Bismarck and the Beginning of Universal Healthcare

When learning about history, either through active searching or through opportunistically bumping into documentaries on TV, it usually takes you to the great events and personalities of history. While enormously fascinating the great wars, great generals and politicians of history are not the whole package, but rather the social consciousness of nations is just as much the driving force of history. Everyone who heard the name Bismarck in a historical context, besides the great second world war battleship, knows the great German politician as “the Iron Chancellor”, the man who through sheer willpower created the German Empire out of a hotchpotch of smaller states, a state builder. While this is an undoubtable historical merit, Bismarck’s ability to react to calls for social reform, as in this case regarding healthcare, had a great historical influence, felt now all around the world.

The year 1883 and Germany’s Social Health Insurance marks the first concrete stepping stone towards Universal healthcare and a landmark moment in the creation of welfare states.

It is very important to understand what triggered the implementation of the Social Health Insurance System; what were the political, social and economical circumstances which give birth to this necessity at this point in human history.

Germany in 1883 was one of the newest states that appeared on the map of Europe. Little over a decade before the German state didn’t exist, but rather it was a loose confederation of German kingdoms, duchies and free cities. In 1848 the German national sentiment really got going, and despite its defeat, the dream of a united German state did come to fruition in 1871, with the defeat of the second French Empire and the coronation of Kaiser Wilhelm I as emperor of Germany in the Versailles palace.

Despite Germany’s youth, it quickly become a European superpower, a player on the world stage and this happened thanks to its rapid industrialisation, especially in the Ruhr valley. Now, this rapid industrialization and the mass migration of people from rural to urban centres that it caused, gave birth to a powerful political movement that has shaped history since then, and it continues to do so: “socialism”.

Socialism is a very powerful political movement that started flourishing in the 19th century, along with the industrialization of the economy and the impact that it had on society. In 1883 the socialist ideals were represented in German politics by the Social Democratic Party(SDP), and this had the indirect effect on the creation of the German Social Health Insurance System by making it into a political tool.

Otto von Bismarck was in 1883 the long-time German chancellor, the very powerful office in the state, second only to the emperor. He managed to forge the German Empire through “blood and iron” and to set up the necessary diplomatic alliances to ensure its survival until the First World War.

Although, at first glance, you would consider the 1848 Revolution in Germany as more of a nationalistic and unionist movement, in 1949 Bismarck expressed the underlying social tensions inside German society by publicly saying “The social insecurity of the worker is the real cause of their being a peril to the state”. You should not be confused by this and consider Bismarck a socialist, or a politician with socialist inclinations. Bismarck was a conservator, with a strong Christian faith, belonging to the Prussian landowning aristocracy, but even he realised the growing political power of the working class, political power channelled especially by the Social Democratic Party, and the Social Health Insurance System set up in 1883 is an attempt to nullify the growing power of the SDP by resolving one of the main issues faced by the factory workers.

Many policies and mechanisms crucial to the SHI pre-date the 1883 Sickness Insurance Act. In 1838 Prussia (the main predecessor of the united German state) passed a law placing responsibility for workers’ injuries on the railroad companies unless they could prove negligence by employees. In 1871 this standard was extended to other industries, detailing responsibilities by occupation.

In the 19th century a system of mutual benefit societies already existed. Those organizations were the forerunners to modern unions and provided benefits, disability payments, pensions and support to widows. They were supported by contributions made by voluntary members. In 1854 membership was made compulsory and mandated employers to pay no less than half of what the worker was paying. In 1876, over 850.000 citizens had insurance coverage through more then 5.000 sickness funds.

Under the Social Health Insurance System, all members of a group contributed to an insurance fund that offered defined benefits. The members provided a steady stream of revenue, often via a portion of their wages.

Bismarck’s innovation in 1883 was the creation of the “sickness funds” that had mandatory enrolment and defined benefits. Unlike previous individual insurance funds, the new system covered members at a national level, but it must be said that this was only for about 10% of the population. The great majority were industrial workers, salt mine workers, metal workers, people working on railways, shipyards and power plants. The benefits included sick pay, free pharmaceuticals, death benefits.

Under Bismarck, the German state took steps towards the social protection in health. He solidified the previous vague principle of government involvement in private healthcare by specifying the mechanism that guaranteed funds and defined benefits. In the next century, Germany continued expanding the system to include more and more categories of workers until all Germans were covered. In 1911 agricultural and forestry workers were enrolled, civil servants in 1914, the unemployed in 1918, non-working wives and daughters in 1919, all primary dependents in 1930, all retirees in 1941, the physically disabled in 1957, students in 1975 and artists in 1981.

Although you would consider Bismarck to be a politician practicing power politics and not a social revolutionary, the step he took in 1883 served to be an example for other states to adopt his ideas and had the effect that today a great majority of European states have Universal Healthcare and a considerable number have it around the world too.

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