UNITED STATES AND SWEDEN: TWO OPPOSITES NOW TRYING TO CONVERGE

“What is the difference between the American health care system and the Swedish one?”
In two words: Welfare State.
The notion of a Welfare State was born in the nineteenth century after the Industrial Revolution and the process of urbanisation of cities, as new social classes came into existence and consequently, new needs were raised. For example, both workers and owners of factories were exposed to many potential risks because of the injuries provoked by the working conditions. Nevertheless, society was not yet interested in creating a market geared towards the prevention these problems. At this point, the nations, recognising the social root of these risks, decided to introduce the so called Welfare State. However, various models of the Welfare State developed, based on the different political and cultural environments at the time.
Be that as it may, to address the difference between the American and Swedish health care systems, it is necessary to recall both the case study presented by the economists Alesina, Glaeser and Sacerdote (2001) [1] and the data provided by the University Michigan’s World Value Survey [2]. The two studies focused on the comparison of the American and Scandinavian and European systems and outline that that their differences lie on alternative social welfare beliefs each system’s population had. For example, Americans tend to negate, more so than their European counterparts, the belief that luck has a role in determining wealth. It was asked, for example, “Do you believe that the income is determined by luckiness?”. Well, United States inhabitants answered negatively to this question, at a percentage of 70, while Union European inhabitants answered positively, at a percentage of 54. This kind of answer, different between these two populations, shows the reason why in the European Union the models of Welfare State were more Social-democratic, with the goal of helping those who were disadvantaged by luckiness, rather than United States, that adopted a Liberal system.
Additionally, both regions adopted different economic models. The United States, along with the United Kingdom, was characterized by the liberal model in which few risks were covered by the intervention of the state and priority was given to the research of market solutions. This kind of policy, consequently, did not impose high taxes on the population. The Scandinavian countries, instead, adopted the social-democratic model. In this model, fiscal pressure was substantially high and, as a consequence, many services were guaranteed. Due to the safety net created by the many services granted by the government, female participation in the work force increased. However, Sweden’s system became even more generous, creating a phenomenon known as “The Swedish Case.” As a result of the increasingly high benefits received from the Swedish government, many decided not to seek employment. Instead they relied on the subsides guaranteed by the government as these were high enough to cover the cost of life.
Today, neither of the models are considered perfect and many governments have tried to alter them to seek better balance. It increasingly seems as if all models, the Liberal, Social-Democratic, the Corporatist (France, Germany, and Belgium), and the Mediterranean (Italy and Spain) are converging into a fusion of all.

The Welfare State in fact, in the last part of the twentieth century, started getting into crisis. The reasons which leaded to this situation were mostly related to the fact that globalisation gave life to a mayor number of market in which it is possible to find those kind of helps that before were not given apart from the government itself. The most important reasons that caused the crisis of this system are:
– Crisis of the Fordist model and advent of a post industrial society, changing the markets
– Increase of the women participation to the labour market, changing the way system like the Liberal one had to consider more the role of social risks, increasing the role of government in social helps
– Globalisation, with consequent increase in the labour mobility and fiscal competition between countries, so that countries with high level of taxes had to reduce level of social contribution (for example the Scandinavian countries)
– Demographical factors, as the society started to become older and so the pensions increased in their volume, causing an increase in contribution of certain sectors of the Welfare State, such as the health care system
President Obama tried to modify the American system with his reform plan, Obama Care, with the goal of increasing “Government dependence”. This is defined as the percentage of people receiving one or more federal benefit payments. With Obama it reached a value of 47%, which is the highest level in American history. For example, there has been a monumental increase in reliance on food stamps in 2010. The value of this increased reliance on food stamps now reaches $68 billion, doubling what it was in 2007, also because of the great recession.
The election of Trump as new president of the United States can determine a different development of this policy, but with all likelihood, the model is destined to continue the path build by Obama, with the intention to increase the role of government and its public expense.
Simultaneously, Scandinavian countries tried to modify their system, in efforts of it becoming more “liberal”, as the Prime Minister of Sweden, Fredrik Reinfeldt, said the 7th march 2011 in his speech here reported: “We are a country that for a long time chose not to take the path towards European integration. Instead, we tried to create our own, separate social model”. Then, he continued saying that “we are in the process of moving from a society of high taxes to a society that combines good economic growth with high ambitions regarding society that combines good economic growth with high ambitions regarding climate, knowledge and welfare”. In his speech is really clear that the intention of Sweden is that of moving towards a new model, more balanced, but without losing its identity.
Even though Sweden and the United States have had very diverging health care systems, one more focused on the welfare state than the other, it seems as if both are facing periods of transformation. The two are abandoning many of the characteristics that once defined their system and are moving into a future convergence into a unique system which would be more efficient and balanced in its nature.

 

1 “Why Doesn’t the United States Have a European-Style Welfare State?” Alesina, Glaeser and Sacerdote (2001)
2 Data from “World Value Survey” (http://www.worldvaluessurvey.org/WVSContents.jsp) University of Michigan, USA

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