A. Previous post | summary
Last weeks’ post highlighted key stats and trends in US healthcare industry; this week, will compare US healthcare policy and trends with other leading nations.
B. Definitions
Socialized healthcare is similar, but not the same as universal healthcare.
- Socialized healthcare
- Single-payer, government run, government delivered healthcare system
- Government provides all healthcare services and facilities
- Doctors, nurses, specialists are considered government employees
- Universal healthcare
- Every citizen has access to basic healthcare services
- This does not imply that government is the single-payer for healthcare
- Many countries use a combination of public and private insurance coverage
- Providers (ie. doctors) and facilities are private, not government owned
- Single-payer healthcare
- Every citizen has access to basic healthcare services
- Coverage is fully-paid for by government, via taxation (multiple sources)
- Providers and facilities are often private, not government owned
- Citizens may not have the option to pay out-of-pocket for additional services, not otherwise guaranteed by law
C. Policy comparison
Information provided by Commonwealth Fund, edited by London School of Economics and Public Policy (2020 Report).
- Canada
- Decentralized, universal, publicly-funded system
- All services provided free at point-of-use; portable across provinces
- Excluded services: outpatient prescription drugs, dental, vision
- 67% of Canadians use private insurance for excluded services
- Legislation originally passed in 1957 and 1966; amended in 1984
- Primary funding source is government revenue, via taxation
- Cost controls
- Single-payer purchasing
- Negotiated fee schedules
- Drug formularies for provincial health plans
- Mandatory global hospital budgets
- Training
- Average physician tuition $12,000; enrollment capped
- Average physician salary $144,000
- France
- Enrollment in France’s statutory health insurance (SHI) system is mandatory
- Includes most costs for hospital, physician, long-term care, and prescription drugs
- Citizens responsible for co-insurance, co-payments, and balance bills that exceed covered fees
- System funded primarily by payroll taxes (paid by employers and employees), national income tax, and tax levies on certain industries and products
- 95% of citizens have supplemental insurance for out-of-pocket costs, dental, hearing, and vision
- Achieved over seven decades by extending statutory health insurance to all employees (1945), retirees (1945), self-employed (1966), and unemployed (2000)
- Cost controls
- Program has incurred deficits during past two decades, mitigated by
- Reduction in acute-care beds
- Increased use of generic and OTC drugs
- Use of central purchasing to negotiate more effectively
- Increased use of outpatient procedures
- Reduction in duplicate testing
- Training
- Average physician tuition $1,000; enrollment capped
- Average physician salary $124,000
- Germany
- Health insurance is mandatory
- 86% citizens enrolled in statutory health insurance (SHI), providing inpatient, outpatient, mental health, and prescription drug coverage
- 12% enrolled in private health insurance; 2% enrolled in government insurance
- Administration is handled by non-governmental insurers known as sickness funds
- Government has no role in the direct delivery of healthcare
- Co-payments apply to inpatient services and drugs; sickness funds offer range of deductibles
- Citizens earning more than $68,000 may opt out of SHI and elect private health insurance; there are no government subsidies for private insurance
- Chancellor Otto von Bismarck’s Health Insurance Act (1883) established the first social health insurance system in the world
- Coverage gradually expanded; universal health coverage was mandated for all citizens and permanent residents (2007)
- Hospitals and physicians treat all patients regardless of SHI or private insurance
- Cost controls
- Hospital Care Structure Reform Act (2016) links hospital payments to good service quality, and reduces payments for low-value services
- All drugs are placed into groups with maximum reimbursement price, unless an added medical benefit may be demonstrated
- Training
- Average physician tuition at public universities is free
- Tuition at private universities $15,000 – $30,000
- Average physician salary $165,000
- Japan
- Statutory health insurance system provides universal coverage
- Funded primarily by taxes and individual contributions
- Enrollment is required in an employment-based or residence-based plan
- Benefits include hospital, primary, specialty, and mental health care, as well as prescription drugs
- In addition to premiums, citizens pay 30% co-insurance for most services
- Young children and low-income, older adults have lower co-insurance rates; there is an annual out-of-pocket maximum for health care based on age and income
- Cost controls
- Price regulation for all services and prescribed drugs is more effective cost-containment mechanism than the 30% co-insurance
- Medical, dental, and pharmacy service fees are approved on an item-by-item basis to meet overall spending targets set by the Central Social Insurance Medical Council
- Fee schedule includes financial incentives to improve clinical decision-making
- Prefectures regulate the number of hospital beds using national guidelines
- Training
- Average physician tuition at public universities $5,000
- Tuition at private universities $45,000 – $75,000
- Average physician salary $129,000
- Singapore
- Achieved universal health coverage through a mixed financing system
- Public statutory insurance system, MediShield Life, covers large bills arising from hospital care and certain outpatient treatments
- Patients pay premiums, deductibles, co-insurance, and costs above claim limits
- MediShield Life does not cover primary care, outpatient care, or prescription drugs
- MediShield Life is complemented by government subsidies, as well as compulsory medical savings account called MediSave, which may help residents pay for inpatient care and outpatient services
- Individuals may purchase supplemental private health insurance
- Government is fully responsible for the health system
- Government relies on competition and market forces to improve service and increase efficiency; intervenes when market fails to control health care costs
- Cost controls
- Strong government control and oversight; de-emphasizes profit maximization
- Demand and supply side controls encourage patients and providers to be cost-conscious in use of health care services
- Training
- Average physician tuition at public universities $4,000
