What Obama Can Learn from "Old Europe"

02/27/2009 05:12 am ET | Updated May 25, 2011

The inauguration of the 44th president looked like the most dramatic debut since the Beatles arrived in New York. But now it's time for Team Obama to produce results. For three of President Obama's top priorities -- energy and climate change, health care, and jumpstarting the economy -- he would do well to look toward "old Europe" for guidance.

Energy and the Environment
The European Union recently displayed global leadership by enacting its 20-20-20 Plan: agreeing to cut human-produced carbon emissions that contribute to global warming at least 20 percent by 2020. They will do this by ramping up renewable energy technologies to 20 percent of energy usage, as well as by implementing far-reaching conservation measures and enacting the world's most ambitious carbon-trading program.

Displaying an important principle that will be crucial to any global climate agreement replacing the Kyoto Protocol, the richest European nations will contribute a greater share toward combating climate change.

Importantly, the EU has not allowed the recent economic crisis to thwart its drive. EU Commission President José Manuel Barroso told the BBC, "The financial crisis is not an excuse. On the contrary, we can make it a win-win situation. We can create more green jobs; we can promote more investment in the low-carbon economy of the future."

Indeed, the European wind and solar industries are creating thousands of jobs, many of them in rural areas where job creation can be difficult. Germany's economy has received a major boost from a massive investment in the renewable energy sector. Tens of thousands of Germans are employed in the wind-turbine industry. Germany's entire renewable energy industry -- including wind, solar and biomass power - included 249,300 jobs in 2007, a 50 percent jump from 2004. On a per capita basis, that is comparable with creating 1 million U.S. jobs.

A study by the German government predicts that by 2020 there will be 400,000 domestic jobs in the renewable energy sector. Other EU nations are enjoying similar economic surges; in Portugal, a massive solar plant is bringing jobs and development to the traditionally poor Alentejo region, 125 miles southeast of the capital Lisbon. The business of wind, solar and other renewables is growing deep roots in fertile European soil, and Europe is leading by example. In a friendly challenge to then President-elect Obama, Barroso said, "Our message to our global partners is: Yes, you can ... especially to our American partners."

Health Care
Similarly on health care, the Obama administration can learn from what has worked in Europe. The World Health Organization (WHO) rates European countries as having the best health care systems in the world, spending, on average, far less than the United States for universal coverage and quality results. France has the top-rated health care system, while the United States is ranked 37th -- just ahead of Cuba and Slovenia. In the Czech Republic, a proposal to introduce a $2 co-payment per office visit nearly toppled the government, as health care is considered a basic right in the social contract.

The United States ranks 28th in the world in infant mortality, at seven deaths per 1,000 live births, tied with Poland and Slovakia, and substantially higher than Sweden (3.4 deaths), France (4.3 deaths) and Germany (4.5 deaths). In life expectancy, the United States ranks 29th, its 77 years lagging behind Italy (81 years), France (80 years), Sweden (81 years) and Germany (79 years), and about the same level as South Korea (76 years) and Cuba (77 years). The United States has fewer per capita physicians, nurses and hospital beds, fewer MRI and CT scanners than the average for other advanced nations, and has the highest rate of medical errors (receiving the wrong medication, incorrect test results, a mistake in treatment or late notification about abnormal results). And of course, the U.S. has some 45 million Americans without health care, with that number rising as more Americans join the ranks of the unemployed and lose their employer-based health care.

In addition to providing better health coverage, Europe also manages to spend less. According to the WHO, the United States spends the equivalent of 16.5 percent of its economy on health care, about $6,100 per person, compared to an average 8.6 percent in EU countries. France spends just $3,500 per person, or about 10.7 percent of its economy. As Dr. Christopher Murray, director of WHO's Global Program on Evidence for Health Policy, says, "Basically, you die earlier and spend more time disabled if you're an American rather than a member of most other advanced countries."

How do the European countries manage to provide better health care than most Americans receive for about half the per capita cost? While there are differences from nation to nation, there also are some broad generalities to point to, as well as national specifics. These give us a pretty good snapshot that should be instructive to the Obama administration as they grapple with a health care system that is continuing to hurt American workers, businesses, and increasingly will hurt American competitiveness in the global economy.

