or the Keynesian phase, nationalized systems for providing welfare services arose across both developed and developing countries (Twaddle: 1996). During this period many developing countries in Africa, Asia, and Latin America managed to build national health service systems with their meagre resources. With the oil shock of the late 1970s both developed and developing countries started to feel the fiscal crunch, and in many countries a cutback in welfare spending was seen as a measure to deal with the situation. As a result, most developing countries had to cut back even their minimal spending on welfare and this had an adverse impact on the growth of services (Gough:1979; Twaddle: 1996). It was during this period that there was a reduction on spending on public services and a greater role for markets in providing welfare services

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(Baru:1998; Price: 1989). Studies of the private sector in several developing countries show that the world recession of the late 1970s had an adverse impact on the financing of public services that resulted in the growth of markets in the welfare sector (Bennett, McPake, Mills: 1997). An important development during the 1980s was the influence of international bodies like the International Monetary Fund (IMF) and the World Bank in giving loans to developing countries under the Structural Adjustment Program for both the economy and social sectors. Before the 1980s the Bretton Woods institutions had primarily concerned themselves with lending for economic program and had played a marginal role for the social sectors, which was confined mainly to population and nutrition programs. But from the 1980s the World Bank started playing a more proactive role in lending to the social sectors, especially health and education, and simultaneously set the policy directions for these sectors. With the World Bank entering the social sectors, lending by bilateral agencies declined, and as a result, the former became the single largest financer of the health sector in developing countries during the 1990s (Cassels:1996; Baru, Nayar, and Gopal:1996). The World Development Report subtitled Investing in Health provided the framework for health-sector reforms for developing countries. Both the framework as well as the content for health sector reforms are similar for all developing countries, and those countries opting for the loans are required to adhere to the conditions prescribed by the World Bank (World Bank: 1993). A common feature of health-sector reform in developed and developing countries is the implicit dependence on the market for service provisioning and also on introducing market principles into public systems to make them more "efficient." The primary focus is on upgrading of public health service institutions by investing in high-technology medical equipment and brand-name drugs. Clearly this has opened up large markets for multinational pharmaceutical, medical equipment, insurance, and software corporations. The interests of these corporations have influenced health policy and research agendas at the global level through international organizations and national governments during the late twentieth century. Therefore, any analysis of healthsector reform has to acknowledge the role played by international finance in setting national priorities. This has become apparent in the case of both research funding and technology transfer in biomedical research. The largest funds for this kind of research are available from pharmaceutical, equipment, and insurance companies, and these companies have been funding several research programs of the World Health Organization. More recently these initiatives have been seen as an important aspect of the strategy for public-private partnerships of WHO. WHO is much more dependent on these sources of funding since its pool of direct multilateral funding has decreased over the years (Koivusalo and 011ila:1997). During the late 1980s and 1990s the World Bank started to play a more crucial role in the communicable-disease programs of WHO both in terms of financing and providing technical assistance. (Bruntland:1998). The

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globalization of research and program priorities by international agencies like the World Bank and the World Health Organization has a direct influence on the research and technical priorities of national governments of developing countries. The World Bank lending program to the social sectors has conditionalities that are not merely financial in nature but also influence technical and structural issues. Typically a country opting for loans has to accept conditionalities that may be at variance with its needs, but the financial crunch often pushes it to accept these conditionalities. HEALTH-SECTOR REFORM: A COMPARISON ACROSS COUNTRIES The pace of health-sector reform in developing countries has been varied. According to Cassels, these countries can be classified into the radical reformers, tentative reformers, and reluctant reformers (Cassels: 1996). The radical reformers include Russia and Zambia, who have undertaken far-reaching, restructuring of their public health service systems. Studies from Russia and Zambia indicate that in these countries the pace of reform was quick and far-reaching, which had an adverse impact on health status and provisioning (Nanda:2000). The tentative reformers have been those countries where the health-sector reforms have been initiated but the pace of reforms has not been very fast. In fact, the socioeconomic and political sectors within these countries that are opposed to the reforms have applied considerable pressure to prevent the restructuring of the public sector. The reluctant reformers include those countries that have been pressured by the World Bank to undertake these reforms or have adopted neoliberal policies as a result of other countries' actions under the Structural Adjustment Programs. This has been seen in the case of some African countries. Even those who are not formally under the Structural Adjustment Program are forced to adopt neoliberal policies for trade and other purposes (Cassels: 1996; Olukoshi:2000). India could be best classified as a tentative reformer because compared to some other countries, its reforms have not been radical. This is due to a number of sociopolitical factors both internal and external to the health service system that have both pushed and checked the pace and direction of reforms. The influence of the nature of the political regime on the health sector has been well documented for a few Latin American and Southeast Asian countries. Among the Latin American countries, the case of Chile is particularly well documented. During the 1950s Chile adopted a National Health Service that was modeled along the lines of the British National Health Service based on the principles of general taxation. The public services were further strengthened and concerns of equity were addressed by Salvador Allende's socialist government. However, the Chilean National Health Service suffered a setback when the military government replaced the Allende government during the late 1970s. The military government adopted a number of market principles to reform the health sector,

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and it is well documented that these reforms were influenced by neoliberal policies. Similarly, in the case of pharmaceutical reform in Sri Lanka, Bangladesh and the Philippines, the concerns for equity and progressive policies were initiated by socialist governments. It is therefore important to point out that the pace of reform is largely determined by the nature of politics in a given society. Thus, while the World Bank had initiated a similar package for health-sector reform in several developing countries, the manner in which these reforms were implemented, the issue of sustainability, and the impact of reform on equity largely depend on the history and socio-political context of the individual countries. There are several factors that operate within and outside the health services as well as the different actors in civil society that influence and shape these reforms. As discussed earlier, the sociopolitical context within which these reforms are initiated will determine the extent and pace of reforms. Many of the early-adjusting countries of Latin America and Africa and later some of the countries in Eastern Europe and Russia are examples of implementing reforms in political regimes where there was little opposition or questioning of the content or direction of reforms. This was largely due to the fact that many of them were not democratically elected governments and had little or virtually no pressure from civil society. India offers a contrast to these countries in terms of its size, its diversity, and the nature of its democratic politics. In addition, there has been a lively ongoing debate among various sections of civil society that also includes trade unions and political parties about the necessity, content, and directions of economic and social sector reforms under the Structural Adjustment Program. (Patnaik:1999). INDIA AND HEALTH-SECTOR REFORM Health services development in India can broadly be divided into three phases. The first phase of development was the postindependence period that up to the 1970s was the period of growth. This phase was followed by the period from the late 1970s to the late 1980s when there were cutbacks on public spending and concessions were given to the private sector. During the third phase India applied for loans from the IMF and the World Bank. This was the period when several state governments received loans for reforming the publicly provided health services. Like many of the newly liberated countries during the twentieth century, the leadership of the Indian nationalist movement had committed itself to principles of universality and a nationalized health service system to ensure that all sections of the population got access to services. The vision at that point in time was to build self-reliance in the economy and social sectors, and hence in health care the emphasis was on the development of institutions, manpower, research, pharmaceuticals, and technology. A number of actors have played an important role in shaping the health service system. The nationalist movement and its commitment to democratic politics

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played a very important role in ensuring that the needs of the majority were represented (Bhargava:2000). These various actors included the political parties, big-business groups, professional bodies, and other civil society bodies. It is interesting to note that different sections of the political spectrum had clearly articulated the need for a state-supported health service system. These sections included the national bourgeoisie, the left parties, and the Indian National Congress. Each of them had expressed their respective positions through well-articulated plan documents. Given the poor health of the majority of Indians, the thrust was to invest in preventive and curative care along with improving the overall living conditions of the population. The Bhore Committee report was an attempt at designing a health service system based on the needs of the majority who belonged to the deprived sections of the population (Government of India: 1946). As the Bhore Committee observed, the majority of the Indian population was suffering from malnutrition and anemia. The major killers were a host of communicable diseases commonly referred to as diseases of the poor. The health status of the population was very poor. Therefore, the political leadership had to take cognizance of the extent of the problem and realized that it had to be tackled through state investment since the market was restricted to individual private practitioners of both allopathic and other systems of medicine. In both provisioning and education, private capital was limited and therefore even the representatives of big business supported state investment in education and health. Within the health services, the professional organizations supported state investment but did not want it to interfere with their autonomy to continue private practice. It is interesting that while the "left" parties called for the abolishment of private interests within the medical and pharmaceutical sectors, the professional bodies wanted the doctors to be allowed to continue their private practice. The Bhore Committee accommodated the interests of the professional bodies by not taking measures to eliminate private interests both within and outside the health service system. Thus even at the time of independence a substantial percentage of doctors were practicing in the private sector as individual practitioners, but the number of institutions was very small. Private interests were also present in the pharmaceutical industry during this period (Jesani and Anatharam: 1993; Baru: 1998). A survey of the health status of the population during the late 1940s revealed that death rates and infant-mortality and maternal-mortality rates were very high and the major causes of death were a host of communicable diseases. Keeping in view the poor health conditions of the majority, the Bhore Committee report emphasized the need for strong primary health care services supported by secondary and tertiary levels of care. It estimated that around 12% of GNP would need to be invested in the health sector in order to provide health services across the country. In addition, it also recommended the need to invest in the pharmaceutical sector in order to develop indigenous capabilities and reduce excessive reliance on the multinational corporations. The Bhore Committee

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symbolized the effort of the Indian state to plan and deliver health services that would be accessible to all its citizens. The real growth period for health services was during the 1960s but even at that time the investments were far from adequate. Thus the vision of the Bhore Committee suffered a setback during the 1960s with inadequate levels of investment that resulted in weakly developed primary health services, with most of the investment going into the secondary and tertiary levels of care (Banerji:1985; Qadeer:1985). In terms of structure, the Bhore Committee had envisioned a three-tier structure with a strong primary health service network as a base, supported by secondary and tertiary levels of care. In order to build an extensive network of services, the committee had suggested fairly high levels of investment of up to 12% of GDP. Despite the rhetoric of primary health care, the structure of provisioning was largely curative, biased towards urban areas and the secondary and tertiary sectors. The structures of provisioning largely reflected the needs and aspirations of the middle classes from both urban and rural areas. As in the other social sectors, in health the low levels of investments resulted in incremental planning rather than an integrated plan. Very often these meagre resources built infrastructure that reflected the needs of the middle and upper classes while the needs of the majority were largely neglected. Several scholars have often criticized this and some have even questioned whether India can be characterized as having a "welfare state" at all (Jayal:1999). Despite the incremental nature of health service planning, India did manage to build a fairly extensive network of services, created indigenous capacity for training personnel for various levels of care, and invested in research and pharmaceutical capability. However, the low levels of investments in health services affected the growth of the public sector, and this was one of the important reasons for the expansion of the private sector during the 1970s and 1980s. Given the nature of democratic politics, with interests of different sections being represented, it was the needs and aspirations of the urban and rural middle classes that were reflected in the manner in which health services developed in India. This matched the interests of the professionals, who were largely drawn from the upper and middle classes. By the 1960s it was apparent that the health services were largely skewed in favor of curative medicine and located in urban areas. Once again there was ideological pressure from opposition parties and civil society, which questioned the directions of health service development. Interestingly, this kind of questioning occurred only during those phases of Indian politics when there was a progressive political regime that expressed concern about inequalities and conditions of the poor and vulnerable sections of the population. This resulted in the setting up of committees that called for reorientation of health services to rural areas and also investing in preventive care. The social basis for this was the agrarian prosperity of the 1970s in several parts of the country. The rural rich, consisting mainly of the rich and middleclass peasants, started putting pressure on the state to invest more in education and health care (Kamat:1985; Nambissan, and Batra:1989). These pressures had

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a marginal impact on service provisioning in rural areas since the state did not increase investments substantially. As a result, the rural-urban inequalities in service provisioning remain largely unaltered. The 1970s were marked by a number of debates concerning the problems of health services development and suggestions for change within the country. Some of them were serious reviews undertaken by national bodies that were extremely critical but also offered alternatives to remedy some of the problems (Indian Council of Social Science Research and Indian Council of Medical Research: 1981). These various reviews discussed the underfunding of the health sector and the structural inequalities within it. The critiques emphasized the need for reorienting health services to rural areas and also to make medical education more responsive to the needs of rural areas. The oil shock of the late 1970s had a negative impact on the financial condition of India, along with several other developing countries that found themselves caught in the world recession. Due to the financial crunch, most third-world governments during the 1980s were in no position to increase investments in health. Inadequate investments in health services meant stagnation in the growth of public services, and this was an important reason for the growth of market forces in the health sector (Baru: 1998). The growth of the private sector and the gradual neglect of the public sector have to be seen in terms of the changes in the social structure after independence in the rural and urban areas and across regions in India. The growth of the middle classes after independence was not merely restricted to urban areas. With agrarian prosperity as a result of the green revolution, there was a rise in the rich and middle peasantry, who were largely drawn from the backward castes. This was mainly seen in some northern, western, and southern states in the country (Kamat:1985). These sections had made use of public investment in education as a vehicle for social mobility in order to challenge traditional social hierarchies. As a result, these upwardly mobile sections invested heavily in the education of their children for social mobility, and from some of the more prosperous areas of the country they immigrated to the United Kingdom and the United States as qualified professionals during the late 1960s and 1970s (Baru:1998; Omvedt:1981; Khadria:1999). Thus a globalized middle class of professionals who had both urban and rural roots was beginning to emerge, and their aspirations were clearly divergent from those of large sections of the poor. Typically the "new middle class" found the public system inadequate to meet their needs, and in those states where there was a vibrant private sector, they started moving out of the public sector. This was seen in the case of health service utilization during the mid-1980s wherein the urban and rural middleincome groups utilized private health services dependent on ability to pay. Here it is important to underscore that there are regional variations, and this kind of trend is seen in the richer states as compared to the poorer ones (Baru: 1998). The moving out of the upper and middle sections of the population from public provisioning had serious consequences for financing, provisioning, and quality

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of services. These sections provided the constituency for support of health-sector reforms and supported the neoliberal position that public services are for the poor and those who can afford to pay should use private services. With the middle class giving up ownership of the public sector, there was a further weakening of the state's commitment toward public provisioning. During the last five decades of independence there has been a growth of social groups who have different needs and aspirations. The "new middle class" in both urban and rural areas with its global links has largely been the support base for the economic and social-sector reforms. However, it is important to recognize that while there has been mobility among certain sections of the population, there has been an increasing marginalization of the very poor, and these disparities are becoming more apparent. This marginalization manifests itself in the outbreaks of various epidemics among poorer regions and classes (Baru and Sadhana:2000). The conditions of these sections are reminiscent of the descriptions of the poor conditions under which marginalized sections of the population live in Latin America and Africa (Sainath:1996). Here it is important to point out that given the nature of democratic politics, the public sector cannot be dismantled or drastically altered, and the state has to at least pay some form of lip service to the poor, not for any altruistic reason but for its own survival. It is this that could explain the fact that while India has chosen the path of liberalization, it has not been able to push it with the speed of some other countries. Growth of the Private Sector The growth of the private sector was largely a phenomenon of the late 1970s and 1980s, as was seen in the rest of the developed and developing world. In India even prior to independence, the proportion of individual private practitioners was as much as 73% and the remaining 27% were employed in government service (Government of India: 1946, pp. 42-43) The committee recognized that private practice by government doctors would go against the principles of equity but did not address how the large proportion of private practitioners would affect the public health services (Baru: 1998). In fact, there was no real debate about either nationalizing or defining a role for the private practitioners, as was the case in some Latin American countries (Jara and Bossert.1995). The growth of individual practitioners continued through the 1960s but at this point there was little growth of private institutions at the secondary level of care. The growth of private institutions occurred mainly during the late 1970s and 1980s and was confined mainly to urban areas and the better-developed states. These institutions were promoted by single owners, mostly doctors, and typically ranged in size from 5 to 100 beds. Thus by the late 1970s the private sector was a heterogeneous structure of individual private practitioners providing primary care. The Indian private sector is characterized by a heterogeneous structure consisting of institutions of varying sizes and patterns of ownership (Bhat:1993;

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Baru: 1998). The bulk of the private sector still consists of individual practitioners, both qualified and unqualified, who essentially provide primary-level outpatient care and are located in both rural and urban areas. The secondary level of care in the private sector is provided by nursing homes with a bed strength ranging from 5 to 50 and promoted by single owners or partners. Most of these promoters are qualified doctors and locate these enterprises in urban and semiurban areas. The tertiary level of care consists of multispecialty hospitals that are promoted by partners or as private limited or public limited enterprises. These are mostly located in the larger cities and have a strong nonresident Indian connection with doctors based in the United States (Baru: 1998). Entry of Finance Capital in the Health Sector In his analysis of privatization in health care, McKinlay observed that for any substantive analysis, there needs to be recognition of the role played by large finance capital in the health sector. Large finance capital was largely confined to the pharmaceutical, medical equipment, and insurance industries, and these operated globally (McKinlay: 1980). The impact of these industries was very visible in the Indian case during the late 1980s and 1990s, when there was a sharp increase in the import of medical equipment. The real peak was seen during the mid to late 1990s, when the government offered reduced import duties for medical equipment (Baru: 1998). Apart from imports, many multinational equipment companies like Siemens, Philips, Becton, Dickinson, and Company, and General Electric started setting up assembly plants in the central and southern parts of India. As an executive of Philips International remarked, "The health care business is a $3000 billion industry world-wide. If even we attract 1 percent of the market in India, the potential for the medical equipment industry is tremendous" (Baru: 1998). India, with its large population and a fairly significant middle class, is a big market for these multinationals. Similarly, computer software industries tie up with the medical sector, and American insurance companies looking for tie-ups will further consolidate the position of global capital in the health sector. This would definitely redefine and alter the spaces for the state to plan its health services. These trends are not restricted to the private sector, but with the restructuring of the public hospitals under the health-sector reform project, they will benefit the interests of some of these industries, especially the medical equipment industry. THE STRUCTURAL ADJUSTMENT PROGRAM AND HEALTH-SECTOR REFORM: RESTRUCTURING PUBLIC HEALTH SERVICES AT THE STATE LEVEL The World Bank through a State Health Systems Project initiated reform of the secondary and tertiary levels of curative services in public hospitals in India

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during the mid-1990s. In the first round, 4 states were selected out of the 10 who submitted project proposals. These 4 were selected because they captured the heterogeneity of the country in terms of epidemiological profiles, levels of economic development, health services development, and political structures. Punjab represents an economically developed state; Karnataka and Andhra Pradesh are average performers, while West Bengal falls into the less developed category. More recently Maharashtra, which is a well-developed state, and Orissa, which is a very poor state, have also taken out loans under the State Health Systems Project. The World Bank describes these loans as "an investment loan with policy reform in areas of resource allocation for the health sector, capacity development for sector analysis and management strengthening, enhance participation of the private and voluntary sectors in the delivery of health services, and implementation of user charges for those who can afford to pay." (World Bank: 1996). All the states that received loans from the World Bank had to adhere to a common agenda for initiating reforms. These included a shift from direct provisioning by governments, which essentially entails greater reliance on private and voluntary services; instituting a number of financial measures like introduction of user fees; and contracting out to the private sector as a way of improving efficiency and patient satisfaction. This is the basic set of assumptions upon which all health-sector reform initiatives are based. Clearly this has meant that national governments have had little say in altering the agenda because the loans for these sectoral reforms are tied to a set of conditions that basically call for strengthening the infrastructure capacities at the secondary level of care. The infrastructure improvement is seen as key for quality improvement and also for introducing user fees in public hospitals. The assumption that seems to operate here is that if the quality of services improves, then people will be willing to pay for services. So far there are six state governments that have initiated the reform process. While it is still too early to say what the outcome will be, some trends from the early-adjusting states point to some problems. All these health-sector reform initiatives are project driven with a similar plan. The designing of the project has very little involvement of the state governments and the professionals within the health service system providing different levels of care. Some preliminary explorations in Andhra Pradesh, where health-sector reform of secondary-level hospitals was first initiated, suggest that there is practically no involvement of doctors or paramedical staff regarding the content and direction of reforms. Given the "project-driven approach," there is little flexibility to redefine needs and strategies. This was clearly demonstrated in the case of the systems project in Andhra Pradesh, where many of the medical and paramedical staff were of the opinion that the objectives of the reform were not addressing the needs of their respective institutions, and wasteful expenditure was incurred on renovation of the buildings that was based on a master plan drawn up at the state level. Therefore, there was little consultation with the institutions to be renovated.

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Many of the administrators of the institutions expressed anxiety whether the state government would be able to muster the required financial resources to sustain these projects (Baru, Murthy, and Rajashri:2000). Another important issue that has come up in this context is one of user fees. All the health-sector reform projects of the World Bank have been hinged on the need for renovating public hospitals in order to introduce user fees, which in turn would be an important source of revenue. In all these project documents, there is mention of exempting the "poor" from paying user fees, but they propose to introduce user charges for all other sections of the population. There are several problems with this approach because means testing for exemption of the poor is beset with a number of administrative constraints, essentially the question of how a system identifies the poor. Second, in some states, like Andhra Pradesh, only a small proportion of the middle and upper classes utilized the public sector during the mid-1980s. When these sections move out of public provisioning, then the possibility of charging patients does not arise, and as a result, the introduction of user fees is a nonstarter. Even when the state governments have tried to introduce user fees, they have met with resistance. In some states, like Punjab, the utilization levels fell in these hospitals after the introduction of user fees (Gill: 1996). The protests against user fees have come from opposition parties, from other civil society organizations, including nongovernmental organizations (NGOs), and also from within the health services in terms of trade unions and concerned professionals. Despite these protests, many state governments have introduced user charges in the public sector. This type of restructuring of the public sector has serious consequences for the future. Through these measures, the public sector will be pushed to compete with the private sector for patients. The introduction of market principles into the public sector will definitely reinforce the existing perception that paying for health care ensures better quality of care. CONCLUSION India is one of the few developing countries that adopted a health policy that aimed to incorporate principles of universality and equity. In order to achieve some of these objectives, the state not only financed but also provided health services. The levels of investment were far from what was required to build a strong primary health care network with supportive secondary and tertiary care. The 1950s and 1960s were the period during which through state investment the infrastructure was laid in both rural and urban areas. The state also invested in medical and paramedical education, and India achieved self-sufficiency in this area. In fact, there was a surplus of medical personnel during this and later periods. This was made possible because of the space that was available to nationalist governments to plan and be able to build systems for delivery of care. The world recession had a very negative impact on both developed and developing countries, and even in India the state faced a fiscal crisis. By the

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1970s the commitment to socialist principles had waned, and there were sections within the Indian population that were very critical of the development path followed. The weakening and later collapse of the Soviet Union resulted in a reduced space within which countries like India could negotiate with the emerging global situation. During the 1990s India joined the ranks ofthe late-adjusting countries to take loans from the World Bank and also started initiating a number of measures in the health sector. A section of the bureaucracy and professional class who were against excess state intervention went to the other extreme of looking towards the market as a perfect solution. This approach was allpervasive not only in the economy but also in the social services. It is important to point out that the health-sector reform process has been initiated by the World Bank and the IMF as a part of the Structural Adjustment Program. While these organizations have initiated the reforms, it is equally important to highlight the role of the middle class that supports the reform agenda of these organizations. The interests and aspirations of the middle class are often global by transcending national boundaries. In the Indian context, professionals—doctors, engineers, and more recently software engineers—have strong links with the United States. This section has been a strong supporter of reforms, and in that sense they are a "globalized middle class." Although they form a small percentage of the population, in terms of numbers they are substantial and are extremely influential in policy making. Thus, unlike the 1940s and 1950s, when the globalized elite from developing countries took into account the social aspirations of the newly emerging middle class and the poor, the middle classes and elites of today are less concerned about the vulnerable sections. During five decades of development, certain sections have definitely benefited more than others, and these sections are the ones who are now applying pressure for greater privatization in both the economy and social sectors. In the case of health care, the trend is apparent in urban areas where the upper-middle and upper sections have moved out of using public hospitals. In some other states, the data suggest that where there is a vibrant private sector, it is the middle and upper-middle classes that use it much more than the lower socioeconomic groups. The push for more advanced technology also is linked to the class differentials. In countries like India and some other Latin American and African countries, there is epidemiological polarization in which a large proportion of the poor are burdened with communicable diseases while the middle and upper classes are affected by lifestyle diseases for which there is an increase in the influx of high-technology equipment. The interactions between the internal and external factors have in effect shaped the health-sector reform agenda. India has a large labor force employed in the public sector, and it is highly unlikely that its members will allow retrenchment of personnel. The fact that in some states where the reform has been initiated, the middle class has largely moved out of the public sector raises a serious concern regarding whether the idea of user fees is a viable one since this class constitutes the "paying sections" within the population. In some of the early-reforming states,

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the issue of user fees has become a politically sensitive issue, with opposition parties protesting against such measures. A number of concerns arise out of the developments in the 1990s. First, the health-sector reform projects have restructured public hospitals at the secondary and tertiary levels of care along market principles. This has serious consequences for comprehensive primary health care since it is dependent on referral linkages between the primary, secondary and tertiary levels of care. Privatizing the secondary, and tertiary levels leads to the weakening of the primary health care approach. The second issue is one of accessibility, universality, and equity, which suffer a setback when secondary and tertiary levels are delinked from primary-level care. Increasingly the concern is also with the middle class moving out of public provisioning, which will result in a public system that is inadequately funded and provides poorer quality of services. Given the general apathy towards the condition of the poor, this would result in a two-tier system. The private sector will provide services for those who can pay, and an underfunded public sector will provide services for the poor. Clearly this kind of trend will have adverse consequences for universal and equitable access to services. REFERENCES Banerji, D. 1985. Health and Family Planning Services in India: An Epidemiological, Socio-cultural, and Political Analysis and a Perspective. New Delhi: Lok Paksh. Baru, R.V. 1998. Private Health Care in India: Social Characteristics and Trends. New Delhi: Sage Publications. Baru, R.V. 2000. "Privatisation and Corporatisation of Health Care." Seminar, May. Baru, R.V., K. Murthy, and C.K.N. Rajashri. 2000. Perceptions of Quality in Health Care: An Exploratory Study. Monograph submitted to the Andhra Pradesh First Referral Health Systems Project, Administrative Staff College of India, Hyderabad. Baru, R.V., K.R. Nayar, and M. Gopal, 1996. "Patterns of Funding by Bilateral and Multilateral Agencies in Health," Paper submitted to the Voluntary Health Association of India, New Delhi. Baru, R.V., and G. Sadhana. 2000. "Resurgence of Communicable Diseases: GastroEnteritis Epidemics in Andhra Pradesh." Economic and Political Weekly, 35(40): 3554-56. Bennett, S., McPake, Bijaud Mills, A. (eds.) 1997. Private Health Providers in Developing Countries. London: Zed Books. Berman, P., ed. 1995. Health Sector Reform in Developing Countries:Making Health Development Sustainable. Cambridge, MA: Harvard University Press. Bhargava, R. 2000. "Democratic Vision of a New Republic: India, 1950." In Frankel, F., Z. Hasan, R. Bhargava and B. Arora, eds., Transforming India: Social and Political Dynamics of Democracy. New Delhi: Oxford University Press. Bhat, R. 1993. "The Private/Public Mix in Health Care in India," Health Policy and Planning, 8(l):43-56. Cassels, A. 1996. "Aid Instruments and Health Systems Development: An Analysis of Current Practice," Health Policy and Planning: ll(4):354-68.

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Gill, Sucha Singh. 1996. "Punjab: Privatising Health Care." Economic and Political Weekly, January 6th. pp. 18-19. Gough, I. 1979. The Political Economy of the Welfare State. London: Macmillan. Government of India. 1946. Report of the Health Survey and Development Committee (Bhore Committee). Vols. I and IV. Delhi: Manager of Publications. Indian Council of Social Science Research and Indian Council of Medical Research. 1981. Health for All: An Alternative Strategy. Pune: Indian Institute of Education. Jara, Jorge Jimenez, de la and T.J. Bossert. 1995. "Chile's Health Sector Reform: Lessons from Four Reform Periods." In P. Berman, ed., Health Sector Reform in Developing Countries: Making Health Development Sustainable. Cambridge, MA.: Harvard University Press. Jayal, N. 1999. "The Gentle Leviathan: Welfare and the Indian State." In M. Rao, ed., Disinvesting in Health: The World Bank's Prescription for Health. New Delhi: Sage Publications. Jesani, A., and S. Anatharam. 1993. Private Sector and Privatisation in the Health Care Services. Bombay: Foundation for Research in Community Health. Kamat, A.R. 1985. Education and Social Change in India. Bombay: Somaiya Publications. Khadria, B. 1999. The Migration of Knowledge Workers: Second-Generation Effects of India's Brain Drain. New Delhi: Sage Publications. Koivusalo, M. and Ollila, E. 1997. Making a Healthy World: Agencies, Actors and Policies in International Health. London: Zed Books. McKinlay, J.B. 1980. "Evaluating Medical Technology in the Context of a Fiscal Crisis: The Case of New Zealand." Milbank Memorial Fund Quarterly: Health and Society, 58(2) 217-67. Nambissan, G., and P. Batra. 1989. "Equity and Excellence in Indian Education: Issues in Indian Education," Social Scientist, (17) 9-10, 56-73. Nanda, P. 2000. Health Sector Reforms in Zambia: Implications for Reproductive Health and Rights. Working Paper. Washington, DC: Center for Health and Gender Equity. Olukoshi, A. "Structural Adjustment and Social Policies in Africa: Some Notes." Draft Paper prepared for the GASSP 4 Seminar on Global Social Policy and Social Rights, New Delhi, 8-10 November 2000. Omvedt, G. 1981. "Capitalist Agriculture and Rural Classes in India." Economic and Political Weekly, 16(52), 26 December. Patnaik, P. 1999. "The Political Economy of Structural Adjustment:A Note." In M. Rao, ed., Disinvesting in Health: The World Bank's Prescriptions for Health. New Delhi: Sage Publications. Price, M. 1989. "Explaining Trends in the Privatisation of Health Services in South Africa," Health Policy and Planning. 4(2):50-62. Qadeer, I. 1985. "Health Services System: An Expression of Socio-economic Inequalities." Social Action, 35, July-September, pp. 35-60. Qadeer, I. 2000. "Health Care Systems in Transition III, India, Part I: The Indian Experience." Journal of Public Health Medicine, 22(l):25-32. Sainath, P. 1996. Everybody Loves a Good Drought. New Delhi: Penguin Books.

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Twaddle, A. 1996. "Health System Reforms—Toward a Framework for International Comparisons." Social Science and Medicine, 43(5):637-54. World Bank. 1993. World Development Report 1993: Investing in Health. New York: Oxford University Press. World Bank. 1996. India Health Systems Project II. Report No. 15106-IN, 20 February.

Chapter 14

Reform of the Australian Health Care Landscape: The Contested Terrain of Development and Innovation Donald Stewart and Ian England Current reform strategies in the Australian health care system are being implemented against a backdrop of major health reforms over the last 30 years. By the early 1970s, with several failed health insurance schemes introduced since World War II and with two million people "uninsured, subject to charity, to means-tested public ward care or no service" (George and Davis, 1998:94), the country was ripe for universal health insurance. The early phase of that reform was in the guise of Medibank, which was introduced on 1 July 1975, by the Labor government. This reform saw the commonwealth (federal) government take over the responsibility for funding half the operating costs of the states' public hospitals and most of the responsibility for funding medical services (Australian Institute of Health and Welfare [AIHW], 2001:233). The introduction of Medibank saw a substantial increase in the proportion of gross domestic product (GDP) expended on health services. In the pre-Medibank period, the proportion of GDP expended on health services typically ranged from 4% to 5% (1960-61 = 4.3%). In 1974-75 this jumped to 6.3% of GDP. The period between 1975 and 1984 was dominated by debate over Medibank and its various modifications. The government changed in 1975 to a more conservative Liberal/National coalition, and between 1975 and 1981 the reform initiative was "progressively reversed" (Duckett, 2000:225) as interest groups opposed to reform flexed their political muscle and as disadvantageous external circumstances began to bite. February 1984 saw the (re)introduction of a universal health insurance scheme called Medicare, based on the principles of universality, equity, simplicity, and ease of access. All Australians were provided with insurance for medical services and, by arrangements with the states, free public hospital services at the point of delivery. Since the introduction of Medicare, the cost of maintaining

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the public health system has increased substantially, to the point where the prospect of totally restructuring the health care delivery system has been considered. For example, there has been a gradual increase in the proportion of GDP expended on health services to 8.3% (1997-98). Progressive changes to the operation of Medicare have been implemented in recent years within the context of a government policy influenced by economic rationalist debate; however, there still appears to be broad bipartisan agreement on removing financial barriers to access to the health care system. The chief characteristic of the Australian health care system, namely, a mixed funding and delivery formula of public and private players, has been regularly raised as a key policy issue at election times, every three years. While the reform that established Medicare was underpinned by issues surrounding equity and access, more recent adjustments, such as the publication of the National Health Strategy in the early 1990s, have urged a more balanced approach to health care. In the last few years, the economic reforms of the current government have promoted an "efficiency" perspective and a more fundamental questioning of how individuals and families pay for the health delivery system, the common thread being "that governments of all persuasions have been applying general management principles to health care, with the aim of providing quality health care services at the lowest possible cost" (Palmer and Short, 2000:v). It is this process of reform that will be the subject of analysis in the Australian context.

