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Health Insurance, National Approaches

HEALTH INSURANCE, NATIONAL APPROACHES

One key feature of a health system is health insurance. Health insurance allows individuals to share the risk of any large costs due to illness, and provides a structure by which individuals are linked with health care services. Although insured individuals often pay fees to obtain medicine or to see a doctor, health insurance pays for a large portion of medical costs.

Typically, health care insurance systems have a combination of public and private components. However, with the exception of a few countries, such as Germany, the Netherlands, and the United States, most industrialized countries have universal health care for basic health services, funded through the public sector. In a universal system, all citizens or residents, regardless of age, income, or health status, have access to a core set of health care benefits. Australia, Canada, France, Japan, Korea, Sweden, and the United Kingdom all have universal health care systems. Individuals can often supplement the health insurance they receive from the government with private insurance for health services not covered by the public system, or to cover large costs. In France, for example, 84.5 percent of the population purchased supplementary insurance from private sources in 1998. Thus, even in countries with universal health care, it is often the case that not all individuals have the same insurance coverage.

Some countries have mixed systems in which a portion of the population has only public insurance, while others have only private insurance. In Germany and the Netherlands, a majority of the population has public health insurance. Participants in the public insurance program are not allowed to purchase private health insurance that covers the core services already covered under the public system. Thus, among this group, everyone has equal basic health care coverage. Only those who have incomes above a cutoff level have the option to purchase their own private health insurance or go without health insurance.

The health insurance system in the United States is one of the most diverse. About two-thirds of nonelderly individuals in the United States obtain health insurance through an employer. Generally, this insurance is paid for by both the employer and the employee and is heavily subsidized by the income tax system. Some individuals who are working but are not offered employer-subsidized health insurance pay the full cost of their private health insurance. There are also individuals who have public health insurance provided for them by the government. Medicaid is a public program that helps some individuals in the United States who have low incomes or who are disabled pay for their health care. Medicare is a program that covers health care costs for most of the elderly population. In 2000, 15.8 percent of the nonelderly population in the United States was without health insurance.

In most countries, elderly persons are covered under the same health insurance program or system as other members of the population. One exception is the United States, where the vast majority of older adults are eligible for the public Medicare program. Another important part of a health care system for the elderly is insurance for long-term care. Long-term care insurance helps pay for nursing home care if, for example, an individual becomes ill or disabled for an extended period of time. In countries such as Sweden and Denmark, coverage of long-term care is included in the country's general health care system. Germany, on the other hand, has a separate public long-term care insurance program that is mandatory for most of the population. Meanwhile, in the United States, private long-term care insurance is optional and limited. Only the poor are provided with long-term care coverage, via Medicaid. Similarly, France provides free long-term care to the poorest elderly adults, but there is no social long-term insurance under the French system.

Financing

Health care spending varies widely across countries. Table 1 shows health care spending for some industrialized countries. In the United States, almost 13 percent of the gross domestic product (GDP) is devoted to health care spending, the highest of any country in the world. At the other end of the spectrum, the Southeast Asian country of Myanmar spends less than 2 percent of its GDP on health care.

High levels of spending do not necessarily guarantee a high-quality health care system. In 2000, the World Health Organization ranked health care systems based on criteria that included measures of overall population health, inequalities within the system, and patient satisfaction. The United States was ranked thirty-seventh out of the 191 countries, despite spending a higher proportion of its GDP on health than any other country. The health status of a population is, of course, determined by many factors outside the health care system itself, such as population wealth and nutrition.

Spending on health care for the elderly makes up a substantial part of health care costs in individual countries (see Table 2). In 1995, the United States spent over $12,000, on average, for health expenditures for each individual age sixty-five and older, as compared to just over $3,000 on average for those younger than sixty-five. Total expenditures on the elderly are particularly high in countries such as Germany, Sweden, and Japan that have a large elderly population. Among the countries shown in table 2, Japan spends the largest proportion of health care expenditures on those sixty-five and older nearly 50 percent of total expenditures on health in Japan were for older adults in 1997. As the proportion of the elderly population increases in many countries, expenditures on health care for this population may rise even further.

