Read the case study “Case 3: International Comparisons: Where Else Might We Go?” in your textbook, Health policy analysis: An interdisciplinary approach (3rd ed.). In a 4-5 page paper, answer the questions below:
1) In most of these countries, does universal coverage provide the gold standard of care? Does rationing occur in these countries? How is it different from rationing in the United States?
2) Do revenues used to pay for health care tend to come from a single source or many?
3) What steps do these countries take to assure that payments required of individuals do not become a barrier to access?
4) To what extent do you think the crafting of the ACA relied on experiences in other countries? Can you think of examples of policies or countries that may have been influential?
5) Which of these policies would you like to see the United States adopt next? Why?
Submission Details
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Case 3: International Comparisons: Where Else Might we go?
It can be useful to consider the roads not taken—the measures that have evolved in other, similarly developed countries. This case study briefly reviews the health systems of six roughly comparable countries: Canada, the United Kingdom, Australia, Germany, the Netherlands, and Japan. The approaches are varied, yet all seem to be producing similar results (except costs). Satisfaction surveys for the four English-speaking countries show similar ratings of consumer satisfaction and quality of medical and hospital care; however, self-reported access and expenditures differ widely.
Different Cultures, Different Systems
Canada
Canada’s health system initially paralleled the U.S system, but the country switched to a single-payer system incrementally, beginning with initiatives in two provinces. Federal legislation passed in 1957 offered to pay 50% of costs if provinces provided universal hospital coverage; by 1961, all ten provinces were participating. The 1966 Medical Care Act extended this cost-share inducement to universal coverage programs, and universal coverage was fully implemented nationwide in 1971. The federal government’s share exceeded 76%, before being lowered.
Key aspects of the Canadian system are:
Universal coverage under provincial health plans is financed through payroll and income taxes. Many Canadians have private insurance to cover costs the government does not pay and to provide rapid access to scarce services.
Physicians are typically in private practices, and are paid per visit according to a government fee schedule. Most hospitals are independent public entities that operate within budgets established by the provincial government. Government regulations also affect the prices of prescription drugs.
Hospitals finance new technology or facilities through the provincial budgeting system, not capital markets. Adoption of new technology such as imaging equipment and surgical capacity is slower than in the United States.
Rationing occurs through delays in elective services, rather than ability to pay. Lengths of hospital stays have not dropped as rapidly as in U.S. hospitals. Physician visits per person are similar to U.S. rates, but percentage of GDP devoted to health care has grown much more slowly. Canada has a similar number of physicians per 1000 population as the United States (2.7 vs. 2.6).
Concerns exist about access to specialists and primary care after hours. Canadians’ levels of satisfaction with their health care are similar to those of U.S. respondents, but they complain a little more about the shortness of physician visits.
Although it slowed sharply after 1971, growth in per capita spending has picked up since, despite long waits for scanning procedures and “elective” surgery such as hip replacements, cataract removal, and cardiovascular surgery.
The system has become increasingly fragmented as the provinces have modified their individual systems over the years. Lewis (2015) argued that it is “a system in name only.”
Per capita healthcare spending is somewhat lower than in the United States and health outcomes slightly better. No one is sure how much leakage of services and expenditures takes place across the border between the two countries, with U.S. citizens purchasing pharmaceuticals in Canada and Canadians purchasing scarce physician and hospital services in the United States.
England
The British National Health Service (NHS) became a socialized system in 1948 after a gradual movement through voluntary and then mandatory health insurance. Until quite recently, NHS was a government program housed in the Department of Health. Ten strategic health authorities (SHAs) implemented national policies at the regional level. Each general practitioner (GP) operated through a local primary care trust (PCT). PCTs served about 100,000 people each and were responsible for disbursing tax revenues dedicated to health within their service areas. In addition to paying GPs through a system of capitation, allowances, and incentives, PCTs contracted with local consultants (specialists) and the government-owned hospitals. A very small private insurance market was allowed. It has grown in recent years and some physicians practice outside of the NHS. In London, so-called Harley Street physicians cater to the wealthy.
The Health and Social Care Act of 2012 significantly reorganized the NHS. Ostensibly, the reforms were designed to make the system more patient-centric, empower medical providers, increase the focus on clinical outcomes, and provide more local autonomy. There are really four different health systems: England, Scotland, Wales, and Northern Ireland, with the latter three functioning through block grants from the national government. So, the systems have gradually diverged.