BACKGROUND The Australian health system is a product of history and prevailing social and economic forces. White settlement in Australia had its roots in the transportation of convicts from overloaded correctional services in England to a new penal colony in the antipodes. Colonization initially occurred through convicts and their guards, with a small contingent of bureaucrats and entrepreneurs (Harris and Harris, 1998; Jupp, 1990). A number of commentators (Dewdney, 1972; Crichton, 1990) have suggested that Australia's modern health system has been shaped by the requirement for "1) public services to tend to the needs of soldiers and felons—both servants of the crown; 2) private services for those with private wealth; and 3) charitable or volunteer services for the poor and sick who were neither soldiers nor convicts" (Harris and Harris, 1998:443). What distinguished the Australian experience from the experiences of other British colonies was the use of migrants as the main source of labor as opposed to the indigenous populations (Jupp, 1990). The new Australian society was predicated on a strong, healthy, expanding migrant population. The influx of free settlers, who were expected to develop land and commerce without becoming a charge on the public purse, continued for over 100 years (Jupp, 1990). The migration history of Australia created a climate wherein all immigrants were seen as "assets." Jupp states, "Almost everyone admitted for permanent residence is assumed to be a useful asset, in

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good health and bringing more to Australia than it will cost to settle them" (Jupp, 1990:25). Such statements clarified the expectations that minimal responsibility would be taken by the state for the health and well-being of migrants. At the same time, myths and images influenced Australian attitudes towards migrants, the most significant of these being the belief in the physical and moral superiority of Australians and the healthiness of the Australian environment (Jupp, 1990:25). An effect of founding ideologies has been both historical and contemporary public statements by politicians that have enunciated core values that are at the heart of Australian daily life and are associated with self-reliance and individualism. Within this context, Australia's health care system has been heavily influenced by both government and professional groups and has been characterized as "a strife of interests" (Sax, 1984) and as "contested terrain" (Duckett, 2000:xix). Analytic frameworks developed by Marmor (1973) and Alford (1975) have been seen by Australian theorists as applicable to the Australian context, and analysis by a number of commentators has been conducted in terms of the structural interests of salient groups (Palmer, 1978; Duckett, 1984; Sax, 1984; Short, 1989; Gardner, 1997; Palmer and Short, 2000). Understanding Australia's recent health reforms and their structural context requires a brief overview of the structure of government and the historical development of the health professional groups. Australia has three levels of government, federal (or commonwealth), state, and local. Federation of the six Australian colonies in 1901 formed the Commonwealth of Australia, which draws its powers from Section 51 of the constitution, while the states and territories have the responsibility for other, nonspecified powers. Local government structures have been established under state legislation, and there is thus a degree of inconsistency between states. The commonwealth and state systems of government are largely derived from the British Westminster system, although the federal structure and other aspects of the Commonwealth Constitution are based on the U.S. Constitution. As in the Westminster system, however, ministers are members of Parliament and are accountable and answerable to it. There is a party system, and the government is formed by the party or coalition of parties that gains the majority of seats, with the minority parties (or coalition) forming the opposition. On many occasions state legislatures and the federal Parliament are controlled by different parties, leading to tension and nonuniform policies. Australia has a strong free-enterprise culture, though this is backed up by a belief in the need to provide a moderately comprehensive welfare system. Individual states have a varying mix of public- and private-sector activity, in part related to their economic strength. Some have also argued that this relates to each state's origin either as a convict settlement or as a free settlement. For instance, Victoria, a free state, has more private hospitals, schools, and health funds than other states. If one reviews the colonial history of Australia over the last century, the use of certain concepts and ideological bases such as assimilation, racial restriction, integration, and multiculturalism becomes apparent in

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terms of both migrant (particularly those from a non-English-speaking background) and indigenous populations (Martin, 1978), and these have been reflected in the normative basis of health care. The health care system in Australia is characterized by diversity and the mixture of public- and private-sector involvement. Under the Australian Health Care Agreements between the commonwealth and the state and territory governments, all eligible people are entitled to free services as public patients in public hospitals. This national health care delivery system is financed mostly by general taxes. A proportion of these taxes is raised by an income-related Medicare levy, discussed later. The commonwealth has the responsibility for raising these funds and, in turn, for disbursing them using a range of mechanisms, such as Health Care Agreement Grants to the states and territories, medical and pharmaceutical benefits, and Health Program Grants. In 1997-98 total health service expenditures, including both government and nongovernment sectors, were AUD $4703 billion, which represented 8.3% of gross domestic product (AIHW, 2001). In 1998-99 some AUD $5.6 billion was contributed by the commonwealth to the states in public hospital funding under the Australian Health Care Agreements. A key feature of the Australian health care system is the role of the Medicare levy. Introduced in 1984 to supplement other tax revenue, it is currently estimated as being equal to about 20% of total commonwealth health expenditures and about 8.5% of total national health expenditures. The Medicare levy has increased from 1% (1984) to 1.5% of taxable income (1997-98). A DESCRIPTION OF THE MEDICAL CARE SYSTEM Public Sector Australians have consistently enjoyed relatively good access to medical care. There have been marked inconsistencies in this, for example, aged care, mental health, and indigenous health, which are now subject to special commonwealth programs. With the more recent health care reform, significant national and transnational factors have impinged on the delivery and quality of health care delivery. For example, after a decade of management and fiscal policy guided by an economic rationalist philosophy aimed at improving delivery of services, health care delivery services have become stretched. The commonwealth government plays a major role in policy formulation in such areas as public health, research, and national information management as well as the planning and funding of health services, but rather less in their delivery. The commonwealth provides the funds for most nonhospital medical services, pharmaceuticals, and health research. Together with the states and territories, it jointly funds public hospitals as well as home and community care for the aged and the disabled. The commonwealth also plays a role in funding residential facilities for aged persons. Other areas of responsibility for the commonwealth include Medicare benefits, private health insurance, medical work-

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force issues, Aboriginal and Torres Strait Islander health issues, and the Health Insurance Commission. The state and territory governments play a major role in the public provision of health services, such as public and psychiatric hospitals, public health, and mental health. They have the primary responsibility for delivering and managing public health services and regulating health care providers. Local governments also provide health services; for example, they deliver most environmental health programs. In addition to services provided by governments, private and nongovernment organizations (both nonprofit and for profit) provide health services. Approximately one-third of Australia's health expenditures are on nongovernmentdelivered services. For example, private, nonsalaried practitioners, including self-employed general practitioners and specialists, provide most medical and dental care as well as some allied health services such as physiotherapy, diagnostic imaging and pathology. The private hospital system has developed from providing less complex, elective surgery to increasingly complex hightechnology services, for example, day-only surgical procedures. Patients may choose to be private patients in public hospitals (which allows them to choose their doctors), or they may elect to be private patients in private hospitals. Such choices are usually governed by whether or not the patient holds private health insurance. Successive governments have committed themselves to a strong private health care delivery sector through such means as direct and indirect subsidies. For example, prescriptions for medicines dispensed by private-sector pharmacies are directly subsidized by the commonwealth through the Pharmaceutical Benefits Scheme. Also, as will be discussed later, such financial incentives as a 30% government-supported rebate are available for those who wish to take out private health insurance. It has been argued that ever since the early days of the colony, when ships' surgeons were given rights to private practice as well as the ability to control admissions to charity hospitals for the poor, the health care system has developed into a dual private/public system (Ferguson, 2000). The majority of doctors work outside of the public hospital system, providing services on a fee-forservice basis. The relationship between health and business has been commented on (Davis and George, 1990), with health care increasingly being perceived as a valuable commodity produced and distributed according to the profit to be made. In summary, Australia has a complex political and professional landscape. The multiple layers of government, the strong free-enterprise culture, and the desire for a welfare system based on values encapsulated in the "fair-go" philosophy, with entrenched vested interests, make change and reform very difficult. This leads to the pattern of slow incremental evolution that characterizes the Australian health care system (Crichton, 1990). Australia's health system is predominantly funded and run by the public sec-

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tor; however, about one-third of health provision and funding is within the private sector. Governments determine the structure of health services and operate the majority of hospitals, while most medical, dental, and allied health services are provided by private practitioners. A significant private hospital system exists, operated by both for-profit and not-for-profit organizations. About 30% of Australia's hospital beds are in private hospitals that tend to be small, specializing in surgery. The small number of large private hospitals have around 400 beds and offer tertiary services, sometimes in advance of technologies available in the public sector. The commonwealth government provides significant funding via taxes and the Medicare levy, and its role is in the operation of the major benefit programs covering medical, pharmaceutical, hospital, and home nursing services. It also establishes specific health programs and provides targeted funding for these. The commonwealth, however, does not own, operate, or provide health services. State and territory governments are responsible for the public provision of health and services that include hospitals, psychiatric care, and public health. The States and territories provide their health services through departments of health or departments of family services that have a wider welfare focus. Local governments are primarily concerned with environmental control (AIHW, 1995). Private Sector As noted earlier, the private sector operates a range of private hospitals. Around half of these are owned by for-profit corporations, many of which are listed on the Australian stock exchange with reasonable overseas shareholding, in particular from Southeast Asia and the United States. The other half of the private hospitals are not-for-profit, the majority being owned by churches, the Catholic church being the major owner. Not-for-profit hospitals enjoy a preferential tax regime. The health insurance industry is made up of for-profit and not-for-profit organizations. Many of the insurers originated as "friendly societies," mutual funds, or employment-related industry associations. In 1997 there were 48 health benefits organizations with the 6 largest holding nearly 80% of the total membership. Only 3 of the health insurers operate on a for-profit basis (Industry Commission, 1997). Health funds operate under tight legislative controls. Recent reforms have relaxed these controls in an attempt to stimulate consumer demand by allowing the funds to offer more attractive "products." Historically the funds had to operate a "community rating" by which premiums were set based on the entire community's risk rather than that of an individual. There have been recent modifications to this principle, however. To encourage early adoption of health insurance and lifetime maintenance of it, premiums are now community rated and are also set based upon the age at which a person joins. Older entrants now pay higher premiums than those joining prior to the age of 30, with premiums increasing as the joining age, and

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hence risk, increases. Additional insurance products, such as coverage for ancillary services or loss of income, are offered but sit outside the more tightly legislated core-health areas. Development of Funding Mix Introduced nearly 30 years ago, following the election of a reformist Labor government, universal health care was a core principle and a major plank of its health platform at a policy and philosophical level. The Health Insurance Act 1973, Section 26, outlines three principles underlying Medibank: 1. Eligible persons must be given the choice to receive public hospital services free of charge as public patients. 2. Access to public hospitals should be on the basis of clinical need. 3. To the maximum practicable extent, a state will ensure the provision of public hospital services equitably to all eligible persons, regardless of their geographic location. The introduction of Medibank was strongly resisted by the medical profession because of the perceived intrusion into medical autonomy and professionalism (Palmer and Short, 2000), and such a perception has been commented upon in other countries (Twaddle and Hessler, 1977). By 1978 universal health insurance had well-nigh been abandoned, except for pension and benefit holders who received government subsidy on a means-tested basis. By 1983 private health funds had been heavily subsidized by tax rebates to encourage voluntary insurance. Medicare was originally introduced with an assumption (that was valid at the time) that a minimum of 40% of eligible Australians would be privately insured. However, the level of the insured population declined until it fell to 30.5% coverage as of June 1999. While there was a rise to 32.7% at the end of March 2000, the overall trend was down from a high of just over 50% of the total population being covered by some level of private health insurance in 1984, at the introduction of Medicare (Lawson, 1991). This trend had become a self-perpetuating cycle, with those having the least need for health insurance giving up their coverage due to high fees, which left a generally sicker insured population, necessitating still higher fees to cover the risk. In an attempt to reverse this trend, in July 1997 the Commonwealth introduced a levy surcharge of 1% for those with household incomes greater that $100,000 who did not hold private insurance. In January 1999, this was replaced by a 30% rebate (uncapped) against premiums payable for health insurance without being means tested. "Lifetime Health Cover" came into effect on 1 July 2000. "Lifetime Health Cover" came into effect on 1 July 2000, with the expressed intent to encourage younger and healthier people to take out health insurance. Those who held private health insurance with hospital coverage prior

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Reform of the Australian Health Care Landscape Table 14.1 Recurrent Health Expenditures, 1995-96 (AUD $Millions) Government Sector Major Area of Expenditure Public acute care hospitals Private hospitals Nursing homes Medical Other professional

Commonwealth 5,197

State and local 5,043

Nongovernment Sector

Total Expenditure

1,025

11,265

2,888

3,183

677

2,955

6,497

1,375

7,872

195

1,155

1,350

295 2,055

223

Pharmaceuticals

2,504

11

2,142

4.657

Other noninstitutional

1,156

1,775

2,230

5,161

395

187

125

707

336

614

851

1,801

18,630

7353

12,468

38,951

Research Other expenditure Total recurrent expenditure

to this date automatically pay the lowest premium, but those who did not join by 1 July but subsequently decide to take out private hospital coverage pay 2% more for each year they are over 30 years old. Health care financing comes from three main sources: • Basic Medicare levy of 1.5% of income • Commonwealth general revenue and state taxes • Private sector The pattern of funding is shown in Table 14.1 (AIHW, 1998a). A cornerstone of the Medicare system is the concept that it acts as an insurer, reimbursing patients for around 85% of their costs of medical care. The intention is to keep patients aware of costs and therefore reduce both overuse of the system and overservicing by doctors. Medicare bases its reimbursement on a schedule of fees, and while doctors are free to charge above the schedule, Medicare only reimburses based upon its schedule. Control Decisions The health sector is dominated by the medical profession, which has been historically and socially very influential. The professions regulate the number

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of trainees, for example, thereby managing supply and demand. Medical practitioners qualified overseas who attempt to gain registration in Australia frequently find this challenging due to professional control. The context of the revised strategy and policy decision-making process is that a major key—if not the key to the delivery of health care services—is the medical practitioners involved in its delivery. The private/public tension described earlier is evidenced in general medical practice, in that the general practitioner, as a self-employed person, has a business to run. As a result, the majority of clinicians are located within the major population areas, leading to service levels out of proportion to the population they service (Lawson, 1991; AIHW, 1998a). A subsequent dilemma is attracting clinicians to traditionally unattractive areas (e.g. aged care, rural health services, indigenous health) with public money. In these areas, the commonwealth is attempting to address this inequity in two ways, first by special funding and programs that have been introduced targeting vulnerable populations. Second, patients can only claim reimbursement for medical treatment if their doctor is registered with Medicare and has a "Medicare number." The commonwealth is restricting access to Medicare numbers in urban populations while making them more readily available for practitioners willing to work in areas with disadvantaged populations. In the context of health care delivery, in which medical practitioners are highly regarded and respected in the community, the decision-making processes and exploration of options reside within the medical body. In this role, the primary care physician has become a de facto gatekeeper. Access to hospital services and many private-sector specialist services is by a formal referral process. This gatekeeping role is not backed up by fundholding or other incentives; rather, it is based upon professional judgment and standards. Beyond this gatekeeping role, public-sector demand is also rationed via waiting lists and the hospital funding models that place a cap on the activity levels for which hospitals will be reimbursed. This again is a replication of the public/private interplay noted earlier that becomes reflected in the interpretation of market demands. Policy and strategic decision-making processes are purported to be made after full and exhaustive consultation to delineate the priorities of competing alternatives. However, in a rapidly changing climate where the volume of information and data can be overwhelming, decision making can easily revert to a process that reflects the safest option rather than the fully considered option.

RECENT REFORM EFFORTS Reforms over the last decade can be seen as a series of "reforms within a reform." The initial reform took the form of the 1975 introduction of Medibank and subsequently the 1984 Medicare based on the Labour Party's philosophy of equity and access. The current reforms stem from the National Health Strategy

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and Plan that emerged through the early 1990s, which was a review of 20 years of Medibank and Medicare, in addition to an evolving series of amendments that have taken place in the decade or so since the National Health Strategy was formulated. The last few years have seen a swing to a conservative coalition (Liberal and National parties) in the commonwealth government that has coincided with closer attention being paid to issues of efficiency and value for money within an economic rationalist framework. The key terms of reference of the National Health Strategy focused on the following: • The distribution of health costs and their impact on individuals and families • Factors creating demand for medical services and options to contain costs • The role of the private sector, particularly private hospitals and private health insurance, in relation to Medicare and the Australian health care delivery system • Service delivery systems that better integrate health and community services • The effect of current financial and organizational arrangements on effective health care delivery • The balance between the supply and demand of health workers (Mitchell, 1990) Current changes focus on cost containment and are expressed through economic and managerial changes at both a strategic and an operational level. Duckett identifies the two major issues that have impacted on hospitals over the last two decades as "changes in the proportion of same day cases" and changes "as a response to the move from historical to casemix funding in the private sector and in most Australian states" (Duckett, 2000:144). Such changes are very tightly controlled and monitored. Previous shifts in health care reform have been at a predominantly strategic level in which policy has been reformulated and market forces are left to interpret these policy changes. An underlying principle of these policy changes has been an emphasis on equity and access. Medicare, originally proposed as a universal insurance scheme providing access to care for all members of the population, has been progressively undermined. In part, the insidious and burgeoning cost of "nonbedside" diagnostic procedures that has increased the cost of health care in general and hospital care in particular can be blamed. For example pathology costs increased 82% in the period 1984-92, and radiology costs increased 179% in the same period. Until relatively recently, this has been aggravated by the decrease in the number of people taking up private health insurance, noted earlier. The governmental and legislative response to this trend has been economically and managerially driven in the form of the introduction of case-mix funding as the approach by which funds should be distributed to individual hospitals. These moves to activity-based funding have been led by the commonwealth and introduced by the states as a means of distributing funds to hospitals. The commonwealth distributes bulk funding to the states. These funds are not allocated

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directly to health, but are placed in the consolidated fund. The states then use case-mix costing and diagnostic-related groups to allocate funds to hospitals, based on the work done and acuity of the patients treated. This type of contracting is not a new phenomenon within an international context, but has been greeted with resistance from major sections of the community, both public and private. The general public sees it as restricting access and equity; the private sector sees it as undue interference in the regulation of fees and medical decision making. In particular, the medical profession has taken a strong stand against "managed-care"-style reforms. The National Health Strategy and Plan of the early 1990s attempted to address the spiraling costs of health care delivery and the increasing numbers of competing priorities to be serviced by the health dollar. The recent focus of commonwealth reforms, however, has been the private sector, with the aim of bringing extra funding into the health system through an increase in the insured population. The dilemma faced by strategists and policy shapers has resulted in efforts to entice people back to private health insurance while continuing with a user-pays approach at the local level of health care delivery. Recent reforms, noted earlier, have attempted to make private insurance more attractive through financial incentives and the introduction of entry-age-related premiums. Reforms also allowed the insurers to offer more attractive products. Historically, insurers were only allowed to offer policies that covered hospital costs and the gap between Medicare reimbursement and the Medicare schedule of fees for medical treatment. This has now been relaxed, allowing 100% reimbursement of actual fees. However, this reform required the medical profession to enter contracts with the insurers, a move that the profession has resisted, claiming it to be a subtle way of introducing managed care. To counter this, the commonwealth offered to guarantee the professions' right to determine treatment options provided contracts were accepted. The implication was also made that failure to adopt contracts could lead to stronger reforms. This situation remains in flux, with political tensions between the government, insurers, and the medical profession. The commonwealth's reform agenda for private health funds is based strongly around its aim to bring additional funding into the health sector and reduce the workload on the public sector. The medical community seems to be focused on retaining clinical freedom and its income levels, while the insurers are looking to increase efficiency and reduce their costs. It has recently been reported in one state, however, that up to 100,000 people a year who hold private health insurance are using state public hospitals. This appears to cast some doubt on the efficacy of the AUD $2.7-billion commonwealth government health insurance reforms in terms of taking pressure off the public system (Courier Mail, 2001 :p. 1). An explanation offered for the apparent failure of the policy to shift activity from the public to the private sector has been patient reluctance to pay extra private hospital charges.

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ASSESSMENT OF FUTURE DIRECTIONS Future developments of health care and service delivery will almost inevitably remain focused on the pivotal role of the medical practitioner. In the Australian context, the major challenges confronting the health care system are likely to be the following: • An aging population. The Australian population is starting to rapidly age, and the type of services available may need to change or contain a new mix. • New medical technology. Despite the doubts and reservations concerning new technology in terms of its net effectiveness as a diagnostic or treatment tool, new instruments and measures are continually being marketed. The cost of new technology is being continually passed on to the consumer in a prevailing climate of "user pays." • The drive to improve the efficiency and effectiveness of the hospital system and the development of improved incentives. • Inequities in health service provision and health outcome. For example, Aboriginal and Torres Strait Islander health remains significantly neglected, as is evidenced by observable outcomes of morbidity and mortality data. Recent commentary has reported that "overall, there has been little or no significant improvement in Aboriginal health, and there is no doubt that the gap between the indigenous and non-indigenous populations is continuing to increase. This is in marked contrast to the US, New Zealand and Canada, where those gaps in life expectancy are approximately three to four years, five to six years and seven years respectively, compared with the 16 to 18-year gap in Australia. Furthermore, the gap in those countries has been narrowing, not widening as it has been in Australia" (Ring, 2001). • Continued equity for rural populations. Australia is the size of the continental United States, with a population of around 19 million. The population within such a vast country is distributed with the majority of the population living on the coast. Rural populations face challenges accessing high-technology health services.

INTERESTS SPONSORING AND RESISTING REFORM EFFORTS As can be seen from the preceding, the major driver of reform is the commonwealth government, in Alford's terms having some equivalence to the "corporate rationalizers." The major repositories of resistance to reform yet also, at times, proponents of reform have been the medical fraternity (or the "professional monopolists") and at times the private health insurance funds and pharmaceutical/technology manufacturers. However, increasing consumer sophistication has led end-user representatives such as charitable organizations and lobby groups (the "community structural interests") to be important, but relatively diffuse, poorly organized, and ineffectual players. Duckett comments that the Australian track record on system-level change is "not so good" and identifies powerful interest groups such as health insurers and the medical pro-

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fession who combined to delay the introduction of universal health insurance. As he says, "Australia was one of the last countries in the western developed world to adopt a system of universal financing for health care, following a long and bitter struggle to introduce Medibank" (Duckett, 2000:230). Government The commonwealth government is a major source of reform. Due to the complicated and regulated nature of Australia's political and health system, these reforms tend to be moderated into incremental refinements of the status quo. Recent government reforms have focused on public-sector efficiency and private-sector attractiveness. It is noteworthy, however, that possibly the most significant recent health care policy change, the introduction of case-mix-based hospital funding, was in fact driven by a state government (Victoria). Palmer and Short point out that Alford's analysis of "structural interests" fails to take into account the significance of party political and ideological influences within this sector. They identify this limitation of the analytic framework with reference to health insurance policies, which "have been influenced considerably by which political party is in power federally" (2000:43). Social Lobby Groups Social lobby groups are organizations such as the Catholic church, which is one of the major private hospital operators in Australia, and the Australian Council of Social Services (ACOSS). The focus of their efforts is to preserve the integrity of their respective organizations while maintaining the effectiveness of the health services they administer—particularly with respect to equity and access regarding these programs and services. An example of service delivery problems experienced by these organizations is that the impact of reordered funding arrangements has resulted in similar health organizations having to compete with each other in terms of tendering for programs and grants. Previously, these groups networked well and assisted each other to a significant degree, whereas now they have to assess what information is of a commercially sensitive nature and therefore cannot be shared. Also, the reforms of the private health sector have given more power to the insurers, who now expect the hospitals to tender for preferred-supplier status and negotiate preferential pricing. This has introduced cost pressures on the private hospitals, particularly the not-for-profit ones, that they never previously experienced. Within this lobby group, there have also been supporters of reform who believe that there had been resource wastage under the previous arrangements. There has been an increasing awareness of the need to organize and advocate through multiple channels, and such groups as the Australian Council of Social Service, the Australian Consumers' Association, and the Consumers' Health

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Forum have a reasonably high public profile. However, in Alford's terms, they lag behind the professional monopolists and the corporate rationalizers in terms of their power and influence, and such power as they do possess appears to wax and wane according to the political orientation of the party in power. Medical Lobby Groups The medical lobby groups in the context of a business environment form the backbone of interests who are both supporting and resisting the reform efforts. The Australian Medical Association (AMA) is an extremely powerful lobby group with far more influence than groups such as the Australian Private Hospitals Association (APHA). In structural terms, a significant percentage of medical practitioners essentially conduct their own private business in the form of a general practice or specialist practice. As such, the clinician needs to conduct his/her business in such a way as to make a profit. Any reforms that threaten the medical profession's status, self-management, or income levels are vigorously resisted. Moves towards increasing salaried employment or restriction of clinical freedom are blocked. Attempts to increase the supply of medical specialists are defeated by the specialist colleges or local practitioners acting in anticompetitive manners. The government's agencies responsible for ensuring fair market practices make attempts to investigate health professionals for price fixing and monopolistic behavior with little success. With regard to being "professional monopolists," it should be noted that over the last decade or so there has been an increasing differentiation within this group and that it is misleading to group the entire profession within a single ideological and structural framework. For example, the Doctors' Reform Society is most commonly advocating consumer interests, and the Private Doctors Association is arguing right-wing, conservative interests. Insurance Lobby Groups The health insurance industry in Australia has been suffering for a number of years. Due to falling insurance levels and the shift of the insured population towards the aged and chronically ill, nearly every fund has been losing money. Understandably, therefore, recent reforms in the private health sector were supported by the health insurers who gained more members, increased subsidies, and increased powers to negotiate contracts with providers. These increased powers have been resisted by the providers. Other Industry Associations The health industry has many industry associations representing unique constituencies. These include the Australian Private Hospitals Association, groups representing allied health professionals, and groups representing public hospitals.

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Each of these lobbies for the interests of its members; however, none of these exert the influence of the medical profession. Palmer and Short have identified a gap in Alford's analysis, in the Australian context, in terms of the increasing strength of trade unions of health employees. While in Alford's terms such groups might be placed within a community-interest perspective, this does not reflect the Australian reality, where "when Labor governments are in power the interests of the trade union movement, as a whole, have been decisive in influencing the direction of health policy" (Palmer and Short, 2000:43). HOW THE REFORM EFFORTS RELATE TO ECONOMIC AND POLITICAL INTERESTS Shifting Focus from Social Need to Economic Need The increasing costs of medical services and the delivery of these services has made the need for efficient and integrated delivery systems more urgent. With respect to "prevention" and "treatment" approaches to health care, quantifying this care would seem to be the crux of the problem in the context of determining the optimal mix of service delivery. In the development of health planning and policy, governments must address a number of issues: • The public/private funding mix • The impact of this funding mix on the delivery of services • The split of services as they are directed to either prevention of ill health or treatment of illness • The increasing significance and convergence of high-technology medical interventions and alternative therapies While the earlier reforms that created Medibank and Medicare focused on the creation of an equitable health service, more recent reforms have been economically driven in an attempt to manage spiraling costs and create a sustainable health system. Palmer and Short comment, "As financial restraint has played a more important role in the public policy environment we have seen an increasing emphasis on managerial control and accountability" (Palmer and Short, 2000: xv). The Social Impact of Changing Economics Fundamental to the introduction of Medibank in 1975 was the concept of risk sharing based on containing costs of health care by providing and promoting equality of access to health care. For example, an emerging and significant sector of health care recipients is the aged. People diagnosed with arthritic and musculoskeletal conditions number approximately 4.6 million Australians, and this

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group has an overwhelming proportion of aged people. About 110,000 of these have a profound disability: 50,000 are bedridden, and 60,000 have very limited mobility. Many of these people are cared for in the community. The demand on the health dollar of these disease processes alone has been estimated as follows: • 11.7% of hospitalizations • 11.3% of casualty and outpatient visits • 6% of day-clinic visits • 8.9% of doctor consultations • 27.5% of health professional consultations • 12.7% of persons taking medication The Australian population has been aging since the early 1970s, and this is expected to continue for the next 50 years as follows: 1976: 9% of the population (1.3 million people) was 65 years or over. 1996: 12% of the population (2.2 million people) was 65 years or over. 2016: 16% of the population (3.5 million people) is expected to be 65 years or over. (AIHW 1998a) Historically, however, during the period 1982-83 to 1994-95, Australian real health expenditure per person grew by 2.8% per year. Of this increase, only 0.6% can be attributed to the aging of the population (AIHW, 1998a). It is this increase in costs, which is not reflected in increased taxation, that has driven the recent reform agenda. The source of many of these increases has been the increased use of high-technology services and pharmaceuticals. Public pressure and manufacturers keep driving the uptake of advanced technologies. Faced with public demand for increasingly expensive interventions that makes rationing or technology restriction unfeasible, the government is left with only two major options, to increase efficiency or to access additional funds. Increasing the Medicare levy or taxation to fund health would not be a popular decision. Therefore, the government has been channeled into its major reform efforts of privatesector improvement and public-sector efficiency.

Service Delivery Continued tension has developed due to the free market and a context of a cultural/social ambivalence of how much governmental control to impose on the marketplace. This means that the medical profession is able to determine what services are supplied, based on its own commercial interests. Minor interventions have been enacted by the government, such as availability of Medicare

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numbers, but the profession retains control over quantity and location of services. Because of an absence of a clear-cut picture of the public/private health arena, and the complexity of the operational and funding structures that currently exist, there is a paucity of conceptual frameworks in which to couch strategy and policy to address such issues as the interplay of efficiency and effectiveness while maintaining a cultural consensus. Further reduction in costs will be difficult to achieve because of entrenched procedures and organizational structures. Therefore, public regulation of the health system appears to offer the best prospects for more effective control over costs and their distribution. REFORM EFFORTS AND INTERNATIONAL SOCIOECONOMIC DEVELOPMENTS Australia's reforms, in many ways, reflect the international trend in health reform. The initial Medibank reforms of 1975 created a universal health insurance scheme while retaining much of the private-sector infrastructure as a complementary funding source and resource pool. In many ways, this reflected the structures found in a number of European countries, with their national health services or sickness funds. This has allowed Australia to deliver a health status in line with the majority of developed nations for costs of around U.S. $1,800 per capita and 8% of GDP. This places Australia's expenditure at 9th out of 20 OECD nations, behind Denmark, the Netherlands, and Norway and ahead of Japan, Sweden, and Italy (AIHW, 1998b). However, in common with several other countries, this pattern of expenditure and health level is not reflected in the indigenous population, where significantly higher spending is maintained for a far poorer result. In line with most of the developed nations and some developing nations, cost pressure has become a major issue for continued health delivery. The most recent reforms have therefore focused on efficiency in the public sector. However, the reforms in the private sector have focused on increasing the relevance and utility of this sector as an additional health resource. This, to a significant degree, is a reform aimed at maintaining equity by encouraging those with sufficient means to use the private sector, thereby freeing up the public system and its funding for use by those with the greatest need. This continued emphasis on equity has not always been seen in the reforms of other nations, and Australia's unique emphasis on a mixed public/private system has facilitated this approach. However, in common with many countries.having significant free-market health approaches, the distribution and allocation of resources and services remain at the mercy of major interest groups, particularly the medical profession. In many countries, the continual tension between containing costs and not compromising what the medical fraternity sees as its professional integrity and credibility continues to be a major problem. In Australia, as in many other countries, doctors have resisted the intrusion of government into what they see

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as their exclusive domain even though there has been a large commitment of government monies. Meanwhile, political economists have suggested that public funding of health care increases opportunities for transnational organizations to gain a corporate foothold and subsequent influence over medical decisionmaking processes and consequently contribute to cost increases. Certainly, Australian for-profit private hospitals have significant levels of overseas shareholding. Duckett forecasts that changes in technology will drive many aspects of hospital reform and that as state governments continue to become less disposed to use state capital funds for hospital refurbishment and upgrading, they will increasingly turn to the private sector to capitalize public hospitals (Duckett, 2000:145). Given a policy climate that is wedded to the assumption "privatization equals efficiency," the stage is set to welcome private investment from home or overseas—within the increasing globalization of the economy. CONCLUSION Australia, like all countries, has reached its current health structure through its unique history, economic performance, and cultural beliefs. In the postwar years Australia's economy boomed. Prices for agricultural products and minerals allowed the country to enjoy a high standard of living. The Labor government of 1972-75 used this economic strength to create a universal health system that delivered equity while maintaining the free-enterprise culture of health care. However, the oil crisis of the 1970s and the economic stagnation ofthe 1980s hit Australia hard. Trade deficits developed, overseas debt grew, and the country was faced with a much less vibrant outlook. In parallel to this economic woe, as in the rest of the world, the costs of health care escalated at a rate significantly above inflation. Yet the expectations of the population remained high, demanding universal health coverage and the latest health technologies. Recent discourses on health care reform have raised questions about the sustainability of universality as it is now understood. Even under universality not all groups are equitably served, and debates continue as to how resources might be distributed among the competing demands and priorities within the health care system. Despite an official entitlement to universal health coverage, the health service needs of those of non-English-speaking background, for example, frequently remain unaddressed. Schofield (1995:118) calls this "institutional disenfranchisement" and identifies as causes "the Anglocentric and hierarchical organizational practices" that have come to characterise the provision of health services. While official policy might articulate access and equity objectives, mainstream health services have been accused of failing to address needs of Australians of nonEnglish-speaking background. Measured by increased life expectancy and declining death rates, the Australian population is one of the world leaders. However, when the population is disaggregated, huge differentials are revealed. Universal health insurance and an ethos of "a fair go" for all Australians have failed to deal successfully with

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important subgroups in the population. This is particularly evident in the case of indigenous Australians, where the health inequality gap has widened between Aboriginal and non-Aboriginal Australians (AIHW, 1998a). Stewart et al. (2000) argue that while there are many environmental, socioeconomic, and cultural reasons for such trends, including issues associated with access to social power, resources, inappropriate service provision, and systematic discrimination, there are also unintended consequences flowing from organizational factors that sustain and reinforce inequity. For example, one of the key features of the Australian health care system is the relationship between the commonwealth and the states and associated funding issues. Partly stemming from the constitution, partly from historical precedent, and partly from the power of vested interests, the arrangements for service delivery and for funding those services are complex and diverse. Such complexity augments the possibility of irrationality in the planning and delivery of appropriate health and other services to the most needy, and attempts to match services to needs by one of the three levels of government is commonly interpreted by another level as cost shifting. The National Health Strategy recognized that the political arrangements that drive the funding mechanisms and that in turn affect the mix of services and the way they are planned and delivered have the propensity to create distortions and inefficiencies. A question raised by Stewart et al. (2000) is whether health reform, as this has been enacted in a context that has historically privileged the viewpoint of professionals and the migrants from the United Kingdom, adequately remedies the health inequities faced by new Australians and the indigenous people of Australia. Australia's complex political structure, with commonwealth and state governments managing health funding and delivery, restricts the ability of the government to make radical changes. Yet changes have been required to continue the delivery of an equitable health service. Therefore, throughout the 1990s and into the current century, the commonwealth governments have undertaken a series of minor reforms to refine the current health system. The emphasis of these minireforms has been to place pressure on both the public and private sectors to become more efficient, yet retain equity, by increasing the attractiveness of the private sector to those able to afford it, thereby reducing pressure on the public system. Without doubt, the most significant of these reforms were the introduction of case-mix-based hospital funding and the associated increase in efficiency incentives. As in many countries, the medical profession has been a major "stakeholder" in reform policy and implementation. The generally private-sector nature of the medical profession ensures that it has strong interests in maintaining its viability, income levels, and independence. In common with other interests in the private arena, such as the private hospitals, private health insurance companies, and specialists, this sector can be seen to have been successful in achieving greater public subsidy for private health insurance. Nevertheless, it is still possible to argue that Medicare is the central feature of the Australian health care system.

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Along with its predecessor, Medibank, universal health insurance structures have been provided through the historical conjunction of reformist governments and a vision for change in the health policy area, within an overall supportive economic context. REFERENCES Alford, R.R. (1975). Health Care Politics: Ideological and Interest Group Barriers to Reform. Chicago: University of Chicago Press. Australian Institute of Health and Welfare. (1995). Health in Australia. Canberra: Australian Government Publishing Service. Australian Institute of Health and Welfare. (1998a). Australia's Health 1998: The Sixth Biennial Health Report of the Australian Institute of Health and Welfare. Canberra: AIHW. Australian Institute of Health and Welfare. (1998b). International Health: How Australia Compares. Canberra: AIHW. Australian Institute of Health and Welfare. (2001). Australia's Health 2000. Australian Government Printing Service, Canberra, Australia,. Crichton, A. (1990). Slowly Taking Control? Australian Governments and Health Care Provision, 1788-1988. Sydney: Allen & Unwin. Davis, A., and George, J. (1990). States of Health: Health and Illness in Australia. Sydney: Harper Educational. Dewdney, J. (1972). Australian Health Services. Sydney: John Wiley. Duckett, S.J. (1984). Structural Interests and Australian Health Policy. Social Science and Medicine, 18:959-966. Duckett, S.J. (2000). The Australian Health Care System. Victoria, Australia: Oxford University Press. Gardner, H. (ed.). (1995). The Politics of Health: The Australian Experience. 2nd ed. Melbourne: Churchill Livingstone, Longman Australia. Gardner, H. (ed.). (1997). Health Policy in Australia. Melbourne: Oxford University Press. George, J. and Davis, A. (1998) States of Health: Health and Illness in Australia, 3rd edition. Melbourne, Australia: South Addison Wesley Longman Australia Pty Ltd. Harris, M.G, and Harris, R.D. (1998). The Australian Health System: Continuity and Change. Journal of Health and Human Services Administration, Spring, 442-67. Industry Commission. (1997). Private Health Insurance. Canberra: Industry Commission. Jupp, J. (1990). Two Hundred Years of Immigration. In The Health of Immigrant Australia: A Social Perspective, pp. 1-38. ed. J. Reid and P. Trompf. (eds). Sydney: Harcourt Brace Jovanovich. Lawson, J.S. (1991). Public Health Australia: An Introduction. Sydney: McGraw-Hill. Marmor, T.R. (1973). The Politics of Medicare. Chicago: Aldine Publishing Company. Martin, J. (1978). The Immigrant Presence: Australian Responses 1947-77. Sydney: George Allen and Unwin. Mitchell, J. (1990). The National Health Strategy: Setting the Agenda for Change. Background Paper No. 1. Queensland University of Technology. School of Public Health. November. Brisbane Treble Press.

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Palmer, GR. (1978). Social and Political Determinants of Changes in Health Care Financing and Delivery. In Perspectives in Australian Social Policy, ed. A. Graycar. Melbourne: Macmillan. Palmer, G.R., and Short, S.D. (2000). Health Care and Public Policy: An Australian Analysis. 3rd ed. South Melbourne: Macmillan Publishers Australia. Parnell, S. Courier Mail. (2001). Patients Ignore Private Benefits. 21 April, p. 1. Ring, I. (2001). Wanted: A Proper Treaty and Humane Policy. Australian, April 30. Sax, S. (1984). A Strife of Interests: Politics and Policies in Australian Health Services. North Sydney: Allen & Unwin. Schofield, T. (1995). The Health of Australians of Non-English Speaking Background: Key Concerns. Australian Journal of Public Health, 19(2): 117-19. Short, S.D. (1989). Community Participation or Manipulation? A Case Study of the Illawarra Cancer Appeal-a-thon. Community Health Studies, 13(1):34—38. Stewart, D.E., Lynam, M.J., Hall, W., and Anderson, J.M. (2000). Continuities, Discontinuities, and Disjunctures: The Borderland between History, Ideology, and Health Care Reform in Canada and Australia. Unpublished paper, University of British Columbia. Twaddle, A.C, and Hessler, R.M. (1977). A Sociology of Health. St. Louis: C.V. Mosby Company.