There are numerous regulations that attempt to control the cost of health care. Costs can be controlled by limiting the treatments available to patients, controlling the cost of drugs, or by setting a limit on the amount of money that can be spent on certain health services. In most countries, there are incentives for individuals to purchase, or for doctors to prescribe, cheaper generic drugs rather than similar but more expensive medicines. In countries such as Belgium, France, and Italy, fixed budgets are used to limit total expenditures on pharmaceuticals. The prices of drugs are also regulated in some countries, such as Australia.

Countries vary not only in the amount they spend on health care, but also in how they raise funds. Health care can be funded publicly by the government or privately by individuals or firms. Public funding generally comes either from general tax revenues, such as income or sales taxes, or designated tax revenues such as payroll taxes, as in the U.S. Social Security system. Private spending is funded either through voluntary private health insurance or through out-of-pocket expenditures.

Public expenditures. Less than half of United States spending on health comes from public sources (see Table 3). In contrast, Sweden and the United Kingdom each raise funds for over 80 percent of total health care expenditures from public sources. Even within the category of public spending, there is variation in funding sources. Sweden and Australia fund their public spending almost entirely through general tax revenues, while France, the Netherlands, and Germany raise funds almost entirely through a designated tax, or social security, system. In most countries, one scheme dominates.

Under tax-financed health care systems, the government collects general tax revenues (e.g., through sales, income, or property taxes), and decides how much of that revenue to allocate to health care spending and how much to other publicly funded programs, such as education or military spending. In health care systems funded mainly through public insurance, participation in the insurance system is typically mandatory. In general, employers and employees are each required to contribute to a general fund, sometimes known as a sickness fund, which is used to pay (in full or in part) for participants' health care services, including doctor visits, pharmaceuticals, and long-term care for the elderly or disabled. In Australia, France, Germany, and the Netherlands, contribution levels are based on incomethose with higher salaries are required to contribute at a higher level. Retirees are also frequently required to contribute a percentage of their pension income to social insurance programs. The United States is an important exceptionthere is no mandatory social insurance contribution imposed on Medicare beneficiaries who are not working.

Private expenditures. Private health care is paid for by individuals, either through private insurance or as out-of-pocket expenditures (see Table 4). Even in countries where the entire population is covered by public insurance, some portion of health care costs are funded through out-of-pocket expenditures. These expenditures typically include copayments for pharmaceuticals or physician visits, or spending on treatments not covered by public or private insurance plans, like dental care. High out-of-pocket costs may prevent low-income individuals from obtaining the health care they require. Due to high copayments, out-of-pocket expenditures make up a particularly high percentage of total health expenditures in Korea. In the United Kingdom, certain groups, such as retirees, are exempt from the copayments required for the rest of the population.

The proportion of private spending on private insurance in the United States is quite high, since most of the population relies solely on private insurance to cover their medical costs. France also has a high proportion of private insurance spending, despite the fact that it relies mainly on public health care spending. This is because individuals covered under the French public system are generally responsible for substantial copayments. Many French people therefore opt to purchase supplementary private insurance policies to reduce out-of-pocket costs.

Medical care resources

The phrase medical care resources is used to describe the many parts of the health care system that work together to improve or maintain a person's health. One of the most important resources is the medical workforce. These are the doctors, nurses, pharmacists, paramedics, and other professionals that treat people who seek care. Hospitals and pharmaceuticals are also important medical care resources. Regulatory institutions around the world face a difficult challenge in coordinating the supply of these important resources and allocating them efficiently.

In many countries with universal health care, such as France and the United Kingdom, the coordination of resources is primarily the responsibility of a central authority or government agency. In other countries, including the United States, many allocation decisions are dictated by economic forces in the marketplace. Nevertheless, even in the United States, many laws are in place to regulate or control medical resources. The characteristics of a health care system and the regulations of the medical workforce, hospitals, and pharmaceuticals impact the medical resources available in a country.