- Switzerland
- Universal health care system, highly decentralized, at canton (state) level
- Funded through enrollee premiums, taxes (canton), social insurance contributions, and out-of-pocket payments
- Residents are required to purchase insurance from private, non-profit insurers
- Adults pay yearly deductibles, in addition to co-insurance, with an annual out-of-pocket maximum, for all services
- Coverage includes physician visits, hospital care, pharmaceuticals, devices, home care, medical services in long-term care, and physical therapy
- Supplemental private insurance may be purchased for services not covered by mandatory health insurance, to obtain greater physician choice, or better hospital accommodations
- Federal government adopted the Health Insurance Law (1994) based on a private insurance model, after several attempts to introduce universal healthcare
- Cost controls
- Switzerland’s health care costs are second-highest in the world
- Uses flat-rate remuneration mechanisms, such as capitation (per head)
- Eliminates incentives for expensive and unnecessary services
- Coverage decisions on new prescription drugs are subject to an evaluation of effectiveness and cost
- One third of existing drug prices evaluated each year; generics must be sold for 20% – 50% less than the original brand; consumers pay higher co-insurance for brand-name drugs if generics exist; pharmacists reimbursed flat rate for prescriptions; no financial incentive to dispense more expensive drugs
- Training
- Average physician tuition $1,000; enrollment capped
- Average physician salary $156,000
- Taiwan
- National health insurance provides universal, mandatory coverage
- Single-payer system funded primarily through payroll-based premiums; government provides subsidies for low-income households
- Health care services provided by private providers
- Services include preventive, primary, specialist, hospital, and mental health
- Long-term care, more recent addition, is provided separately
- Out-of-pocket costs include co-payments for outpatient care and prescription drugs, and co-insurance for hospital stays
- Private health insurance consists of disease-specific, cash indemnity policies
- Implemented (1995) after studying other nations; based on: equitable access, effective cost control, and administrative simplicity; Uwe Reinhardt, professor and healthcare economist at Princeton, served as key advisor
- Cost controls
- Uses global budget system; containing annual cost growth to 3.8%
- Considers both clinical effectiveness and cost-effectiveness in coverage decisions; prices for breakthrough drugs that are under patent protection are set through world-wide reference pricing
- Training
- Average physician tuition at public universities $1,000; enrollment capped
- Physician tuition at private universities $2,000; enrollment capped
- United Kingdom
- All residents entitled to free public health care through the National Health Service (NHS), including hospital, physician, and mental health
- NHS funded primarily through general taxation
- Universal healthcare replaced voluntary insurance and out-of-pocket payments (1948)
- Universal healthcare considered one aspect of wider welfare reform designed to eliminate unemployment, poverty, illness, and to improve education
- Cost controls
- Costs constrained by three-year budget cycle, that may not be exceeded
- Costs for prescription drugs are contained through voluntary agreement between UK government and pharmaceutical industry; Voluntary Scheme for Branded Medicines Pricing and Access (2019) caps growth in the sales of non-generic medicines at 2% annually; new drugs are not recommended as cost-effective if they exceed $29,000 – $43,000 per quality-adjusted life year
- Training
- Average physician tuition is free; academic fees may be subsidized
- Average physician salary $159,000
- United States
- Mix of public and private, for-profit and non-profit insurers and providers
- Federal government provides funding for Medicare, for adults age 65 and older, and some people with disabilities (ie. end-stage renal disease)
- Private insurance, dominant form of coverage, provided primarily by employers
- Uninsured rate reduced by Affordable Care Act (2010) from 16% to 8%
- Employer-sponsored health insurance was introduced during 1920s; gained popularity after World War II, when US government imposed wage controls and declared fringe benefits, such as health insurance, tax-exempt (by the IRS)
- First public insurance programs, Medicare and Medicaid, enacted through Social Security Act (1965)
- Veterans Health Administration largest integrated health care system in the US, provides care at 1,293 health care facilities, including 171 medical centers and 1,112 outpatient sites, serving 9-million enrolled Veterans each year
- Cost controls
- Private insurers rely on increased use of greater patient cost-sharing
- Federal government
- Sets provider rates for Medicare and Veterans Administration
- Uses capitated payments for Medicaid
- Caps annual out-of-pocket fees for Medicare Advantage and ACA-plans
- Negotiates drug prices for Veterans Administration, and is legally mandated a 24% minimum discount from non-federal manufacturer’s price
- Medicare, largest buyer of prescription drugs, does not negotiate drug costs with manufacturers
- Training
- Average physician tuition for public universities $40,000
- Average physician tuition for private universities $63,000
- Average physician salary $216,000
D. Performance comparison
- Chart 1: bifurcates public and private healthcare spending
- US has highest amount of private spending
- Chart 2: bifurcates public and private insurance coverage
- US has highest amount of private insurance
- US is only leading nation without 100% insurance coverage
- Chart 3: overweight and obesity
- US has highest rates for adult and child; lifestyle disease
- Chart 4: type II diabetes
- US and Germany highest rates; lifestyle disease
- Chart 5: life expectancy
- US lags, despite highest rate of healthcare spending
- Chart 6: mortality rate
- US leads best-in-class for heart attack, stroke, and cancer
- US lags in infant and maternal
- Chart 7: healthcare spend per capita
- US and Switzerland highest rates
- Chart 8: healthcare % of GDP
- US has highest healthcare costs at 17% of GDP
- US average healthcare cost increased 8.5% annually over 50-years
- Most leading nations are plagued by healthcare costs increasing faster than GDP
E. Next post | looking ahead
Next week, will address the issues faced by the US healthcare system, and identify possible mitigating solutions.
garthmonroe 