Chapter 15

Rural Health Care Reforms in the People's Republic of China Ofra Anson As in many other developed and developing societies, the rural health care system in China underwent a major reform during the early 1980s, followed by several modifications thereafter. However, unlike the reforms in most other countries, the health care reform in rural China was unplanned. Rather, it was largely an unanticipated by-product of the economic reforms of 1979 and of the transition from a planned, centralized economy to the "socialist market economy." In this chapter, the transition in the health care system in rural China will be described. Special attention will be paid to the challenges facing China as it enters the new millennium. BASIC INFORMATION Some basic data are necessary in order to appreciate the social, economic, and health achievements of China during the five decades since the Communist Revolution and the difficulties and the challenges that it has faced and continues to face. First, the People's Republic of China is the size of a continent: the mainland area is 9,600,000 square kilometers, the length of its coastline is 18,000 kilometers, and it borders on 13 different countries. It is composed of 31 provinces, municipalities, and autonomous regions, which together are composed of 2,126 counties. By contrast, the contiguous United States of America covers almost the same area, has 48 states, borders on 2 countries, and has less than one-quarter the population of China. In 1998 China had over one-fifth of the world's population, 1,248,100,000 individuals, with an annual natural growth rate of 9.53 per 1,000 population. The majority of the population was rural, 69.6% in 1998, with a somewhat higher natural growth rate, 10.04 per 1,000 that year. Children under 14 years

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of age comprised 24.3% of the population, and the elderly, 7.4% (China Yearbook, 1999). The large majority of the Chinese population is Han. Minorities comprised 8.0% of the population at the last census (1990), the biggest minority group being the Zhuang (15,555,820 persons or 17.2% of all minorities), and the smallest minority group the Lhoba (2,322 individuals residing in Tibet). China is considered a low-income country (World Bank, 2000). In 1998 its per capita gross national product was U.S. $750, or $3,051 in terms of the international standard of purchasing power parity (PPP) rates. The average per capita GNP in the world that year was $4,890, and the average per-capita PPP $6,300. These figures ranked China in the 145th and the 132th places, respectively, among the 206 countries listed by the World Bank. At the same time, China's economy is more successful than that of other industrial, developing, and low-income countries. Its annual per capita GNP has grown by an average of 6.8% each year since 1965, while the annual average growth rate of the world has been 1.4%, and that of the low-income societies 3.7%. In 1997-1998 alone the average per-capita GNP of China increased by 6.4%. Other low and middle-income countries experienced negative growth that year, bringing the world average down to zero. Not surprisingly, given the size of the country and the enormous variability in the geography and the natural resources, economic growth and development are unevenly distributed. While some regions, counties, villages, and individuals are fairly prosperous, others are relatively poor. In 1998, 4.6% of the rural population was below the national poverty line, 18.5% lived on less than $1.00 a day, and 53.7% lived on on less than $2.00 a day (World Bank, 2000). Yet the size of the population and the economy heavily constrains China's ability to establish a welfare state despite its socialist ideology. Chinese socialism sought to establish a completely public-owned society, where the distribution of resources, goods, and products was based on, and designed to meet, the needs of the people. In line with this aspiration, "five guarantees"—the right of all to food, health care, education, shelter, and a funeral—were included in the constitution of the People's Republic of China, approved within a few years after the liberation in 1949. At this stage of its economic development, however, China has not been able to sustain a universal welfare benefits system, that is, monetary transfers to individuals, especially to the large rural population. Instead, the government's efforts were, and still are, concentrated on providing the very poor regions and villages with means of survival, on one hand, and on enhancing the development of agriculture and industrial production, on the other. Thus most welfare transfers and support are offered at the village level. Villages facing persistent poverty or temporary hazards are provided with food supplies (mainly grains), and emergency action is taken to avoid starvation. Longer-term guidance and assistance are given to poverty-stricken villages in

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order to speed up their economic development, increase their production, and thus help them move out of poverty in the foreseeable future. Furthermore, the Chinese Communist Party has had to rely on local communities and the family as the main source of support for the old and the needy as it pursues its ideological and constitutional commitment to provide all citizens with at least the "five guarantees." It should be noted that relying on family ties and local commitments was not only at variance with the socialist ideology, but also had the potential to bring about social fragmentation, reinforce sectoral loyalties, and strengthen the patriarchal Confucian value system. Yet despite the risk of encouraging counterrevolutionary processes, the obligation of kin to support needy family members was embedded in the constitution. The duty of children to provide and care for their elderly parents was further established in a series of later laws that are largely enforced by local governments and communities (Tang et al., 1994). Only persons who have no source of income, no work, and no relatives to support them—the "three no's"—are entitled to the welfare safety network of publicly financed "five guarantees." The responsibility for providing the five basic needs lies with the local authorities, which, in the rural areas, are the village committees. Yet, as will be described later in this chapter, the massive decollectivization, an important part of the economic reforms of 1979, seriously hampered the ability of the village administration to meet this responsibility. China is in the midst of the epidemiological transition. In 1998 the life expectancy at birth of men in China was 68 years, and that of women was 72 years. During the first two decades after the transition to the "socialist market economy," the life expectancy of Chinese men increased by four years and that of Chinese women by six years. According to the World Health Report of 1999 (World Health Organization, 2000), the life expectancy of Chinese women was 4.2 years longer than might have been expected on the basis of the level of income. Crude overall mortality rates in rural China decreased steadily after liberation, but this trend seems to have ceased during the late 1970s (China Yearbook, 1999). Crude mortality rates increased from 6.47 per 1,000 population in 1978 to 7.01 per 1,000 in 1998, probably as a result of the aging of the population. Throughout this period, rural mortality rates exceeded the urban mortality rates by about 25%. Infant and child mortality has decreased dramatically since the establishment of the People's Republic of China in 1949. Infant mortality declined from 132 per 1,000 live births in 1960 to 52 per 1,000 in 1978, and to 41 per 1,000 in 1998, 33% lower than the level predicted by China's level of economic development. The mortality of children before their fifth birthday declined from 6.5% in 1980 to 3.6% in 1998 (World Bank, 2000). As with overall mortality, infant and childhood mortality in the countryside is considerably higher than in the cities. The urban/rural discrepancy is also apparent in the leading causes of death. Urban China has largely completed the epidemiological transition, and degen-

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erative diseases were the major causes of death in 1997. Malignant neoplasms and cardio- and cerebrovascular diseases accounted for 62.1% of deaths in the cities, but for less than half of all deaths in rural China. The leading cause of death in the country was respiratory disease, accounting for 22.9% of all rural deaths that year. Furthermore, pulmonary tuberculosis and infectious diseases, absent from the list of the top 10 leading causes of death in urban China, were responsible for 2.8% of rural deaths. Deaths due to external causes—trauma and intoxication—were almost twice as frequent in rural than in urban areas (China Yearbook, 2000). This pattern is at least partially the result of differential access to emergency health services, crucial in the prevention of trauma-induced death (Jiang et al., 1996). China is thus faced with a whole range of health problems characterizing both developing and postindustrial societies, the problems of the poor and the affluent. It needs to cope with, prevent, and treat both infectious diseases and noncommunicable, chronic conditions; malnutrition, malaria, and schistosomiasis have not yet been eradicated, while hypertension and obesity have started to emerge as public health problems (Berrios et al., 1997; Hao et al., 1999; Popkin et al., 1995; Qu et al., 2000; Wang et al, 1998; Yu et al., 1995).

THE HEALTH CARE SYSTEM BEFORE THE REFORMS The development of the rural health care system before the reforms can be roughly divided into two major periods: the first three five-year plans, from the establishment of Communist, independent China to the Cultural Revolution; and from the decade of the Cultural Revolution to the political changes and the economic reforms of 1979. These two periods and their effect on the development of both health and the health care system will be briefly reviewed here. From Liberation to the Cultural Revolution 1949-1965 The People's Republic of China (PRC) was established in 1949 after centuries of exploitive feudalism, bloody war against Japan, and civil war between the Communists led by Mao Ze-Dong and the Kuomintang, led by Chiang KaiShek. Poverty prevailed, housing conditions were largely inadequate, and sanitation was nonexistent, particularly in the rural areas, which is the focus of this chapter. As a result, the health status of the population was extremely poor. Although systematic vital statistics were scarcely collected, it is commonly accepted that the life expectancy at birth was about 37 years, infant mortality was about 250 per 1,000 live births, and maternal mortality was estimated at 150 per 100,000 live births (Young, 1989; Ministry of Public Health, 1993). Health services were extremely scarce and were especially lacking in the rural areas. Most of the available services were located in the cities and were privately owned. It is estimated that in 1949 there were 0.67 doctors per 1,000 population and some 3,600 health institutions in the whole of China. Of these, 2,600 were

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located in the cities; just 1,000 institutions operated in the counties or in the villages. In other words, health services were largely inaccessible to the majority of the Chinese population, 87.5% of whom lived in the rural areas (Ministry of Public Health, 1984; China Yearbook, 1998). The rural population had to rely on traditional healers or persons applying traditional Chinese medicine, with little or no formal education or vocational training (Liu et al., 1994). The poor health status and the lack of health services were incompatible with the Chinese Communist Party's (CCP) ideology and goals. This ideology was the basis of the First Five-Year Plan (1949-54), which laid down the foundations for a health and welfare policy that aimed to establish nationwide improvements in health and health services. The "Four Principles" were formulated at the First National Health Conference in August 1950, as were measures for their implementation (Dezhi, 1992; Liu et al., 1994; Wong and Chiu, 1998). According to this policy, 1. health care should be provided to workers, farmers, and soldiers by publicly owned andfinancedhealth services; 2. health services should integrate traditional Chinese medicine and Western medicine in care provision; 3. priority should be given to public health, with special attention to the prevention of communicable and infectious diseases and to mother and child care; and 4. health care should be combined with mass movements in the form of health campaigns aimed at eradicating endemic infectious diseases and accompanied by health education presenting the benefits of personal hygiene and nutrition. These four principles were largely put into operation during the Second and Third Five-Year Plans (1955-65; see Chen et al., 1995). Since 1949 most private enterprises have been nationalized. Private capital and land have been confiscated by the government, and private industry has been bought out at a low price. By 1956 most of the land had been redistributed to rural collectives, and the share of private production, over 60% of GNP in 1949, had been reduced to less than 1% (Liu et al., 1994). Similar action was taken in the health care sector. Health institutions were transferred from private or foreign ownership to public hands, either to the Ministry of Health or to the health departments of local governments. Doctors in private practice were gradually recruited by the developing public sector. Data from Shanghai suggest that by 1962 only 3.2% of the health personnel were engaged in private practice, compared with 56.5% in 1950. Basic medical training programs were developed for preparing health workers to carry out public health policies and health campaigns. A war was declared on the "four pests"—bedbugs, flies, mosquitoes, and rats. A special program was established along the Yangtze River valley to eradicate snails and thus control schistosomiasis. Village health workers were involved in promoting personal hygiene and nutrition among their fellow farmers, along with

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measures taken to improve sanitation, purify water supply, and, from the early 1960s on, carry out the different immunization programs. These efforts were highly successful, and mortality from infectious diseases, in which animals, environmental factors, and personal hygiene play a major role, declined rapidly. The decline in morbidity, however, was slower, as were the results of the national immunization programs. During this period, all aspects of health care delivery were developed and financed by public resources, and a three-tier system of city and county hospitals, township health centers, and village local services was developed. This required simultaneous investments in infrastructure, materials, equipment, and manpower, in particular in rural China (Chen et al., 1995). It was then that a multilevel medical education system was established. Local health workers, that is, midwives, public health personnel, and barefoot doctors, were trained by a threemonth apprenticeship in township health centers to carry out health campaigns and preventive, mother and child, and simple curative care for the rural population at the commune/brigade level. Three-year college programs were established to provide doctors for township-level facilities, and university medical schools prepared doctors in Western or Chinese medicine for county- and citylevel hospitals. During this period, the ratio of doctors to population increased by 50%, from 0.74 per 1,000 population in 1952 to 1.05 per 1,000 in 1965 (China Yearbook, 1999). Health facilities were also developed during this period, though they varied in the quantity and the quality of care available, in terms of both technology and personnel. By 1952 there were close to 37,000 health institutions, 10 times more than in 1948 (China Yearbook, 1999). Clinics were established around the country, and their number increased from 769 in 1949 to over 29,000 in 1952. The number of hospitals increased during these early years from 2,600 to 3,540, all located in county centers and in the larger cities. Each tier was responsible for both preventive and curative care, guiding and supervising the lower tier and accountable to the upper level. It was during this period that health insurance started to emerge. This process can be seen in light of the CCP ideology, which saw meeting the health needs of the population as providing a basic right, but also in light of the population's active involvement in health issues. Health insurance, named "the cooperative medical scheme," started as a local initiative in several collectives, relied heavily on the collective economy system, and was based on the voluntary collaboration of the residents of each village. In 1960 it was adopted by the Chinese Ministries of Health, Agriculture and Finance. Within a short time after the "Rural Medical Cooperation Rules (Tentative Draft)" was published, over 90% of the villages (then, production brigades) established medical cooperative systems that financed the health services from three sources: the contributions ofthe members, the welfare funds of the brigade, and the public welfare funds of the commune (Lennart et al, 1996). On the average, 1.5-3.0 yuan per year were collected from each individual

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at the end of crop year. In return for this contribution, a member of the cooperative medical scheme was entitled to health care at reduced cost, though coverage varied from one village to another. In some villages, registration fees were charged and medications were free; in others, registration fees were waived, but medications and other treatment fees were not covered; and in still other villages, medication and treatment were purchased at a discount price. Hospitalization charges were covered, fully or partially, according to the patient's and the brigade's financial situation. It should be noted, however, that at that time, medical expenditures were relatively very low, partly because traditional Chinese medical intervention and Chinese herbal medicines were widely used at low costs. The medical cooperation system thus guaranteed access to basic health care to almost all the rural population. Yet beside the rapid improvement in health status and the development of health services for the rural population, the end of the 1950s and the beginning of the 1960s also witnessed major natural and man-made disasters. The Great Leap Forward, a widespread industrialization effort launched by Mao Ze-Dong in the late 1950s, brought about environmental damage, famine, and the loss of millions of lives. The purpose of the plan was to speed up industrialization, with an emphasis on heavy steel industry, and boost agricultural production. The allocation of most social resources and rural manpower to industrialization and the implementation of unsuitable agricultural methods, such as overfarming, drained soil, forestry, health, and welfare resources. A sharp decline in agricultural production followed, which, together with other natural disasters, brought about a severe famine. Some estimate the cost of the Great Leap Forward and the famine associated with it at between 20 and 50 million lives (Hesketh and Zhu, 1997). The events of 1959-1961, however, had some by-products that, in the years to come, had positive health-related effects. A system of grain transfer and distribution was developed that guaranteed each commune at least a minimum grain supply per person and ensured survival in case of natural disasters such as flood or drought (Tang et al., 1994). Also, water supply, necessary for the industrialization effort, was extended to remote parts of rural China. This expansion not only made safe water more accessible to the population, but also founded the infrastructure that enabled rural industry to flourish two decades later. By the end of the 1970s, rural industry had become an important source of income, both for individuals and local administrations. The Cultural Revolution, 1966-1976 The period of the Cultural Revolution was characterized by severe social and economic turbulence. Ideologically, the Cultural Revolution was in line with Mao Ze-Dong's perception of communism's underlying philosophy of perpetual social change and reexamination of values, attitudes, and beliefs. In practice, one of the formal objectives of the Cultural Revolution was to prevent the

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development of capitalist and Western orientations, and to fight bureaucratic stagnation and nepotism brought about by the relative social and political stability of the postrevolution period. During the Cultural Revolution, the residual private economic enterprises that had survived the early nationalization period were banned, and self-employment production was prohibited. Many intellectuals, in particular those with Western training or specialization, and persons with foreign relations were publicly criticized and lost their working positions. Scholars, students, administrators, and others who were suspected of holding revisionist attitudes or relaxed Marxist ideology were "sent down" to the countryside to be reeducated by farmers (Zhou and Hou, 1999). This period of turmoil deeply affected the health sector too. The few doctors who still practiced privately either stopped practicing or joined publicly owned facilities. Similar to the fate of the universities, higher-level medical education largely ceased, research was discontinued, and many hospitals were closed. The number of doctors declined from 1.05 per 1,000 population to 0.85, and the number of health facilities declined by 33%. Some health campaigns that had successfully decreased mortality from infectious diseases during the first 15 years of the independent PRC were discontinued (China Yearbook, 1998; Dezhi, 1992; Liu et al., 1994). The Cultural Revolution, however, affected mainly the urban health care institutions and personnel. The rural health services continued to flourish and expand. The eradicated private practices were replaced by public services, and the relocation of university-trained physicians brought many competent medical personnel to rural health institutions. This population movement enabled the development and expansion of county-level hospitals and township health centers and the training of selected members of the rural brigades as health workers, barefoot doctors, and midwives. While the total number of health care personnel decreased by 5% between 1965 and 1970, the number of nurses and midwives increased by 25%. The three-tier health delivery network was completed during the period of the Cultural Revolution. The number of village clinics and health centers increased dramatically, and by the end of the period almost all villages had a clinic, in which 2 to 4 barefoot doctors served a population of 1,000 to 3,000 people. The few exceptions were small remote villages, which were mainly located in the mountains. Barefoot doctors could consult with, and refer patients to, the nearest township health center, which served, on the average, some 25 villages, or a population of 15,000-50,000. By the end of the Cultural Revolution, most health centers were equipped with inpatient facilities, and the span of their services had been expanded. If these were not sufficient, patients could be referred to the county hospital, which was responsible for about 14 township health centers. The rural cooperative insurance scheme had also been expanded and became

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compulsory during the Cultural Revolution. By 1976 health services were available, that is, affordable and accessible, to almost all the rural population of China, as the great majority of the urban and rural population was entitled to one of the health insurance schemes. Further, hospital registration fees, the price of medications, and that of treatment procedures were still low. The three-tier grass-roots facilities were well spread out, though they were sometimes poorly equipped and the quality of care provision was uneven. In general, village clinics provided services for the population in a radius of 1.5-2.5 kilometers and were thus highly accessible. Moreover, rural health care providers were eminently motivated to serve the population to the best of their ability because they were chosen by their fellow farmers, trained at their expense, and enjoyed far better working conditions (Chen et al., 1993; Dezhi, 1992; Kan, 1990; Liu et al., 1994). At the same time, it should be remembered that the Cultural Revolution had serious negative health consequences. Some 17 million urbanites, the majority of whom were youngsters from high-school to college age, were mobilized and "sent down" to agricultural work (Zhou and Hou, 1999). For many, this experience was traumatic. Most of them were unfamiliar with the comparatively poor living conditions of the countryside and were required to perform manual labor for long hours, seven days a week. Above and beyond the physical difficulties and the poor nutrition, the relocated persons were cut off from family, friends, and social support networks. In the cities, most services and government agencies, including health, welfare, and job allocation, practically stopped functioning. The urban economy became largely paralyzed, and unemployment rates increased dramatically. The negative health consequences of such processes have been well documented in developed, developing, and former Communist societies. The Cultural Revolution certainly claimed many lives, and its long-term health consequences still remain unclear. Nevertheless, the health status of the population continued to improve. Crude mortality rates declined from 11.1 per 1,000 rural population in 1952 to 10.6 in 1965, and further to 6.47 in 1978, just before the transition to "the socialist market economy." Improved nutrition and preventive and public health activities played a major role in reducing mortality rates from 23 leading infectious diseases. Mortality caused by infectious diseases fell from 18.7 per 100,000 in 1965, the first year for which reliable data are available, to 4.4 in 1979, and morbidity rates declined from 35.0 per 1,000 population in 1965 to 20.8 in 1979 (Dezhi, 1992). In sum, on the verge of the reform, health services were owned and financed by the public sector and were accessible and affordable to nearly all the population. The great majority of the population had health insurance and enjoyed a welfare network funded jointly by central and local governments, and in most places the commune/brigade used collective work points to sustain these systems.

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THE ECONOMIC REFORMS OF 1979 AND THE HEALTH CARE SYSTEM The upheaval of the Cultural Revolution almost ruined China's economy. The major challenge in the first years after this revolution was to revitalize the economy. During the period 1977-1979, a transition from collective production and consumption toward a "socialist market economy" was planned and gradually implemented. The rural economy, embracing 82% of the population at that time and crucial to avoid further famine, was the top priority. Indeed, one of the first measures to be introduced was "the responsibility system of household production" in rural China. Collective agriculture was disbanded over a two-year period, and land was redistributed to families, according to household size. Generally, households received their portion of the commune/brigade's land on a 15-year lease. Planned agricultural production was gradually reduced, and farmers enjoyed the freedom to cultivate products not defined by the state. A given amount of tax per unit of land was paid to the government, and the rest could be sold on the free market. This dual-track approach enabled the government to keep basic food at a relatively low price and gradually to increase the price of state supplies to market level (Sachs and Woo, 1996). Contrary to the Cultural Revolution's effect on the health sector, the new economic reforms left the urban health care system basically intact, but had profound consequences for the rural health services (Chen et al., 1993; Gian, 1991; Kan, 1990; Liu et al. 1994; Shi, 1993; Sun, 1992; Young, 1989). "The responsibility system of household production" initiated a number of intertwined processes that ended in the collapse of practically all cooperative medical insurance schemes and the privatization of almost half of the rural clinics within six years. By 1989 health services at reduced fees, or other systems of reimbursement of medical expenses, were available in only 4.8% of villages in the whole of China. One of the most important factors behind these processes was the collapse of the financial basis of the commune (brigade) as a consequence of the dissolution of the collective structure. Before the economic reforms, the cooperative medical scheme was financed by the contributions of the members, the commune welfare fund, and the county or the provincial government. Bookkeeping was done by the village administration, which distributed cash against work points. In many places, the village administration deducted the premium directly from the work points accumulated by a given household before the income was transferred. With the transition to the household-responsibility economy, the village was no longer able to maintain and finance the medical cooperative. Further, while the medical cooperative scheme had started off as a local initiative, it had become compulsory during the Cultural Revolution. Mobilizing the population to voluntary participation in an insurance scheme presented several problems. First, farmers had no concept of "insurance," and those who did

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not expect medical expenses were not willing to join. Premium collection thus became almost impossible. Second, for many farmers, administrators, and politicians, the cooperative medical scheme, enforced during the Cultural Revolution, had been identified with the turmoil. In effect, the cooperative medical insurance scheme broke up of its own accord along with other aspects of this period of upheaval, already discredited by the People's Congress. Moreover, the disposable income of rural families increased dramatically within a short time, and increasing demand for high-quality health care quickly followed the increase in income. Well-to-do farmers preferred to seek medical help at county or city hospitals, despite the inconvenience and the additional costs (Yip et al., 1998). At the same time, the income generated from practicing medicine in the village cooperative clinic was relatively low (Chen, 2001). Barefoot doctors, who formerly had enjoyed a higher standard of living than farmers, now ran the risk of falling behind their neighbors. The demand for better-quality health services forced them to improve the equipment they used, store a wider range of medications, and upgrade their professional skills. With the breakup of the cooperative medical scheme under the individualresponsibility system, they had to bear all costs themselves. Some exchanged practicing medicine for other economic activities or enterprises, such as agriculture or business, or joined the developing rural industry. Others combined business and/or agriculture with medical practice, a solution that seems to prevail today, since village doctors, like their fellow farmers, have received their share of the redistributed collective land. The brigade clinic, no longer supported by the village administration, was often leased out to one or more of the doctors who had operated it under the cooperative system. Others established a group practice or opened a clinic in their homes or business. Most of the village doctors were now paid on a feefor-service basis, with fees being paid out of the patient's pocket or partially covered by the newly emerging rural medical insurance schemes. Some village doctors were also contracted to continue the provision of preventive health care for a fixed annual income financed by the township administration's public resources. Currently, over half of the villages are served by private practitioners alone. Around 20% of villages, mainly those that enjoy economic success, have been able to maintain the old collective system. In about the same proportion of the villages, primary health care is provided by both private practitioners and collectively owned clinics. These villages typically have a large population and are economically successful. The reforms deeply affected the whole of the three-tier rural health provision system. Township health centers, formerly financed by public resources from the central or local government, were now increasingly dependent on patients' fees and on operating nonmedical economic enterprises (Liu et al., 1996). Many township hospitals could not cope with the economic reforms in the health sector and had to close down or reduce the number of staff and beds. Material costs

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increased, the share of government in financing the health center decreased, but patients' fees remained low and were still controlled by the government. Between 1980 and 1987 the number of township hospitals decreased by 15%, and the number of township level beds by 17%. Similarly, public funding no longer covered the costs of running the county hospitals. While facilities at both levels enjoyed more freedom in generating income and the use of any surplus, the pressure to generate income and cut expenses affected medical practice, equity, and equality. The links between the three tiers of care provision weakened, health centers and hospitals became reluctant to invest in supporting grass-roots primary care, and village doctors became solo practitioners, relatively free of collegial supervision. Nonetheless, some hospitals have opened branches in rural areas since 1979. This trend has been motivated by a combination of three factors already discussed. First, the collapse of the collective left some villages, especially the poorer ones, without any primary health care services at all. The government had to step in to meet the health needs of this population. Second, branches of upper-level hospitals in the rural areas, staffed by doctors who had graduated from colleges or universities, were one measure taken to improve the quality of health care. Finally, opening outpatient, fee-for-service facilities enabled hospitals to cope better with the increased pressure to generate an increasing part of their own resources. About 5% of the villages are currently served by such clinics. The government continued to cover most public health expenses. However, since health centers and hospitals no longer participated in public health tasks, these services were administratively separated from curative care provision. It also became increasingly difficult to mobilize farmers for health campaigns, as they were not paid for the time spent on these activities. In sum, the economic reforms of 1979 brought about a far-reaching reform of the health care provision system in rural China. As mentioned in the beginning of this chapter, these changes were unplanned, and the transition from a system run by the collective and financed jointly by members' contributions and public resources to a fee-for-service system raised several problems. In the years that followed the reforms, attempts were made to remedy some of the ills they caused. We now turn to review distinguished examples of these modifications. THE MODIFICATION PERIOD, 1985 AND THEREAFTER Following the economic reforms of 1979, China's farmers experienced a rapid increase in their standard of living. By the end of the land-redistribution process, which lasted for about two years, the national average per capita annual income in the rural areas increased by 39% in real terms. Ten years after the implementation of the "system of household responsibility" had been completed, the average annual per capita income was three times higher than it was in 1978

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(China Yearbook, 2000). Given the size of the country, there are, of course, large regional variations, which are associated with differential health status of the population, its access to care, equity, and inequalities. Nevertheless, on the average, the elevated standard of living, together with the continuation of free-of-charge public health services and preventive medicine, has brought about a significant improvement in the health status of the population. In 1987, 10 years after the initial steps toward the transition from a state-planned and controlled market to a "socialist market economy," the life expectancy at birth was 71.5 years in the cities and 67.3 years in the countryside (Ministry of Public Health, 1993); infant mortality in the cities was 20.0 per 1,000 live births and 46.5 in the villages (Dezhi, 1992); and maternal mortality in 1989 was 50 and 115, per 1000 live births respectively (Lawson and Lin, 1994). Mortality rates from the 23 leading infectious diseases continued to decline, from 4.40 per 100,000 population in 1979 to 1.49 in 1988; the respective morbidity rates were 20.8 and 4.7 per 1,000 population. Nonetheless, there are some indications that the improvement in health indicators leveled off during the 1990s, and that the health consequences of the economic prosperity experienced in rural China since the economic reforms are far from being satisfac-. tory. Some observers argue that the overall improvement masks considerable national and regional variation in health (Liu et al., 1999). In other words, while some communities enjoyed dramatic improvement in access to health, in other villages health stagnated, and that of still others seems to have deteriorated. Yet, in line with socialist ideology, it was necessary to ensure access to care for the rural population as well as to ensure the quality of care. Since 1982 several steps have been taken toward these goals. Small villages, those with populations under 500 persons, receive primary care services in the nearest village or in township health centers. This arrangement currently covers some 4% of the villages. Hospital branches were established in larger villages unable to attract care providers, as mentioned earlier. It seems that the efforts taken to maintain the well-spread primary rural health services achieved before the reforms were indeed successful. On the average, the distance from a village center to a township health center is 2.0 kilometers, and the distance from the average household to the closest clinic is less than 0.5 kilometer (Henderson et al., 1995). Efforts were made to regulate prices of health care and to avoid poverty as a result of sickness and medical expenditures. Selling medications prescribed and performing medical procedures such as injections and infusions are the main source of income of the village doctors (Zhan et al., 1998). The price of drugs is still largely regulated by the government, and the profit margin was set to an average of 15% for Chinese herbs and 30% for Western medications. While the purpose of this measure was to avoid accelerating out-of-pocket costs, village doctors now have a twofold incentive to prescribe Western drugs. One is embedded in the nature of traditional Chinese herbs, which take up more space and preparation time; the other is the higher profit generated from selling Western medicines. Indeed, it is estimated that medications account for about half of

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the total health expenditures in China (McGreevey, 1995), and that doctors prescribe 2.3 drugs per visit (World Bank, 1992). In the 1990s, as China prepared to carry out "the program of 'health for all in 2000' in our rural areas," ways to recover the cooperative medical system were sought. In May 1997 the Chinese State Department issued Document No. 18, "Suggestions for Developing and Improving the Rural Cooperative Medical System," drafted by the Ministries of Health and Agriculture, the Treasury Planning Committee, and the Civil Administration Office. Since then, more than 350 counties have developed a cooperative medical system, though one quite different from the earlier schemes that existed before the economic reforms. "Under the leadership of the government, regulated by the local people, and supported by the public," (Chinese State Department, 1997) the financial basis of the new schemes relies heavily on individual contributions, with coverage decided at the local level. It was hoped that adjusting the cooperative insurance scheme to local conditions and needs would increase the motivation of the villagers to join the new arrangements. Under this assumption, if decisions regarding methods of fundraising, premium collection, and eligibility are made locally, a universal insurance coverage will gradually be achieved. According to a survey conducted in 42 experimental townships, an average farmer paid 17.7 yuan for cooperative medical insurance in 1996.' In this survey, 84.2% of the funds of the cooperative medical scheme came from local individual residents. An additional 8.9% came from the village committees, 5.6% from the township authorities, and 1.4% from the county government. The average reimbursement for outpatient services was 29.4% in village clinics, 20.8% in township hospitals, and only 7.1% for inpatient services in county or city hospitals (Young et al., 1998). Until now, however, China has not developed a definitive model of rural medical insurance. The quality of care has to be considered too. As mentioned earlier, most health personnel in the villages before the reforms had only basic training, with periodic refresher courses. Bare-foot doctors were appointed by the commune/brigade, which bore all training and continuing education costs. There was no licensing, since only the assigned and trained persons could engage in medical practice and were rewarded by work points from the village administration. With the dissolution of the collective, these means of control disappeared too. It was necessary to develop licensing procedures to ensure the vocational competence of the practitioners. Since January 1985 rural health practitioners have been required to take a qualification examination, issued by the Health Department of the province in which they practice. Officially, there were no prerequisites of formal medical training for taking these examinations. Those who could prove a knowledge equivalent to a secondary medical high-school level were qualified as "village doctors," those who failed, about one-half of the applicants in 1985, were certified as "medical persons." Following the new licensing regulations, "barefoot

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doctors" were no longer legally recognized by the Chinese Health Ministry as providers of health care. Yet the mandatory examinations were not sufficient to assure the quality of health care. Evaluation projects sponsored by the Ministry of Health in 1991 showed that the professional knowledge and competence of many of the rural health care providers, and the "medical persons" in particular, were far from satisfactory. "The education plan for rural practitioners (1991-2000)" was launched in order to provide rural health practitioners with a systematic secondary medical education. This program brought about an increase in the number of certified village doctors in the rural health care system and a decline in the proportion of medical persons. In 1997, 73.8% of the village doctors met the criteria of secondary medical education, an increase of 51.2% from 1985 (Yearbook of Sanitarian Statistics, 1998). The transition from a state-planned economy to a market economy reached the pharmaceutical industry in 1982 (Dong et al., 1999). In other words, pharmaceutical companies no longer had to follow a centralized plan of production, but could adjust their industrial activity according to the demands of the market. The government also largely withdrew from drug distribution, and individual factories could market their products directly to customers and consumers at wholesale prices, avoiding the delays and the expenses involved in using the government distribution network. Indeed, more medications became available to the public over the counter, and the costs to the customer fell by 3.2% within one year of the reform (1983-84). Market forces, however, do not necessarily ensure the availability of essential medications or the quality of the product. Several steps were taken by the Ministry of Health to meet these potential problems. A national essential drug list was published in 1982, before the transition. The list included the attributes of each medication, the rationale for using it, and the potential risks and side effects. The list, which has been annually revised since then, was distributed among both doctors and pharmaceutical factories. It was hoped that providing the doctors with the list would encourage appropriate utilization and thus increase the demand for the essential drugs. Distributing the same list to the pharmaceutical industry was supposed to ensure supply. Since 1985 several legislative actions and enforcement steps have been taken to ensure the quality of pharmaceutical products. A new pharmacopeia was published, providing detailed criteria for manufacture, distribution, and the safe use of drugs. Criteria for the registration of new medications and inclusion in the essential national list were also published that year. Quality control units, both on the central and the provincial level, were established, testing a set number of samples of manufactured drugs each year. Nevertheless, sale of over-thecounter drugs is not yet regulated. During the early period of the transition to the "socialist market economy" and the mass privatization of rural health care, some of the achievements of the earlier public health policy were reversed (Huang, 1988). Uncertainty regarding

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the division of public health labor, such as water purification and immunization, caused a decline in sanitation conditions and immunization rates. Since the early 1980s village doctors have been commissioned to perform these tasks, with variable success. A poliomyelitis outbreak in 1990 led to "national immunization days" in the winters of 1991-1996, during which some 100,000,000 children under the age of three or four, depending on the province, received two doses of oral poliovirus vaccine. The largest share of the costs, 47%, was shouldered by the township administration, while the village administration bore only 18% of the costs.

POLITICAL AND ECONOMIC FORCES AND THE REFORMS OF THE HEALTH CARE SYSTEM Overt political resistance is strongly discouraged in current China and is rarely reported, except for events that concern human rights or protest against the political system. Labor unions and professional organizations serve as a power base for the leadership, and actions aimed at promoting the interests and the working conditions of their members are diffused and indirect (Guidotti and Levister, 1995). It is plausible to assume that the demand to reduce costs and generate income, which forced health care facilities to reduce staff and beds and initiate nonmedical enterprises, has not been entirely welcomed by their administration and employees. For consumers, the economic reforms and their impact on the health care system have led to a considerable increase in out-of-pocket medical expenses, which have exceeded the increase in income. During the period from 1985 (the earliest figure available) to 1997, the annual out-of-pocket medical expenditures of urban households increased from 16.7 to 179.7 yuan, and those of rural households from 7.5 to 62.5 (China Yearbook, 2000). In other words, urban per capita out-of-pocket medical expenses were 10.8 times higher in 1997 than in 1985, and rural per capita expenses were 8.3 times higher. The per capita income, however, has increased at a much slower pace for both populations. The average annual per capita income of urban households in 1997 was 5,160.3 yuan, 7.0 times higher than in 1985. In the same year, the rural household average annual per capita income was 2,090.1 yuan, 5.3 times higher than in 1985. Indeed, during these years, the proportion of per capita expenditures for health increased from 2.3% of the per capita income to 3.4% in the cities, and from 1.9% to 3.0% in the countryside. No overt protest, however, has been documented. The unplanned health care consequences of the economic reforms in China have been the main theme of this chapter. Since the reforms, China has experienced a rapid increase in national expenditures for health. In 1990, the first year for which data are available, the health expenditures accounted for 3.48% of GDP; in 1997 they were 4.55% (World Bank, 2000). The increase in health expenditures far exceeded the population growth. The aging of the population

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and the changing pattern of disease only partially explain this increase (Dong et al., 1999). It has been suggested that the transition from collective provision of health care to a fee-for-service system and from "putting prevention first" to emphasizing curative medicine has contributed to the increase in the costs of care (Chen, 2001). One measure taken by the government to cut costs and increase productivity has been curtailing the government share in the operating costs of public hospitals. Currently, public resources cover, on the average, 60% of the salaries, and all other expenses have to be covered by income generated by the facility itself. In most cases, as already mentioned, patients' fees and selling medications are the main sources of the income generated. For total health expenditures, the share of the public sector has declined even further, while that of the private sector increased. In 1990 the public sector shouldered close to 62% of total health expenditures, but by 1997 its share had declined to 43%. The implications of the cuts in the public resources allocated to health for inequalities in access to health and health care are yet to be established. HEALTH REFORMS IN CHINA AND THE INTERNATIONAL ECONOMY The successful transition of China to a market economy has been attributed by some to the lack of foreign debt rather than to the dual-track approach (Sachs and Woo, 1996). After the Chinese Communist Party took power in 1949, the"self-reliance" policy was a cornerstone in the process of nation building (Sidel, 1975). During the Mao Ze-Dong era, and particularly during the Cultural Revolution, China refrained from relying on international institutions and avoided Western influence. The economic reforms and the consequent extreme changes in the health care system were the result of internal needs, free of international pressure. The need for foreign investments to propel the development of the "socialist market economy" led China to open its doors to the West. International welfare organizations, universities, and individual scientists now cooperate with Chinese institutions in promoting public health and solving long-standing health problems. One example is the efforts to eradicate the health implications of iodine deficiency disease (IDD). Iodine-deficiency-related disorders were recognized in China over 4,000 years ago (Wang et al., 1997). Iodized salt and oil have been distributed by the Chinese Ministry of Health since 1959, but still in 1990 the costs of IDD were estimated at 495,000 disability-adjusted life years lost. A collaborative ChineseAustralian effort to eliminate IDD started in 1986, UNICEF joined in 1990, and the World Bank in 1995. Since the economic reforms, China has joined other worldwide public health efforts and has enjoyed international support in actions taken toward eradicating poliomyelitis, malaria, schistosomiasis, and other communicable and infectious diseases.