At the center of the reformed NHS is NHS England with 80% of the population, which was established as the Commissioning Board in October 2012. This independent quasi-governmental agency pushes public funds out to local Clinical Commissioning Groups (CCGs), which replaced PCTs on April 1, 2013. It also promotes quality of care and improvements in health outcomes. The role of the national government has been limited to general oversight of the system and combined strategic leadership for the health and social services systems. SHAs were abolished along with the PCTs.
CCGs are primarily composed of GPs, but nurses and other providers are represented. The CCGs can commission any health services that meet government standards, including NHS hospitals, consultants (who are typically hospital-based), mental health services, urgent and emergency care, rehabilitation, and community health services.
The Health and Social Care bill made several other changes to improve coordination, increase democratic input, improve quality and address community public health. For example, leaders of public health, adult social services, children’s social services, a consumer representative, and an elected community representative comprise health and wellbeing boards, which promote coordination across sectors and advise CCGs. An organization called Monitor has authority to license providers beginning April 2014 and is responsible for overseeing the transition of NHS hospitals from government entities to foundations. Public health has become a local responsibility, but a new government agency, Public Health England, performs a national role similar in ways to the role the Centers for Disease Control and Prevention plays in U.S. public health.
The number of physicians per thousand patients is slightly higher in the United Kingdom than in the United States (2.8 vs. 2.6). British nurses do many things physicians would handle in the United States, including delivering babies.
Rationing has been based in part on waiting times for treatments for nonacute conditions. These have included cataract removal, hip replacement, and coronary artery bypass surgery, for which patients may wait as much as a year.
In 2004, the NHS adopted a pay-for-performance system for family physicians that involved 146 quality performance measures. According to Doran et al. (2006), primary care practices met targets for 83% of patients and achieved 97% of the possible points, much more than the 75% anticipated in the budget, resulting in an average of more than $40,000 in additional payments per physician. The result was a substantial budget overrun. Because a major baseline study was not performed, how much of the improvement was due to changed medical care and how much was due to improved documentation is not knowable.
Long queues were a major political issue in the 1997 elections that brought back the Labour government. That government increased NHS funding, and waiting times dropped. Some management decision-making was also decentralized from the regional SHAs to the local hospitals, whose accountability for quality and cost was increased. At the same time, the government established the National Institute for Health and Care Excellence (NICE) to evaluate procedures, treatments, and technologies and to speed their adoption if the evidence is adequate and favorable. This was in response to reliable evidence of differences in treatments and outcome differences among various geographic areas, regional health authorities, and fund-holder groups.
Australia
Australia has a hybrid public–private healthcare system. A national healthcare system called “Medicare” is financed out of taxation. When established in 1984, Medicare supported government hospitals, medical care, and prescription drugs for the indigent. It also provided grants to state and territorial governments to operate hospitals. The 1999 addition of a Medicare levy—1.5%–2.5% depending on income level—extended these benefits to the general population. Government incentives encourage private insurance, which pays “cost sharing” fees and provides access to private hospitals, specialists, and physicians. About 50% of Australians have private insurance, which pays 11% of healthcare costs.
Australia has a federal system with the states and territories actually managing the public hospitals and a number of other services, but most primary care and pharmaceutical coverage is paid by the central government.
Australians seem to have less access problems overall than Canadian and U.S. patients, but they report problems accessing care on nights and weekends and difficulties paying for prescription drugs.
Australians with insurance entering local public hospitals decide whether to do so as public or private patients. Public patients receive free hospital and physician care. Private patients can choose their doctors. They pay minor charges, but most charges are covered by a combination of Medicare and private insurance.
Subsidies are limited to pharmaceuticals approved for cost-effectiveness by the independent Pharmaceutical Benefits Advisory Committee.
Under a program called Lifetime Health Cover, those who join a private health plan before the age of 31 pay a lower premium over their lifetime. Two percent is added to the premium for each year of delay. This is to prevent “hit-and-run” enrollment when people anticipate major expenses and to maintain a larger, healthier risk pool.
Community rating is mandatory for private health insurance. A “reinsurance” system redistributes the costs of claims among insurers to avoid winners and losers.
To reduce reliance on public funding, the government provides a 30% rebate on private health insurance costs.
A government subsidy for the long-term care of older persons includes institutional, community-based, and in-home support. In return, the government controls the supply of long-term beds.
Australia has 3.5 physicians per 1000 population compared with 2.6 in the United States.
Germany
Chancellor Otto von Bismarck is credited with starting the first national health insurance program in the 1880s. Today, it is built around hundreds of not-for-profit sickness funds that negotiate with labor unions, employers, and providers. The various parties interact quite formally.
