Friday, March 12, 2010

Healthcare Systems Around the World, Part 4 of The Itch For Healthcare Reform

     In part one The Itch for Healthcare Reform, the need for reform in the United States was explained; part two addressed those who are opposed to healthcare reform; part three provided statistical evidence that it is possible to provide high quality, low cost universal healthcare. Now, part four will give examples of healthcare systems around the world that do, in varying ways, what the US seems to have so much difficulty accomplishing. Below, the healthcare systems of Canada, the United Kingdom, Germany, and Japan are briefly explained, but with enough detail to see how each of them are similar and how each of them are different. Since part three provided a lot of statistical information, I will not provide much here; instead, I want to provide a general idea about the workings of the systems.
     Once again, I should give credit to investigative journalist TR Reid, whose book The Healing of America, and PBS Frontline documentary Sick Around the World, have been paramount to my enlightenment on healthcare around the world. If anyone wants just one source on the healthcare issue, this book is it. 
     In Canada, there is single-payer government healthcare run at a provincial level but mandated by the federal government. Although the care is funded by the government, most doctors and hospitals remain private, and healthcare related information is strictly between the patient and doctor. The single-payer system has no deductible for patients and low or no co-pays. Some provinces require a small monthly premium, which can be reduced or eliminated based on ability to pay. Specialty care is directed by a patient's general physician, and pharmacy costs are negotiated by the Canadian government to keep costs down.
     While there are complaints about the wait times in Canada for special procedures, much of that is exaggerated. Most Canadians are happy with their healthcare system, and a survey in 2009 indicated that 86.2% supported the public system, and 82% preferred the Canadian system to the United States. In fact, in a 2004 contest held by the CBC, Canadians voted Tommy Douglas, the founder of Canadian Medicare, the Greatest Canadian of All Time!  And, while those in the US claim Canadians prefer to come to the United States for medical care, surveys indicate only 0.5% of Canadians received any sort of health care in the US, and of those people, only 25% sought out US care; most others were traveling when they were sick or injured. 
     In Canada, life expectancy is 80.7 years (US: 78.2), infant mortality per 1000 births is 4.8 (US 6.3), $3895 USD is spent per person, per year, on health-care (US: $7290 USD), and the government spends 16.7% GDP on health care (US: 18.5).

     In England all care is paid for by the government through tax revenue. The program is run by the National Health Service, and is free at the point of service. There is a private insurance market that provides care for those who choose not to participate in the NHS provided care, but it is used by a small portion of the population, and usually to cover services not provided by the NHS. There has been a trend to privatize some aspects of medical care, making more of the providers and facilities private, but the patient's care would still be paid for by the government through the NHS. The British Medical Association opposes these efforts.  A newly created Constitution for Health Care explains the role the NHS will play in health care and outlines what patients rights and responsibilities are. Some items listed include that healthcare will be administered free of charge to all, regardless of age, sex, religious or personal beliefs, care will be continuously monitored for effectiveness and improvements made where necessary. The document is long, and has a lot of other rights and obligations, but the idea is that all people in the United Kingdom, will have access to quality healthcare, free, regardless of ability to pay.
     There are some minor expenses in the British system: there is a co-pay for prescriptions, about $10.  However, certain groups, like children, anyone over 65 years old, pregnant women, and the chronically ill, don't have to pay. In the early 1990's, there was a plan to create a small co-pay for office visits, supported by the BMA. The plan met with such public opposition that it was dismissed!
     Most General Practitioners are independent, but their only payer is the NHS. They are paid a certain amount per patient, regardless of what the patient needs, so it is in the doctor's best financial interest to keep his or her patients healthy. Patients can choose their GP, but the GP acts as a gatekeeper for other services and specialists. If your GP doesn't think you need a specialist, you can't get an appointment. A patient may visit a different GP anytime for a second opinion, but generally treatment courses are very similar. Waiting times for services used to be an issue, but Prime Ministers Tony Blair and Gordon Brown put resources in the the NHS to reduce these times, and they are now about the same as waits in the United States. One example, provided by Mr. Reid in The Healing of America, was an asymptomatic hernia repair, which might have a three month wait. He was clear to add that if it was acute, it would be a much shorter wait. Mr. Reid wrote that all cancer patients are seen typically within two weeks, and acute cardiac cases are hospitalized immediately.
     There are some downsides to the NHS, such as the GP as gatekeeper and longer waits for procedures determined to be elective. But the results of the system speak for themselves. According to the WHO, The UK is 18th worldwide (US: 37th). The CIA World Fact Book projects 2009 overall life expectancy in the UK is 79.1 (US: 78.1). Infant mortality per 1000 births in the UK is 4.8 (US: 6.3).