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The most recent development in this direction is the clinical trial of an HIV/ AIDS vaccine to take place in three provinces during 2001-2 (Normile, 2000). By the end of 1999 there were 670 confirmed cases of AIDS and 18,143 confirmed HIV positive cases, yet the China Center for AIDS Prevention and Control estimates the number of HIV positive cases at close to half a million. Its relative isolation and stable population make China an ideal location for a clinical trial of the vaccine. Chinese, German, and U.S. scientists will collaborate in performing, monitoring, and evaluating the results of the trial, which will be funded by the European Union, the International AIDS Vaccine Initiative, and the U.S. National Institutes of Health. CONCLUSIONS This chapter has presented the reforms in health care that have taken place in China since 1979. In particular, the effect of the economic reforms on the rural health services was discussed. The reforms were not planned, but were largely a by-product of the economic reforms. Decollectivization, which demolished the financial bases of the village as an administrative unit, brought about a massive privatization of rural primary health care and affected the whole three-tier care system. China took several steps to cope with the risks that the market economy and the fee-for-service care system entailed. Regulating the price of care and the distribution of doctors were aimed at overcoming barriers to care. Experimental measures were taken to revive the cooperative health insurance scheme that collapsed with the transition to market economy. Licensing procedures for village doctors and pharmaceutical standards were established to ensure the quality of care. Similarly, actions were taken to prevent deterioration in public health. The new economy has required China to relax its isolation policy and the constraints on interaction with Western societies. Opening the doors to the Western world has enabled scientific collaboration and joint public health efforts that go beyond economic advantages. Like many other societies, China faces an increase in the costs of care. The share of the public sector in the national health expenditures is on the decline, while private, out-of-pocket expenditures are increasing at a rate that exceeds the increase in the average income. The effects of this trend on equity and equality in access to health and health care are not yet clear. NOTE 1. The formal (state controlled) exchange rate is 8.4 yuan to 1.0 U.S. dollar. REFERENCES Berrios, X., Koponen, T., Huiguang, T., et al. (1997). Distribution and prevalence of major risk factors of noncommunicable diseases in selected countries: The WHO

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Inter-Health Programme. Bulletin of the World Health Organization, 75(2):99108. Chen, M.S. (2001). Transformation of health care in the People's Republic of China. Pp. 456-82 in W.C. Cockerham (ed.), The Blackwell Companion to Medical Sociology. Maiden, MA: Blackwell Publishers. Chen, M.Z., Xu, G , and Shi, Y.Q. (1995). Medicine in China. Pp. 518-31 in S.K. Majumdar, L.M. Rosenfeld, D.B. Nash, and A.M. Audet (eds.), Medicine and Health Care into the Twenty-First Century. Philadelphia: Pennsylvania Academy of Sciences. Chen, X.M., Hu, T.W., and Lin, Z. (1993). The rise and the fall of the cooperative medical system in rural China. International Journal of Health Services, 23(4): 731-42. China Yearbook. (1998, 1999, 2000). Beijing: China Statistical Publishing House. Chinese State Department, 1997, Document No. 18. Dezhi, Y. (1992). Changes in health care financing and health status: The case of China in the 1980s. UNICEF Economic Policy Series 34. Dong, H., Bogg, L., Rehnberg, C , and Diwan, V. (1999). Drug policy in China: Pharmaceutical distribution in rural areas. Social Science and Medicine, 48:777-86. Gian, Y. (1991). Collective ownership is a necessary way for the development of village clinics: An investigation report of reorganization of village clinics in Xu Xi city. Primary Health Care in China, 3:17-18 (Chinese). Guidotti, T.L., and Levister, E.C. (1995). Occupational health in China: "Rising with force and spirit." Occupational Medicine, 45(3): 117-24. Hao, W., Young, D., Xiao, S., Li, L., and Zhang, Y. (1999). Alcohol consumption and alcohol-related problems: Chinese experience from six area samples, 1994. Addiction, 94(10): 1467-1476. Henderson, G , Jin, S., Akin, J., Li, X., Wong, J., Ma, H , He, Y., Zhang., X., Chang, Y., and Ge, K. (1995). Distribution of medical insurance in China. Social Science and Medicine, 41 (10): 1119-30. Hesketh, T., and Zhu, W.X. (1997). Health in China: From Mao to market reform. British Medical Journal, 314:1543-1545. Huang, S.M. (1988). Transforming China's collective health care system: A village study. Social Science and Medicine 27(9):879-88. Jiang, C , Driscoll, P., Woodford, M., et al. (1996). Trauma care in China: Challenge and development. Injury, 27(7):471-75. Kan, X. (1990). Village health worker in China: Reappraising the current situation. Health Policy and Planning, 5(1):40^18. Lawson, J.S., and Lin, V. (1994). Health status differentials in the People's Republic of China. American Journal of Public Health, 84(5):737-^ll. Lennart, B., Dong, H., Wang, K , Cai, W., and Vidon, D. (1996). The costs of coverage: Rural health insurance in China. Health Policy and Planning, 11(3):238—52. Liu, G , Liu, X., and Meng, Q. (1994). Privatization of the medical market in socialist China: A historical approach. Health Policy, 21:151-1 A. Liu, X., Xu, L., and Wang, S. (1996). Reforming China's 50,000 township hospitals— effectiveness, challenges, and opportunities. Health Policy, 38(1): 13-29. Liu, Y., Hsiao, W . C , and Eggleston, K. (1999). Equity in health and health care: The Chinese experience. Social Science and Medicine, 49:1349-56.

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McGreevey, W. (1995). Eight steps to health care financing reform, 1996-2001. Mission report. Washington, D.C.: World Bank. Ministry of Public Health. (1984). Chinese Yearbook of Health. Pp. 17-19. Beijing: People's Health Press. Ministry of Public Health. (1993). Background paper for International Seminar on Health Reforms under Socialist Market Economy, Beijing, June 1993. Department of Planning and Finance. Normile, D. (2000). China awakens to fight projected AIDS crisis. Science, 288:231213. Popkin, B.M., Paeratakul, S., Ge, K, and Zhai, F. (1995). Body weight patterns among the Chinese: Results from the 1989 and 1991 China Health and Nutrition Surveys. American Journal of Public Health, 85(5):690-94. Qu, J.B., Zhang, Z.W., Shimbo, S., Liu, Z.M., Chai, X.C., and Wang, L.Q. (2000). Nutrient intake of adult women in Jillin Province, China, with special reference to urban-rural differences in nutrition in the Chinese continent. European Journal of Clinical Nutrition, 54:741-^8. Sachs, J., and Woo, T. (1996). China's transition experience, reexamined. Transition 7(3-4): 1-6. Shi, L. (1993). Health care in China: A rural-urban comparison after the socio-economic reforms. Bulletin ofthe World Health Organization, 71(6):723-36. Sidel, V. (1975). Medical care in the People's Republic of China. Archives of Internal Medicine, 135:916-26. Sun, Y. (1992). A report of sampling investigation of rural health services in HeBei Province. Administration of Rural Health Organization in China, 7:20-25 (Chinese). Tang, S.L., Bloom, G, Feng, X.S., et al. (1994). Financing Health Services in China: Adapting to Economic Reform. Research Report 26. Brighton: Institute of Development Studies. Wang, J., Harris, M., Amos, B., Li, M., Wang, X., Zhang, J., and Chen, J. (1997). A ten-year review of the iodine deficiency disorders program of the People's Republic of China. Journal of Public Health Policy, 18(2):219^1. Wang, Y., Popkin, B., and Zhai, F. (1998). The nutritional status and dietary pattern of Chinese adolescents, 1991 and 1993. European Journal of Clinical Nutrition, 52(12):908-12. Wong, V.C.W., and Chiu, S.W.S. (1998). Health-care reforms in the People's Republic of China. Journal of Management in Medicine, 12(4/5):270-86. World Bank. (1992). China: Long-term issues and options in the health transition. A World Bank Country Study. Washington, DC: World Bank. World Bank. (2000). World Development Indicators. Washington, DC: World Bank. World Health Organization. (2000). World Health Report of 1999. Geneva: WHO. Yearbook of Sanitarian Statistics. (1998). Beijing: China Statistical Publishing House. Yip, W.P., Wang, H., and Liu, Y. (1998). Determinants of patient choice of medical provider: A case study in rural China. Health Policy and Planning, 13(3):31122. Young, H., et al. (1998). Ways and ration of service reimbursement under CMS. Chinese Journal of Rural Health Services Management, 18:44-51 (Chinese). Young, M.E. (1989). Impact of the rural reform on financing rural health services in China. Health Policy, 11:27-42.

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Yu, J.J., Glynn, T.J., Pechacek, M.W., and Manley, M.W. (1995). The role of physicians in combating the growing health crisis of tobacco-induced death and disease in the People's Republic of China. Promotion on, II(1):23—25. Zhan, S.K., Tang, S.L., Guo, Y.D., and Bloom, G (1998). Drug prescribing in rural health facilities in China: Implications for service quality and cost. Tropical Doctor, 28:42-48. Zhang, J., Yu, J., Zhang, R.Z., et al (1998). Costs of polio immunization days in China: Implications for mass immunization campaign strategy. International Journal of Health Planning and Management, 13(1): 15-25. Zhou, X., and Hou, L. (1999). Children of the Cultural Revolution: The state and the life course in the People's Republic of China. American Sociological Review, 64(1): 12-36.

Chapter 16

The Health Care Reform Initiative in Thailand Fathom Sawanpanyalert GENERAL INFORMATION ABOUT THAILAND Thailand is located in tropical Southeast Asia above the Equator. The temperature ranges from 25 to 35° C, with high humidity. In 1998 the population was 61.47 million, and the country's area is 0.514 million square kilometers. Thailand is divided into five regions, North (mountains), Northeast (plain plateau), Central (plain), East (mountains and seashores), and South (seashores). The capital is Bangkok. In the Bangkok Metropolitan Administration (BMA) areas, the population is almost 10 million during the daytime and about 6 million during the nighttime. This implies that many persons live outside Bangkok and commute to work in the BMA areas during the day. The country is ruled under the democratic monarchy system. About 92% of the people are Buddhists and the rest are Muslims and Christians. The first constitution was granted in 1932. Despite more than 60 years of struggling democratic experiences, it can be said that the country has relatively stable political conditions compared to its neighboring Indochinese countries, including Myanmar, Cambodia, and the Lao People's Democratic Republic (Lao PDR). The fertility rate of Thailand was relatively high in the past. However, due to intensive efforts of both governmental and nongovernmental organizations to promote family planning during the past several decades, the population growth rate has been declining sharply over the years. There are now approximately 0.9-1 million new births per year. At the same time, people live longer. Thus the proportion of elderly people has been increasing significantly in the recent past. About 8% of Thai people are now over 60 years of age. The declining proportion of youths and the growing proportion of older persons affect economic development. However, the dependency ratio as defined by the number

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of people under 15 and over 60 years old to the number of people between 15 and 60 years old decreased from 92% in 1960 to 58% in 1990. Improved physical infrastructures were the main targets for economic developments in the past. These brought about "urbanization" and "modernization" concepts. About 40% of the country's population in 1997 lived in the so-called urban areas, defined by high population density and availability of public facilities, including schools, roads, and public water. Demographic characteristics of the Thai people in the past 50 years are shown as follows: Characteristics

1947

1960

1970

1980

1990

1998

Total population (millions)

17.4

26.2

34.4

44.8

54.4

60.8

Dependency ratio

NA

92

85

75

58

NA

% under 5 years old

NA

10.2

16.4

12.1

8.2

NA

% over 60 years old

NA

4.5

5.1

5.3

7.4

NA

% between 15 and 60 years old

NA

52.2

49.8

56.4

63.4

NA

% living in urban areas

NA

12.5

13.2

17.0

18.7

40 (1997)

Population density (per km 2 )

34

51

70

87

106

118

NA = not available. Source: Bureau of Health Policy and Planning, Ministry of Public Health, Thailand.

After the first constitution, there were a few amendments and rewritings of the constitution. Most of these were carried out by politicians, technocrats, and bureaucrats. Most of the constitution rewritings were associated with coups d'etat. In December 1997, after efforts to reform Thai political systems to get more participation from the people, Thailand enacted a new constitution that Thai people believe will bring about new hopes of reforms of political and other sectors. In the past, Thailand was an essentially agricultural country. However, over the past few decades, it has undergone a significant shift from a mainly agriculture-based economy to one that is more industry and service based and export oriented. Before the serious economic crisis in July 1997, Thailand enjoyed high economic growth rates from export of agricultural products and textiles and from tourism. Thailand adopted its first national economic development plan in 1961. Economic developments based on the five-year development plans have brought rapid economic growth at the average rate of 7.8% per year in the past three decades. From such rapid development, it was widely believed among Thais and foreigners that Thailand could easily become the next economic tiger in Asia. However, the economic crisis in July 1997 destroyed all hopes and illusions. The country experienced negative economic growth rates, increasing inflation, depletion of national financial reserves, and growing international debts.

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Thailand was forced to resort to the International Monetary Fund (IMF) for help. Although macroeconomic indicators have shown that economic conditions are slowly improving, the crisis is still far from over.

CURRENT HEALTH STATUS, HEALTH PROBLEMS, AND HEALTH CARE SYSTEMS Life expectancy for Thai people was 68.72 years in 1996 (for males, 69.97 years; for females, 74.99 years) (Bureau of Health Policy and Planning, 1996). The infant-mortality rate in 1996 was 26.1 per 1,000 live births, and the maternal-mortality rate in the same year was 10.6 per 100,000 live births (Bureau of Health Policy and Planning, 1996). The under-five mortality rate in 1992 was 31.37 per 1,000 population (Health Planning Division, 1992). The general mortality rate was 6.02 per 1,000 population (Bureau of Health Policy and Planning, 1995a). The population growth rate was 1.2% in 1995 (Bureau of Health Policy and Planning, 1996). The average family size in 1990 was 4.36 members (Bureau of Health Policy and Planning, 1997). The total fertility rate in 1996 was 1.95 (Bureau of Health Policy and Planning, 1997). About 9 3 % of Thai people in 1990 were literate (Bureau of Health Policy and Planning, 1997). The disease-specific death rates (per 100,000 population) of major causes of death in Thailand in the past 30 years are as follows: Cause of death

1967

1977

1988

1995

Heart diseases

16.5

15.9

44.6

95.0

Injuries

26.2

34.6

46.7

74.7

Malignant neoplasms

12.0

19.0

33.5

50.9

Respiratory diseases

NA

NA

NA

38.2

Infectious diseases

NA

NA

NA

29.6

NA = not available. Source: Health Planning Division, 1992.

The major causes of illnesses among outpatients over the past 25 years have the following morbidity rates (episodes per 1,000 population): Cause of illness

1982

1985

1993

Respiratory illnesses, e.g., common cold

100.2

136.3

232.8

Digestive system, e.g., peptic disease

59.4

73.1

120.9

Injuries

34.9

39.8

67.8

Infectious diseases

53.9

60.7

66.9

Musculoskeletal system and connective tissues, e.g., back pain

15.3

22.8

60.0

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327

Some interesting health figures of the Thai people are as follows: The proportion of children under 5 years of age with normal growth and development = 92% (7.9% with first-degree malnutrition, 0.5% second-degree, and 0.005% thirddegree). Morbidity rate of acute diarrhea = 1,814.12 per 100,000 population (1998). Morbidity rate of dengue hemorrhagic fever = 202.2 per 100,000 population (1998). Morbidity rate of pulmonary tuberculosis = 76 per 100,000 population (1997). Mortality rate from all types of injuries = 49.7 per 100,000 population (1997). Mortality rate from all forms of cardiovascular diseases = 72.1 per 100,000 population. Mortality rate from all forms of malignancies = 43.8 per 100,000 population. Smoking prevalence rate among people (11 years of age or older) = 20.5% (38.9% for males and 2.4% for females; 1999). Prevalence rate of congenital hypothyroidism = 1 per 10,000 live births (1995). Prevalence rate of phenylketonuria = 1 per 25,000 live births (1995). It has been more than a decade since Thailand saw its first AIDS case. The HIV/AIDS epidemic then started to take its toll among various risk groups, including injecting drug users, female commercial sex workers (CSWs), male clients of these sex workers (as reflected in male patients attending sexually transmitted diseases [STD] clinics), housewives, and newborn babies. In 1989 Thailand started a biannual HIV serosurveillance system among six population groups: female commercial sex workers, both direct (brothel based), and indirect (not brothel based), male commercial sex workers, male attendees of STD clinics, injecting drug users, pregnant women attending antenatal clinics, and blood donors. The system was switched to an annual survey in 1995. The latest reported HIV prevalence rates in July 1998 were as follows: direct and indirect CSWs, 21.1% and 6.7%, respectively; male CSWs, 15%; blood donors, 0.4%; injecting drug users, 47.5%; male STD patients, 8.5%; and pregnant women, 1.5%. Based on several epidemiological studies, the incidence rate of HIV infection among new military recruits (young males 20 years of age, usually from low socioeconomic status) was 1.2% per year in 1998. The corresponding incidence rate of HIV infection among pregnant women less than 25 years of age was 1.49% per year in the same year. There is evidence that these figures decreased from previously higher figures. The reductions could be attributed to intensive HIV/AIDS prevention and control efforts by public, private, and traditional sectors. CURRENT PROBLEMS IN THE HEALTH CARE SYSTEM OF THAILAND Problems in health care systems originate from the same roots as social problems, including illiteracy, poverty, social inequity, and lack of opportunity. De-

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spite the fact that Thailand has made substantial economic progress over the last 40 years, it still has more than 10 million poor people. The proportion of poor people ranges from about 5% in municipality areas to almost 30% in rural villages. In 1995 the country as a whole enjoyed a doctor/population ratio of 1:4,180, a dentist/population ratio of 1:20,300, a pharmacist/population ratio of 1:10,104, and a nurse/population ratio of 1:1,092. However, the ratios were not equally distributed. For instance, the doctor/population ratio in Bangkok is 11.5 times greater than in the poorest northeastern province. A similar phenomenon was seen for other health resources, including the bed/population ratio (e.g., 219 people per bed in Bangkok versus 1,012 people per bed in the Northeast in 1994). The figures improved over the years on a gradual basis. Until about 100 years ago, when Western medicine was first introduced, Thai people relied on traditional ways of healing. From then on, the country has been seeing rapid expansions in hospital facilities and public health infrastructures. Western medicine came with establishment of the first medical school in Thailand. It is now considered the mainstream of health care in Thailand. Thailand's Western-style health care services are considered to be of high international standard. This comes with the dwindling and shrinking of Thai traditional medicine. However, Thai traditional medicine is still an important part of Thailand's pluralistic health care systems. A revival of Thai traditional medicine was initiated some 10 years ago when global attention was turned to the roles of herbal medicine, massage, and other forms of healing as alternative but complementary ways to modern Western medicine. Thailand has also adopted the ideology of primary health care (PHC) as a means to improve people's participation and inter sectoral collaboration in health for more than two decades. The PHC concept was advocated by the World Health Organization (WHO) as the main strategy to achieve the visionary goal of health for all by the year 2000 (HFA 2000) set forth by WHO. The basic minimum needs (BMN) were used as indicators for the HFA 2000 vision. A concrete translation of PHC is the training of village health volunteers (VHVs) in all villages of Thailand. These VHVs serve as health communicators between the villagers and the health care authority. Other strategies were also used, for example, village drug funds (to pool resources from villages to support developmental activities of the villages) and health cards (as a form of voluntary insurance). In Thailand, there is at least one general hospital in each of the 75 provinces (excluding BMA, which has its own special administrative structure), at least one community hospital in each of the 729 districts, and at least one health center (staffed by nurses, midwives, and sanitarians) in each of the 9,108 subdistricts (tambons). As mentioned earlier, each village (the number of villages is 65,277) also has a village health volunteer (VHV), who is a liaison villager elected by villagers. There are currently about 680,000 village health volunteers. The Ministry of Public Health (MOPH) of Thailand has about 210,000 staff

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329

members. In addition to the just-described health care facilities and personnel, MOPH also maintains several specialized hospitals and institutes in Bangkok and other metropolitan areas, for example, hospitals and institutes for cancers, heart diseases, neurologic diseases, dermatologic diseases, orthopedic diseases, and children's diseases. There are medical, dental, pharmacy, and nursing schools and schools of other associated health sciences (medical technology, rehabilitation) under the administration of the Ministry of University Affairs (MUA). Most of these schools are public and have their own tertiary care teaching hospitals. In addition, some state enterprises, such as the Tobacco Monopoly of Thailand and the Railways Authority of Thailand, have their own hospitals. In big cities where the levels of economic, community, and social development have elevated them to the level of "municipality" (a form of local government), there are also municipality hospitals. Also, the Ministry of Defense has its own hospitals in Bangkok and other regional and provincial armed-forces bases. Data from the Bureau of Health Policy and Planning of MOPH showed the following figures in 1997: Ownership MOPH Other ministries State enterprises Local governments Private sectors

Number of hospitals 845 79 11 8 358

Number of beds 79,818 18,074 2,360 2,208 29,945

Although the government has been quite successful in expanding its health care infrastructures, the private sectors were not strictly controlled. The number of private hospitals started from one in 1962 and grew exponentially to almost 400 in 1995. The number of beds in these hospitals also grew at the same rate. There are now almost 30,000 beds in private hospitals nationwide. However, the country has a much greater concentration of private hospitals and beds in Bangkok, its vicinity, and big cities than in small cities and rural areas. For instance, in 1994, 51% of all private beds were in Bangkok (Supasit Pannarunothai, personal communication). It can be said that about 30% of all health care provision in Thailand is made by the private sector, including hospitals, polyclinics, and clinics. There are large variations in sources of financing of the Ministry of Public Health's hospitals. On the average, 60% of a hospital's total revenue is obtained from the government budget, and the rest is from user charges (Supasit Pannarunothai, personal communication). Of the user charges, about one-third to one-half is paid by the patients out-of-pocket on a fee-for-service basis, and the remainder comes from reimbursement from insurance/welfare schemes. The user charges are mainly from the sales of drugs. Health care in Thailand has been geared towards specialist-oriented high-

330

Asia and

Oceania

technology-based care. For instance, after graduation, most doctors are bound to spend two or three years serving in community hospitals (a payback period for receiving subsidy from the government during medical training), only to return to medical schools to obtain their further specialist training after having served this term. In 1993, about 36.5% of all medical practitioners in Thailand were specialists. The proportion increased to 70% in 1996 and to 82% in 1999. In the area of medical technology, the whole country has more than 200 computerized-axial-tomography (CAT) scanners. The CAT-scanner/population ratio is 12 times as high in Bangkok as in the Northeast (6 times that of the North and 8 times that of the South). Similar pictures are seen for magnetic resonance imaging (MRI) technology, extracorporeal shock-wave lithotripsy, and ultrasonography. Such orientation towards specialists and high-technology equipment is part of the conditions driving health care costs. The increasing health care costs and the country's weak primary medical care system have been two of the main issues that need urgent changes. Thailand is currently spending about 200-300 billion baht (or approximately U.S. $5-7.5 billion at the exchange rate of U.S. $1 = 40 baht in December 2000) on health care. This total spending is about 5-7% of total gross domestic product (GDP). About 75-80% of the spending is paid from private sources (e.g., direct out-of-pocket payments from the patients or relatives). On the average, a typical Thai spends 3,000-4,000 baht on health care each year. The other 20-25% of the total health care expenditures is spent through the government budget. The Ministry of Public Health receives about 55-65 billion baht in its annual budget. In 1997 the figure was 66.5443 billion baht, or about 6.7% of the total government budget. The figure remained relatively stable even during the recent economic crisis. The Health expenditures spent by the government are distributed as follows (1996 figures): Curative services Health promotion

50% 20%

Disease control

12%

Administration

5%

Manpower development

3%

Primary health care

2-2.5%

Addiction control

1.5-1.6%

Research and development

0.6-0.7%

Consumer protection

0.5-0.6%

About 25-30% of total health expenditures is spent on drugs. The total retail price of drugs in the market of Thailand in 1991 was about 54 billion baht (Wibulpolprasert, 1994). The proportion of drugs distributed through various channels is as follows:

The Health Care Reform Initiative in Thailand Drugstores

45%

Hospitals (public and private)

35-40%

Private clinics

11 %

Others

3-4%

Exports

3%

331

Drug-use patterns are also changing and reflect health-care-seeking behaviors of the Thai people. Over the past 15 years, Thailand has seen a significant decrease in self-prescription from about 30% in 1981 to about 18% in 1992. This has occurred in parallel with the concomitant increase in reliance on professional care and use of hospital or other clinical facilities. In other words, the Thai people's health-seeking behaviors are strongly influenced by modern Western medicine. About one-fourth of total health care spending is made through public channels, for example, through the MOPH budget, and the other three-fourths are spent through private channels, for example, individual out-of-pocket spending. The majority (95%) of the public financing is used for public health care services, and the rest (5%) is spent for private health care services. On the contrary, about two-thirds of the private spending is used for private health care services and the rest for public health care services (Viroj Tangcharoensathian, personal communication). Public (governmental) hospitals have been notorious for long waiting lines for both outpatient services and inpatient care and less-than-ideal hospitality, while private hospitals and clinics are much more expensive, but arguably have better care quality. However, the situation in service behaviors and quality of public hospitals gradually improved as the concepts of quality improvement and hospital accreditation became more and more widely accepted. It should be noted that a majority of doctors working in public hospitals also spend time after office hours doing their solo private practice or working in private hospitals. This is a cross-subsidization phenomenon. The majority of the public hospitals are run by the Ministry of Public Health. However, in Bangkok and big cities such as Chiang Mai, Khon Kaen, and Hadyai, there are university hospitals that are also governmental. The university teaching hospitals belong to the Ministry of University Affairs. There is only one private medical school in Thailand. As mentioned earlier, the Ministry of Defense, the Ministry of Interior, and other ministries and state enterprises also own hospitals. All of these public hospitals are under strict and centralized government rules and regulations with regard to personnel recruitment, maintenance, and promotion, supply and equipment procurement, and hospital financing and management. All doctors and health personnel are mainly paid on a salary basis based on a position-classification (PC) system that is universally applied to all civil servants. The military and the state-enterprise workers also have equivalent systems of classification of personnel. It is believed that such

332

Asia and Oceania

bureaucracy is part of the root cause of relative inefficiency in public hospitals as compared to private hospitals. However, there have been recent efforts to reduce the inefficiency through some innovative payment systems, including compensation for government doctors who do not have a private practice, payment by workload to government doctors, and financial incentives for government doctors to work in remote rural areas. The number of beds and bed-occupancy rates of health care facilities of various agencies in 1995 can be shown as follows (Bureau of Health Policy and Planning, 1995b). It can be seen that the bed-occupancy rates ranged from about 30% in hospitals of other ministries to more than 80% in the Ministry of Public Health hospitals.

Agency Ministry of Public Health Ministry of Interior Other ministries State enterprises For-profit private sectors Nonprofit private sectors Total

No. of Beds

No. of BedDays per Admission

Patient/Bed Ratio

BedOccupancy Rate (%)

73,191

4.87

626.6

83.64

3,359

9.71

229.9

61.21

14,236

5.49

183.5

27.65

365

10.71

143.4

43.17

25,298

4.03

38.31

42.34

1,968

7.33

34.59

69.44

118,417

4.86

50.39

67.09

In 1987 the country spent 5.7% of its GDP on health. From 1986 on, the rate of growth of health care expenditures in real terms has been 7.6%, compared to the 7% growth rate for GDP during the same period. Of particular note is the fact that in 1998, one year after the beginning of the serious economic crisis, the health expenditures still increased at the rate of 12% due to high capital investment to achieve the goal of 100% coverage of community hospitals in all districts of the country (Supasit Pannarunothai, personal communication). The higher growth rate of health expenditures than that of GDP has been another major concern in the health care system in Thailand and is an impetus for health reform. Only about three-fourths of Thais are insured or covered under one or more insurance or welfare schemes. The other 25% are left uninsured. Futhermore, each scheme has different financing sources, target populations, and benefits packages. The welfare scheme for the low-income population (approximately 11 million persons or 17% of the total population) is a public assistance program. Financing comes from the government budget (general tax revenues). This program entitles the poor (who pass a means test and receive the program card) to receive free medical care (excluding experimental treatments, cosmetic surgery, eyeglasses, and certain dental procedures) in public hospitals, mainly the hospitals of the Ministry of Public Health.

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333

The welfare scheme for the elderly, the handicapped, the priests, and the war veterans covers about 11.8% of the total population. It is financed through the government budget (general tax revenues). Cardholders of this program are entitled to benefits similar to those of the welfare program for the poor. School health insurance covers all primary-school children (under 12 years of age). The government budget allocates funds to cover health benefits for this group. The number of beneficiaries is about 14% of the total population. About 30 baht per head per year are allocated. The program is jointly operated by the Ministry of Education and the Ministry of Public Health. The health-card project is a voluntary health insurance plan. The government, through its subsidiary hospitals and health centers, encourages villagers to buy a health card that entitles the cardholder, including four more family members, to medical benefits in public hospitals. The card price is 1,000 baht, with a matching fund of equal amount from MOPH to subsidize the program. The health-card project encourages a referral system for medical and health services. To achieve economy of scale, the health-card fund needs at least 35% enrollment in a village. The health-card project covers 9.1% of the total population. The workmen compensation fund is an employer-liability scheme designed to cover medical expenses for work-related injuries and illnesses. It collects contributions from employers only (with 10 or more employees) and pays hospitals under contract on a fee-for-service basis. This scheme has been in operation for more than 20 years and covers 7.3% of the total population. The employees can use services from both public and private hospitals. The social security fund is contributed by three parties, the government, the employers, and the employees, on an equal basis. It provides medical benefits for non-work-related injuries or illnesses for essentially the same group as those covered under the workmen compensation fund. However, it pays the hospitals and providers on a capitation basis. It entitles the workers to medical benefits at both public and private hospitals under contract. Medical benefits for the civil servants and the state-enterprise workers take the form of a work contract that the government will provide medical benefits to the officers and the workers and their parents and children (up to the age of 18 years). Outpatient services from private hospitals and both outpatient and inpatient services from public hospitals are covered. This scheme covers 13.1% of the total population. About 6% of all Thais are covered by private insurance. Most of the contracts under this scheme are job benefits offered to the employees. This is a 6.8-billionbaht business. There are 12 active insurance companies in Thailand. Usually, the scheme pays the hospitals on a fee-for-service basis with a ceiling. Insurance for car-accident victims is compulsory insurance for all cars to cover medical expenses for victims of car accidents. The scheme pays the hospitals on a fee-for-service basis with a ceiling. The amount of the government contribution to each insurance/welfare scheme varies considerably. For example, the level of government subsidy per head for

334

Asia and Oceania

the assistance program for the poor is about 350 baht, while the government pays more than 2,000 baht per head for government and state-enterprise workers. This signals a problem of equity in access to health care. The insurance/welfare schemes do not specifically address the HIV-related illnesses, treatment of which is left to the discretion of hospital doctors and health professionals. However, most health care services related to HIV/AIDS, for example, treatment of opportunistic infections and malignancies and use of antiretroviral, drugs, are based on direct policies from MOPH implemented in the provinces as vertical (top to bottom control by Central Health Authorities) programs. The policies serve as frames for the work of the public hospitals. Another issue that is not specifically addressed by health insurance and welfare is health care for immigrants. Recently, there has been a large influx of migrant workers from neighboring countries. Most of these workers entered the country illegally. Military and civil conditions in the neighboring countries of Thailand have been strong push factors for such immigration. Although employers of the illegal migrant workers are not required by law to cooperate in registration of these workers, they are unwilling to do so. This makes it difficult to keep track of the workers. The workers come with diseases that had been on the decline in Thailand before the influx, for example, syphilis and filariasis. They also have other health problems such as substance abuse and violence. The reemergence of infectious diseases is a new public health concern and can be a time bomb. In addition, the influx of migrant workers also poses a financial burden on the Thai health care system. Although their employers cover some of the medical care costs for the migrant workers, the major part is borne by the government using general tax revenues. The health care system was further burdened by the major economic crisis in 1997. After the devaluation of the Thai baht, private wealth dropped significantly (Robobank International, 1999). This affected health and health care considerably. People avoid health spending if possible. For instance, the average length of stay was shortened. Some consumers with private medical insurance are allowing their policies to expire. Health benefits in some business companies have been cut. Some people who used to use services from private hospitals moved to public hospitals because of lower prices. As part of its requests for technical and financial assistance from the IMF, the Thai government had to commit itself to reform its health care structure, including autonomizing its public hospitals. The hospitals would be turned into so-called public organizations (POs) or transferred to local governments. It is believed that POs can work more efficiently than the traditional governmental agencies because they can avoid bureaucracy in their systems. POs receive their budget from the government but have their own policies and governing board. The autonomization of public hospitals started with a few pilot hospitals. At present, there is a medium-sized community hospital in central Thailand that has been turned into a public organization. Monitoring and evaluation are being done to assess the performance of this case-study hospital.

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335

Effects of the 1997 economic crisis have been seen not only in the public sector but also in the private sector. A few private hospitals were taken over by bigger ones. Some are facing financial losses. Several marketing strategies, mainly price reduction and a low-cost package of physical checkups, are being used for the hospitals' business survival. More consolidation of private hospitals may be likely in the near future. Prior to the consolidation, there will be debt restructuring and restoration of financial discipline in this business as well as other businesses of the country. In addition to the recent increase in attention paid to improving quality of health care in Thailand, the focus of health care quality has been shifted to the accreditation process (such as hospital accreditation or HA) and the introduction of the ISO (International Standards Organization) system into the health care system, to ensure a quality process is in place. A few private and public hospitals have been ISO-9002 certified. A coalition of various agencies and people has been formed to establish a hospital-accreditation system in Thailand. Health care financing in Thailand is being shifted from heavy reliance on general tax revenues and individual direct spending to more collective financing. The concept of collective financing is supportive of the expansion of health insurance and welfare. It is also an important goal for the health care system to achieve universal or near-universal coverage of insurance and welfare. Such insurance and welfare systems may be funded by either public or private sources. Despite their current small scope, it is likely that organized private financing schemes will grow. In addition, the current marked disparities among various insurance and welfare schemes are unbearable. It is necessary to diminish such gaps by pooling all schemes together or by equalizing benefits, government subsidy, and contributions of various parties under one principle.

