Income Redistribution and the Political Economy of Social Health Insurance: Comparing Germany and Switzerland

In many countries, collectively financed health insurance systems or health services delivery systems (such as the NHS) exist. Typically, these institutions are financed via general taxes or specific contributions levied on earnings. As benefits are not dependent upon income, this implies a redistribution from high to low earners. An exception can be found in Switzerland, where equal per-capita contributions are used. From a public-choice perspective it is natural to ask whether the combination of health insurance and income redistribution leads to an expansion or a contraction of the size of a public health care system, a question that is particularly relevant in view of the projected rapid increase of health care costs in the next decades due to population ageing and medical progress. Building upon the work of Gouveia (1997) and an earlier paper by the author (Breyer 1995) I use a simple model of direct democracy to analyze under what circumstances income redistribution tends to expand the size of a public health insurance system. The predictions of the model are confronted with existing evidence from Germany and Switzerland and are used to develop hypotheses on the future development of the systems.

Health Care Rationing and Distributive Justice

The rapid progress in medical technology makes it unavoidable to ration health care. In the discussion how to ration many people claim that principles of justice in distributing scarce resources should be applied. In this paper we argue that medical resources are not scarce as such but scarcity is a necessary by-product of collective financing arrangements such as social health insurance. So the right question to ask is the determination of the benefit package of such an institution. Hartmut Kliemt is currently involved in a commendable interdisciplinary research project in which principles of 'prioritization' of medical care are studied. This contribution adds a specific perspective to this endeavour: we ask how the goal of distributive justice can be interpreted in this context and compare different approaches to implementing 'just' allocation mechanisms.health care, health ethics, rationing in medicine, allocation, distributive justice, scarce resources, prioritization

Why Funding Is not a Solution to the "Social Security Crisis"

Es ist heute unbestritten, dass die umlagefinanzierten staatlichen Rentensysteme in den meisten OECD.Ländern in den kommenden Jahrzehnten wegen der dramatisch steigenden Alterslastquote schwerwiegende finanzielle Probleme bekommen werden. Dennoch gibt es eine intensive Debatte über die angemessene Therapie. Gerade in den letzten Jahren haben Vorschläge zugenommen, die auf einen (teilweisen) Übergang zur Kapitaldeckung hinauslaufen. Da ein solcher Übergang bekanntlich keine Pareto-Verbesserung bewirkt, muss man fragen, durch welche Zielsetzungen er gerechtfertigt werden könnte. Die vorliegende Arbeit geht dieser Frage nach und identifiziert sieben Trugschlüsse, die von Anhängern eines solchen Übergangs häufig begangen werden. It is now a commonplace that the unfunded public pension systems of many OECD countries will run into severe financing problems in the coming decades due to a dramatically increasing pensioner/worker ratio. While this diagnosis is completely undisputed, there is still a vigorous debate on the appropriate therapy. In this debate, a number of proposals have been brought forward in particular in the last five years, which mainly consist in a (partial) transition to a funded pension system. Because such a transition is not a Pareto improvement, it is necessary to ask what can be the policy target that justifies such a redistributive move? The present paper tries to examine this question by identifying seven fallacies that are commonly made by advocates of such a transition.

General Purpose Computer (GPC) to GPC systems interface description

The General Purpose Computer (GPC) 'subsystem' of the Orbiter Data Processing System was described. Two interface areas are discussed. One is the area of GPC intraconnections and intracommunications involving the hardware/software interface between the Central Processing Unit (CPU) and the Input/Output Processor (IOP). The other is the area of GPC interconnections and intercommunications and involves the hardware/software interface between the five Orbiter GPC's. Based on the detailed GPC interface given, it is felt that the basic CPU to IOP interface and the GPC to GPC interface have the potential for trouble free operation. However, due to the complexity of the interface and the criticality of GPC synchronization to overall avionics performance, the GPC to GPC interface should be carefully evaluated when attempting to resolve test anomalies that may involve GPC timing and synchronization errors

The Dead-Anyway Effect Revis(it)ed

In the expected-utility theory of the monetary value of a statistical life, the so-called "dead-anyway" effect discovered by Pratt and Zeckhauser (1996) asserts that an individuals' willingness to pay (WTP) for small reductions in mortality risk increases with the initial level of risk. Their reasoning is based on differences in the marginal utility of wealth between the two states of nature: life and death. However, this explanation is based on the absence of markets for contingent claims, i.e. annuities and life insurance. This paper reexamines the "dead-anyway" effect and establishes two main results: first, for a risk-averse individual without a bequest motive, marginal WTP for survival does increase with the level of risk but when insurance markets are perfect, this occurs for a different reason than given by Pratt and Zeckhauser. Secondly, when the individual has a bequest motive and is endowed with a sufficient amount of non-inheritable capital, the effect of initial risk on WTP for survival is reversed: the higher initial risk the lower the value of a statistical life.Value of life, expected utility, willingness to pay, insurance markets

On the Fairness of Early Retirement Provisions

Declining fertility and increasing longevity have rendered public pension systems in many OECD countries unsustainable and have triggered substantial reforms of these systems. One of the officially declared reform objectives is to raise the average retirement age. Crucial parameters for this endeavor are first the legal retirement age and secondly the early retirement provisions inherent in the public pension system. In this paper we discuss several notions of "fairness" of early retirement provisions in pay-as-you-go financed public pension systems and we claim that the "right" notion of fairness depends upon the objectives pursued in the design of pension systems. We point out the problems attached to the extreme positions "efficiency" and "welfare maximization" and propose a more modest concept of equity called "distributive neutrality", which is based on the notion that the ratio between total benefits and total contributions to the pension system should not depend systematically on the individual’s ability. By applying this concept to the German retirement benefit formula and taking empirically estimated relationships between average annual income, life expectancy and retirement age into account, we show that at the present discount rate of 3.6 per cent per year there is systematic redistribution from low to high earners, which would be attenuated if the discount rate were raised. This seemingly paradoxical finding is due to the fact that in our data set, there is a negative relationship between earnings and retirement age.public pension system, early retirement