All individuals must have health insurance. A federal unemployment insurance fund pays premiums for the unemployed. A worker’s pension fund pays premiums for retired workers. Workers have choices among funds, but funds tend to be linked to an industry or locale.
Management of the system is split between the states, the Federal government and a number of independent organizations representing employers, providers and insurers. Yet the system is considered very efficient. However, consumer satisfaction tends to be low as well.
Funds assess premiums on a graduated scale based on income. Co-payments have increased in recent years to cover revenue shortfalls.
Physician associations receive a fixed amount per person per year, as do hospitals. Hospitals pay hospital-based physicians salaries from their capitation income. Hospitals are reimbursed under a DRG system similar to the U.S. system except that it includes physician services and aftercare for 30 days post discharge. Ambulatory-care physicians are paid either a fee for service or the physician associations pay them a salary from capitated revenues. They generally cannot follow patients into the hospital. Germany has recently started to develop specialized ambulatory care centers for specific diseases with highly integrated services.
Doctor visits are shorter and more frequent than in the United States, and hospital stays are longer; however, the hospital staffing ratios are much lower. The average cost of a hospital stay in the United States is much greater than that of Germany despite a much longer average length of stay.
Germany has 4.1 physicians per 1000 population compared with 2.6 in the United States.
Among developed countries, Germany has the fourth-highest percentage of GDP devoted to health care after the United States, France, and Denmark. Because of cost increases, high unemployment, and an aging population, a 2006 political compromise increased premiums to an average of 15.5% of salaries beginning in 2009. Premiums are pooled, and each insurer receives the same premium per enrollee in an attempt motivate efficiency improvements.
Netherlands
The Netherlands is considered one of the best developed-country health systems. It has universal coverage, but its delivery system is private with many not-for-profit insurers and independent primary care providers. On top of that there is a mandatory government insurance system for long-term care. Despite premium and co-pay requirements, out-of-pocket costs are low.
Primary care providers are the gatekeepers in this system. Access to specialists is virtually available only through referral from a GP, including mental health issues. A special program brings mental health services to youth through their schools.
The Dutch health system is not cheap despite low drug prices and low hospitalization rates.
This system has focused a great deal on integrated (health and mental) care and coordination of services. Recent legislation (2014 & 2015) has focused on long-term care in the community, on a special program for integrated care for the frail elderly, and psychosocial youth care. These reforms required more involvement by municipalities which had to scramble to build capacity.
Attempts to allow insurers to limit their networks failed in Parliament in 2014.
Netherlands institutions while independent are under pressure from the government to follow evidence-based practices.
The Netherlands has an unusually small number of pharmacists. In 2014 it had 4.27 physicians per 1000 compared to 3.35 for the U.S. International comparisons for nurses are difficult because their roles vary so much. In the United States many nurses have roles outside direct delivery due to the complexity of our insurance systems.
The Dutch public reports more satisfaction with their health system than do their neighbors.
Japan
Employment-based health insurance is the core of Japan’s health system, and it continues to produce the best health outcomes of any of the systems mentioned here; however, some ascribe much of the differential outcomes to demographic and lifestyle issues, especially diet.1 There is also a national health insurance program financed with national and local taxes. Premiums are scaled to family income. Households not covered by employment-based insurance must belong to community insurance programs under the national plan. Retirees are covered by their former employers or their community plans. There is a high-risk pool available to literally thousands of insurance schemes. The co-pay for most services is 30%.
The government sets fee schedules for physicians at a level much below U.S. rates. Fees are identical for all plans; however, patients often add 3% or 4% “gifts” to their payments. Fee levels are modified based on utilization. If too many of a procedure are done, the fee is lowered.
There are both nonprofit and for-profit hospitals, and hospitals may be owned by doctors.
Most physicians work out of large clinics, some of which are associated with hospitals, and are reluctant to send patients into the hospital because they cannot follow them once they are admitted. Japan has 2.4 physicians per 1000 population compared to the United States with 2.6.
Specialists are hospital employees and earn less than primary care physicians.
Clinics usually dispense their own drugs.
Japanese patients have many more, briefer visits and many more prescriptions than their U.S. counterparts. They also have many fewer admissions, although lengths of stay tend to be much longer.
There are fewer doctors per capita in Japan than in the United States, and waiting lines tend to be managed on a first-come, first-served basis.
Japanese hospitals are considered by many to have somewhat outdated equipment and shabby facilities. Physicians do not seem to be customer oriented or highly motivated to meet patients’ affective needs.
The government is aware of the collision course the health system is on with a decreasing and aging population.