HEALTH CARE REFORM GOALS The current problems in Thai health care systems could be summarized as follows. Although health care costs are rising, Thai people are still not universally covered by comparable health insurance/welfare schemes. In addition, although a proportion of the uninsured may be able to cover their own medical and health care bills, that is not necessarily true for catastrophic illnesses. Although availability of both public and private hospitals and health care facilities in Thailand poses few or no significant geographical barriers to the people, some still face financial barriers to access to health care. The existing different schemes of health insurance and welfare are grossly inequitable in terms of level of contributions/premiums, level of government subsidy, and mode of payment to the providers and medical benefits. Public and private hospitals are now competing with each other for consumers with insurance or their own ability to pay. A supply-induced demand phenomenon is occurring. There are also still problems of quality of health care services. The current direction of the Thai health care system is very much geared towards curative services with big facilities,

336

Asia and Oceania

high-end technologies, and a variety of specialists and subspecialists. Primary medical care is still immature and rudimentary. This results in inefficiency in financing, organizing, managing, and providing health care. In addition, consumers (individuals, families or communities) participate very little in the health care system. In other words, the system is not very socially accountable to the needs of the consumers. Health care reform goals should adequately address the aforementioned shortcomings in the system. In short, the needs are to contain costs, to ensure equity in access to health care across various target groups, to expand insurance coverage to a universal or near-universal level, to increase quality of care, and to make the health care system more efficient and socially accountable. These objectives may or may not be achievable at the same time. Some kind of prioritization of the objectives may be needed. CURRENT STATUS OF THE HEALTH CARE REFORM INITIATIVE IN THAILAND Until the new constitution in 1997, health care reform was never on the national agenda. Most health developments in the past, except those based on the concept of primary health care advocated by WHO, have been incremental and dictated by health professionals in MOPH and the universities. Several recent economic, political, and social events in Thailand, including violence related to management of natural resources and problems related to several big development projects, have exposed gross inefficiencies in Thai systems, including the bureaucratic government system and the potentially corrupt political system. These phenomena, together with other evolutions, led to the new constitution. The new constitution has led to, or at least supported, ongoing reforms in various systems of the country, including government reform and health care reform. It can be said that the health care reform process in Thailand started with technical development and model development rather than with political movements. The health care reform process was first recognized by MOPH in late 1997 when it jointly launched the three-year health care reform project with the European Community (EC). The project was intended to prepare technical details of the reform process, should the reform happen. It is composed of four main activities, namely, training and human resources development, policy development and research, field-model development, and institutional linkage and public education. The project builds on current and past social and health development activities in Thailand. For instance, it studied how community funds exist and propagate and how Thailand can strengthen them and encourage their expansion to other areas. The project's design is based on knowledge and scientific evidence with demonstrable development models for changes by learning from the existing ones and finding ways to encourage the expansion of good models. It is hoped that these kinds of technical knowledge will serve as sine qua non ingredients when a health care reform bill is drafted and enacted. At

The Health Care Reform Initiative in Thailand

337

the same time, the project is intended to build up the capacity of human resources in health and to create linkages and form networks with local and international institutes in the global health reform initiatives. It is necessary to mention that MOPH has a government-funded semiautonomous research institute called the Health Systems Research Institute (HSRI). The institute receives its annual budget from MOPH but operates under the direction of its own governing board. Its mandate is to support and carry out research related to health systems. Some of its research interests are the health card as a form of voluntary health insurance and reform of the civil servants' medical benefits scheme. HSRI also set up a program to encourage research in health care financing, management, and delivery. The program provides technical knowledge that is useful for health care reform in Thailand. In addition to the health care reform project jointly funded by the EC and the work done by the HSRI, in 1998 the Thailand country office of WHO established a technical area on health care reform to foster development and research activities that will lead to health care reform. The technical area is composed of three main activities, development and research, forum activities, and training. WHO operates on a biennial basis. The technical area on health care reform continued from the biennium 1998-99 through the biennium 2000-2001. Most of the research and development work of WHO is intended to complement work of the health care reform project and HSRI. In addition, WHO's Thailand office also supports the National Health Foundation (NHF), a private organization, to establish a linkage mechanism for the EC-funded project, the HSRI-supported program, and the WHO-funded work. The objective of the mechanism is to avoid duplication of work among the three main institutes. Activities currently undertaken by the institutes include model development of universal reference insurance, development of an essential medical benefits package for health insurance, strengthening of primary care in Thailand, utilization of a hospital-accreditation process and other quality-improving models for health care services in Thailand, development of appropriate diagnostic and treatment guidelines for health care services to improve clinical efficiency of care, creating social accountability within the health care system, and encouraging public participation in health. It is well perceived that political wills to lead or support health care reform are never strong and technical development will not lead to reform. Thus in 1999 a group of social activists and health reformists lobbied the government to set up an ad hoc office to finish the drafting of the health reform act within three years. This Health Reform Office serves as the secretariat for a national committee on health reform chaired by the prime minister. The office will utilize knowledge and models developed by various other institutes and involve nongovernmental organizations, civil societies, and people's groups in its working process. The current House of Representatives was dissolved in November 2000, and the next general election for 500 representatives was scheduled on January 6,

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Asia and Oceania

2001. It was the first general election under the new constitution, which created several working mechanisms to ensure more transparent and efficient political systems, for example, the Election Commission, the Antigraft Agency, and the ombudsmen. In the election campaign, people started to learn about health policies of various political parties. Most of the policies are not much different and focus mainly on universal or near-universal access to health care as a basic human right. Reform of the health care system was, for the first time, on the political agenda, it's a subject. In the election, the newly formed Thai Rak Thai Party headed by Dr. Taksin Shinawatra won with a landslide majority. The new government is implementing a universal health insurance policy, providing universal coverage with an essential health package. There is a nominal user fee set at 30 baht per visit. REFERENCES Bureau of Health Policy and Planning. 1995a. Public Health Statistics. Bangkok: Ministry of Public Health. Bureau of Health Policy and Planning. 1995b. Health Resources Report, Thailand. Bangkok: Ministry of Public Health. Bureau of Health Policy and Planning. 1996. The Eighth Five-Year National Health Development Plan (1997-2001). Bangkok: Ministry of Public Health. Bureau of Health Policy and Planning. 1997. Health Futures Study Handbook. Bangkok: Ministry of Public Health. Health Planning Division. 1991. The Seventh Five-Year National Health Development Plan (1992-1996). Bangkok: Ministry of Public Health. Robobank International. 1999. Impact ofthe Crisis: Immediate and Long-Term Outlook for Asian Health Care Markets. Asia Health Care. Wibulpolprasert, S., ed. 1994. Drug Information System in Thailand. Bangkok: Health Systems Research Institute.

PART VII

CONCLUSION

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Chapter 17

Health Care Reform and Global Hegemony Andrew C. Twaddle The task of this chapter is to review the chapters on individual countries to see what patterns can be discerned that transcend the experience of discrete nations, to try and identify the sources of the reforms that seem truly transnational in scope, and to identify areas in particular need of further investigation. COMPARING NATIONAL REFORMS Our purpose is not just to describe reforms in different countries, but to explore the possibility that they are related at the level of a common, transnational reform movement. We approached this task in two steps. The first was to compare national reforms to seek out common patterns. We placed the reforms in each country in a common temporal framework, grouping nations by region of the world and/or similarity of developmental level: Western Europe and North America, Eastern Europe, the Middle East, Latin America, and Asia and Oceania. These are far from homogeneous groupings, but consideration of alternatives (cf. Elling, 1980; Roemer, 1977) did not suggest a classification that would be more enlightening in this instance. We wanted to see to what extent the same or similar reforms were taking place in different countries and if those reforms took place at the same or similar times. If it is the case that the reforms are similar and simultaneous, we have the necessary groundwork to explore further the question of whether there is a single, transnational health care reform movement. Toward this end, we constructed a timeline for each country represented in this study. Based on the presentation in each preceding chapter, we noted major events in the development and reform of the system and entered it by year. This allowed a comparison across countries of the nature of the changes in medical

342

Conclusion

care systems. Within the limits of what each author included within the discipline of the framework outlined in chapter 1, augmented by author responses to a draft of the Table, we could see whether similar or different medical care system changes took place from country to country and whether there was any correspondence in the timing of change. An inspection of Table 17.1 shows that there was enormous variety in the ways medical care was organized from country to country. At the same time, there were some similarities in the patterns manifested across countries. Among the most obvious are the following: 1. From the earliest time noted in each chapter (ranging from the 1100s to the 1920s, depending on the country) until the mid-1970s, all of the countries represented in this study experienced an expansion of medical services. This applies, of course, to the technical capacity of medical care, but even more to a trend toward more universal and comprehensive access to the medical care system. This happened more completely in some societies than in others and more as a matter of deliberate public policy in some than others, but the general direction was the same in all the countries included in this study. 2. The expansion of access to medical care grew more rapidly in the period between the 1920s and the mid-1970s and was mostly concentrated in the period between 1950 and the early 1970s. 3. With the possible exception of Latin America, the countries represented in this project changed their emphasis to cost containment beginning in the 1970s. Many national governments switched from cost-plus reimbursement schemes to block grants. The United Kingdom (UK) and Canada took this step early; Sweden not until 1984. Entities that finance medical care, both governments and private insurance, experimented with alternative reimbursement schemes in order to cap the rise in medical care costs or, failing that, to shift the costs to other entities. In the United States, this began in the early 1970s. In most countries, this change came somewhat later. 4. In the early 1980s there was a move in countries with budget-driven systems to cap or reduce expenditures on medical care. A conservative government in Israel began reducing economic support to sickness funds. Australia scaled back Medibank. Sweden and Canada capped the block grants to counties and provinces, respectively. This was often accompanied by a process of decentralizing administration of medical care from national to county and from county to municipal levels of government. Sweden started county-level experiments to reduce expenditures by altering budget negotiations. The United States initiated a prospective payment (diagnosis-related groups, or DRG) system that was widely adapted by other countries ranging from the UK, Australia, and Sweden to Mexico. 5. In the 1980s there was also a move toward privatization, competition, and the introduction of "market mechanisms" into medical care as a feature of a neoliberal economic agenda found in most parts of the world. The UK was the lead country, introducing a separation of "purchasers" and "sellers" of medical care that soughts to introduce price competition into the system. That initiative was imitated in several other countries and remains popular among right-of-center politicians, even when expected benefits of that reform have not been realized anywhere. Other features of

Table 17.1 Timelines for Medical Care Development: (A) Western Europe and North America

Date

United Kingdom

Sweden

1500s

Nobles responsible for health and welfare of peasants.

1533

Hospitals placed under public control.

1698

First public health authority.

1733

State takes responsibility for primary care.

Voluntary health insurance funds established. First nationally sponsored sickness fund (income replacement).

1870$ 1891 1910

1931 1934

United States of America

British North America Act makes health care a provincial responsibility.

1867

1911

Canada

Flexner Report establishes standards for medical education.

Health Insurance for lowincome people established. First obligatory medical benefits set fees for service. American Medical Association proposes comprehensive health insurance.

Table 17,.1 (continued) 1 1936

Social Security passed without including medical care. President Truman proposed comprehensive medical care under social security.

1945

1946

Transition from voluntary to compulsory health insurance.

1947

1948

Kaiser-Permanente health plan establishes nonprofit prepaid group practice in Oregon.

National Health Insurance for ambulatory care established. Saskatchewan introduces first public plan for hospital insurance.

National Health Service created medical care at no cost at point of delivery. Federal grants to states for medical care of public assistance recipients.

1950

1955 1957

1960

National Health Insurance begins. Hospital Insurance and Diagnostic Services Act provided Federal cost sharing.

Aimee Forand introduced bill to fund hospital, surgical and nursing home care for aged through Social Security. Kennedy made health insurance for the aged a campaign priority.

1 1961

All provinces join Federal cost sharing.

1962

Saskatchewan government under Farmer-Labor leadership places physicians under public employment. Physicians strike.

1964

Blue Cross Association announced it would terminate health insurance for the aged.

1965

Health insurance for the aged under Social Security (Medicare) enacted.

1968

Federal government introduced national medical care insurance based on Saskatchewan model.

1970

Seven Crowns Reform abolished fee-for-service in hospital sector. Development of National Health Insurance completed in all provinces.

1977

1974

j Regional Health Authority and District Health Authority established.

Decision to increase size of medical school classes and cap residency slots outside general medicine, pediatrics, and long term care.

Lalonde Report strengthened public health and preventive programs.

Table 17.1 (continued) 1 1977

Cost sharing changed to block grants.

1979

Health Services Review of physician "extra billing."

1980s

Three budgets limited federal transfers to provinces.

1983

Health and Sickness Care Law decentralized medical care to counties.

1984

Dagmar Reform set block grants to counties and required private physicians to enter into contracts with counties.

1987

"No benefit day" established. Employees assume risk for short-term work loss.

Canada Health Act asserted national authority to set standards and tightened criteria for federal funds.

Canadian Coordinating Office for Health Technology Assessment (CCOHTA)—private, nonprofit—created to promote "evidence based practice."

1989

1990

Prospective payment for Medicare (DRGs) instituted.

Decentralization of medical care for agedfromcounties to municipalities. Care guarantee reform for list of 12 conditions. Municipalities liable for "bed Mockers."

1 1991

NHS reform to separate "purchasers and sellers" and to introduce "market mechanisms" into medical care system.

1992

National Health Strategy introduced setting targets for health care system.

Decision by FederalProvincial-Territorial Health Human Resources Committee to reduce number of medical students and number of residence slots to match number of medical graduates.

Clinton wins Presidency on platform featuring a national health insurance plan.

Clinton health plan fails in Congress. Insurance industry and large employers institute "managed care."

1993

Point of Service primary care reform requiring enrollment with gatekeeper physician.

1994

Psychiatric care transferred from counties to municipalities.

Proposals to "delist" medical services in many provinces.

1995

Point of service reform and care guarantee repealed.

30% decrease in hospital days between 1991-92 and 1995-97. Hospital downsizing and restructuring continues through decade.

Table 17..1 (continued) Sickness payments (income replacement) reduced.

1 1996

1997

Conservatives defeated, in part because of public distrust of market reforms. Labor government retains purchaser-seller and primary care emphasis, abolishes GP fundholding in favor of primary care groups. Private Finance Initiative—private funding of public construction.

Sickness payments reduced. Employers assume responsibility for income replacement for first month of sickness.

1 Canada Health and Social Transfer de-indexed federal transfers. Federal expenditures decline. Topdown pressures on provincial governments to pressure "stakeholders" to reduce spending. Regional boards established with fixed global budgets. 1990-1996 increasing numbers of primary care physicians left Canada for managed care in USA. Health Transition Fund established to provide information and evidence on possible future directions in home care, pharmacare, primary care, and integrated service delivery systems. Disillusionment with managed care in USA produces return migration of physicians to Canada. Funding of Canadian Institute for Health Research. Increased spending on home care and community based services throughout 1990s.

1 1998

1999

Increased support for parents of sick and handicapped children. Care guarantee reinstated for all conditions. Income replacement raised. Increased cost sharing for dental care. Reinvestment in health care systems and research as federal and provincial budgets are balanced and have surpluses. Increased interest in performance indicators—"report cards"—for system. Increased medical school enrollment.

Conclusion

350 Table 17.1 Timelines for Medical Care Development: (B) Eastern Europe Date 1136

Central Europe

Pantokrator Monastery Hospital founded in Hungary.

Serbia

Russia

1912

First national health insurance act.

1918

Bolshevik Revolution ushers in Communist era. State provision of medical care in polyclinics and hospitals under direction of Ministry of Health Protection.

Late 1920s

Shift of emphasis from prophylactics to clinics.

Late 1930s

Health Insurance System formed in Hungary.

1948

Soviet type health system established in Czechoslovakia and Hungary—centralized system of polyclinics and hospitals.

1950

Uniform State Health Service Act in Hungary—free universal care.

1962

Cuban missile crisis results in shift from domestic to military spending.

mid 1960s 1970s

Rise in infant mortality.

1970

Embargo on publication of most vital statistics. Expansion of physician numbers in Czechoslovakia.

Law on health insurance and compulsory care.

351

Health Care Reform and Global Hegemony

1972

Health Act of 1972 in Hungary. Soviet constitution guarantees medical care,

1977 1979

Poland scheduled to start private health insurance.

1980s

Entrance examinations for medical school re-established in Hungary.

Law on health care. Public health services deteriorate—defunding of preventive services, hospitals, and ambulatory care. Beginning of perestroika. Government begins to encourage fee-for-service and physician-owned practices.

1985

19871990

Flaring of nationalist passions incorporated into state policy.

1987

Communist Party coup—conservative wing takes over. Isolationist policy.

1988

Privatization reforms curtailed.

19891994 1989

Economic collapse.

1990

19911995

Health Reform Task Force created in Czech and Slovak Republics. Poland begins privatization of pharmacies.

Beginning of economic decline.

End of Semashko model in Czech Republic and Poland. End of payroll deduction self-management insurance model in Croatia and Slovenia.

New Constitution.

Wars for territory in Croatia and Bosnia result in destruction of infrastructure.

Collapse of Soviet empire.

352

Conclusionn

Table 17.1 (continued) 1991

General Health Insurance Office established in Czech and Slovak Republics. Czech National Council initiates compulsory health insurance.

1992

Central European Free Trade Association established. Czech National Council starts feefor-service payments for hospitals. Hungary separates health insurance funds from state budget—employer and employee contributions—with free choice of primary care providers. Poland initiates "shock therapy.'' New health care law in Slovenia provides for insurance, contracting, and private practice.

1993

Implementation of social security based health insurance, except in Poland. Czech Republic health insurance becomes independent of government, and publicly sponsored private firm becomes largest insurer. Poland's parliament introduces health insurance.

1994

Strong recovery in Slovakia. Socialist victory in Hungary brings shift from privatization. Poland starts privatization with national investment fund.

19961999

New health care law hands health care system over to ruling "Mafia" with strict centralization under Ministry of Health.

Strikes by physicians and other health workers.

Reform legislation approved. Health Insurance Act establishes regional boards to mediate between patients and providers, and change financing from government to employers and employees.

Institutions—independent media and universities—destroyed.

353

Health Care Reform and Global Hegemony

1997 1998

2000

Liberal-Right-Center coalition wins in Hungary—plans announced for closing or privatizing hospitals. Economic crisis in Croatia. Health insurance cards issued in Slovenia.

Team of experts organized to plan new health care reform.

Meltdown of Russian economy.

Conservative Communist rule ended with free election.

this reform included cost shifting to patients, making medical care less accessible, the use of "performance indicators" to decide what services to fund, and in some cases the use of "evidence-based medicine" to limit services to be covered. In the most extreme case, the U.S. insurance companies took over the medical care system and instituted "managed care" in which the insurers controlled the use of tests, therapies, and referrals, significantly encroaching on the professional judgment of physicians and undermining conditions of trust between physicians and patients. 6. Beginning in 1979 in Poland, there was a move to encourage private health insurance in a system that had been entirely state run. The Soviet Union picked up that notion in 1985, and by the early 1990s all of the former "Soviet bloc" had private insurance systems in operation. Mexico, which had a very different kind of state-run system, formally recognized the private sector in the 1980s. Both Mexico and Argentina moved to privatize state institutions in the early 1990s. 7. There were a few countries that had trends counter to some of the changes just noted. Australia, in 1983, took steps to increase accessibility at a time when most countries were curtailing it. Within a decade, however, it was again reducing benefits. In that country, there seems to be more volatility than in most, with policy changing with changing governments. Israel instituted a new, more comprehensive health plan in 1995, clearly countering the international trend. While it has made some modifications along market lines since then, the more comprehensive program is still intact. Saudi Arabia has a health plan provided by the royal family with no taxes or private sector. It seems to exist in a world entirely separate from the other counties represented here. 8. By the mid-1990s some countries had pulled back from the more drastic market reforms, either reversing some decisions to improve accessibility or quality or shifting to a more gradualist approach to market reforms. It is not clear that the market experiments were very successful in any of the countries that tried them. 9. While the reforms in the first world were initiated by groups within the nations in question, in the "third world" the International Monetary Fund was a significant player, making the funding for development of medical care dependent on a "Structural Adjustment Program" (about which we say more later) that forced a reduction in public health services, privatization, and limitations on taxation. In most instances, it cannot be demonstrated that this program has been helpful, and in some cases it likely has done substantial damage.1

Conclusion

354 Table 17.1 Timelines for Medical Care Development: (C) Middle East

Date 1920

1926

i

Saudi Arabia

Israel

Largest sickness fund, Kupat Holim Clalit (KHC) founded by General Federation of Labor (GFL or Histadrut).

Establishment of a "Health Department" by King Abdulaziz Al-Saud, founding monarch.

1931

Amamit sick fund founded by Hadassah Medical Organization for farmers.

1933

Revisionist Party founds Leumit sickness fund.

1936

Liberal Party founds Mercazit sick fund.

1940s

Maccabi sick fund founded by physicians to ease unemployment of physicians from Germany.

1946

Total number of hospital beds is 300. Independence—open door to Jewish immigration.

1948 1950

Hospitals established in Makkah, Jeddah, Riyadh, and three other cities. I l l physicians and 1,000 hospital beds in kingdom.

1951

Establishment of National Ministry of Health.

1966

Saudi Red Crescent Society established.

19701975

First five-year development plan, leading successively to seventh 1 plan 2000-2005.

355

Health Care Reform and Global Hegemony

19711996

Increase in number of primary health centers, public sector hospitals, private sector hospitals, physicians, and dentists.

1973

Yom Kippur War forces re-evaluation of values.

1974

Meuhedet Sick Fund created from merger of Mercazit and Amamit funds.

1976

First class of Sauditrained physicians graduated at King Saud University; Residency program started at King Abdulaziz University Hospital in Jeddah. Labor election defeat removes political support for KHC.

1977 1979

First renal transplantation.

1980s

Likud governments reduce economic support for KHC.

1988

Commission of Inquiry recommends regulation of sick fund and decentralization of hospital administration

1992

Creation of home health care agency in King Faisal Specialist Hospital in Riydah.

1994

Dramatic increase in physician salaries.

1995

National Health Insurance Law to achieve universal coverage, regulation of sick funds and cost containment. Health tax administered by National Insurance Institute. Hospital income growth capped.

356

cONCLON

Table 17.1 (continued) 1997

Bill eliminates parallel tax collected by NHI, increases Ministry of Finance control, and Ministry of Health oversight.

1998

Bill limiting number of sick-fund facihties in small communities and allowing differential copayments. Price and benefit competition introduced.

A second step was to construct Table 17.2, in which all the reforms noted in any of the preceding chapters were listed and grouped as professional, democratic, or market in nature. Reforms were coded as "professional" when the policy changes focused on core professional values (effectiveness, quality), when professionals gained autonomy, when physicians organized to bargain collectively, or when not-for-profit modalities of delivering care were created. Reforms were coded as "democratic" when democratic values (e.g., equity, equality) were the focus, when health care services were made more accessible to a larger proportion of the population, when leftist interests promoted the reforms, or when Keynesian or Marxian economic analysis supported them. Reforms were coded as "market" when efficiency was the dominant value, when privatization or market mechanisms were called for, when professional action was constrained in the interest of cost containment, when access to care was restricted by cost considerations, when rightist interests promoted the reform, or when a neoliberal economic analysis supported it. Almost all the reforms could be classified as professional, democratic, or market by these criteria and by inspection of the context for the reform effort in the preceding chapters. That is, they "made sense" when they were situated in the specific sociocultural milieu of the countries under consideration. There were, however, a few reforms that could not be so classified. Centralization of planning or administration seemed to be a way for conservative forces to control the process in Sweden, Canada, and the UK, while being a way of making the system more democratic in Israel. Decentralization was a way of moving toward a market system in the UK, Canada, Argentina, and Russia, while it was used to consolidate leftist control in Serbia, the PRC, and perhaps Israel. Capitation as a form of payment was central to the socialist organization of medical care in the UK and Sweden, while it was used as a management tool for private interests to increase profits in the United States. In cases such as these, the reforms seemed to be neutral with respect to control of the system by professionals, politicians, or business groups. Any could make use of them for their

357

Health Care Reform and Global Hegemony Table 17.1 Timelines for Medical Care Development: (D) Latin America Date

1521-1821

Argentina

Mexico

Catholic church major organizer of medical care.

1821

Independence—concept of public welfare, but limited provision of hospital services. General neglect of medical care.

1880-1910

Diaz dictatorship reactivates sanitation and welfare programs, but inadequately.

1910-1917

Revolution—little change in organization of medicine.

1934-1940

Cardenas administration establishes social assistance as compulsory activity ofthe state.

1937

Ministry of Public Assistance created to deliver medical care, while Department of Sanitation deals with public health.

1940s

Development of the welfare state. Trade unions tied to state gain right to manage sickness funds (obras sociales). Others use mutual aid institutions or public services managed by national Ministry of Health.

(early) Ministry of Sanitation and Assistance formed from merger of two ministries.

Mexican Institute of Social Security created to provide care to industrial workers.

1943 1946-1952

Expansion of public services.

1950s

Hospitals financed by state budget.

1953

Conflict between obras sociales and professional associations.

1960s

Professional associations become counterparts for benefit negotiations. Beginnings of private health insurance.

(late) Servicios Coordinados de Salud Publica en los Estados combines federal and state decision-making authority to administer rural health programs.

1960

Institute of Social Security and Services for State Workers created.

1961

Attempt to organize National Medical Association rejected by the government.

Conclusion

358 Table 17.1 (continued) 1965

Attempt to organize interns and residents defeated by the state. Interns and residents strike.

1970s

Expansion of coverage and improved access under obras sociales. Expansion of private services.

1970

Alliance of CGT, CONFECLISA, and COMRA.

1976

National Services Commission (NSC) formed.

1977

Creation of National Institutes for Protection of Infancy, Childhood Care, and Comprehensive Family Development.

1980s

Public system under-resourced with technological and plant deterioration. Expansion of private insurance.

1982-1988 1982

Modernization effort with legal recognition of the private sector. Debt crisis.

1984

1985

NSC recommends coordination of medical care with Secretary of Health in clear charge. General Health Law estabhshes a national health system with public institutions for the poor, social security, social service institutions, and private services.

Obras sociales stratified by benefit level.

1987

Decentralization process initiated—creation of state health agencies.

1988-1994

Effort to reduce role of state.

1988

Cost shifting—law increases contributions to obras sociales, tempering reduction of resources.

1989-1990

Hyperinflation

1990

State reform law authorizes privatization of national enterprises. Economic Emergency Law suspends subsidies and opens way to foreign investment. Crisis of identity for Peronist party.

Health Care Reform and Global Hegemony

359

Table 17.1 (continued) 1991

Convertibility Plan—privatization of public enterprises, deregulation ofthe economy, and so forth. Monetary stability achieved. Strategy to centralize social security contributions.

1993

Decree No. 3 enables free choice of obras sociales and freedom of contract to providers and financers. Obras sociales required to pay for public hospital services.

1994

New national constitution.

1995

Mexican crisis reduces economic activity. Deregulation decree mandates minimum benefit packages for obras sociales.

1996 1997

Beginning of effort to privatize public institutions.

National Development Plan for health care reform to promote quality and efficiency, increase social security coverage, encourage decentralization, and expand coverage. Increased outsourcing. Expansion of "feereversal" system. Medical Arbitration Commission formed.

Choice of obras sociales implemented.

Table 17.1 Timelines for Medical Care Development: (E) Asia and Oceania

1 Date Australia

1 India

1859

1 Royal Commission on causes of poor conditions of British Indian army.

1919

1 Montague-Chelmsford Reforms begin programs in sanitation, public health, and vital statistics.

People's Republic of China

Thailand

First constitution takes effect.

1932 1938

National Planning Commission (NPC) established.

1946

Health Survey and Development (Bhore) Committee Report formulates National plan for health.

1947

Independence from Britain.

1949

Liberation of China by Communists.

19491954

First five-year plan set foundation of public health services. Multi-tiered health system developed. Health Insurance begun.

I 1951

1953

Firstfive-yearplan focuses on communicable disease; Primary Health Centers (PHC) founded. Page voluntary health insurance scheme established.

Late 1950s

Great Leap Forward— environmental damage.

19661976

Cultural Revolution— end of private practice, closings of hospitals, medical education stopped. Compulsory health insurance instituted.

1968

Commonwealth Committee of Inquiry into Health Insurance concludes major reform needed. Liberal/Country coalition introduces single table of medical benefits and scheduled fees for physicians.

1974

Medibank—compulsory national health insurance— implimented.

1975

Coalition government scales back medibank; Increase in private health insurance.

Fifth five-year plan puts 50% of health money into family planning.

Table 17.1 (continued) 1 1979

Economic reform—Shift from a planned centralized economy to a "socialist market economy." Collapse of cooperative medical insurance schemes. Privatization of rural clinics. Cost shifting to patients.

1982

Steps to ensure access for small villages to primary care at township health centers. Pharmaceutical industry turned over to market. Essential drug list published.

1983

Medicare—universal health insurance— reintroduced under Labor government.

National Health Policy (NHP) to restructure health services.

1985 and after

Modifications period.

1985

Rural physicians required to 1 pass qualification examination. Enforcement to ensure quality of pharmaceuticals.

I 1986

Pharmaceutical Benefits Scheme provides subsidies for the general public, welfare beneficiaries, and pension recipients; Establishes ceiling for outof-pocket payment for medications. HIV serosurveillance system established.

1989 19901997 1990 1991

363

Government contributions to medical facilities dropped. National Strategic Health Plan.

1994

Victoria introduces "casemix" prospective payment system. Federal government taxes high-income people at a higher rate for medicare.

1996

Private health insurance rebates for low and middle income people. Funding for Commonwealth dental program withdrawn.

Eighth five-year plan focuses on "health for the underprivileged."

Education plan for rural practitioners launched.

Table 17.1 (continued) 1997

198

Document No. 18 calls for recovery of cooperative health system.

Serious economic crisis—reduction in health insurance, devaluation of Baht, health benefits cut. IMF imposes "Structural Adjustment Program" of decentralization and privatization. Political reform project initiated to broaden democratic base. WHO establishes technical area of health care reform—research activity to promote market reforms.

365

Health Care Reform and Global Hegemony Table 17.2 Indicators of Reform Types and Incidence in Study Countries Indicator Professional Reforms

Ideology of quality and effectiveness Autonomy for physicians Professional decision-making on clinical matters

Countries Before 1980 UK, Sweden, U.S., Israel, Australia, Canada

After 1980 Saudi Arabia, Israel

Sweden, Canada, Serbia, U.S., Argentina, India, Australia

Professionals organize system

U.S., Israel, Australia

Israel

Professionals determine financing

Sweden, U.S., Australia

Central Europe, Israel

Physicians as gatekeepers

UK Sweden, Serbia, Canada

Australia

Physician unions

Sweden

Mexico

Not-for-profit non-governmental hospitals

U.S., Australia, Canada

Not-for-profit community-rated health insurance

U.S., Australia

Democratic Reforms

Ideology of equity or equality

Expanded financing Creation of health insurance, compulsory health insurance, NHI, NHS

UK, Sweden, Canada, Serbia, Russia, India, Australia, PRC

Israel, Mexico

UK, Sweden, Canada, UJS., Central Europe, Serbia, Israel, Argentina, Mexico, India, Australia, PRC

Central Europe, Russia, Israel, Mexico, Australia

Creation or expansion of sickness funds (income replacement)

Sweden, Israel

Shift toward universality

UK, Sweden. Canada, Russia, India, Australia, PRC

Rationing by need

UK, Australia

Israel, Thailand

Conclusion

366 Table 17.2 (continued) Budgetary control and/or political decision-making

UK, Sweden, Canada, Serbia, Australia, PRC

Israel, PRC

Focus on access

UK, Sweden, Israel, India, PRC Canada

Israel, PRC

Sponsorship by labor unions and left wing political parties

UK, Sweden, Israel, Argentina, India

Keynesian or Marxian economic analysis

UK, Sweden, Russia, PRC

Restriction or ban on extra billing

UK, Sweden, Canada, Serbia

Canada

Price regulation/controls

Canada (short time in early 1970s all parts of economy)

PRC, Canada .. .caps on total budget for medical

UK

UK, Sweden, Canada, U.S., Central Europe, Russia, Saudi Arabia, Israel, Argentina, Mexico, India, Australia

Market Reforms Ideology of efficiency

Deregulation

U.S.

Privatization Shift from public to private coverage/services

UK, Sweden, Canada, U.S., Central Europe, Russia, Israel, Argentina, Mexico, India, PRC, Thailand, Australia

Shift from public to private administration of public services

U.S., Russia, Mexico

Reduction/elimination of state capacity to ration technology, personnel or care

Sweden, U.S., Russia, Mexico

Legal recognition of private services

Australia

UK

Private investment in public capital Shift from public to private financing

Serbia, Central Europe, Russia, Mexico, PRC

India

Central Europe, Russia, Argentina, Mexico, PRC, Thailand, Australia

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Health Care Reform and Global Hegemony

Market Mechanisms Internal competition (e.g. purchaserprovider split)

Israel

UK, Sweden, Central Europe, Russia, Argentina

Contracts replacing policy

UK, Sweden, Argentina, Australia

Prospective payment (DRGs)

UK, Sweden, U.S., Israel, Argentina, Australia

Gatekeeping by financiers/insurers

U.S.

Managed care

U.S.

Limitations on choice of provider

U.S.

Exclusion of services

U.S., CANADA

Investor-owned, for-profit delivery systems

U.S., Australia

Regulated competition

UK, Sweden, Central Europe, Israel, Argentina, Mexico, India

Cost-benefit analysis

UK, Sweden, Canada, U.S., Mexico

Focus on outputs and outcomes

Russia

UK, Sweden, US, CANADA

Argentina

UK, Sweden, Canada, US, Mexico, India UK, Sweden, Canada, U.S., Central Europe, Russia, Israel, Argentina, Mexico

U.S.

Australia

Outsourcing Focus on competition, incentives, "productivity" and choice

Canada, U.S., Argentina

Downsizing Rationing by cost Restrictions on Professions Scope of practice

Canada

Number of practitioners

Sweden

Canada

Location of practice

Sweden

Canada, Australia

Coverage of services; basic benefits pa

Canada, U.S., Israel, Argentina, Mexico

Medical/clinical audits, "Evidence based" medicine

UK, Sweden, Canada, U.S., Israel

Conclusion

368 Table 17.2 (continued) Risk or "experience" based private health insurance World Bank/IMF "Structural adjustment program" Restrictions on Patients Benefit cuts/cost shifting to patients

Argentina, Mexico, India, Thailand Argentina

Sweden, Canada, U.S., Central Europe, Serbia, Russia, Israel, Argentina, Mexico, India, Australia, PRC Canada

Restrictions on access/facilities Focus on cost containment and/or rationing

UK

UK, Sweden, Canada, U.S., Central Europe, Russia, Saudi Arabia, Israel, Australia

Shift toward particularism

U.S.

U.S.