Medical workforce. There are many different types of care in which physicians may specialize. They may also choose whether to live and practice in urban or rural settings, or in hospitals as compared to private clinics. Nurses and other health professionals can typically make similar decisions about their work specialization and location. A health system can provide incentives such as student loans or grants for professionals to enter particular specialties or communities. Alternatively, such choices may be regulated directly by governing institutions.

Rules governing where doctors can practice and which doctors a patient can see vary from country to country. In the United Kingdom and Germany, general practitioners are almost always precluded from practicing in hospitals and can only practice in outpatient settings. In these countries, specialists provide most of the care in hospitals. In Canada and France, meanwhile, general practitioners can practice in both inpatient and outpatient settings. Such regulations sometimes influence the prevalence of a particular specialty in the medical workforce. In France, for example, the fact that patients can choose either a general practitioner or a specialist as their doctor has created an environment of competition between the two professions. One result is that some doctors that are technically specialists work as general practitioners.

Health care systems also vary in how physicians are paid. Under a fee-for-service payment system, physicians are paid for each service they provide. A capitated payment system gives physicians a fixed level of payment for each patient that may be treated over a set period of time. Alternatively, physicians can receive a salary. Each of these payment systems is used around the world, often regardless of the universality of their coverage or the level of government involvement. Fee-for-service is the dominant form of physician payment in France, where patients pay up front and are later reimbursed by the public system. In the United Kingdom's National Health Service, physicians are paid on a capitation basis. Meanwhile, physicians in the Swedish health system are paid a salary. Since the United States is dominated by a private system of care, the market has evolved to compensate physicians in each of these three ways depending on their specialty and the environment in which they practice. The different payment schemes may provide different incentives for physicians, thus impacting the availability of certain health care workers in a society.

Hospitals. Hospitals are another medical resource whose regulation varies between health systems. In countries that have public hospitals, such as the United Kingdom, the government can use its central authority to establish hospital capacities and services in a manner that is responsive to the distribution of health needs in the population. In other countries, such as Canada and the United States, hospitals are largely private and guided by the economic forces of the marketplace, though in Canada their budgets are regionally controlled. France, Germany, and Japan, meanwhile, have a more equal share of public and private hospitals.

Pharmaceuticals. The types of drugs that are legal to use in a country are often regulated at the national level. In the United States, the Federal Drug Administration (FDA) determines which drugs are safe and can be made available to patients. It is important to note that insurance providers in the United States and in other countries will often only pay (or help pay) for a portion of legally available drugs. From a patient's point of view, some legal drugs may still be unavailable for use, as the patient may not be able to afford expensive drugs without the help of his or her insurance company. On the other hand, in countries with universal health care, such as Sweden, it is often the case that all legal drugs are made available to all patients.

Health systems also vary in how pharmaceuticals can be obtained. In most countries, physicians prescribe medications but cannot sell them. An interesting exception is Japan, where physicians prescribe and sell drugs to their patients, acting as both physician and pharmacist. By affecting the availability of medical resources, pharmaceutical regulations such as these also affect a patient's use of health care.

The patient's experience

Health care systems exist to serve the patient. Thus, an understanding of the patient's experience is crucial when attempting to compare and evaluate different systems. Rates of health care coverage, degrees of patient choice, amounts of hospital utilization, and types of long-term care vary from country to country, providing patients with vastly different experiences across health care systems.