Other OECD Countries
Most other Organization for Economic Cooperation and Development (OECD) countries have more physicians and nurses per thousand population than the United States. The Netherlands has one of the highest ratios of nurses and recently increased the roles of nurses in primary care. France, Sweden, and Spain had high ratios of physicians per 1000 population (3.3, 4.2, and 3.92, respectively). All physician per 1000 population statistics cited herein come from the OECD data base.
Some Repeating Themes
A number of themes recur in the systems of these various countries. Some represent ideas that have been tried in the United States (under the ACA, in some instances), but all might warrant further consideration as the U.S. system changes over the next 10–20 years.
Universal Coverage
Health care is provided to all. Often it is through a patchwork of public and private funds, but every effort is made to have everyone in the system. General tax revenues (income, payroll, and value added taxes) are used extensively to fund health care, but in most cases, there is a mixture of additional revenue sources, including patient co-payment, employment-based insurance, retirement funds, local government revenues, and private insurance. This patchwork of payment mechanisms does not leave large gaps of uninsured or underinsured citizens. Private insurance and private care are available to those who choose to pay more. Where co-pays are required, a careful effort is made to make sure that ability to pay does not control access to basic care. In the United States, there have been numerous attempts to expand coverage over the last several decades, with ACA being the most ambitious attempt to approach universal coverage.
The Public-Private Pendulum
Anell (2015) used the “public-private pendulum” analogy with respect to Sweden. But similar issues have been playing out in England, France, The Netherlands and especially in Australia which has seen at least five changes in the way health care is financed since 1976 (Hall, 2015). For example, while France has universal coverage, 96% of its population also carries complementary health insurance. Vouchers to purchase the private complementary insurance are available to the poor (Steffen, 2016).
Centralized Versus Decentralized Delivery System Controls
Country after country that started out with a centralized healthcare system has decentralized operational control to district or regional authorities. Sometimes their boards are elected separately from the local administrative body. The objectives here are multiple. Sometimes it is privatization, sometimes it is seeking more patient-centered care, and often it is aimed at adding regional and local revenue sources to the mix.
Hospitals Are Budget Constrained
Since the introduction of prospective payment based on diagnostic-related group classifications, hospitals in the United States have operated more as cost centers than revenue centers. A number of countries have established global hospital budgets or capitation budgets for hospitals, often administered through local authorities or trusts. Capital investment is constrained to avoid a hospital arms race.
Specialists Are Salaried and PCPs Incentivized
Income of the universal coverage system is used to pay the salaries of specialists, whereas fee-for-service payments reimburse the primary care providers. They serve as gatekeepers for referrals to specialists and hospitals and do not follow patients into the hospital. They are motivated, therefore, to avoid unnecessary hospitalizations. The British experiment with pay-for-performance was sufficiently successful that Epstein (2006) argued that its time has come for the United States. One might also see it as a way to boost the incomes of primary care physicians in the United States sufficiently to attract new practitioners and bolster the currently dwindling supply (Basch, 2006).
Large Premium and Risk Pools Are Maintained
Individuals are compelled to belong to one health plan or another. Young and healthy individuals cannot opt out, or where they can, incentives are provided to try to keep them in. Trusts serve very large employers, but the needs of small businesses and individuals are met through required community rating, local community health plans, and tax subsidies. Large premium and risk pools are built in to level the playing field and hold down administrative and marketing costs.
Systems Integration
The integration of the system is provided at the governmental rather than the institutional level. Circuit breakers in the system, especially between hospitals, specialists, and primary care practices, keep individuals and institutions from maximizing utilization. Incentives focus on motivating primary care physicians to control costs and improve quality.
Rationalization and Standardization
A trend toward decentralization of healthcare services is offset in part by setting up staff units that analyze and report on current medical technology, evidence about best practices, and evaluation of the cost-effectiveness of common interventions. These recommendations will probably be worked increasingly into pay-for-performance systems. For example, the Netherlands started with a personal healthcare budget for those in long-term care, but has had to rein in expenses after an expenditure growth rate of 23% (van Ginneken, 2015).
Labor Substitution
Many countries with lower costs seem to have not only lower professional incomes, but also substitute nurses and pharmacists for physicians, and physician generalists for specialists in their delivery systems.
Pharmaceutical Costs
Most developed countries except New Zealand and the United States constrain or ban direct-to-consumer advertising for prescription drugs (a cost that reached $4.5 billion annually in the United States in 2009), and rely on recommendations by physicians for decision-making. The profit margins of pharmaceutical companies are constrained through a number of mechanisms, depending on what alternatives exist for payment in the national system. In a few cases, physicians may supplement their revenue by dispensing in their practices.