Sponsorship by employers associations and right wing political parties

UK, Sweden, U.S., Central Europe, India

Neo-liberal economic analysis

UK, Sweden, U.S., Israel, Argentina, India

Charges of institutional stagnation and "gridlock"

UK, Sweden, Canada, Israel, Argentina

Ambiguous Reforms

Centralization of planning, administration, or setting of standards

Sweden, Canada, Russia

UK, Canada, Serbia, Israel, PRC

Decentralization

Serbia, Australia, PRC

UK, Sweden, U.S., Canada, Russia, Argentina

Leadership by primary care

UK, Sweden, Canada

Block grants

Sweden, Canada, U.S., Australia

Capitation

UK, Canada

Sweden, U.S., Israel, Argentina

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own ends. They were tools that could serve different ideological and control ends. Given that there seems to have been a substantial shift toward the market mode of organization in the 1980s (Table 17.1), the reforms were listed as preor post-1980 in Table 17.2. An inspection of that table demonstrated the following findings. Prior to 1980, most of the reforms were professional or democratic. This was an era when the medical care system was developing in most countries. Technical capacity was increasing. Professional skills were improving relative to the state of knowledge. Professionals were asserting their capacity and fitness to control their own work and, to very different degrees in different countries, to control their own working conditions and the systems within which they worked. Indeed, this was a period when there was a growing imbalance of power between physicians and patients that was a matter of concern in social science writing (e.g., Freidson, 1970; Twaddle, 1979; Twaddle and Hessler, 1977, 1987). It was also a period, particularly after World War II, in which nations tried to see that medical care was made more available and accessible to everyone in need. Many countries enacted national health care systems or national health insurance schemes. Costs were reduced or eliminated at the point of service delivery. Among the countries in this study, this was carried out most comprehensively by Sweden and least comprehensively among the developed countries by the United States. Even in the United States, however, the poor were provided for by public hospitals and a "Robin Hood" system of billing in private hospitals (where those who could not pay "paid with their bodies" as "teaching patients" while paying patients paid more than the cost of treatment to make up the cost of providing for the poor). Private health insurance expanded rapidly, led by the not-for-profit Blue Cross system. In the 1960s there was a "free-clinic" movement in which professionals donated services, usually during their off hours. Public health care insurance was provided for the aged and the poor. There was agitation for more universal health insurance coverage. In the less wealthy world, governments expanded medical services as well, although not as rapidly or as comprehensively in practice, even when universality was the goal in policy. Throughout the world there was economic expansion and increased capacity, making it easier to provide such services, even when the costs of health care delivery began to rise rapidly. After 1980 there was a shift toward market reforms. While in some countries professional and democratic reforms could still be found, both the number of such reforms and the number of countries engaging in them dropped sharply. In this period we found almost all of the market reforms, which were greater both in number of types of reforms and in the number of countries engaging in them. This was a period when the world economy grew much more slowly, while medical care inflation continued to outstrip economic growth in almost every

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country. Beginning in the 1970s, many countries became concerned with the increasing cost of medical care. Most European and North American countries, for example, had medical care systems that grew in cost by more than 10% annually. Almost all countries began at least discussing ways to "cap the cost" of medical care. Many experiments were done by many countries. In this climate, it was easy to propose that the system was "failing" and that some more "radical" approach was needed to make medical care more efficient, cost-effective, and cheap. Rightist interests, in the ascendancy in most developed counties, had medical care reform as a part of their agenda. The reforms they proposed were those of the market, which was claimed to be more "efficient." By organizing medical care more along market lines, the system would be cheaper, less wasteful, and more "profitable." Further, by their control of international financial organizations, market forces in the first world could impose similar standards on the developing world. While there were a large number of reforms tried when all countries in the study are considered, relatively few were tried by a majority of the countries under consideration here. The most popular professional reform was to increase professional autonomy for clinical decisions, a development entirely before 1980 and mentioned by 7 countries. There were three elements of democratic reforms and five elements of market reforms that were found in 10 or more countries: 2 a. An ideology of equity or equality (8 countries before 1980, 2 after) b. Creation or expansion of health insurance coverage or move toward a national health system (12 countries before 1980, 5 after) c. A shift toward more universal health care coverage (7 countries before 1980, 2 after) d. An ideology of efficiency (1 country before 1980, 12 after) e. A shift from public to private insurance coverage or provision of services (13 countries, all after 1980) f. A focus on competition, incentives, "productivity" and choice (1 country before 1980, 9 after) g. Reduction of benefits to patients and/or "cost shifting" by requiring patients to pick up more of the cost of services (1 country before 1980, 12 after) h. A focus on cost containment and/or rationing of care (1 country before 1980, 9 after) In addition, decentralization was a feature of reform in 9 countries. To follow up these findings, an e-mail check was made with the authors to verify the dates of the introduction of market reforms based on a neoliberal economic ideology. It was indeed the case that almost all of them had taken place in a period within five years of 1980. Hence there seems to be sufficient reason to conclude that

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a. market-oriented reform of medical care systems was a widespread phenomenon affecting a broad spectrum of countries on all continents and at all levels of development; b. the almost simultaneous emergence of these reforms in settings so diverse in socioeconomic and medical care organization suggests that there is a reform movement that transcends the nation-state; and c. we need to look to institutions and organizations at the suprastate level to understand them. THE SOURCE OF MARKET REFORM In chapter 1, we developed two themes that could explain at least parts of the trend toward an integrated, seemingly coordinated, shift in the direction of health care policy: trends in medical care organization that increased costs and made financing more problematic, and the elaboration of a world economic order increasingly coordinated by "hegemonic systems." Here we return to these themes. While most of the chapters did not fully develop the theme of the medical care trends, what information was presented was entirely consistent with the model outlined in Figure 1.1. Medicine, at least at the level of clinical knowledge and practice, has been an international activity for centuries. Medical training is roughly equivalent in all countries, and the institutions of medicine (hospitals, clinics, and so on) are recognizable wherever one travels. Countries differ most in the resources they place into medical care and in the distribution of medical care personnel, facilities, and expenditures within their populations. All countries are faced with the issue of a fiscal crisis and a need for cost containment. It seems likely that a crisis of alienation is also widespread, although the information on this point is thin. We also posited a "globalization"3 of socioeconomic activity that has altered the capacities of the nation-state to organize effective medical care services. In our meetings at the Social Science and Medicine conferences in Hungary (1994) and Scotland (1996), we had a consensus that the increase in the volume of international trade had resulted in an increase of interdependence among nations, creating an impetus for the formation of economic unions such as the European Union, the North American Free Trade Association, the World Trade Organization (incorporating the earlier GATT agreements), and the like. Our discussion focused particularly on the impact of the World Bank and the International Monetary Fund on destabilizing public health systems, especially in the third world. Implicit in these observations was the thought that important decisions were being taken away from the nation-state and housed in organizations that were transnational, often undemocratic, and powerful enough to compel nations to "fall into line" behind a hegemonic project formulated by interests not accountable to any level of political organization. Somehow, there was a new way of coordinating social policy decisions so that socioeconomic interests with trans-

372

Conclusion

national hegemonic power were "calling the shots." This is a thesis with wide implications for the quality of life, ranging from the provision of social services to the development or decline of democratic institutions. To the degree that elite economic interests have gained control of the world economy and organize it to serve their interests, both are threatened. With this in mind, we raised the question of where the world economy might be coordinated. The starting point was to consider the hegemonic systems indicated in Figure 1.4. Several components of these systems seem, on the face of it, unlikely to be points of global coordination. Bilateral aid, for example, is rapidly declining and constitutes a small part of international funding as compared with earlier decades. While some bilateral aid comes from powerful countries who have used it to enhance their strategic position, the trend has been toward multilateral aid. In addition, countries have differed strongly in where aid has been granted and the underlying conditions of that aid. Finally, while it is easy to document the impact of bilateral aid on developing countries, it is harder to explain how the activity of the first world can be coordinated through this process. Nongovernmental organizations (NGOs) also seem an unlikely focal point, as they are a multitude of organizations with a variety of objectives. Together they are not in a position to have a major world economic impact, although they are often important in the development of specific projects in specific countries or regions. Even the much-criticized World Bank and International Monetary Fund seem weak candidates for being the center of economic coordination on a global scale. These are big, powerful agencies that are the main source of international development funds. They are clearly organizations of the first world, dominated by the United States. They have equally clearly been instruments by which the first world has imposed its will on countries that have a need for economic aid. In our chapters on Russia, Central Europe, Mexico, India, and Thailand, we can see the impact of these institutions as they have mandated the dismantling of public-sector activities and have imposed a market model. Development funds are thus in the service of an economic agenda coming from the bankers of the first world. It would seem difficult to underestimate the power of these organizations in shaping the world economy, yet it is my contention that they are not the place where transnational coordination takes place. What is needed is some kind of organization that meets the following characteristics: 1. Being international in scope, having representation from virtually all countries on the globe 2. Having a membership of people with great political and economic power enabling them to strongly influence the economic activity in an important part of the world 3. Having an agenda of promoting a neoliberal economic view of public policy

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4. Having a program of promoting consensus among economic elites 5. Having links to operational means for structuring international economic activity Only such an organization could orchestrate the almost simultaneous reforms we have found in this collection of countries irrespective of medical care needs or medical care system characteristics. We cannot claim to have found a source of international coordination in the materials presented in the previous chapters. A search for such a coordinating mechanism, however, seems merited. In what follows, I offer some disciplined speculation in the hope that it will become the focus of a more systematic empirical investigation. Consultation with experts in international organizations produced some leads that were followed up with a search of the Internet. The result was that several organizations seemed to be in a position to be part of a process of elite coordination. Indeed, it seems as if a network of organizations performs that function, some focused on creating ideological consensus and others on operational coordination of the world economy. The "hegemonic systems" posited in Figure 1.4 need to be modified as provisionally shown in Figure 17.1. Ideological Hegemonic Organizations Several organizations are candidates, separately or together, for being the center(s) of transnational ideological consensus building. The following are some of the more important of these. World Economic Forum The strongest candidate is the World Economic Forum (WEF), created in 1971 by Swiss economist Klaus Schwab, professor of business administration at Geneva University.4 WEF is a forum of business elites and selected academics and politicians. For membership, one must be the CEO of a corporation doing at least one billion Swiss francs of business each year and pay a "membership fee" of U.S. $24,000. In addition, there is a conference fee of $6,000 as of 1997 (Whitney, 1997). In 2000 the corporations represented at the meeting accounted for 80% of world industrial output (Kellaway, 2000). The forum meets each year toward the end of January in Davos, Switzerland, for a week of seminars, lectures, discussions, and networking, all "committed to improving the state of the world." It was originally set up as a conference for European business leaders to "discuss a coherent strategy for European Business to face challenges in the international marketplace," but soon expanded into a worldwide conference. WEF operates under tight security and secrecy. The village of Davos is cordoned off during the conference by Swiss police. Nobody is allowed in or out of the village except conference participants. It is a rule of the forum that nothing

Figure 17.1 Hegemonic Systems Revisited (Cf. Figure 1.4)

Ideological Global World Economic Forum Trilateral Commission Club of Rome International Forum on Globalization World Forum on Democracy Regional Summit of the Americas

Operational Global World Trade Association World Bank International Monetary Fund Regional European Union North American Free Trade Association Non-governmental Organizations National Bilateral aid programs

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said there is to be quoted or attributed to anyone. Except for speakers at plenary sessions, the names of participants are not released or publicized. Except for plenary-session speeches, there are no reports on the content of discussions. Only invited members of the press may attend. Their coverage is limited. Members of the press are certified to attend only certain sessions, the more "trustworthy" ones having more latitude in which sessions they can attend. They may not report discussions or identify members beyond speakers at plenary sessions. Their participation is limited, in the parlance of journalism, to "deep background." A Lexis/Nexus search produced no news articles on WEF before 1988 and only scattered coverage since that time. Only a few participants can be identified over the years. Nonbusiness people attending tend to be heads of state, key finance advisors, and academics who provide intellectual support for the kind of globalization the forum promotes (one based on free trade, deregulation of world markets, and private-sector solutions; in short, the neoliberal agenda). WEF often brings together people who are not seen in their own countries as pursuing a common agenda (Crane, 1998; Uchitelle, 1998; Lebergott, 1998; Friedman, 1998). Each conference is designed to produce a consensus among business elites on the direction the world economy should take and the policies governments should pursue. That agreement becomes an agenda that can then be carried back to countries across the globe by the most powerful economic leaders in the world. Given the secrecy surrounding the WEF meetings, it is hard to be confident that newspaper reports capture all, or even the most important, topics of discussion. Press coverage is thin and widely scattered across the globe. Nevertheless, at least some of the topics have been reported in recent years. Table 17.3 lists topics that have been reported in English-language newspapers since 1990. Clearly, the forum reacts to world events. The question of how to cope with the end of Communist rule in the USSR and Eastern Europe has been an important issue. At the forum, leaders of East and West Germany were brought together to discuss reunification, a plan was developed for aiding Eastern Europe, and strains on the German economy were addressed. All of this seems to have taken place before 1994. A second theme was the boom and bust of the Asian economy. In 1990 the question was how to contain Japan and open its economy to imports from other countries. Later it was how to deal with the collapse of Asian national economies. A third theme was coping with the U.S. economy. The savings and loan crisis of the early 1990s, the threat of inflation, and in 2001 the threat of a recession were discussed. The United States was influenced to deal with issues of international concern. Currently, there seems to be considerable ferment over the unilateralism of the Bush administration's policies. A fourth theme was cutting back on the welfare state, particularly the need to overcome objections in the affected populations. It was contended in 1994 that having a widespread franchise was a deterrent to rational economic policy.

Table 17.3 World Economic Forum Themes, 1990-2001 Year 1990

Themes Reunification of Germany; assistance to Eastern Europe; world investment; containing Japan.

Sources Brummer, 1990; Hogg, 1990; Lord, 1990; Crane, 1990a, 1990b; Dullforce, 1990

1991

Gulf War; German budget deficit; GATT negotiations; U.S. S&L crisis; multiple home bases for transnational corporations.

Hutton, 1991; Lorenz, 1991

1992

How to deal with demise of world communism; liberalization of world trade; controlling inflation.

Hutton, 1992; Huhne, 1992; Cohen, 1992; Crane, 1992; Rodger, 1992

1993

Fear of trade war.

Crane, 1993

1994

Cutback of welfare benefits; shift of economic power to Asia; democracy as problem for cutting benefits.

Crane, 1994; George, 1994a, 1994b, 1994c; Khanna, 1994a, 1994b

1995

Free press; respect for institutions; global governance; opposition to UN Economic Security Council; privatization of internet; agenda for Halifax G-7 meeting.

Fernandez, 1995a, 1995b, 1995c; Norman, 1995

1996

Falling wages, rising unemployment, growing inequality; need to account for "social return" on globalization; environmental concerns.

Lockwood, 1996; Pfaff, 1996; Segall, 1996; Crane, 1996; Mathews, 1996

1997

Emerging "network society"; corporate responsbility for social ills; threat of democratic backlash.

Rubin, 1997

1998

Consumer driven culture; need for labor standards.

Crane, 1998; Uchitelle, 1998; Lebergott, 1998; Friedman, 1998

1999

World financial Crisis; globalization undermining democracy; need for social contract; limits of neoliberal economic theory.

Crane, 1999a, 1999b, 1999c; Chote, 1999; Plate, 1999

2000

Response to Seattle; lack of response from pharmaceutical companies to AIDS crisis; threats to democracy (media mergers, etc); social inequality; environmental threats.

Crane, 2000; Hoong, 2000; Swardson, 2000; Uchitelle, 2000; Bello, 2000; Kahn, 2000

2001

Possibility of U.S. recession; U.S. unilateralism; pollution; mental illness; social inequality; backlash on globalization.

Baker and Peel, 2001; Crane, 2001; Drozdiak, 2001; Kaur, 2001

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Conclusion

From the standpoint of our framework, this seems an acknowledgment that market and democratic principles were recognized as being in conflict. Throughout this time period, there was a theme of liberalizing trade relations, removing restrictions on corporate activity, and opposing attempts to distribute the benefits of economic growth to the working and peasant classes. In recent years, there seems to have been a shift in the discussions reflecting increased concern with socioeconomic inequality, the need for a social contract, and environmental degradation. Labor leaders have only recently been included in the forum, and they have brought to the table the growing gap between "haves" and "have-nots" in the world. While the elites have clearly benefited from liberalized world trade, most of the population of the world has become more impoverished. The discussions since 1996 have clearly acknowledged this and have opened discussion on whether and how to respond. Also beginning in 1996, there has been discussion of environmental degradation that has accompanied the globalization process. Clearly, at least some of the world economic elite see a need to address these issues, and they are working to build a consensus to make them an agenda for action. The last thing we can glimpse from the press coverage is that WEF has been a place where other international activities are brokered. In 1990 the Catholic and Protestant leaders of Northern Ireland were brought together to negotiate a resolution to the long-standing hostilities that have severely damaged life in that area of the world. In 1997 Davos was the venue for negotiations between Israel and Palestine that led to at least a temporary cease-fire. In 1995 WEF was the agency for setting the agenda for the economic G-7 conference held in Nova Scotia that year. While the World Economic Forum has no organization to implement policy, it is clearly a place where agreement is reached on an agenda. It is here that the world economic elite "get on the same page" and carry the message back to their respective countries. Trilateral Commission The Trilateral Commission was formed in 1973 at the instigation of David Rockefeller and Zbigniew Brzezinski to bring together political leaders and "distinguished citizens" for discussions on world problems.5 Members have consisted of about 325 people from Europe, North America, and Pacific Asia. The "distinguished citizens" were mostly elite business people, although there were some academics and labor leaders included. The full commission has met annually, rotating among the three parts of the represented world. Much of the work of the commission, however, has taken place in task forces that prepare reports on assigned topics. These reports have been brought to commission meetings in draft form for discussion, after which they have been published. Some recent titles are Managing the International System over the Next Ten Years (1997), Maintaining Energy Security in a Global

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Context (1996), Engaging Russia (1997), and The New Central Asia: In Search of Stability (2000). The commission has drawn strong criticism from right-wing interests as a "shadow world government." Barry Goldwater considered it a Rockefeller family project and thought that it worked for his defeat in the 1968 election. It has been faulted for secrecy and for trying to run the world by controlling democracy. Pat Robertson (1991), on the other hand, considers it a Marxist organization. Both of these views seem overdrawn. Clearly, the commission seeks to influence public policy and to engender consensus among elite interests in three economically dominant parts of the world. Its scope is more limited and its processes are more open than those of the WEF. It is clearly an influential voice in policy discourse. The Club of Rome The Club of Rome characterizes itself as a "global think tank" consisting of "scientists, economists, businessmen, international high civil servants, heads of state, and former heads of state." It presents itself as nonpolitical and nonideological. It sees the world as in the midst of enormous changes and in need of broad, globally focused thinking about important issues. It has held annual meetings at which issues were discussed and reports issued. Its mission, as expressed on its Web site, (www.clubofrome.org), has been the following: • "The identification of the most crucial problems facing humanity, their analysis in the global context of the world-wide problematique, the research of future alternative solutions and the elaboration of scenarios for the future." • "The communication of such problems to the most important public and private decision-makers as well as to the general public." At its first meeting, the topic was the environment, resulting in the influential report The Limits of Growth, published in 1972. The environment continues to be a core interest. Some recent reports include Factor Four: Doubling Wealth— Halving Resource Use (1997) and Oceanic Rule: Governing the Seas as a Global Resource (1998). All the reports are commercially published. Operational Hegemonic Organizations Other transnational organizations are designed not to create an ideological consensus, but to implement policies and to organize transnational economic activity. These tend to be better known to the general public, at least in broad outline. Some of the most important are the following. World Trade Organization The World Trade Organization (WTO) was created in the Uruguay round of GATT (General Agreement on Tariffs and Trade) negotiations.6 Under treaty

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among the 140 member countries (as of 30 November 2000), this organization incorporated GATT and was granted important legislative, executive, and judicial powers that supersede those of national governments. It is a forum for trade negotiations, the administrator of WTO trade agreements, the monitor of national trade policies, and the judicial unit for resolving trade disputes. The general thrust of WTO is to liberalize world trade. A consensus model dominates its decision making (which WTO claims makes the process "democratic"), focused on setting rules for international trade. The governments of member states appoint representatives. The rules promulgated by this council are fully in line with WEF positions. They liberalize international trade by preventing governments from creating restrictions based on protection of national industry, health, the environment, or human rights. When there are disputes, a board dominated by corporate representatives adjudicates. The overall objective is to protect the profits of transnational corporations, to make trade fairer to corporations, and to limit the impact of consideration of issues other than profits on trade activity. While WTO is clearly the central organization for coordinating and governing the world economy, there are also several very important regional organizations that operate in a manner entirely consistent with the WTO mission. Among the most important of these are the World Bank and the International Monetary Fund, the European Union, the North American Free Trade Association, and the Summit of the Americas. The World Bank and the International Monetary Fund Both the World Bank and the International Monetary Fund (IMF) were created in 1944 as part of the Bretton Woods agreements. While they are separate organizations, the two were created together and have worked closely together over the past several decades. The World Bank was set up to aid in the reconstruction of Europe after World War II. The IMF was designed to stabilize currency exchange rates between nations (International Forum on Globalization, 2000). Nationally appointed managers govern both. The board is dominated by the United States and is committed to a neoliberal economic point of view. Together, the World Bank and IMF have evolved into the main source of development loans for developing countries (World Bank, 1998). The mechanism used to enforce a neoliberal economic agenda is the "Structural Adjustment Program," extended in 1987 into the Enhanced Structural Adjustment Facility (ESAF). What this means is that "eligible member countries that pursue programs of adjustment and reform supported by the IMF and World Bank and establish a sound track record of economic adjustment before the end of 2000 can qualify for exceptional assistance with the objective of achieving debt sustainability over the medium term" (International Monetary Fund, 1999). Structural adjustment means placing the focus on reducing inflation, balancing the budget, liberalization, privatization, and deregulation, often called the

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"Washington Consensus." The effect is to condition loans on reduction of public institutions, including public health programs, and privatization. The program has been criticized by a long list of nongovernmental organizations for overvaluing low inflation, ignoring the impact of the program on people, particularly the poor, and imposing a political agenda under an economic guise (e.g., Watkins, 1999). Responding to that criticism and an external report issued in 1998 (Esdar, 1998), the World Bank and IMF have started paying attention to environmental and social impacts of their policies. It is not clear that the fundamental thrust of these policies has changed, however. The World Bank and IMF, as seen here, are less an instrument for either arriving at a neoliberal consensus or a means of implementing that consensus than an operational mechanism for the first world to impose its agenda on the developing world. The European Union The European Union (EU) was formed out of the European Community, which, in turn, was formed from a merger of the European Economic Community and the European Free Trade Association.7 It is the result of a postWorld War II project to provide for a more economically integrated Europe. As constituted in 1994, the EU had several advisory groups, including an Economic and Social Committee consisting of NGO representatives, an elected European Parliament that has the authority to veto the budget, and a European Commission appointed by the member states that administers EU "laws" and makes proposals for new "laws." Decision making rests with a Council of Ministers and the European Council. The former consists of ministers with particular portfolios (e.g., labor market, social, agriculture). Foreign ministers meet monthly, the others less frequently. The European Council consists of heads of member states who meet twice a year and consider questions referred from the Council of Ministers. Decisions by either council constitute the "laws" of the EU. There is also a Court of the European Union consisting of 13 judges and 6 general counsels. It adjudicates disputes and interprets EU "law." Its decisions cannot be appealed. To date, the work of the EU has been directed toward liberalization of trade, creation of a monetary union, and restriction of the right of member states to regulate imports on grounds of health and safety. North American Free Trade Association The North American Free Trade Association (NAFTA) was created in 1994 to "foster increased trade and investment among the partners . . . [including] an ambitious schedule of tariff elimination and reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the free trade area."8 The partners are the United States, Mexico, and Canada. The treaty is governed by a Free Trade Commission consisting of "cabinet level representatives from the three member countries" who give political direction to the agreements. Most of the work is carried out through some 30 working groups

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addressing a variety of topics. This is presented as an "apolitical arena for the discussion of issues." The preamble to the treaty lists 15 purposes of the treaty. Number 14 on the list is to "strengthen the development and enforcement of environmental laws and regulations"; number 15 is to "protect, enhance and enforce basic workers' rights." The treaty, however, makes no provision for either of these, and scholars who have studied the effects of the agreement contend that it is, in fact, designed to allow corporations to escape regulation of the environment and workplace safety (e.g., Bonanno and Constance, 1995). Summit of the Americas The Summit of the Americas was formed in 1994. It was an outgrowth of earlier presidential summits held in 1956 and 1967 under the auspices of the Organization of American States (OAS). In 1956 heads of 19 states signed the Declaration of Panama, in which they agreed to cooperate to "promote human liberty and raise standards of living" and laid the groundwork for the InterAmerican Development Bank.9 In 1967 the same leaders agreed on hemispheric free trade south of the United States. These ad hoc summits were institutionalized into a Summit of the Americas based on the "principles of democracy and free trade" in the early 1990s. The first Summit of the Americas took place in 1994 in Miami, Florida, and produced a "Declaration of Principles" that "sought to expand prosperity through economic integration and free trade; to eradicate poverty and discrimination in the Hemisphere; and to guarantee sustainable development while protecting the environment." Its "plan of action" set 23 objectives and assigned countries to lead work in each of these areas. The most important, in the eyes of the summit participants, were the creation of a Free Trade Area of the Americas (FTAA) and a task force on sustainable development. The latter reported the Plan of Action of Santa Cruz in 1996, in which initiatives were proposed in health and education, sustainable agriculture and forestry, sustainable cities and communities, water resources and coastal areas, and energy and minerals. The second summit met in Santiago, Chile in 1998 with a primary focus on education. Its main achievement was to create organizations to institutionalize the summit process and to follow up on summit decisions (cf. www.summitamericas. org/chileplan. htm). The third meeting was in 2001 in Quebec City. It committed the member nations to implementation of the FTAA initiative by the year 2005 and stated that "free and open economies, market access, sustained flows of investment, capital formation, financial stability, appropriate public policies, access to technology and human resources development and training are key to reducing poverty and inequalities." It also supported environmental protection, democratic processes, and cultural diversity (Summit of the Americas, 2001). In sum, it appears that the Summit of the Americas is an instrument for furthering the neoliberal socioeconomic agenda, albeit with some attention to

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social and environmental consequences. As with other neoliberal agencies, it conflates democratic process and free markets. The governance of the "new world order," it seems, is a network of transnational organizations, some of which are designed to produce ideological consensus and others to organize international trade relationships. Both types are dominated by neoliberal economic thinking and international elite corporate interests. They vary in the degree to which other interests are included in their decision making and hence the degree to which they take into account environmental and labor interests. None of them are politically accountable, and hence they are undemocratic in nature. Their main success has been in removing economic policy from the purview of the nation-state and ensuring that it is set by the largest corporations in the world. Opposition to Hegemonic Systems The main opposition to hegemonic systems has come from four sources: some United Nations agencies, various NGOs, an expressive, ad hoc collection of ineffective leftist direct-action groups, and several new counterhegemonic organizations designed to facilitate opposition to the neoliberal agenda. The UN agencies and the NGOs have in common a mission to solve human problems associated with environmental sustainability, labor, health care, education, poverty, and human rights. Many try to speak on behalf of people in the world who are injured by the neoliberal agenda, while they are being influenced themselves by that same agenda (Menotti, 2000). While they are clearly not sufficient to cause the hegemonic systems to redirect their mission, they are slowly gaining a seat at the table where their views can be debated. To the degree that they can create effective transnational systems of their own, they may be able to challenge the corporations. Currently, they are a long way from that point. Some of the new organizations are attempts by people who oppose the neoliberal globalization project to counter the organization of the world economy by transnational corporations. There are a number of these, and new ones are appearing rapidly. Some examples follow. International Forum on Globalization The International Forum on Globalization (IFG) was created in 1994 by 60 "leading activists, scholars, economists, researchers, and writers" [sic] as a "think tank" to "stimulate new thinking, joint activity, and public education in response to economic globalization" (International Forum on Globalization, n.d.[a]). It has evolved into an organization of some 60 organizations from 25 countries with programs such as the following: • The International Forum on Food and Agriculture to investigate and counter the "global conversion to industrial agriculture"

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• The Committee on Environmental Impacts of Economic Globalization to coordinate environmental activists around the world • The Committee on Globalization of Water to open discourse on the world water supply and distribution in response to the World Bank's assertion that "the wars of the next century will be about water" • The Committee on Global Finance to address the equity concerns of currency speculation and the relationships among finance, trade, and investment and transnational corporations • The Committee on Corporations to "combat the emergence of de facto global corporate governance of the economic and political scene" (International Forum on Globalization, n.d.[b]).

The Berne Declaration The Berne Declaration is a Swiss initiative created to monitor and publicize the activity of Swiss banks in the developing world. It contends that while Switzerland is a small country, its banking system has an enormous international impact. It issues reports in French and German for the most part, although a few have recently been issued in English. Among them are a report from the World Commission on Dams opposing massive river dams such as the Three Gorges Project in China; a Clean Clothes Campaign in Indonesia to buttress workers' rights in the textile industry; and an expose of the Syngenta marketing of genetically engineered plants with sterile seeds designed to make farmers dependent on the company for seed. It is also active in opposing the renegotiation of the WTO General Agreement on Trade in Services, which requires third-world countries to allow unfettered competition from the first world in such areas as tourism (Bossard, 1996). One important project is the "Public Eye on Davos," a meeting that parallels the WEF meetings, publicizes as much as it can of what goes on at the WEF, and offers viewpoints in opposition to the neoliberal agenda. World Forum on Democracy The first World Forum on Democracy took place in Poland in June 2000, sponsored by Freedom House and the Stefan Batory Foundation. It was a gathering of "democracy leaders and activists, academic experts, leaders of civic and religious organizations, representatives of the business, community, labor, NGOs and the media to discuss the continued advancement of democratic governance and values throughout the world" (World Forum on Democracy, 1999). Many of the political leaders represented governments that have a major impact on furthering the neoliberal agenda. It appears that this forum is an effort to broaden the base of discussion beyond the largest international corporations. It is too early to tell what impact it might have, but it certainly bears watching. There are other counterhegemonic organizations, such as the Commission on Global Governance (www.cgg.ch), which has issued a report entitled Our Global

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Neighborhood, which is a serious study of the need for a different approach to world governance. These, however, will suffice to give some idea of the emerging opposition. NEXT STEPS The previous chapters and the analysis presented here have demonstrated that a neoliberal reform of medical care is widespread in the world, encompassing countries at all levels of development and in several continents. Moreover, the almost simultaneous initiation of these reforms in the countries studied and the lack of any relationship between the direction of reform and the conditions in particular countries or in their medical care systems strongly suggest that these reforms are being coordinated by agencies organized at the supranational level. Further, the emergence, mostly since 1970, of a variety of transnational hegemonic organizations that, on the one hand, work toward a global ideological consensus around neoliberal economic theory as a policy framework and, on the other hand, devise and operate multinational and transnational systems of international trade suggests a new political and economic order in the form of interpenetrating networks of elite economic, political, and social interests. Both in terms of the disciplinary interests of the social sciences and the practical concerns of the vast majority of people on this earth, these developments place much at risk. Economic perspectives other than the neoliberal and the work of social sciences other than economics are increasingly marginalized. This means that the disciplines that can focus on the social consequences of globalization are removed from systematic consideration. They receive less funding, and their findings are increasingly ignored by decision makers. Further, as universities, particularly in the United States, increasingly accommodate corporate interests, those disciplines that are critical of corporate dominance find themselves without administrative support or the financial means to conduct their research. On a more practical side, labor interests are either no longer "at the table" where important decisions are made affecting the working class, or they are given only token representation in networks that are overwhelmingly composed of elite corporate leaders. Peasants, who have never had effective representation in economic decision making, now have no voice at all. Long-range consequences for the environment have been almost completely ignored by the decision makers, who are focused on reducing the costs of production found in labor and environmental standards. These considerations lend considerable urgency to setting a research agenda that will allow us to better understand what is happening in the world and, hopefully, to exert stronger influence by and on behalf of the non-economicelite peoples—that is to say, almost all of us. That agenda is not yet well defined. What follows is a suggestion of what some of its elements must be in my personal sense of priority.

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First, the social sciences need to develop well-grounded and well-tested theories and models of globalization. In this volume, we have made use of some models that were developed ad hoc at a conference. While they have proved heuristically useful in organizing materials for cross-national comparisons of health care reforms, they do not constitute a developed theoretical framework for understanding the transnational organization of health care or any other activity. Given that socioeconomic organization has spilled over the boundaries of the nation-state and must be considered transnationally if we are to grasp the most important social development of our time, it is imperative that theories be developed to aid in our understanding and guide our research. The models we have employed may be a good point of departure in this venture. An adequate theory would account for at least the following: transnational socioeconomic development; political decision making with reference to economic policy; linkages between nation-states and transnational organizations; changes in the capacities of nation-states; determinants of the direction of policy changes; consequences of transnational organization for different kinds of nation-states; and consequences of changes for different populations within nation-states. This is obviously a tall order. It will not be addressed further in this volume other than to note that what we have discovered to date would suggest that key points of departure will be found in organizational theory, network theory, and the theory of the state. Second, we need to develop a more systematic study of transnational hegemonic organizations. In this chapter, we have identified a few organizations, mostly developed in the past 30 years, that seem to have an enormous impact on the development of global socioeconomic policy. We have also suggested some different ways in which they operate to create an ideological consensus and to implement that consensus in transnational agreements. What we have done in this area is extremely superficial. There is no reason to hold that we have created even an inventory of the international organizations that need to be taken into consideration, much less good information on how they work. For what appear to be the core organizations, we need studies of their internal workings and how their decisions get translated into policy, both for other transnational organizations and for nation-states. Studies modeled after Domhoff's 1974 Bohemian Grove could be extremely useful here. For both theoretical and practical reasons, it is important to get a better grip on the structure, processes, and results of what appears to be the new de facto world government. Third, parallel with the study of transnational hegemonic organizations, we need to gain a better understanding of counterhegemonic activity. Certainly the International Labor Organization (ILO) and a variety of environmental organizations have been actively seeking to curtail the corporate agenda in the globalization process and to assert the interests of their memberships. Opposition takes a variety of forms, and none of them have been brought under systematic social science investigation. There is some evidence that the ILO and some other United Nations agencies

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with responsibilities for social welfare have been seeking a place in the ideological discourse. In addition, some NGOs have been vocal opponents of the corporate agenda, and there are groups that have captured media attention by demonstrating at meetings of transnational hegemonic organizations. When one seeks a social science literature that helps understand these activities, there is little there. Possibly influenced by our earlier study of health care reform in Sweden (Twaddle, 1999), we have treated the issue of neoliberal global reform as a political question. There are other arguments that need to be considered, including the thesis of a crisis of capitalism that makes some such reform inevitable (e.g., Teeple, 1995). Last, there is also a need to continue with cross-national or transnational comparisons of core social institutions, such as medical care, making use of theoretical discipline. While we hope that this study is a contribution to that process, it cannot be the final word. We have prepared some important groundwork by having a number of well-trained investigators work from a common set of models to do comparisons of medical care reforms in a number of countries representing a variety of levels of development and forms of organization. We have made comparisons and speculated on their meaning. From this we are confident that medical care reform is a transnational process that is intimately linked to the particular forms of socioeconomic "globalization" now in the ascendancy. This is a first step. What we now need is a study that is more representative of all parts of the world, in which there is a systematic selection of countries. We need to undertake a more formal operationalization of models, either the ones we have used or others to be developed from a more sophisticated theoretical formulation. We need more systematic data collection and analysis. Most of all, we need a prospective design. We offer our work as a starting point. There is much to be done. NOTES 1. It has been contended that the IMF demand that public health services be dismantled as part of a program of privatization removed the capacity of developing countries to respond to public health needs. The AIDS epidemic that is ravaging sub-Saharan Africa, for example, has been blamed on the IMF, and not without reason. 2. In this analysis, Central Europe is treated as one country. 3. This is, of course, a multidimensional concept, and there is no consensus on what "globalization" means. A review of the concept is available on the internet (Riggs, n.d.). 4. Information on WEF comes mostly from Web sources. Most important were the Financial Times site, specials.ft.com/davos2001/FT3PTWL7AIC.html, and the WEF Web site, www.weforum.org, 5. Most of this information comes from the Trilateral Commission Web site, www.trilateral.org, and from the Geocities Web site, www. Geocities.com. 6. See www.wto.org for most of this information. 7. The materials summarized here come mostly from Twaddle (1997).

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8. Information mostly from the Canadian Department of Foreign Affairs and International Trade Web site. 9. This document is the source of all information in this section unless otherwise noted.

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Dullforce, William. 1988. "Clouded Views from a Swiss Alp." Financial Times, 3 February, 3. Dullforce, William. 1989. "Business Views of Global Outlook Hedged with Tfs' and 'Maybes.' " Financial Times, 31 January, 2. Dullforce, William. 1990. "Sun Fails to Dispel Overcast Global View." Financial Times, 7 February, 1. Elling, Ray. 1980. Cross-National Study of Health Systems, Countries, World Regions and Special Problems: A Guide to Information Sources. Detroit: Gale Research Co. Esdar, Bernd. (1988). "Statement of Bernd Esdar, Chairman of the Evaluation Group of Executive Directors, on the Report of the External Evolution of The ESAF." In External Evaluation of the ESAF: Report by a Group of Independent Expenses, Washington: International Monetary Fund. Fernandez, Warren. 1995a. "E. Asia, West 'Need to Strike a Golden Mean.' " The Straits Times, 29 January, 4. Fernandez, Warren. 1995b. "Plan for UN Economic Security Council Draws Fire." Straits Times, 31 January, 4. Fernandez, Warren. 1995c. "Let Private Sector Develop Info Network." Straits Times, 2 February, 6. Freidson, Eliot. 1970. Profession of Medicine. New York: Dodd, Mead. Friedman, Thomas. 1998. "Good Governance Is Always Best Protection." Houston Chronicle, 11 February, A30. George, Cherian. 1994a. "Welfare State Comes under Attack." Straits Times, 31 January, 10. George, Cherian. 1994b. "The Davos Spirit." Straits Times, 1 February, 6. George, Cherian. 1994c. "West Finds It Hard to Swallow Bitter Pill: SM 'Vital to Asean.' " Straits Times, 2 February, 1. Greenhouse, Steven. 1988. "Theme of Economic Forum Is a Tighter Belt for U.S." New York Times, 8 February, Dl. Hogg, Sarah. 1990. "Davos Debates a New Germany." Sunday Telegraph, 4 February, 27. Hoong, Chua Mui. 2000. "Deep Sense of Crisis." Straits Times, 29 January, 78. Huhne, Christopher. 1992. "Pure Business Gives Way to High Policy at Davos." Independent, 3 February, 21. Hutton, Will. 1991. "Davos Notebook: Mortgage Rates? That's the Least ofthe World's Problems." Guardian, 2 February. Hutton, Will. 1992. "Pricey Preview of an Emerging World." Guardian, 3 February, 23. International Forum on Globalization. 2000. "On the (IMF) and the World Bank." www. ifg. org/imf. html. International Forum on Globalization, n.d.(a). "History of the IFG." www.ifg.org/ about.html. International Forum on Globalization, n.d.(b). "IFG Programs." www.ifg.org/programs .html. International Monetary Fund. 1998. "IMF Concessional Financing through ESAF." www. imf org/extenal/np/exr/facts/esaf. htm. Kahn, Joseph. 2000. "Globalization: If You Can't Beat It, Reshape It." New York Times, 6 February, 3:4.