     Germany has the oldest modern day Universal Healthcare system in the world. It was started in 1883 when Chancellor Otto von Bismark proposed and passed the Sickness Insurance Law.  This law provided a health insurance plan that was paid for jointly by employers and employees. At first it was only for a certain group of workers, but it was eventually extended to all Germans. Today, the law requires that almost everyone have health insurance, funded jointly by employers and employees as a percentage of income. The only exceptions are for the very rich, who were originally excluded from the mandate because it was thought that they had money to pay for their own health-care. Today, however, most of the very wealthy who choose not to participate in the mandated insurance program, about 7% of the population, buy their own coverage without the aid of the employer. In Germany, even illegal immigrants are able to participate in the health insurance programs. 
     Despite the government mandate for coverage, both the insurance providers and the care providers remain private and competitive. There are about two hundred insurance companies that people can choose from; all are non-profit companies and all have the same fixed premiums, a percentage of income, that is split between the employer and the worker. The competition between the insurance companies is not about lower rates, since the rates are set, or for more coverage, because the prices are negotiated regionally between the insurance companies and the doctor's unions. Instead, they offer faster pay times or other fringe benefits to entice members. Hospitals or other care facilities are mostly run by either a charity or a city or regional government, but there has been an insurgence of privately run hospitals. 
     Healthcare in Germany is one of the more expensive, accounting for about 11% of GDP (still much lower than the US). There have been measures taken to reduce these costs, including digitizing all patient records and, starting in 2006, required a small co-pay for office visits (very small, it may not exceed about $13.00 per quarter). Doctors unions are getting concerned because there is also talk about putting a max on how much is spent on health-care, and after that, no more. 
      Since the insurance industry is private, and the doctors are private, and both work with little government interference, one might conclude that the German system and the American system are similar, and they are. There are three main differences, as pointed out by Mr. Reid, and they are that the insurance industry, by law, is non-profit; that insurance follows the insured and his or her family from job to job, and if the insured becomes unemployed, the government pays the entire premium, no matter how long; and a person may choose any insurance provider for the same cost, and change at almost any time. 
(Reid, Chapter 5)
     Japan has a system similar to Germany's, but there are some significant differences. The doctors and hospitals are private, and an insured shares the cost of the premium with his or her employer. When service is provided, the insurance company pays 70% of the bills, and the patient is responsible for 30%, with a maximum out of pocket expense for a patient of $650 per month. There is a mandate for insurance, and an insurance company may not deny coverage to anyone. 
     There are about 3500 insurance companies in Japan, and all are non-profit. Despite the high number of companies, they fall into only three basic categories, each for a different type of person and with different government subsidies. The first category includes large company plans that cover employees. These plans require the company pay a portion of the premium and the employee pay the rest; they get no government assistance. Some of the big companies that use these plans have their own doctors and hospitals in an attempt to reduce costs. The next group includes smaller companies. It works similarly to the previous group, with the employer and employee splitting the premium, but gets a 14% subsidy from the government. The third group includes the self-employed and retirees. For those in this group, the government subsidizes the employers portion of the premium, and the insured pays his or her portion of the premium.
     In this system, employees don't get a choice in their insurance provider, it is whoever the company chooses. And although the insurance companies, doctors, clinics, and most hospitals are private, there are very strict price controls set by the government for every procedure, and the prices are dirt cheap by American standards, so cheap, that many Americans would consider not having insurance at all. The biggest problem in this system is that, because of the low prices set by the government, many clinics and hospitals are having difficulty staying open.
(Reid, Chapter 6)

     There are other countries with unique healthcare systems that perform well, but these basic models are the most common. They include single-payer systems run by provincial governments or national governments, multi-payer systems with private insurers and private care providers that regionally negotiate prices to private care providers, and multi-payer systems with private insurers and providers that have prices controlled by the government. There are many other countries with variations of the systems described here that also work well.
     There are some similarities, both good and bad, among all these systems and the ones not mentioned. One, which American doctors will be quick to criticize, is that doctors don't make nearly as much money in the countries highlighted. Generally, they make about one third to half of what comparable American doctors make. They are never poor, but earn about what a mid-level manager would make at an American company, between $120,000 and $150,000 per year. There are some benefits for the doctors, though. There is significantly less overhead because the paperwork and payments are streamlined, often electronically, and payments are usually made within a week, and claims are never declined. Doctors in every country highlighted also get free or extremely low cost medical school; none graduate in debt. Finally, in each of these countries, medical malpractice insurance is a minimal expense, often between $1200 and $1400 per year, which is what some doctors in the US pay in one week. 
     Another similarity between these systems is price controls. Whether they are set by the government, like the UK and Japan, or negotiated regionally so there is a lot of bargaining power, they are strict and the same for everyone, regardless of their insurance provider. 
     The final similarity is the mandate for insurance. In Canada and the UK, there is no mandate because there is a single-payer system that covers everyone, but in Germany, a person must participate in the insurance program or be wealthy enough to be able to pay for care out of pocket. In Japan, everyone must participate. That way, even healthy people pay into the system to help cover costs, and the system will be there for them when they need it. 

     A critic of healthcare reform in the US will easily and quickly be able to find examples of health-care gone wrong in any system they examine, including the four presented here. But overall, the results speak for themselves. American economist Tsung-Mei Cheng, for Mr. Reid's book, discussed what he called the Universal Laws of Health-Care Systems, which states: 1. No matter how good the health care in a particular country, people will complain about it; 2. No matter how much money is spent on health care, the doctors and hospitals will argue that it is not enough; and 3. The last reform always failed.  (Reid p27)  These laws were meant jokingly, but are likely very accurate, and should be remembered when critics of reform are spouting off about the horrors of any changes. 

     The Itch for Healthcare Reform will continue with part five, when I talk about what has to happen in America before real reform can take place.


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I appreciate this perspective on medical insurance reform because it's based on facts, not the ususal business and political propaganda. Keep up the good work. Bob, Memphis TN

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