Academic journal article German Policy Studies

Federalism and the "New Politics" of Hospital Financing

Academic journal article German Policy Studies

Federalism and the "New Politics" of Hospital Financing

Article excerpt

1 Federalism and Health Care Reforms

In comparative welfare state literature there is consensus that federalism hinders welfare state expansion (Obinger et al. 2005: 3). There is empirical evidence that social policy spending is lower in federal states than in unitary states (e.g. Castles 1999; Huber et al. 1993) and that welfare state development was delayed by federalism (Kittel et al. 2000). Newer research focusing on institutional aspects of federal welfare states to explain the relationship between federalism and low welfare spending draws a more sophisticated picture. Federalism was a major barrier in the phase of welfare state consolidation in federal nation-states where democracy was established at an early stage, but not in federal nation-states where welfare state consolidation preceded democratic consolidation. In the latter, social policy evolved at the national level from the beginning, whereas in the former, social policy was initially the concern of the constituent states, and the bottom-up evolution of the welfare state was hindered by political structures that produced veto points and limits on the possible course of action (Leibfried et al. 2005: 318ff). Given this important role of federalism in the early days of the welfare state, the question arises whether the "silver age" is equally influenced by federalism. In the literature there is no consensus as to whether federal institutions boost or impede welfare state transformation. The veto player theory would suggest that fragmented interests block reforms and so preserve the status quo. Comparative research findings support this thesis but "as in the era of the 'old polities', much depends on context, including country-specific institutional settings, policy structures and actor constellations." (Leibfried et al. 2005: 332)

Veto player theory has been prominent in explaining the slowness of reform in German health policy (e.g. Rosewitz/Webber 1990; Webber 1988, 1989). Beside corporatist actors and interest groups, the federal council, the Bundesrat, has been identified as a relevant veto player in health policy. Because most health legislation affects the administrative responsibility of the Lander in some way, health reforms usually need approval by the Bundesrat. But the Bundesrat does not always use its veto power, and if it does, decisions are often taken irrespective of party-political majorities (Bandelow 2006: 170). Beside this general reform approach, the influence of federal institutions on health care system restructuring has rarely been researched. (1) Analyzing this interaction the other way round, Gerlinger (2008) concludes that the implementation of competitive governance instruments in health care regulation has changed the relationship between national and state governments. To function optimally, he argues, competition needs a level playing field which must be organized centrally. Therefore regulatory power is centralized and the influence of the states on health policy decreases (ibid: 256).

In the hospital sector competition mechanisms were established through the implementation of a performance-oriented and case-based reimbursement system. The states have blocked other instruments which foster competition, like selective contracting, or weaken the influence of the states, like monistic financing. They bear the ultimate responsibility for adequate supply of hospital care and therefore try to hinder any reform that might make it harder for them to meet this obligation. (2) Thus the states have prevented any regulatory changes in hospital planning and investment. Hospital reimbursement, however, is decided at the national level. (3) In pursuit of lower insurance contributions, central government has transformed hospital reimbursement through competitive measures over the past fifteen years. This complex nexus of responsibility and heterogeneous interests has produced two different systems within hospital sector regulation. …

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