Healthcare Around the World

Tweet about this on TwitterShare on FacebookShare on TumblrEmail this to someoneShare on Google+Share on LinkedInShare on Reddit

By Torus Lu

American health care is, by many metrics, exorbitant in cost and mediocre in quality.  At 17.2 percent, the share of the United States economy dedicated to health care spending is larger than that of any other country in the OECD.  At the same time, international rankings consistently find that American health care is far from the best.  The Legatum Institute, for example, placed the United States 32nd among 149 countries, using a summary of metrics describing “basic physical and mental health, health infrastructure, and preventative care”.

The last major government overhaul of American health care, the Affordable Care Act (also known as Obamacare), passed in 2010 and was mostly implemented by 2014.  Although the law was a wide-reaching reform of health care policy, a major portion of it was regulation of private insurance markets. Prior to the Affordable Care Act, health insurers had incentive to reject individuals that had expensive medical conditions (known as pre-existing conditions), as insuring them would pass large costs onto the insurer.  Alternatively, they could charge prohibitively premiums that would, in effect, also prevent those with pre-existing conditions from getting insurance.  The Affordable Care Act banned such practices and narrowed the methods with which insurers could vary their premiums.  In order to encourage individuals to responsibly pay into insurance and share in the cost of medical care, the Affordable Care Act introduced an individual mandate; i.e. a requirement for individuals to buy health insurance, punishable by a fine.  To facilitate the purchase of health insurance, the Affordable Care Act also introduced marketplaces, where individuals could purchase insurance directly from insurers.  This is by no means an exhaustive list, but these reforms were particularly instrumental in re-shaping American insurance markets

Since then, there have been additional calls for reform.  Most recently, a Republican-led effort to repeal Obamacare faltered after it narrowly missed a majority vote in the Senate.  On the other side of the partisan divide, many prominent Democrats have backed a bill hoping to implement a “Medicare-for-All” health care system.  Generally speaking, health care reforms have focused on insurance coverage; by enacting certain policies with respect to health insurance, governments hope to expand health care access, cut costs, or promote public health.

Given that other countries seem better at controlling costs and improving quality, it seems wise to look to these other countries for an example of how to improve American health care.  Although mimicking other countries’ policies will not necessarily mimic their results, perhaps something useful can be learned.

Universal Coverage

One standard for quality health care is universal health coverage.  The logic behind such a standard is clear.  Given that some form of health insurance is necessary to keep medical procedures affordable for the average person, expanding health insurance to cover everybody is almost equivalent to expanding access to health care to everybody.  It is also clear that there is room for improvement in America with respect to universal health coverage, as approximately 91 percent of Americans have health insurance.

Supposing universal health coverage is a desirable goal, the question then becomes “How is it achieved?”  There are 19 countries that have achieved 100 percent health insurance coverage according to OECD statistics: Australia, Canada, Czech Republic, Denmark, Finland, Germany, Ireland, Israel, Italy, Japan, Korea, New Zealand, Norway, Portugal, Slovenia, Sweden, Switzerland, UK, and Russia.  For most of them, the answer is government-provided health insurance, with Germany and Switzerland as notable exceptions.

While government is responsible for ensuring most health coverage in these countries, private insurance still plays a significant role.  Australia, Ireland, Israel, New Zealand, and Norway all allow for “duplicate private health insurance,” which is generally intended to provide the same types of services as public health insurance while introducing  more choice in terms of “providers (e.g., private hospitals) or levels of service (e.g., faster access to care.)”  Additionally, many of these countries allow private insurance to cover services and costs not covered by the government.

Germany is a notable case of a mixed private-public insurance system. Health insurance is required by law, but certain individuals, specifically those meeting a wealth threshold, civil servants, and the self-employed, may opt for private insurance.  In this respect, the German system may resemble the American one the most.  The requirement to have health insurance is essentially a stronger version of the individual mandate under the Affordable Care Act, and while German public insurance is more widely provided than American public insurance, a significant private insurance market exists and choice between public and private is maintained.

Controlling Costs

On the cost side of health care, countries mainly use regulations to influence prices and rein in spending.  Israel spends 7.3 percent of its GDP on health care, less than half the comparable U.S. figure.  According to researchers Jack Zwanziger and Shuli Brammli-Greenberg, Israel controls costs using “a range of mechanisms, including caps on hospital revenue and national contracts with salaried physicians.”  In terms of recommendations for American health care, Zwanziger and Brammli-Greenberg state that the exchanges introduced by the Affordable Care Act “loosely resemble” the Israeli system, but also that the main area of cost reduction would be rationing, i.e. choosing not to cover certain services.  They go on to state that there is unlikely to be political will to consider such policies.

Ireland spends 7.8 percent of its GDP on health care and ranks higher than the United States according to the Legatum Institute’s criteria.  At the same time, it runs a tiered system of health care, with mostly free (at point of use) health care for those below an income threshold, subsidized health care for those above that income threshold, and private insurance available for those looking to pay for faster access.  A 2013 Irish government report laid out guiding principles by which Ireland regulates its private health insurance markets.  The existing principles section is remarkably reminiscent of Affordable Care Act provisions; they feature Community Rating, Risk Equalization, Open Enrolment, Lifetime Cover, and Minimum Benefits.  Conceptually, they are equivalent to community rating, risk-adjustment, pre-existing conditions, and essential health benefits provisions enforced by the Affordable Care Act.  The major point of difference is the prominence of government involvement, specifically in guaranteeing health care for those that cannot pay and subsidizing prices for those that can.

Additionally, some of the countries that perform better than the United States on a cost basis run single-payer health care systems.  Essentially, a single government entity provides universal health coverage with negligible private involvement.  While private insurance often still exists in a small and supplementary way, proponents of single-payer systems contend that the centralization inherent in single-payer systems can efficiently reduce administrative costs, erase the need for marketing, and help put downward pressure on prices.  Two countries recognized for their single-payer systems, Canada and the United Kingdom, hold costs down to 9.7 and 10.3 percent of GDP, respectively.

In all fairness, the American health care system does have upsides.  For example, by OECD statistics, breast cancer survival rates (2005-2010) in America are high, and second only to that of Norway.  Likewise, mortality following admission to a hospital for heart attack (2010) is lower in America than most OECD countries – only Sweden, Australia and Norway do better in this regard.  However, given its high cost and overall quality, American health care still leaves much to be desired.  If reforms implemented in other countries can produce similar results achieved in other countries, then there are plenty of examples for American policymakers to follow.

Tweet about this on TwitterShare on FacebookShare on TumblrEmail this to someoneShare on Google+Share on LinkedInShare on Reddit



Leave a Reply

Your email address will not be published. Required fields are marked *