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Kaur, Hardev. 2001. "Uneven Results of Globalization." New Straits Times (Malaysia), 1 February, 17. Kellaway, Lucy. 2000. "Inside Track: Big Cheese and Wine Party." Financial Times, 31 January, 18. Khanna, Vikram. 1994a. "Meeting Will Be Remembered for Cast of Business Bigwigs." Singapore Business Times, 5 February, 5. Khanna, Vikram. 1994b. "Coping with the Demise of the Welfare State." Singapore Business Times, 16 February, 14. Lebergott, Stanley. 1998. "Consuming Passion." New York Times, 10 February, A21. Lockwood, Christopher. 1996. "Movers Shake It All About at World's Costliest Junket." Daily Telegraph, 3 February, 12. Lord, Rodney. 1990. "Shivers in Shade of the Forum Beauty Contest." Times, 5 February. Lorenz, Christopher. 1991. "Much Ado about the Meaning of 'Transnational.' " Financial Times, 8 February, 12. Mathews, Jessica. 1996. "Business Goes Green." Washington Post, 12 February, A19. Menotti, Victor. 2000. "Globalization and the United Nations." International Forum on Globalization, www. ifg. org/un. html. Nordberg, Donald. 1988. "Pessimism Clouds Economic Forum." Toronto Star, 1 February, Bl. Norman, Peter. 1995. "World Economic Forum: Value of World Institutions in the Balance." Financial Times, 30 January, 4. Pfaff, William. 1996. "Beyond Capitalism." Baltimore Sun, 5 February, 7A. Plate, Tom. 1999. "California Prospect: America Plays Ostrich in Davos." Los Angeles Times, 2 February, B7. Riggs, Fred W. nd. "Globalization: Key Concepts." www2.hawaii.edu/~fredr/glocon.htm. Robertson, Pat. 1991. The New World Order, Dallas: Word. Rodger, Ian. 1992. "Higher and Mightier Yet at Davos World Forum." Financial Times, 1 February, 2. Roemer, Milton. 1977. Comparative National Policies on Health Care. New York: Dekker. Rubin, Trudy. 1997. "Confronting Social Ills." Journal of Commerce, 11 February, 7A. Segall, Anne. 1996. "Multinational Heads Warn of Gloomy Future for Europe." Daily Telegraph, 6 February, 25. Summit of the Americas. 2001. Declaration of Quebec City. Washington, DC: Organization of American States. Swardson, Anne. 2000. "Clinton Appeals for Compassion in Global Trade: World Economic Forum Told Don't Leave the 'Little Guys' Out." Washington Post, 30 January, A18. Teeple, Gary. 1995. Globalization and the Decline of Social Reform. New Jersey: Humanities Press. Twaddle, Andrew. 1981. Sickness Behavior and the Sick Role. Cambridge, MA: Schenkman; Boston: GK Hall. Twaddle, Andrew. 1999. Health Care Reform in Sweden 1980-1994, Westport: Auburn House. Twaddle, Andrew. 1997. "EU or Not EU? The Debate on Swedish Entry into the European Union." Scandinavian Studies, 69:2:189-211. Twaddle, Andrew and Richard Hessler. 1977. A Sociology of Health. St. Louis: Mosby.

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Twaddle, Andrew, and Richard Hessler. 1987. A Sociology of Health,. New York: Macmillan. Uchitelle, Louis. 1998. "Rare Bird in Davos: Labor Chief Makes His Points." New York Times, 5 February, D4. Uchitelle, Louis. 2000. "Economic View: From the Streets of Seattle to the Table at Davos." New York Times, 30 January, 3:4. Watkins, Kevin. 1999. "ESAF Reform and the Power," Oxfam Policy Papers, London: Oxfam. www.oxfam. org. ulc/policy/papers/imfsp.htm. Whitney, Craig. 1997. "Hobnobbing at Very High Levels: Political and Corporate Elite Soak Up Big Ideas at Davos." New York Times, 28 January, Dl. World Bank. 1998. The World Bank Annual Report. Washington, DC: World Bank. World Forum on Democracy. 1999. "About WFD." www.fordemocracy.net/about.html.

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Name Index The Swedish letters Aa, Aa, and 06 are i Aa and Oo.

xed as though they were the English letters

Abbott, Andrew, 19 Ackerman, D., 129 Acuna. C, 226 Adelsohn, Ulf, 72, 73 Aksyonov, Vassily, 174 Albert, A., 127 Albrecht, Gary, 188 Alfonsm, Raul, 229 Alford, R.R., 284, 293, 294, 295, 296 al-Khader, Abdullah, 188 Allen, I., 53 Allende, Salvador, 269 Allman, James, 185 Alpers, Josh, 26 al-Saud, Abdul Aziz, 182 al-Saud, Fahd Bin Abdul Aziz, 183 Altenstetter, Christa, 115 Anatharam, S., 271 Anders, George, 190 Anderson, G.F., 112, 113 Anderson, Odin, 103 Angus, Douglas, 82 Anson, Ofra, 206, 210 Antonio, Robert, 17

Ashton, Toni, 26 Avdeev, Alexander, 168 Badgely, Robin, 78, 79 Baer, Nichole, 88 Baker, Gerard, 377 Bakr, Abdullah, Bakr, 182 Banerji, D., 26, 272 Barbeito, A.C, 227 Barer, M., 7 Barnes, Marsha, 82 Baru, Rama V., 268, 271, 273, 274, 275, 277 Bascolo, E., 227 Bastian, L, 173 Batra, P., 272 Beccaria, L., 226 Bello, Walden, 377 Belmartino, Susana, 222, 223, 227, 234 Bennett, C, 127 Bennett, S., 268 Berg, Ayelet, 202 Berger, Brigitte, 181 Berger, Peter, 181

394 Bergstrom, Hans, 64 Bernstein, Richard, 168 Berrios, X., 306 Bhargava, R., 271 Bhatia, Vandna, 81, 84 Bickel, S.R., 26 Bildt, Carl, 3, 64 Bin-Nun, Gabi, 213 Bismark, Otto, 121 Blau, Peter, 115 Blendon, Robert J., 114 Bloch, C, 234 Bloom, Gerald, 26 Bloor, K., 47, 49 Bluestone, Barry, 17 Blum, Alain, 168 Bobak, M., 127 Bodenheimer, T., 137 Bojan, R., 127 Bojar, M., 127 Bonanno, Alessandro, 17, 382 Borich, T., 165 Borsellino, Matt, 84, 87, 88 Bossard, Peter, 384 Bossert, T.J., 274 Boyle, T., 92 Brachet, V., 247 Brammli, Shuli, 202 Brante, Thomas, 19 Brezhnev, 167 Brock, R.M., 26 Brugha, CM., 26 Brummer, Alex, 376 Bruntland, 268 Brzezinski, Zbigniew, 378 Bukhman, Gene, 168 Buneta, Z., 146 Burchardi, H , 26 Burger, Edward J., 174 Buske, Linda, 87 Bustelo, E.S., 262 Cardenas, Lazaro, 245 Cardoso, J.M., 26 Cassels, A., 259, 268, 269 Cecuk, L.J., 146 Cetrangolo, O., 226 Charhut, Maureen, 114

Name Index Charles, Catherine, 78, 84 Chavez, Ignacio, 249 Chen, M.S., 313, 319 Chen, M.Z., 307 Chen, X.M., 311, 312 Chernichovsky, Dov, 203 Chinitz, David, 137, 203, 204 Chiu, S.W.S., 307 Chote, Robert, 376 Clarke, Simon, 17 Cleaves, P.S., 248 Clinton, William Jefferson, 92 Cohen, Roger, 376 Cohen, Stephen, 174 Collins, C, 39 Conrad, Peter, 8 Constance, Douglas, 17, 382 Coote, A., 54 Cowan, C, 112 Crane, David, 375, 376, 377 Crichton, A., 283, 286 Cruz, C, 254 Daronzynski, A., 137 Dauphinee, W.D., 87 Davis, A., 282, 286 Davis, Christopher, 165, 166 De la Rua, President, 236 Deppe, H , 121, 135 Dewdney, J., 283 Dezhi, Y., 307, 310, 311, 315 Dias, Porfirio, 245 Dieguez, H.O., 226 Dixon, J.L., 3 Dobson, F„ 50 Domhoff, William, 385 Dong, H. 317, 319 Doron, Abraham, 200 Dos Santos, Guilherme, 222 Drozdiak, William, 377 Duckett, S.J., 26, 282, 284, 291, 293, 294, 299 Dullforce, William, 376 Duran, Luis, 247, 250 Elioutina, S., 26 Elling, Ray, 341 Elmbrandt, Bjorn, 68, 69, 71, 73

395

Name Index Enachescu, D., 127 Engellau, Patrik, 71 Engels, Friedrich, 163 Enthoven, A., 6, 27, 43, 51, 53, 115 Esdar, Bernd, 381 Esping-Andersen, Gosta, 17, 27, 67 Espinosa de los Reyes, V.M., 250 Eukjak, R., 133 Evans, David B., 113 Evans, Robert G., 3, 7, 27 Farmer, P.E., 173 Feachem, Richard, 166 Feldman, S., 226 Feldt, Kjell-Olof, 67-70 Ferguson, 286 Ferlie, E., 42 Fernandez, Warren, 376 Feshbach, Murray, 166 Fiedler, J.L., 26 Field, Mark, 26, 112, 160, 162, 166, 168, 174 Firth, Noel, 167 Fitzpatrick, Ray, 188 Fooks, Catherine, 80, 81 Freidson, Eliot, 19, 369 Frenk, J., 26, 251, 259 Friedenberg, Edgar, 157 Friedman, Milton, 171 Friedman, Thomas, 375 Fromm, Erich, 149 Gaebler, T., 42 Gallagher, Eugene, 8 Garcia Delgado, D., 226 Gardiner, H , 284 Garrett, Laurie, 166, 169, 172, 173 Garside, M., 3 George, Cherian, 376 George, J., 282, 286 Giacomini, Mita, 84 Gian, Y., 312 Gill, Sucha Singh, 277 Ginsberg, Eli, 27, 114 Giordano, O., 236 Gittlesohn, L.A., 114 Glavina, D., 133 Goldberg, Carey, 171

Goldsmith, J., 84 Goldwater, Barry, 379 Golubovic, Zagorka, 147, 156 Gopal, M., 268 Gorbachev, Mikhail, 167, 168 Gough, I., 267 Grace, H.K., 26 Gramsci, Antonio, 17 Gray, Bradford, 114, 115 Green, A., 39 Griffin, R.D., 155 Griffiths, Lesley, 3 Griffiths, R., 42 Groning, Lotta, 70 Groodendorst, Paul, 84 Gross, Revital, 198, 202, 204, 205, 206, 213 Grumbach, K., 137 Guidotti, T.L., 318 Haber, Manfred, 112 Hadenius, Stig, 68, 72 Hafferty, Frederic, 115, 116 Hage, J., 7 Halevi, H.S., 199 Hall, Emmett, 79 Hall, Jane, 26 Ham, Chris, 3, 47 Hanneman, R., 7 Hao, W., 306 Harris, M.G., 283 Harris, R.D., 283 Harrison, Bennett, 17 Harrison, Michael, 201, 206 Harvey, David, 17 Hayo, B., 130 Hazell, R., 39 Hebrang, A., 131, 132 Heinrichs, K., 26 Hellander, I., 114 Henderson, G, 315 Hesketh, T., 309 Hessler, Richard, 6, 9, 19, 288, 369 Hicks, Alexander, 17 Himmelstein, D., 114, 167 Hirschman, Albert, 7, 27 Hofstede, G.H., 147, 156 Hoge, Warren, 161

396 Hogg, Sarah, 376 Hollingsworth, J. Albert, 7 Hood, C , 42 Hoong, Chua, Mui, 377 Hou, L , 310, 311 Hsiao, W.C, 261, 262 Huang, S.M., 317 Huber, Evelyne, 17 Hughes, David, 3 Huhne, Christopher, 376 Hunter, David, 39, 47, 52, 53 Hurley, Jeremiah, 81, 84 Hutton, Will, 376 Hyndman, L.D., 82 Ivab, 134 Ivanov, Dr. G., 165 James, O., 43 Jameson, Fredric, 17 Japsen, Bruce, 115 Jara, Jorge Jimenez, de la, 274 Jayal, N., 272 Jervis, P., 39 Jesani, A., 271 Jessop, Bob, 21, 27 Jiang, C, 306 Jinks, Martin, 26 Johansson, Astrid, 60 Jonsson, Bengt, 6, 27 Jost, T.S., 3 Jupe, J., 283, 284 Jyothi, K., 26 Kahn, H , 84 Kahn, Joseph, 377 Kai-Shek, Chiang, 306 Kalina, K., 127 Kalman, I., 128 Kamat, A.R., 272, 273 Kan, X., 311, 312 Karcher, H , 137 Karlsson, Bert, 73 Katz, Steven J., 84 Kaur, Hardev, 377 Kellaway, Lucy, 373 Kellner, Douglas, 17 Kellner, Hansfried, 181

Name Index Kent, Heather, 88 Khadria, B., 273 Khanna, Vikram, 376 Kimberly, J., 115 Kishovsky, Sophia, 171 Kjellberg, A., 67 Klein, Rudolph, 55, 116 Klemencic, K., 133, 134 Kloos, Helmut, 26 Kobayashi, Y., 26 Koivusalo, M., 238 Korpi, Walter, 67 Kotz, David M., 168 Kovrigina, Maria D., 162 Kramer, Ralph M., 200 Kronick, R., 6, 27 Kruschchev, Sergei, 162, 167 Lachman, Ran, 202 Lackovoc, Z., 146 Lambert, John, 17 Lane, Robert, 7, 27 Langby, Elisabeth, 64 Lassey, Marie, 26 Lassey, William, 26 Latsis, Otto, 168 Lavoie-Roux, T., 82 Lawson, J.S., 288, 290, 315 Lebergott, Stanley, 275, 376 Leeder, Stephen, 26 Le Grand, J., 48 Lenin, V., 143, 160 Lennart, B., 308 Leslie, Charles, 8 Letica, S., 145 Levister, E.C., 318 Light, Donald, 3, 6 Lin, V., 315 Lindgren, B., 7 Lindholm, Ann-Marie, 60 Lipietz, Alain, 17 Lipset, Seymour, 97, 112 Little, Bruce, 92 Liu, G, 307, 310, 311, 312 Liu, X., 313 Liu, Y., 315 Lockwood, Christopher, 376 Lomas, Jonathan, 81, 84, 85

397

Name Index Lonnroth, Johan, 7 Lopez, N., 226 Lopez-Acuna, D., 263 Lopez-Portillo, Jose, 247 Lord, Rodney, 376 Lorenz, Christopher, 376 Lo Vuolo, R.M., 227 MacMillan, Robert, 82 Malm, Stig, 69 Manning, N., 43 Marklund, S., 67 Markota, M., 133, 134 Marks, L., 52 Marmor, Theodore, 116, 284 Martin, J., 284 Marx, Karl, 143 Mathews, Jessica, 376 Maynard, A., 47, 49, 139 Mays, N., 48 McGreevey, W., 316 McHale, Jean, 3 McKee, M., 127, 128, 133 McKinlay, John, 26, 27, 115, 116, 166, 275 McPake, 268 McPherson, K., 114 Mechanic, David, 112 Mellor, A.C, 3 Menem, Carlos, 229, 235 Menotti, Victor, 383 Mercer, William M., 89 Meyer, Marshall, 115 Milanovic, B., 139 Miller, S.M., 26 Mills, Bijaud, 268 Milosevic, Slobodan, 158 Minujin, A., 227 Misra, Joya, 17 Mitchell, J., 291 Moller, Tommy, 67 Monekosso, G.L., 26 Mufti, Mohammed, 185, 187, 189, 194 Mulligan, J.A., 48 Murray, C.J., 26, 31 Murray, R.G, 82 Murthy, K., 277, 279 Myrdal, Gunnar, 67

Nambissan, G, 272 Nanda, P., 269 Nayar, K.R., 268 Neffa, J.C, 226 Nemec, 128 Nevo, Yaakov, 209 Nordenfelt, Lennart, 26 Noreen, James E., 167 Norman, Peter, 376 Normile, D., 320 Noy, Shlomo, 202 Ohlund, U., 67 Ollila, E., 268 Olmert, Ehud, 208 Olsson Horst, Sven, 6 Olukoshi, A., 269 Omran, Abdel R., 185 Oreskovic, Stipe, 121, 131, 134, 135 Orosz, E., 123, 128 Osborne, D., 42 Paikin, A., 165 Palme, Olof, 71 Palmer, G.R., 283, 284, 288, 294, 296 Palty, Haya, 212 Pannarunothai, Supasit, 329, 332 Parsons, Talcott, 26 Patai, Raphael, 184 Paunovic, V.R., 157 Peabody, J.W., 26 Peel, Quentin, 377 Peron, Juan, 222 Perry, Seymour, 106, 114 Pfaff, William, 376 Picciotto, Sol, 17, 31 Pillay, Y.G., 26 Pitelis, Christos, 17 Plate, Tom, 376 Pollitt, C , 42 Pollock, A., 54 Popkin, B.M., 306 Portaels, F. 173 Poullier, J.-P., 112, 113 Powell, Francis D., 112 Pozas-Horcasitas, R., 249 Prager, K.M., 175 Preker, Alexander S., 166

398 Press, Irwin, 13 Pressat, Roland, 166 Price, M., 268 Qadeer, L, 272 Qu, J.B., 306 Ragin, Charles, 17 Raison, Christophe, 174 Rajashri, C.K.N., 277 Ramon, Haim, 208 Reich, M.R., 26 Relja, M., 146 Relman, Howard, 7 Remnick, David, 168 Reynolds, Barry, 182 Rhenberg, C, 6 Rhodes, R.A.W., 42 Rich, Pat, 87 Rigouts, L., 173 Rimashevskaia, Natalia, 166 Ring, I., 293 Robertson, Pat, 379 Robinson, R., 47, 48 Rockefeller, David, 378 Rodger, Ian, 376 Roemer, Milton, 31, 341 Rogers, J., 7 Rosen, Bruce, 201, 209 Rosenthal, Marilyn, 13 Rubin, Trudy, 376 Rushing, William, 261 Ryten, Eva, 87 Sachs, J., 312, 319 Sadhana, G, 274 Saint-Simon, H , 143 Saltman, Richard, 6, 27 Sassen, Saskia, 17 Sax, S., 284 Scarpaci, J.L., 26 Schofield, T., 299 Schroeder, S.A., 3 Schuster, H.P., 26 Schwab, Klaus, 373 Sebai, Zohair, 194 Segall, Anne, 376 Semasko, Nikolai, 160, 163

Name Index Sen, Amartya, 167 Sepulveda, J., 26 Sheehan, Neil, 167 Sheiman, Igor, 172 Sheng-lan, T., 26 Shi, Leilu, 26, 114, 115 Shirom, Arie, 204, 213 Shishkin, Sergei, 170 Short, S.D., 283, 284, 288, 294, 296 Shuval, Judith, 199, 200, 206, 210, 212 Shwartz, Shifra, 207 Sidel, Victor, 167, 319 Sigerist, Henry E., 160 Silina, G, 165 Simons, Geoff, 183 Singh, Douglas, 114, 115 Skupnjak, B., 132, 133 Smee, C, 48 Smith, David R., 163 Smith, S., 113 Smolen, M., 129 Soboron, Guillermo, 26, 247 Soderland, N., 3 Spasoff, R.A., 32 Specter, Michael, 172, 174 Stalin, Josef, 163 Stamblovic, Vuk, 146 Starr, Paul, 114 Stephens, John, 17 Stevens, Rosemary, 19 Stewart, Donald, 300 Strashun, I.D., 160 Sun, Y., 312 Surjan, L., 128 Swardson, Anne, 377 Szalai, J., 123, 128 Tajimi, K.Y., 26 Tang, S.L., 305, 309 Tangcharoensathian, Viroj, 331 Tarasov, V., 26 Taylor, Malcom G, 79 Teeple, Gary, 387 Terborn, Goren, 67 Thamer, Mac, 106, 114 Thatcher, Margaret, 42, 43, 44 Thurber, A.D., 87 Tichy, N.M., 262

Name Index Toguchi, T., 26 Tomashevskii, Iu, 165 Tretiakov, A.F., 160 Truman, Harry S., 115 Tuohy, Carolyn, 111, 115, 116 Turek, S., 133 Twaddle, Andrew, 3, 6, 8, 9, 11, 19, 23, 26, 27, 59, 66, 75, 76, 155, 181, 188, 194, 198, 267, 288, 369, 387 Twigg, Judyth, 170, 171, 173, 174 Uchitelle, Louis, 375, 376, 377 Uddhammar, Emil, 59 Vale, Whitley, 26 Vieira, C, 262 Vincent, Victoria, 84 Vinogradov, N.A., 160 Vishnevskii, A.G., 168 Vitanovic, Slobodan, 167 Viveros-Long, A., 26 von Otter, Casten, 6, 27 Wachmeister, Count Ian, 73 Walker, Robert, 88 Wallerstein, Immanuel, 17, 26 Wang, J., 319 Wang, Y., 306 Wardwell, Walter, 13 Watkins, Kevin, 381 Weber, Max, 26, 33, 115 Webster, C , 38 Wedel, Janine, 174 Weinblatt, Jimmy, 200 Weintraub, L.S., 90 Welch, H , 84

399 Wennberg, J.E., 114 Wessen, Albert F., 112 Whitney, Craig, 373 Wibulpolprasert, S., 330 Wickbom, Ulf, 66, 70, 71 Wigzell, Kerstin, 60 Willison, Donald, 84 Wines, Michael, 173, 174 Wloch, T., 130 Wolfe, Samuel, 79 Wong, V.C.W., 307 Woo, T , 312, 319 Woolhandler, Stephanie, 114, 167 Xingyuan, Gu, 26 Yip, W.P., 313, 322 Yishai, Yael, 201, 204, 207, 218 Young, D., 321 Young, H , 322 Young, M.E., 306, 312, 322 Yu, J.C, 26, 323 Yu, J.J., 306, 322 Zabag, Shlomoh, 208 Zakharov, Serge, 168 Zedillo, Ernesto, 259 Ze-Dong, Mao, 306, 309, 319 Zelman, Walter, 115 Zhang, J., 315 Zhou, X., 310, 311 Zhu, W.X., 309 Zielmann, S., 26 Zinoviev, A., 175 Zuger, Abigail, 173

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Subject Index The Swedish letters Aa, Aa, and 06 are indexed as though they were the English letters Aa and Oo. Access to care, 59, 79, 100-101, 124, 139, 164-66, 227-28, 260, 270, 283, 288, 290, 292, 294, 315, 342, 353, 356, 369 Accountability, 83, 206, 231, 336 Adam Smith Institute, 43 Adel Reform, 60 Adverse selection, 48 Affordability of health care, 102, 369. See also Access to care Afghanistan, 191 Africa, 267, 270, 278 Aging of population, 62, 63, 74, 195, 293, 296-97, 305, 318-19 AIHW (Australian Institute of Health and Welfare), 282, 287, 290, 298, 300 Albania, 156 Alienation. See Crises in medical care Allocation of personnel, 59 Alternative medicine, 13 Ambulatory care. See Primary care Ambulatory sector v. hospital sector, 48, 59, 82, 100, 145, 169, 271, 272, 279 AMGDs (medical areas of decentralized management), 258, 260

Andhra Pradesh, 276, 277 Angus Reid Group, 91 ANSSAL, 232, 233, 238 Aparatchiks, 144 Arabs, 199. See also Saudi Arabia Argentina, 221-40, 353, 356 Argument Agency, 153 Asia, 267, 375 Asociacion de Bancos Argentinos (ADEBA), 225 Asociacion National Medica (National Medical Association). See Unions Association Feminine d'Education et d'Action Social, 90 Association of Free Doctors (Serbia), 157 Australia, 282-302, 319, 342, 353 Australian Consumers' Association, 294 Australian Council of Social Services (ACOSS), 294 Australian Health Care Agreements, 285 Australian Institute of Health and Welfare. See AIHW Australian Medical Association, 295 Australian Private Hospitals Association, 295

402 Austria, 128, 131 Austro-Hungarian Empire, 121, 128 Authoritarianism, 147 Autonomy, 109, 202, 210, 211, 271, 288, 353, 356, 369, 370. See also Professional control Bahrain, 183 Balance of payments, 68 Bangkok, 328, 329, 330, 331 Bangkok Metropolitan Administration (BMA), 324 Bangladesh, 270 Bank crisis, 64-65, 73 Barefoot doctors, 313, 316-17 Bed blockers, 25, 60, 82, 146 Berne Declaration, 384 Bhore Committee (India) {Report of the Health Survey and Development Committee), 271 Bilateral International Aid, 6, 21, 268, 372 Bismarkian health insurance. See Models, Bismark Block grants, 60, 81, 342 Bosnia, 147, 157 Brain drain, 99. See also Physicians, emigration of Brazil, 221 Breton Woods agreement, 268, 380 Bribing. See Corruption Brigade. See Commune, collapse of British Mandate, 199 British North America Act of 1867, 78 Budgetary control, 52, 61, 63 Budget deficit, 63, 66, 68, 69, 74, 81, 92, 101, 128, 134, 137, 203, 213 Bureaucracy, 9, 47, 59, 62, 88, 105, 108, 130, 139, 169, 181, 183, 283, 332 Bureau of Health Policy and Planning (Thailand), 326, 329, 332 Cambodia, 324 Canada, 78-96, 105, 109, 111, 113, 123, 251, 293, 342, 356 Canada Health Act, 79, 84, 86, 89 Canada Health and Social Transfer (CHST), 81

Subject Index Canada House of Commons, 78 Canadian Coordinating Office for Health Technology Assessment (CCOHTA), 83 Canadian Healthcare Association, 89 Canadian Home Care Association, 89 Canadian Hospital Association. See Canadian Healthcare Association Canadian Institute for Health Information (CIHI), 85 Canadian Medical Association, 79, 86 Canadian Nurses Association, 88 Canadian Pharmaceutical Manufacturers Association, 90 Capital. See Finance, capital Capitation. See Finance, capitation Caregivers. See Home care Care Guarantee Reform, 60-61 Catholic Church, 243, 294 CEFTA. See Central Europe Free Trade Association Central Bureau of Statistics: Croatia, 133, 140; Israel, 200, 202 Central Europe, 121-41, 372 Central Europe Free Trade Association (CEFTA), 121, 124 Centralization, 53, 67, 130, 147, 150, 169, 225, 331, 356 Centre for Business and Policy Studies, 62 Centre for Policy Studies, 43 Certification of physicians, 248^-9, 250 CGT. See Unions CGT backed reform, 232 Chancellery Right Wing, 67-70 Chaos, 151-52 Chiang Mai, 331 Charges. See Cost sharing; Cost shifting; Purchaser-seller split Chechnya, 171 Chile, 262, 269, 382 China, People's Republic of (PRC), 99, 185, 303-23, 356, 384 China Yearbook, 304, 305, 307, 308, 310, 315, 318 Chinese medicine: traditional, 307, 315; western, 307, 315 Chinese State Department, 316

Subject Index Choice. See Patients, choice Christian Democratic Party. See Political parties, religious Clinical audit. See Cost effectiveness; Evidence-based medicine Clinical Center of Serbia, 157 Club of Rome, 379 Collectivism, 123, 147 Commission for Health Improvement, 52 Commission of European Communities, 121 Commission of Inquiry on Health and Sickness Care (Sweden), 59, 72 Commissions, provincial, 82 Committee for the Defense of Democracy (Medical Faculty, Belgrade), 157 Committee on Corporations, 384 Committee on Environmental Impacts of Economic Globalization, 384 Committee on Global Finance, 384 Committee on Globalization of Water, 384 Commodification. See Market, principles Commune, collapse of, 312 Community services. See Social services Competition, 7, 42, 44, 64, 67, 69, 104, 127, 139, 145, 203, 206, 213, 214, 229, 231, 232, 259, 294, 342, 370 Competitive tendering. See Outsourcing Comprehensive coverage, 79 Comprehensive Health Care Program, 231, 236, 239 Compulsory Health Program (PMO), 232 COMRA. See Unions CONFECLISA. See Unions Confederacion General del Trabajo. See Unions Confidence in system. See Effectiveness Conservative Party. See Political parties, right Consolidation, 108. See also Centralization Constitutional guarantee of medical care, 162 Constraints on clinical decision-making. See Autonomy Consultative Council (Saudi Arabia), 183 Consumer. See Market, ideology

403 Consumer choice. See Patients, choice Consumer groups. See Market, ideology; Patients Consumers Health Forum (Australia), 29495 Contracts, 45, 46, 133, 224, 230, 233, 234, 247, 276, 292, 333 Contribution Unica de Seguridad Social (CUSS) (Argentina), 229 Control of press. See Press, control of Convertibility Plan (Argentina), 221, 229 Cooperative medical scheme. See Insurance Coordination of international economy, criteria for, 372-73 Copayment, 37, 89, 90, 91, 93, 224, 276, 311. See also Cost sharing Corporations, international, 93, 268, 271, 275 Corporatization, 107-8 Corruption, 153-54, 169, 172-73, 183, 336 Cost and financing, 4, 9, 11, 43, 48, 50, 54, 59, 83, 98, 100, 127-28, 137, 139, 206, 291, 318, 320, 371 Cost consciousness, 48 Cost containment, 38, 41, 43, 48, 61, 8081, 83-84, 98, 109, 133, 195, 206, 21011, 213, 215, 238, 261, 291, 296, 318, 336, 342, 356, 370, 371. See also Funding, crisis Cost effectiveness, 40, 49, 52, 139 Cost sharing, 78, 79, 80-81, 84, 136, 277, 279, 293, 318. See also Copayment Cost shifting, 25, 75, 84, 90, 101, 145, 318, 342, 353, 370 Council of Ministers (Saudi Arabia), 183 County reforms, 61-62 Credit policy, 68 Crises in medical care: alienation, 11-13, 59, 74, 181, 195, 371; fiscal, 9-11, 59, 74, 133, 194, 203, 226-27 Crisis group, 68 Croatia, 121, 122, 124, 130, 131-34, 135, 139, 147, 157 Croatian Institute for Health Insurance (CIHI), 132

404 Cross-training, 83 Cuba, 166 Cuban Missile Crisis, 166 Cultural Revolution, 309-11, 312 Cuts in programs, 84, 86-87, 88, 91, 93, 128, 259, 267, 270, 291, 292, 313-14, 318 Czech National Council, 127 Czechoslovakia, 67 Czech Republic, 102, 121, 122, 124, 12728, 130, 131, 135, 136 Dagmar Reform, 60 DALE Index, 102 Data deficiencies. See Research, lack of Deaths. See Mortality Debt, 222 Decentralization, 3, 25, 39, 44, 51, 59, 60, 61, 69, 84-87, 106-7, 124, 143, 144, 173, 248, 257, 305, 320, 342, 356, 370 Deficit reduction. See Budget deficit Defunding, 150. See also Underfunding Deindexing, 81 Deletion of services. See Cuts in programs Delisting. See Cuts in programs Demand, 9 Democracy, 7, 21, 62, 65, 70, 75, 147, 157, 183, 221, 241, 371, 372, 378. See also Model, communal or democratic Democratic centralism, 122 Democratic model. See Models, communal or democratic Democratic reforms. See Reforms, democratic Denmark, 113, 298 Dental care, 101 Departamento de Salubridad. See Department of Sanitation Department of Health (UK), 47, 49, 56 Department of Health and Human Services (US), 99 Department of Sanitation (Mexico), 246 Deregulation, 63, 74, 104, 229, 230, 231, 232, 380. See also Regulation Desarrollo Integral de la Familia (DIF) (Mexico), 242

Subject Index Deskilling of care, 60, 88 Devaluation, 69 Devolution. See Decentralization Diagnosis Related Groups (DRGs), 44, 234, 292, 342 Diagnostic services. See Technology DIF. See Desarrollo Integral de la Familia Directors' Revolt. See Employers' offensive Disability Adjusted Life Expectancy. See DALE Index Disease, 4, 6, 47, 241-42, 271, 276, 278, 306, 307, 308, 320, 326-27, 334. See also Epidemiological polarization; Epidemiological transition Disenfranchisement, 90 Doctors' Reform Society (Australia), 295 Downsizing. See Cuts in programs Eastern Europe, 122, 270, 375. See also Central Europe Economic crisis, 65, 137, 170, 226-28, 229, 241, 312, 325, 334-35, 371 Economic Emergency Law (Argentina), 229 Economic incentives. See Market, principles Economic Reforms of 1979 (PRC), 31214 Economic theory: Keynesian, 21, 63, 68, 69, 74, 267, 356; Marxian, 356; neoliberal, 7, 21, 63, 65, 68, 70-71, 73, 74, 130, 228, 267, 270, 342, 356, 370, 372; rationalist, 283 Economy: collapse, 226-28, 312; as element of national system, 4; as explanation of reform, 11, 58, 63, 64-66, 65, 167; internationalization of, 17-21, 75; market, 123, 130, 303; planned, 123, 303; recession, 65, 72, 131, 150; stabilization, 131, 221. See also Inflation Effectiveness, 3, 4, 14, 38, 41, 43, 44, 47, 59, 60, 62, 82, 83, 84, 90, 91, 93, 104, 127, 130, 139, 150, 168, 171, 173, 184, 188, 198, 203, 223, 238, 256, 257, 259, 260, 261, 267, 276, 293, 316, 317, 331, 335, 353, 356 Efficacy. See Effectiveness

Subject Index Efficiency, 3, 4, 14, 38, 43, 48, 51, 61, 64, 83, 92, 93, 127, 139, 160, 167, 18890, 206, 223, 225, 228, 231, 257, 258, 259, 260, 261, 267, 276, 283, 293, 296, 299, 336, 356, 370 Eichmannism, 151, 157 Ekonomicommissionen, 64, 76 Emigration of physicians. See Physicians, emigration of Employer associations, 7 Employers' offensive, 70-71, 74, 75 Entrepreneurs, 283 Environmental health, 286 Epidemiological polarization. See Inequalities, health Epidemiological transition, 169, 185, 305 Equity, 3, 4, 14, 39, 41, 46, 51, 100-101, 107, 124, 137, 139, 145, 188, 195, 198, 222, 223-25, 236, 257, 260, 267, 270, 274, 279, 282, 288, 290, 292, 293, 294, 296, 314, 315, 336, 356, 370 European Community. See European Union European Health Management Association, 46, 56 European Union, 45-46, 63, 66, 73, 75, 121, 133, 146, 336, 371, 381 Evaluation. See Research Evidence-based medicine, 47, 49, 353 Evidence-based policy, lack of, 47^1-8 Expectations for medical care, 64 Expenditures for medical care, 79-80, 92, 98, 103, 131, 133, 134, 135, 210-11, 215, 254-56, 282, 283, 314, 318, 330, 332, 342 Extra billing, 79, 145, 289 Federation of Blue Collar Unions (LO). See Unions Federation of County Councils. See Landstingsforbundet Federation of White Collar Unions (TCO). See Unions Fees. See Finance, fees Fiji, 103 Finance, 42, 43, 47, 124, 129, 251-53, 268, 273-74; capital, 275; capitation, 44, 61, 84, 105, 134, 209, 233, 234,