The first overriding difference between American and European healthcare systems is one of philosophy. The various European healthcare systems put people and their health before profits. It is the difference between health care run mostly as a nonprofit venture with the goal of keeping people healthy and working, or running it as a for-profit commercial enterprise. For example, UnitedHealth Group CEO William McGuire received an obscene $124.8 million in compensation in 2005. He's just one of many grossly overcompensated kingpins of the U.S. health care industry. If nothing else, the U.S. health care system provides a valuable tale illustrating that corporate profits and affordable, quality universal health care are not a viable mix.

The second major difference between American and European healthcare is in the specific institutions and practices that flow from this philosophy of "health comes first." Contrary to stereotype, not every country in Europe employs government-run, "socialized medicine." Unlike single-payer Britain or Sweden, France, Germany and other nations have figured out a third way hybrid with private insurance companies, short waiting lists for treatment and individual choice of doctors. This model is based on the principle of "shared responsibility" between workers, employers and the government, all contributing their fair share to guarantee universal coverage. Health care is mandatory: everyone pays what they can afford into the health care fund so that everyone can receive health care.

A similar health care plan now is used in Massachusetts, and has been proposed by Governor Arnold Schwarzenegger in California, but with two essential differences: in France and Germany, the private insurance companies are non-profits. Doctors, nurses and health care professionals are paid well, but you don't have corporate health care CEOs making hundreds of millions of dollars. Generally speaking, the profit motive has been wrung out of the system.

The second key difference is in the area of cost controls. In France and Germany fees for services are negotiated between representatives of the health care professions, the government, patient consumer representatives, and the private nonprofit insurance companies. Like in America's publicly financed Medicare system (which provides health care to the retired and elderly), the negotiations establish a national agreement for treatment procedures, fee structures and rate ceilings that prevent health care costs from spiraling out of control. In the end, this not only benefits personal health, but also has been good for European businesses, which aren't exposed to the soaring health care costs that have plagued American businesses.

Economic Stimulus
The Obama administration also could take notes from how the Europeans are jumpstarting their economies. Europe sometimes is criticized for its lack of unity, but sometimes that multi-headed hydra affords certain advantages. Having so many powerful nation-states allows each nation to act as a laboratory for the others, learning from each other's successes and shortcomings.

For example, during the massive financial meltdown in the fall of 2008, as markets reeled and the US announced a $700 billion bailout plan, Europe was harshly criticized for its initial failure to craft a continent-wide bailout. Eurosceptics saw it as another example of Europe's disunity and weakness.

But that was a rush to judgment. Each country initially tried its own bailout formula, and less than two weeks later the British strategy under Prime Minister Gordon Brown emerged as the most effective. Much of the rest of Europe followed, as did the United States in a change of tactics from Secretary of the Treasury Hank Paulson's original plan, which had proven to be so ineffective.

The European plan also includes tighter controls over the bailout money, equity in the banks, reductions in dividends and concessions from the bankers (including restrictions on executive pay in some countries), all of which were lacking from the US bailout. And Europe already has enacted a fiscal stimulus worth hundreds of billions of dollars at the continental and national levels, while Americans still await Obama's plan. Europe is looking relatively light on its feet, while the U.S. has looked flatfooted.

With a half billion people, Europe is the largest, wealthiest trading bloc in the world, producing nearly a third of the world's economy -- as large as the U.S. and China combined. While its critics have derided Europe as a land of "creeping socialism," in fact Europe has more Fortune 500 companies than the US, China or Japan.

Like the United States, Europe is fighting to pacify the rising economic floodwaters. But something about Europe and its "social capitalism" seems particularly well-suited to this make-or-break century challenged by a worldwide economic slump, global warming and new geopolitical tensions. Team Obama would do well to take notes.

Steven Hill is director of the Political Reform Program at the New America Foundation. His book "Europe Rising" will be published by the University of California Press in September 2009.

Different versions of this article have been published in the Prague Post, Hürriyet Daily News & Economic Review (Turkey), Providence Journal, Santa Monica Mirror, Truthout, and other places.