Coverage. Different types of health care coverage can drastically affect the amount of health care individuals receive. Virtually the entire populations of Australia, Canada, France, Japan, Korea, Sweden, and the United Kingdom have public health care coverage. In contrast, only 45 percent of the population in the United States and 74.5 percent of the population in the Netherlands are covered under public systems. In countries in which large proportions of the population have no coverage, the poor and other at-risk groups may not receive adequate health care. However, it is important to note that even in systems offering universal health coverage, not all patients will necessarily have equal access to care. Patients' experiences may, in fact, vary with factors like income or geographic location. For example, while the Swedish system used to be relatively equitable, rising co-payments have recently increased the gap in services between rich and poor. Because medical resources in France are concentrated in urban areas, residents in rural locations may not have access to the same medical services available in cities.

Health care systems also differ in their coverage of pharmaceutical goods. Elderly individuals are by far the largest consumers of pharmaceuticals, and are thus most affected when drugs are not covered by their health insurance. In Australia, Japan, Korea, Sweden, and the United Kingdom, all people are covered for approved pharmaceuticals. The French public insurance system covers pharmaceuticals at varying rates, with higher rates of reimbursement for drugs considered more essential to patients' health. In Canada, less than half the population receives assistance for pharmaceuticals through the national public system. Most Canadian provinces and territories, however, have developed supplementary programs to help provide pharmaceuticals to the elderly population. In the United States, only 12 percent of the population has public pharmaceutical coverage.

Patient choice. Systems vary in the degree of choice they allow patients. Individuals may have more power to decide how, where, and from whom they receive medical care in some systems than in others. In France, Japan, and Korea, patients are not restricted to any particular set of doctors. Publicly insured individuals in Germany, Sweden, and the Netherlands can choose their doctor from among those affiliated with their sickness fund, or within a specified geographic area. Once patients have chosen a doctor, they can generally change their doctor at will, except in Germany, where they have to complete a three-month period with their current doctor before moving to a new one. In the United States, patients in the managed-care system are typically restricted to a list of medical providers, and some can only change their doctor during specified enrollment periods.

Individuals in the United States managed-care system usually must visit their primary care doctor before seeking care with a specialist. In this way, the primary care doctor serves as a gatekeeper, having complete discretion over patient referrals to specialists. Similarly, in the Netherlands, publicly insured patients can only visit specialists after receiving vouchers from their primary doctor.

In practice, patients' ability to choose a doctor may depend on their level and type of insurance coverage, their income, or the location of their residence. For example, though patients in Canada may typically choose their primary care doctor, the availability of such doctors tends to vary by region. In France, lower-income people are more likely to receive care from general practitioners, while higher-income people tend to receive care from specialists.

Inpatient care. The number and length of hospital stays can also vary greatly between countries. France has the highest hospital admission rate of the countries considered here. Patients in France are frequently checked into the hospital for short stays to undergo procedures that would take place in an outpatient setting in most other systems. Hospital stays are almost completely reimbursed under the French system.

Meanwhile, in Japan and the Netherlands, the average length of stay in hospitals is highover thirty days in each country. This is mainly due to the incorporation of long-term care patients in their measure of hospital stays. In comparison, individuals in hospitals in Sweden spend only 6.6 days as inpatients. In Canada, average stays are 8.2 days; while in the United States they are 71 days.

Elderly patients. An elderly patient's experience may differ from that of a younger individual in the same health care system. Even in countries that offer universal coverage, certain groups of patients may receive less care. Elderly persons may be especially affected by this health care rationing. In the United Kingdom, for example, a survey found that the oldest segment of the population rarely received certain health services, including heart transplants, bypass operations, and admission to intensive therapy units.

Another important factor in an elderly patient's experience is long-term care. In the past, older individuals have traditionally received long-term care in hospitals or institutional settings. However, some countries have come to rely increasingly on home care for long-term patients. Table 5 details the share of elderly persons in institutions versus those receiving formal home care. While France, Japan, and the United Kingdom have relatively equal percentages of the elderly population in institutions and receiving formal home care, a greater proportion of the elderly in Australia, Canada, Germany, the Netherlands, Sweden, and the United States receive long-term care in the home. Some countries have passed laws explicitly encouraging this move towards home health care. For example, some localities in Sweden pay family members to provide care in the home. The Netherlands and Germany attempt to provide more flexibility for older adults by offering them an option to receive a lump-sum payment so that they can seek treatment wherever they prefer.