405 333, 356; cash transfers, 79, 289; crisis of (see Crises in medical care, fiscal); fees, 44-45, 61, 83, 105, 127, 134, 224, 233, 234, 235, 259, 286, 287, 289, 313; prepaid, 105, 189, 228, 231, 235, 236; public, 307, 331; salaries, 135, 161, 189, 295, 331; single payer, 261; state, 161-63, 202, 223, 254, 287, 289. See also Private, health care Fiscal crisis, see Economic crisis "Five guarantees," 304, 305 Five-Year Plan: China, 307; Thailand, 325 Flexibility, 62, 169, 276 Fondo Solidario de Redistribution, 225, 231, 232 Fordism, 267. See also Global postFordism Former Socialist Economies (FSE), 122— 24 Formularies. See Pharmaceuticals For-profit. See Private, for profit "Four pests," 307 "Four Principles," 307 Fragmentation: care, 59, 106; system, 223 France, 123, 132, 137 Free establishment, 61, 62, 75 Free Market. See Market, ideology Free Trade Area of the Americas, 382 Fundacion de Investigaciones Economicas Latinoamericana (FIEL), 225 Fundacion Mexicana para la Salud (FUNSALUD). See FUNSALUD Fund for Commerce, 70 Fundholding, 44, 45, 51, 290 Funding: crisis, 43, 371; private, 91-92, 241; public, 91-92, 241, 330. See also Finance FUNSALUD, 254 G7 Conference, 378 Gatekeepers, 25, 40, 290 General Federation of Labor (GFL). See Unions General Health Insurance Act, 127 General Health Insurance Company of the Czech Republic (VZP), 127 General Health Insurance Office, 127

406 Germany, 101, 108, 113, 121, 123, 131, 132, 135, 137, 229, 375 Glaxo-Wellcome Incorporated, 90 Globalization, 97, 273, 371 Globalized middle class, 278 Global post-Fordism, 17, 18-19. See also Fordism GP fundholding. See Fundholding Great Leap Forward, 309 Gridlock, allegation of, 43 Hadassah Medical Association, 199 Hadyai, 331 Health and Sickness Care Law (HSL) (Sweden), 59-60 Health Canada, 79, 84, 92 Health care reform analysis: national level, 4-6; need for, 168-69; priority of, 168; project goals, 7-8; resistance to, 169-70; transnational level, 6-7 Health for All initiative (WHO), 47 Health insurance. See Insurance Health Insurance Act: Croatia, 131; Hungary, 128 Health Insurance Fund: Hungary, 128; Serbia, 152 Health Insurance Institute of Slovenia, 134 Health Maintenance Organizations (HMO), 105, 109, 189, 200, 262. See also Managed care Health of the Nation (HOTN) strategy, 47 Health Planning Division (Thailand), 326 Health Reform Office (Thailand), 337 Health Systems Research Institute (HSRI) (Thailand), 337 Health Transition Fund, 85 Hegemonic project, 22, 146-48, 154, 371 Hegemonic systems, 8, 19-21, 372. See also European Union; International Monetary Fund; North American Free Trade Association; North Atlantic Treaty Organization; World Bank: ideological, 373-79; operational, 21, 146, 148, 379-83; resistance to, 383-85 Histadrut. See Unions Home care, 89, 90, 191-92

Subject Index Hospital beds, 187, 200, 314, 332; oversupply, 171 Hospital Insurance and Diagnostic Services Act, 78 Hospitalization rates. See Utilization Hospitals, 89, 286, 308, 328, 329, 331, 332, 333, 335, 371 Hospital sector v. ambulatory sector. See Ambulatory sector v. hospital sector Hungarian Democratic Front. See Political parties, right Hungary, 102, 112, 114, 121, 122, 124, 127, 128-29, 130, 131, 135, 136, 137, 139, 185, 371 Huslakare reform. See Point-of-service reforms Hyperinflation. See Economic crisis ICN Pharmaceuticals, 158 Ideal types. See Models Ideology, 48, 49, 58. See also Values Imbalances. See Inequalities Immigration, 199, 283-84, 334 IMSS. See Instituto Mexicano del Seguro Social Incentives. See Market, principles Income replacement. See Sickness funds Independent Doctors and Pharmacists Union (Serbia), 157 India, 99, 267-81, 372 Indian Council of Medical Research, 273 Indian Council of Social Science Research, 273 Individualism, 284 Indonesia, 384 Industrial sector. See Manufacturing Industry Commission (Australia), 287 Inequalities, 241, 272, 273, 327-28; health, 47, 49, 251-54, 272, 278, 300, 315; income, 137, 148, 222, 304; outcomes, 293; rights, 222; rural-urban, 272-73, 305-6, 315; service, 203, 224, 251, 263, 290, 293, 306-7; wealth, 226, 304. See also Equity Inflation, 65, 68, 69 Information. See Research Initiativitis. See Reform fatigue Institution Mexicana de Asistencia a la

407

Subject Index Ninez (Mexican Institute for Childhood Care), 246 Institute for Public Policy Research, 54 Institutional memory, 171-75. See also Structural inertia Institutiones de Seguros e Atencion Previcional en Salud (ISAPRES). See Managed care Instituto de Securidad y Servicios Sociales para los Trabajadores de Estados (ISSSTE) (Institute of Social Security and Services for State Workers), 246, 248 Instituto Mexicano del Seguro Social (IMSS), 242, 246, 248, 257-58, 259 Instituto National de Proteccion a la Infancia, 246 Insurance, 24, 37, 101, 308, 313; collective financing, 335; companies, 275, 333; compulsory, 121, 127, 129, 131, 132, 160, 170-71, 172, 190, 310-11; deficit, 133; drug, 90; employer based, 121, 170, 258, 259, 333; expansion of, 370; failure of, 282; private, 43, 89, 90, 101, 104, 123, 129, 130, 136, 145, 200, 228, 241, 286, 292, 333, 337, 353, 369, 370; social (public), 43, 79, 101, 130, 133, 241, 332-33, 370; voluntary (see Private) Insurance companies, 268, 353 Inter-American Development Bank, 382 Interests, 284, 293-94 Internal market. See Market International Conference on Health Policy, 130 International Conference on Social Science and Medicine, 23, 24, 371 International debt, 74 International Forum on Food and Agriculture, 383 International Forum on Globalization, 38384 Internationalization: of economies (see Economy); of medicine, 371 International Monetary Fund (IMF), 21, 146, 268, 270, 278, 325, 334, 353, 371, 372, 380-81. See also Hegemonic systems, operational

ISAPRES (Institutiones de Seguros e Atencion Previcional en Salud). See Managed care ISES (Institutiones de seguros especializadas en salud). See Managed care Islam: Shia, 184; Sunni-Wahhabi, 184, 191-92 ISO (International Standards Organization), 335 Israel, 198-218, 342, 353, 356 Israeli Medical Association (IMA), 201, 212. See also Unions ISSSTE. See Instituto de Securidad y Servicios Sociales para los Trabajadores de Estados Italy, 185, 298 Japan, 113, 183, 298, 306, 375 Jordan, 187 Karnataka, 276 KHC. See Sickness funds Khon Kaen, 331 King Faisal Specialist Hospital (Saudi Arabia), 188 Kosovo, 156 Kuwait, 183, 187, 191 Laboratory tests. See Technology Labour Party. See Political parties, socialist Landstingsforbundet, 61, 62, 63, 64, 76 Lao People's Democratic Republic, 324 Latin America, 267, 270, 278 Law about Health Insurance and Compulsory Ways of Health Care (Serbia), 156 Law on Health Care (Serbia), 156 League of Communists of Serbia, 146 Lengths of stay, 59, 98. See also Utilization Leumit, 199 Liberal party. See Political parties, center Life expectancy, 40, 102, 184, 299, 305, 306, 315, 326 Likud Party. See Political parties, right LO. See Unions Long-term care, 82, 88, 90, 101

408 Macedonia, 156, 157 Mafia (Serbian), 148-49 Maharashtra, 276 Malnutrition, 222 Managed care, 3, 25, 87, 92, 101, 10910, 112, 188-90, 259, 260, 292, 353 Managed competition, 129, 206 Managed markets, 259. See also Market, ideology; Market, internal Management (managers), 38, 43, 46, 50, 65, 107, 124, 129, 143, 229, 234, 262, 283 Managerialism. See Corporatization Manufacturing, 68 Market, 47, 269-70, 303; failure, 92, 104, 262; ideology, 42, 90, 103-4, 123, 130, 228, 231, 259, 260, 262, 278, 303, 370; internal, 43, 44, 45-50, 55, 115; model, 14, 16, 75, 155, 241, 369, 372; principles, 43, 61, 63, 64, 69, 127, 131, 134, 169, 173, 214, 215, 230, 258, 261, 262, 267, 268, 286, 312, 335, 342, 356, 370; reform (see Market reforms); retreat from, 50-53, 353; shortcomings, 237, 271 Market mechanisms. See Market, principles Market model. See Market, model Market reforms, 3, 6-7, 37, 49, 62, 130, 139, 168-69, 353, 356, 369, 370, 371; source of, 371-85 Market socialism. See Privatization Markets v. democracy, 49, 75 Means testing, 282; cost of, 277, 288 Medibank (Australia), 282, 288, 296, 342 Medical Care Act of 1966, 78 Medical education, 99, 328, 329, 331, 371 Medical profession, 248-51. See also Physicians; Professional; Professions; Unions Medicare: Australia, 282, 283, 285, 296; USA, 101, 111 Medicine. See Pharmaceuticals Medico-sanatarios Ejidales (Mexican Ministry of Medical and Sanitary Services for Peasants), 246 Mental health, 101

Subject Index Merck-Frosst Incorporated, 90 Mercosur, 212 Mergers and acquisitions. See Consolidation Metohija, 156 Meuhedet Sick Fund, 199 Mexican Foundation for Health. See FUNSALUD Mexican Health Care System, development, 243^7 Mexican Revolution, 249 Mexican Social Security Institute (IMSS). See Instituto Mexicano del Seguro Social Mexico, 92, 101, 102, 103, 112, 113, 114, 241-64, 342, 353, 372 Military v. medical care spending, 146, 167-68, 171 Ministrio de Salud y Action Social (Argentina), 226, 232 Ministry of Defense (Thailand), 329, 331 Ministry of Education (Thailand), 333 Ministry of Finance (Israel), 201, 205, 206, 210-11, 213, 214 Ministry of Health: Israel, 198, 199-200, 201, 202, 204, 205, 206, 210, 211; Mexico, 242, 247, 248, 250, 257, 259; Saudi Arabia, 193; Serbia, 150, 157; Sweden (Socialstyrelsen), 60, 62, 63, 73, 77 Ministry of Health Protection (Russia), 162-63, 172 Ministry of Higher Education (Saudi Arabia), 193 Ministry of Public Assistance (Mexico), 245 Ministry of Public Health: Peoples Republic of China (PRC), 306, 307, 315, 316, 319; Thailand (MOPH), 328, 330, 331, 332, 333, 334, 336, 337 Ministry of Sanitation and Assistance (Mexico) (Secretaria de Salubridad y Asistencia), 246 Ministry of the Economy (Argentina), 229 Ministry of University Affairs (Thailand). See MUA Models: Bismark, 121, 124, 131, 133,

Subject Index 135, 136; communal or democratic, 1315, 143-46, 155, 241; national health care systems, 4-6, 37-39; professional, 14, 15, 155, 241; Semashko, 121, 124, 136, 161-68; trends in professionalpatient relationship, 8-13. See also Market model Mode of organization. See Models Modernization, 181 Modes of Organization. See Models Modification period (PRC), 314-18 Monarchy, 183 Monopoly, public sector as, 42, 75 Montenegro, 156-57 MOPH. See Ministry of Public Health, Thailand Mortality, 40, 59, 91, 102, 146, 166, 169, 185, 257, 271, 305, 306, 308, 309, 311, 315, 326 MUA (Ministry of University Affairs), 329, 331 Multinational corporations. See Corporations, international Myanmar, 324 National Academy of Medicine (Mexico), 249, 250, 263 National Audit Office (UK), 56 National Development Plan (Mexico), 257, 259 National Forum on Health, 90 National Health Conference (PRC), 307 National Health Foundation (Thailand), 337 National health insurance, 37, 60, 78, 80, 369 National Health Insurance Fund (OEP) (Hungary), 129 National Health Insurance Law (NHI) (Israel), 198, 201, 205, 208, 209, 210, 212, 213, 215 National Health Service, 37-57, 111, 269; critique of, 51. See also Market, internal; United Kingdom National Health Services Coordination, 247 National Health Strategy (Australia), 283, 290, 292, 300

409 National health systems, 369 National Institute for the Protection of Infancy. See Instituto National de Protection a la Infancia National Institute of Clinical Excellence, 52 National Institutes of Health: Mexico, 242; US, 99, 320 National Insurance Institute (Nil) (Israel), 204 National Investment Funds (Poland), 130 Nationalism, 147 National Science Foundation (NSF), 99 National System for Comprehensive Family Development (Sistema National para el Desarrollo Integral de la Familia), 246 Netherlands, 101, 108, 113, 123, 132, 134, 183, 206, 298 New Democratic Party. See Political parties, right Newfield Provincial Hospital Trust, 43 New Public Management (UK), 42, 43 New Welfare, 70 New Zealand, 43, 45, 102, 123, 293 Nomenklatura, 142-43, 144, 145, 146, 147, 148, 157 Non-Governmental Organizations (NGOs), 6, 21, 277, 372 North American Free Trade Agreement (NAFTA), 21, 92, 263, 381-82 North Atlantic Treaty Organization (NATO), 149 Norway, 114, 298 Not-for-profit health care. See Private, nonprofit Nuclear power, 68, 71 Nurses, 88, 212 Nurses union. See Unions Nursing Homes. See Long-term care Obras sociales. See Sickness funds Oil Shock of 1973-74, 65, 68, 267, 273 Oman, 183 One-nation v. two-nation strategies, 22 Ontario Medical Association, 87 Opting out by the wealthy, 273, 277, 278

410 Organization for Economic Cooperation and Development (OECD), 7, 37, 47, 56. 97, 98, 102, 104, 105, 107, 108, 110, 123, 124 Organization of American States (OAS), 382 Orissa, 276 Outcome measures, 102-3 Outsourcing, 43, 88, 258 Palmer D'Angelo Consulting Inc., 90 Pan American Health Association, 26, 31 Paraguay, 221 Particularism, 108-9 Partido Justicialista, 222 Patent Medicines Prices Review Board, 84 Patients: charter, A6-A1; choice, 41, 42, 43, 62, 101, 109, 123, 124, 128, 131, 135, 198, 203, 206, 224, 227, 230, 237, 254, 258, 288; groups, 90-91; resistance to privatization, 292 Pension funds, 68 Peoples Republic of China. See China, People's Republic of "Performance indicators," 353 Pharmaceutical Benefits Scheme (Australia), 286 Pharmaceuticals (pharmaceutical companies), 84, 89, 90, 100, 101, 130, 134, 137, 145, 150, 169, 268, 271, 275, 286, 297, 317, 330-31 Philippines, 262, 270 Physicians, 86-88; associations, 135, 201, 212; emigration of, 87, 92; trust in, 353; weakness of, 122. See also Swedish Medical Association; Unions Physicians' Union. See Swedish Medical Association; Unions Physician supply, 84, 87, 328 Plan and Program of Health Activities (Croatia), 132 Planning, central, 47, 163. See also Centralization PMO (Programa Medico Obligatorio). See Compulsory Health Program Point-of-service reforms, 61, 72, 91, 105

Subject Index Poland, 102, 112, 114, 121, 122, 123, 124, 127, 130-31, 135, 136, 137, 353 Political ideology and health reform, 4 5 46. See also Political parties Political parties, 270, 271, 294; center, 61, 62, 63, 64, 65, 71, 72, 129, 207; religious, 63, 64, 72; Revisionist, 199, 207; right, 7, 37, 41, 46, 50, 59, 61, 62, 63, 64, 65, 70-74, 92, 129, 201, 208, 282, 291, 342, 370; socialist, 37, 46, 50, 59, 61, 63, 65, 66-70, 71, 72, 129, 130, 199, 201, 207, 215, 270, 271, 282, 290, 305, 356 Political system, 4, 66-74 Population increase, 195, 241, 303, 32425, 326 Portugal, 102, 103, 113 Poverty, 227. See also Inequality Power shifts, 48, 49, 66-74, 230, 294 PPP, 304 Preferred Provider Organizations (PPO), 105 Press, control of, 93 Prevention v. treatment, 4, 259, 296, 307 Primary care, 59, 63, 80, 145, 164-65, 200, 328; reforms, 61 Primary care groups, 51 Primary Care Trusts, 52 Private: for-profit, 82, 88, 90, 92, 104, 287; health care, 53-54, 60, 62, 132, 202, 246, 248, 251, 274-75, 286, 28788, 329, 331, 353; non-profit, 83, 88, 90, 104, 287, 356, 369 Private Doctors Association (Australia), 295 Private Finance Initiative (PFI), 53-54 Privatization, 25, 43, 44, 46, 53-54, 60, 61, 64, 69, 73, 75, 84, 86, 104, 11112, 123, 128, 129, 130, 135, 148, 152, 158, 170, 173, 206, 221, 228, 229, 247, 259, 274-75, 276, 279, 299, 312, 317, 334, 342, 353, 356, 380 Productivity, 62, 134, 260, 319 Professional: associations (see Unions); control, 62, 122, 202, 290; model (see Models); reforms (see Reforms, professional); standards (See Effectiveness)

Subject Index Professions: v. democracy, 62; v. markets, 7, 49, 75, 260 Profit motive. See Market, ideology Programa do Attention Integral (PAMI). See Comprehensive Health Care Program Programa Medico Obligatorio (PMO). See Compulsory Health Program Project Hope, 130 Prospective payment, 25, 43-44, Protests, 67, 79, 87, 88, 93, 136, 203, 212, 249, 277 Provider networks, 234 Public dissatisfaction, 203, 206, 208, 276 Public health, 50, 226, 286, 307, 314, 353, 371 Public monopoly, 63 Public organizations (POs), 334 Public-private partnerships, 46, 54 Public v. private sectors, 3, 7, 41, 58-59, 69, 273 Punjab, 276, 277 Purchaser-seller split, 3, 44, 51, 61, 69, 75, 123, 169, 230, 342 Purchasing Power Parity. See PPP Qatar, 183 Quality of care. See Effectiveness Quality of life, 372 Railways Authority of Thailand, 329 Rationing, 52, 90, 93, 101, 290, 370 Recession, 268 Reform. See Health care reform Reform fatigue, 50 Reforms: comparison of, 341-71; democratic, 341, 356, 369; instability of, 48; market (see Market reforms); professional, 342, 356, 369 Regression: psychological, 147-48; social, 147 Regulation, 7, 41, 83, 92, 104, 198, 203, 212, 213, 231, 251, 260, 320. See also Deregulation, failure, 223 Report of the Health Survey and Development Committee. See Bhore Committee

411 Research, 85, 132, 134; biomedical, 99; control of, 107, 269; cost of, 99; lack of, 44, 47, 49, 60 Resources, adequacy. See Underfunding Responsibility system of household production, 312 Restrictions on care. See Rationing Rigidity. See Flexibility Risk sharing, 296 Robobank International, 334 Romania, 135 Rural Cooperative Medical System, 316 Russia, 121, 160-78, 269, 270, 356, 372 Salaries, 134 Saltsjobaden accord, 71 Saskatchewan, 78, 79, 91, 93 Satisfaction. See Public dissatisfaction Saudi Arabia, 181-97, 353 Saudization, 185, 190-94 Science Citation Index, 100 Scotland, 371 Secretaria de Asistencia Publica. See Ministry of Public Assistance Secretaria de Salubridad y Asistencia. See Ministry of Sanitation and Assistance Secretaria de Salud (SSA). See Ministry of Health, Mexico Secretary of State for Health (UK), 47, 50, 57 Self-reliance, 284 Semashko health system. See Models, Semashko Serbia, 142-59, 356 Serbian Agency for the Evaluation of Assets, 152 Servicios Coordinados de Salud Publica en los Estados, 246 Servicios Rurales Cooperatives. See Servicios Coordinados de Salud Publica en los Estados Sex workers (CSWs), 327 Shock therapy, 130 Shortages. See Underfunding Sickness Funds, 24, 59, 127, 145, 202, 209-10, 222, 342; Amamit, 199; Kupat Holim Clalit (KHC), 199, 200, 201,

412 203, 204, 207, 208, 209, 210, 212, 214; Lemuit, 199, 203; Maccabi, 199, 203, 209; Mercazit, 199; Meuhedet, 199, 203, 209; obras sociales, 223, 224, 225, 227, 228, 229, 230, 231, 232, 233, 234, 235, 236 Singapore, 262 Sistema National para el Desarrollo Integral de la Familia. See National System for Comprehensive Family Development Sistema Unico de Seguridad Social (SUSS) (Argentina), 229 Slavonia, 157 Slovak Republic, 121, 122, 124, 127-28, 131, 136, 137 Slovenia, 121, 122, 124, 130, 131-34, 135, 136, 139, 156 Slowdowns. See Protests Social Democrats. See Political parties, socialist Socialism v. democracy, 143 Socialist Autonomous Republic of Kosovo and Metohija, 156 Socialist Federative Republic of Yugoslavia (SFRY), 142, 156 Socialist market economy, 303, 305, 312, 315 Socialist Republic of Slovenia. See Slovenia Socialization, 307 Social services, 83, 291, 294 Socialstyrelsen. See Ministry of Health, Sweden Solidarity, 63, 128, 230, 278 Southeast Asia, 287 South Korea, 102, 103, 112, 113, 262 Soviet Socialized Medicine. See Model, Semasko Soviet Union. See Union of Soviet Socialist Republics Specialization of medicine, 4, 9, 59, 63, 84, 100, 105, 150, 169, 172, 329-30 Sri Lanka, 270 SSA (Secretaria de Salud). See Ministry of Health, Mexico Stakeholders, 53, 85, 86-91, 206, 21415, 235, 300

Subject Index Standards, professional. See Effectiveness State Commission of Inquiry into the Operation and Effect of the Health Care System in Israel, 203-^1 State Health Systems Project (India), 275, 276 Statens Ofentliga Utredningen (SOU), 77 State Reform Law (Argentina), 229 Statistics Canada, 82 Strategic planning, 52 Strikes. See Protests Structural Adjustment Program, 221, 268, 269, 270, 275-77, 278, 334, 353. See also International Monetary Fund; World Bank Structural inertia, 185. See also Institutional memory Structural problems in medical care, 6264 Studieforbundet Naringsliv och Samhalle. See Centre for Business and Policy Studies Subsidiarity, 51 Summit of the Americas, 382-83 Supplies, 134 Sustainability, 267 Sweden, 3, 58-77, 105, 109, 113, 298, 342, 356, 369 Swedish Employers' Association, 65, 70, 71 Swedish Medical Association, 72, 75 Switzerland, 98, 113, 373, 384 Taxation, 38, 43, 53, 206, 210, 287; earmarked, 136, 285, 287; lack of, 183; restrictions on, 60, 66, 68, 69, 73, 353; tax reform, 66, 68, 72, 73, 74, 206 Tax points, 81 TCO. See Unions Technology, 9, 59; assessment, 83, 106; cost of, 62, 297; growth of, 110, 181, 293, 330, 342; industry, 275; lack of, 124, 146, 150, 169, 173; use of, 99, 100, 189, 268, 297, 330 Thailand, 183, 324-28, 372 Three Gorges Project, 384 Three Mile Island, 71 "Three no's," 305

Subject Index Tibet, 304 Tiered Society. See Equity Tobacco Monopoly of Thailand, 329 Traditionalization, 182 Transnational analysis, need for, 6-7 Transnational reform movement, 341, 371 Transparency, 231 Trends in medical care, 8-13 Trilateral Commission, 378-79 Trusts, 44 Turkey, 101, 102, 112, 113 Underfunding, 42, 52, 60, 63, 80-81, 85, 89, 91, 93, 134, 139, 146, 160, 168, 173, 230, 248, 251, 259, 273, 279 Unemployment, 63, 64, 65, 68, 128, 130, 137, 156,222, 227, 311 UNICEF, 319 Union of Soviet Socialist Republics (USSR), 67, 97, 112, 160, 278, 353, 375 Unions, 62, 63, 64, 67, 69, 71, 73, 74, 88, 93, 122, 124, 148, 199, 201, 21213, 223, 229, 233, 246, 249, 270, 277, 296, 318, 356; Asociacion Mexicana de Medicos Residentes e Internos, 250; Asociacion National Medica, 249-50; Confederacion General de Clinicas y Sanatorios (CONFECLISA), 223; Confederation General del Trabajo (CGT), 223, 230, 231, 232, 235, 238; Confederation Medica Argentina (COMRA), 223; General Federation of Labor (GFL), 199, 207, 208, 209, 212 United Arab Emirates, 183, 187, 191 United Kingdom (UK), 3, 37-57, 104, 105, 109, 111, 114, 115, 123, 183, 191, 206, 273, 284, 342, 356 United States of America, 3, 67, 92, 97118, 185, 191, 251, 273, 278, 284, 287, 293, 342, 353, 356, 369, 372, 375 Universal coverage, 79, 101, 161, 198, 236, 270, 279, 282, 288, 291, 294, 335, 338, 342, 369, 370 Uruguay, 221 User charges. See Copayment; Cost shar-

413 ing; Cost shifting; Means testing, cost of; Opting out by the wealthy Utilization, 59, 82, 98, 109 Values, 58, 123. See also Effectiveness; Efficiency; Equity VHVs (village health volunteers), 328 Victoria, 284, 294 Vietnam, 67 Village health volunteers (VHVs) (Thailand). See VHVs Vojvodina, 156 Voluntary benefit funds, 137 Voluntary community-based organizations, 104 Vseobecna Zdravotni Pojistovna (VZP). See General Health Insurance Company of the Czech Republic Wage earner funds, 68, 69, 71 Wage reductions, 227 Waiting lists, 40, 46, 47, 50, 61, 62, 63, 91, 101, 203, 331 War of the Roses, 69 Washington consensus, 381 Waste. See Efficiency Welfare as element of national system, 4 5, 58, 64 Welfare state, critique of, 67 West Bengal, 276 WHO. See World Health Organization Women. See Caregivers Womens groups. See Patients, groups Workers' councils, 144 Work pressure, 9 World Bank, 21, 124, 130, 131, 133, 135, 141, 146, 221, 231-32, 235, 241, 259, 268, 269, 270, 275, 276, 277, 278, 304, 316, 318, 319, 371, 372, 38081. See also Hegemonic systems, operational World Commission on Dams, 384 World Economic Forum (WEF), 373-78 World Economic System, 17, 371, 372. See also Hegemonic systems World Forum on Democracy, 384-85 World Health Organization (WHO), 6, 46, 51, 57, 102, 103, 112, 124, 130,

414

Subject Index

156, 166, 172, 185, 187, 197, 200, 202, 257, 268, 269, 305, 328, 336, 337 World Trade Organization (WTO), 21, 371, 379-80. See also Hegemonic systems, operational

Yugoslavia health system: dominant actors, 144; dominant goals, 143-44; regulation, 145; structure, 143 Yugoslav United Left (YUL), 155, 157, 158

Yemen, 187, 191 Yom Kippur War of 1973, 207

Zambia, 269

About the Contributors

OFRA ANSON is Professor of Sociology of health in the Faculty of Health Sciences (Recanati), Ben-Gurion University of the Negev, Beer-Sheva, Israel and is an Honorary Professor at the HeBei Academy of Social Sciences, PRC. Her research focuses on health inequalities and religion and health in Israel. She is the author of Social Structure and Health in Israel (with J.T. Shuval), recently published by the Hebrew University Press. The chapter on Israel, co-authored with R. Gross, reflects her interest in the politics of health and health care. Professor Anson also has been involved in the study of health and health care in rural China since 1995. The chapter on the health reforms in the rural People's Republic of China is partially based on her research in rural HeBei, conducted in collaboration with the Institute of Rural Development in the HeBei Academy of Social Sciences, as well as on interviews with officials in the HeBei Health Department, care providers, and personal communication with colleagues. RAMA V. BARU is Associate Professor at the Centre of Social Medicine and Community Health at the Jawaharlal Nehru University, New Delhi, India. Trained as a medical and psychiatric social worker, she has worked with disabled persons and later completed her doctorate in public health. Her research interests include privatization of health care, comparative health care systems, and social policy. Her book entitled Private Health Care in India: Social Characteristics and Trends was published by Sage in 1998. She is currently on the editorial board as South Asia editor of Global Social Policy, published by Sage. SUSANA BELMARTINO holds a Ph.D. in history from the Faculte des Lettres, Universite d'Aix, Marseille. Since 1984, Dr. Belmartino has been a lecturer and researcher at the Universidad Nacionale de Rosario in Argentina, where she now occupies the Chair of Contemporary Argentine History. Since 1978, she has

416

About the Contributors

been a researcher with the Centro de Escuelos Sanitarios y Sociales (CESS) in Rosario. Dr. Belmartino is an expert in the field of health policy in Argentina and is the author of several articles and books on the subject. CATHERINE A. CHARLES is a medical sociologist with an interest in health policy analysis. She is a member of the Center for Health Policy Analysis, Associate Professor of Clinical Epidemiology and Biostatistics, and an Associate Member of the Department of Sociology at McMaster University in Hamilton, Ontario as well as Investigator in the Supportive Cancer Care Research Unit cosponsored by McMaster and the Hamilton Regional Cancer Center. She is honorary Research Associate in the Faculty of Health Sciences, University of Sydney, Australia. She holds a Ph.D. in Socio-medical Sciences from Columbia University and has held health research and policy positions in both government and university settings in Canada. LUIS DURAN-ARENAS received a Medical degree from the National Autonomous University of Mexico, an MPH, an MA in Sociology, and a Ph.D. in Health Services Organization and Policy, and Sociology, from the University of Michigan. He is the Health Planning Advisor at the Mexican Institute of Social Security. He was formerly Director of Health Systems Organization Research at the National Institute of Public Health of Mexico. His research interests are health care reform, health care technology evaluation, and quality of health care. IAN ENGLAND is Senior Manager, Cap Gemini Ernst & Young. He is currently visiting lecturer and a Ph.D. candidate researching the diffusion of information technology in health care at Queensland University of Technology, Faculty of Health. He holds a degree in computer science and a postgraduate diploma in Business Administration. He has performed a wide range of management and consulting roles covering patient administration, clinical information systems, and financial and resource management systems. His experience includes evaluation and comparison of systems being offered by vendors, implementation of hospital information systems, and development and support of systems. MARK G. FIELD, a medical sociologist, is an Associate of the Davis Center for Russian Studies and an Adjunct Professor, School of Public Health, Harvard University. He is also an Emeritus Professor at Boston University and a Senior Sociologist at the Department of Psychiatry, Massachusetts General Hospital. His major interests are comparative health care systems and the health care system of the former Soviet Union and now Russia. He holds A.B., A.M. and Ph.D. degrees from Harvard University and is the author, co-author, or editor of eleven books and 130 articles. His latest book, with co-author Judyth L. Twigg is Russia's Torn Safety Nets: Health and Social Welfare During the Transition (St. Martin's Press, 2000).

About the Contributors

417

EUGENE B. GALLAGHER holds a B.A. in Economics from Lehigh University and an M.A. and Ph.D. in Sociology from Harvard University. He has done research on mental health roles and institutions, the health care of infants, medicine in developing societies with an emphasis on Arab society, and psychosocial aspects of end-stage renal disease. His most recent publication is The Sociology of Health and Illness (Sage) sponsored by the International Sociological Association. He has served as editor of the Journal of Health and Social Behavior. Currently, he is chair of the Research Committee on the Sociology of Health of the International Sociological Association. He has held visiting appointments in Saudi Arabia, the United Arab Emirates, Kuwait University, Maastrich University, and the Fogarty Center of the National Institutes of Health. OCTAVIO GOMEZ-DANTES is Assistant Director General of Performance Evaluation at the Ministry of Health of Mexico. He was formerly Director of Health Policy and Planning at the Center for Health Systems Research at the National Institute of Public Health, Mexico. His research areas are health policy and international health. REVITAL GROSS is Senior Researcher and Deputy Director of the Health Policy Research Program at the JDC-Brookdale Institute, where she has been working since 1989. She also has an academic appointment of Senior Lecturer at the Bar-Ilan University School of Social Work. She holds degrees in Sociology, Statistics, and Public Administration from the Hebrew University, and a Ph.D. in Sociology from the Bar-Ilan University. Her work in recent years has focused on the impact of the National Health laws in Israel. DAVID J. HUNTER graduated from the University of Edinburgh in political science in 1974 and went on to study for a Ph.D. He is Professor of Health Policy and Management at the University of Durham. He was previously director of the Nuffield Institute for Health at the University of Leeds. Earlier appointments include the King's Fund in London. He is an advisor to the World Health Organization on health sector reform. He is an Honorary Member of the Faculty of Public Health Medicine and a Fellow of the Royal College of Physicians of Edinburgh. MALAQUIAS LOPEZ-CERVANTES is Associate General Director for the Coordination of the National Institutes of Health of Mexico. He formerly was the Director of the Health Systems Research Center at the National Institute of Public Health. His research interests are the application of epidemiological methods to health services research as well as equity in health care. STIPE ORESKOVIC is Professor and Director of the Andrija Stampar School of Public Health at the University of Zagreb. He has conducted international and regional projects that have resulted in numerous research and policy papers—more than 70 in referenced international journals. International research

418

About the Contributors

project activities include comparative health care systems, pharmacobehavioral research and health outcomes research (Minimal Health Information Set and Related Procedures, Burden of Illness Studies on Asthma, Osteoporosis, Cardiovascular disease). He is executive editor of Croatian Medical Journal, editor of Social Ecology, and regional editor of Eurohealth. He is also a member of the Executive Board of International Association for Health Policy and the European Health and Medical Sociology Association. PATHOM SAWANP ANYALERT is a general practitioner turned epidemiologist. He received his M.D. from Mahidol University in Thailand and his doctorate in public health from Johns Hopkins School of Hygiene and Public Health. He has served as the director of a community hospital in northeastern Thailand and is the Director of the Division of Occupational, Environmental and Genetic medicine of Thailand's Ministry of Public Health. He is now the Director of the National Institute of Health of Thailand. He has been involved in epidemiological studies of HIV/AIDS in northern Thailand for more than 12 years. Apart from his interest in HIV/AIDS, he was recruited to help design the first social security system in Thailand and has been participating in several reform initiatives in health systems in that country for more than 10 years. SANDRA SOSA-RUBI is an Economist, with a master's in Health Economics from the Center for Economic Research and Education in Mexico. She is currently a Ph.D. candidate in Health Economics at the University of York. She is also an investigator at the National Institute of Public Health. Her research interests are economic evaluation, health care financing, and the macroeconomic analysis of the health sector. VUK STAMBOLOVIC, MD, Ph.D, is Associate professor of Community Medicine at the Medical Faculty Belgrade. His professional interests include human rights and health care. He is currently involved in projects dealing with development of civil society and the empowerment of members of marginalized groups. The framework of his research is based on holographic paradigm and constructive Postmodernity. DONALD STEWART is Associate Professor and former Deputy Director of the Queensland Centre for Public Health, at the School of Public Health, Queensland University of Technology, Brisbane, Australia, where he coordinates the Master of Public Health program and teaches in the area of health service management. He holds qualifications from the UK, New Zealand and Australia and has held teaching and academic posts in each of these countries. During the last six years he has served as a consultant for the World Health Organization in the Western Pacific region, specializing in school-based health promotion in China and Vietnam. ANDREW C. TWADDLE is Professor Emeritus of Sociology at the University of Missouri. He holds degrees from Bucknell University and the University of

About the Contributors

419

Connecticut and a Ph.D. from Brown University. He has been affiliated with the University of Western Ontario, College of the Holy Cross, Harvard University, the University of Pennsylvania, Colby College, Goteborgs Universitet, Universitet i Linkoping, Uppsalas Universitet, and the University of Southern Maine. He has written extensively on sickness behavior and health care systems. He is the co-author of A Sociology of Health and author of several books, most recently, Health Care Reform in Sweden 1980-1994 (Auburn House, 1999). ALBERT F. WESSEN received his Ph.D. in Sociology from Yale University. He is Professor Emeritus of Sociology and Medical Science at Brown University. Formerly the Chief of the Behavioral Science Unit of the World Health Organization, he has written widely in the areas of social epidemiology and comparative health care systems. His most recent books are Migration and Health in a Small Society and Health Care Systems in Transition: An International Perspective. CHRISTEL A. WOODWARD is a member of the Centre for Health Economics and Policy Analysis (CHEPA), a Professor in the Department of Clinical Epidemiology and Biostatistics, and a member of the Program for Educational Development at McMaster University. She has done research on many aspects of the Canadian health care system, including the impact of downsizing in the hospital sector, developing an understanding of continuity of care in the home care sector, and examining differences in the practice patterns and behaviors of men and women primary care physicians in Canada. She serves on the Independent Health Facilities Outcome Assessment Team for the College of Physicians and Surgeons of Ontario, has been a member of numerous provincial and federal grants panels, and has consulted internationally regarding health care resource, organization, and delivery issues.