The future of health care

One of the greatest challenges facing health care systems today is the aging of the world population. As noted in the financing section, spending on care for elderly persons already makes up a substantial portion of health care costs. These costs will to continue to rise as the size of the elderly population grows, with people living longer than they ever have before. Most countries are experiencing aging populations, but the most dramatic example of the aging phenomenon is Japan. Life expectancy at birth in Japan rose from seventy to eighty-four years for women and from sixty-five to seventy-seven years for men between 1960 and 1999. In 1960, 5.7 percent of the Japanese population was age sixty-five and older, while 16.7 percent of the population was age sixty-five and older in 1999. Projections indicate that more than 20 percent of Japan's population will be age sixty-five or older in 2020. Meanwhile, in the United States, the large group of baby boomers will result in a growing proportion of elderly persons beginning in about 2010.

Countries continue to explore new ways of financing and managing their health care systems. In Sweden, for example, efforts have been made to privatize the hospitals. Many of these reforms are aimed at controlling costs, either due to concerns about population aging or because of overall economic and structural shifts in governments. France has instituted a number of reforms intended to reduce soaring health care costs. Most of these have involved increasing patients' contributions for medical services, particularly for pharmaceuticals; however, the wide prevalence of supplementary private insurance schemes to cover these increased payments has limited success of these reforms. In another attempt to control costs, the Netherlands attempted in the early 1990s to implement a system incorporating greater private insurer control. However, since this plan met great opposition from both physicians and the public, these reforms were halted, and the government has instead focused on providing a more efficient public health care system.

Other types of reforms are aimed at improving the quality and availability of health care. In the mid-1990s, the German government passed a law intended to improve equity of care by allowing nearly all insured individuals a choice of sickness funds. Prior to the law's enactment, workers had access to sickness funds of differing quality. In Canada, meanwhile, a recent study showed that a significant number of family physicians are limiting the number of new patients they will accept, signaling an issue in access to care in Canada that will need to be addressed. The one consistent trait across these diverse health systems is that they are all undergoing reform. It remains to be seen how all these changes will effect the provision of health care throughout the world.

Elise L. Gould, et al.

See also Employee Retirement Income Security Act; Long-Term Care Financing; Medicaid; Medicare.

BIBLIOGRAPHY

Age Concern England. "New Survey of GPs Confirms Ageism in the NHS." World Wide Web document, 2000. www.ACE.org.uk.

Bocognano, A.; Couffinhal, A.; Dumesnil, S.; and Grignon, M. "Which Coverage for Whom? Equity of Access to Health Insurance in France." World Wide Web document, 2000. www.credes.fr/En_ligne/

College of Family Physicians of Canada. "Initial Data Release of the 2001 National Family Physician Workforce Survey." World Wide Web document, 2001. www.cfpc.ca/research/

Diderichsen, F. "Sweden." Journal of Health Politics, Policy and Law 25, no. 5 (2000): 931935.

Fronstin, P. "Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 2001 Population Survey." EBRI Issue Brief No. 240. Washington, D.C.: Employee Benefit Research Institute.

Jacobzone, S. "Ageing and Care for Frail Elderly Persons: An Overview of International Perspectives." Paris, France: Organisation for Economic Cooperation and Development, 1999.

Jacobzone, S. "Pharmaceutical Policies in OECD Countries: Reconciling Social and Industrial Goals," Labour Market and Social Policy Occasional Papers No. 40. Paris, France: Organization for Economic Cooperation and Development, 2000.

Organisation for Economic Cooperation and Development. "OECD Health Data 2001: A Comparative Analysis of 30 Countries." Paris, France: Organisation for Economic Cooperation and Development, 2001.

World Health Organization. "Report on Health, Statistical Annex, Table 10." Geneva: WHO, 2000.

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