February 21, 2020

How 4 nations provide universal health care—in very different ways

Daily Briefing

    Vox recently published a series, funded by the Commonwealth Fund, that profiles how countries around the world have reformed their health systems to provide universal health care.

    Infographic: A snapshot of health systems around the world

    Here's what Vox reporters learned about how care is provided in Australiathe Netherlands | Taiwan | United Kingdom and the tradeoffs that come with their health systems.

    Australia's public-private model

    Australia's health care system gives everyone the option to choose whether they want to seek care from public providers under Australia's national health care program, called Medicare, or seek private care, which they can pay for out-of-pocket or via the country's private insurance system.

    How is the system funded: Australia's Medicare program is funded through a 2% levy on personal taxable income as well as other revenue sources. Workers with incomes below about $15,000 are exempt from the tax levy. States, territories, and the Australian government primarily fund the country's public hospitals, which were responsible for 2.8 million cases of ED care out of 6.7 million total episodes of care in 2017-2018.

    In contrast, the private insurance system relies on residents paying premiums, while the government provides rebates for low-income residents.

    Coverage costs: Australia's Medicare program typically covers medical care at public hospitals and other health care providers with no out-of-pocket costs. However, patients can face copayments for outpatient prescription drugs, with caps varying based on income. Prescription drug coverage is determined by an independent advisory board of academics, doctors, and patient advocates, which makes recommendations to the government based on the drugs' cost-effectiveness.

    Australia's Medicare program typically does not cover care at private hospitals, nor does it cover dental and vision care. Patients can pay for private insurance to provide supplementary benefits or to receive care entirely at private facilities.

    About half of Australia's population has some form of private insurance. Individuals with annual incomes above $62,000, in U.S. dollars, and families with annual incomes over $124,000, in U.S. dollars, are incentivized to purchase private insurance over Medicare via a number of penalties, including a tax.

    Quality of care: The low cost of Australia's Medicare program comes with tradeoffs, Vox reports. For instance, patients who undergo elective surgeries at public hospitals can experience long wait times, and patients who go to public EDs and ICUs might face crowded facilities, particularly amid public health crises, such as a bad flu season, Vox reports.

    There also are clear differences in the patient experience of public and private care in Australia, Scott reports.  

    For instance, Eloise Shepherd delivered all three of her children at public hospitals—and "[i]t wasn't glamorous," Scott writes. Shepherd said when she delivered her second baby, she remembers sharing a hospital room with three women—with only curtains between their beds. But she said the care was adequate and low-cost. Shepherd said she paid copays for prenatal appointments, but had no out-of-pocket cost for her delivery and epidurals.

    On the other hand, Madeleine Campbell, Shepherd's sister, decided she would deliver her first child at a private hospital, which allowed her to choose her own obstetrician, who oversaw her entire care plan from the first prenatal appointment to delivery. After Campbell delivered her baby at the private hospital, she was moved from an inpatient suite to a hotel. But private care comes at a higher cost: In total, Campbell's maternal care cost her 5,000 Australian dollars.

    Providers acknowledge differences, too. John Cunningham, who practices at the private hospital Epworth Richmond Hospital and the public hospital Royal Melbourne Hospital, said he spends less time with his patients at the public facility. He said he might see a patient at the public facility for five minutes before their surgery, which means he has less time to prepare his patients for procedures.

    Does the system work? The country's health care model is putting private insurers at risk of a "death spiral," as more Australian residents use the country's public health coverage, leaving an increasingly sick and expensive pool to be covered by private insurance, Scott reports. In response, the government has increased the rebates it provides for patients who choose private coverage.

    Australia's health care system also struggles with access to care in rural areas and among the country's indigenous population. But overall, the health care system still performs well in global comparisons, Vox reports. On the Healthcare Access and Quality (HAQ) Index, Australia scored a 95.9, which is higher than the U.S. score of 88. Australia also spends about 50% less per capita annually on health care than the United States.

    The Netherlands' managed competition model

    The health care system in the Netherlands relies on a managed competition, which uses a combination of private markets and government regulations to control health care costs and maintain care quality, Scott reports. The system involves private insurers, independently employed doctors, and privately owned nonprofit hospitals, which each have to meet strict regulations set forth by the government to ensure care is accessible and low cost.

    How is the system funded: The Netherlands' all-private market requires everyone to purchase private health insurance. Under the country's system, residents who are uninsured face fines for up to six months, after which they are automatically enrolled in a health plan and pay premiums about 20% higher than they would have paid if they signed up for coverage.

    The government also collects contributions from employers to fund the cost of care for children and the country's private insurance system. Revenue generated from the health care system is spread among insurers based on the health status of their patients. Overall, public financing covers nearly 75% of the health system's costs. Under the health system, most insurers and hospitals operate as nonprofits, Scott reports.

    The system uses a global budget, under which insurers establish caps on payments for medical services, to keep costs down. The government also can implement cuts if spending exceeds the predetermined limit.

    Coverage costs: Patients in the Netherlands shoulder higher costs than in other health care systems with universal coverage—and doctors note their patients cannot always the cover their out-of-pocket costs. However, only 1% of the country's population has defaulted on their premiums and have had their wages garnished to cover the cost of insurance, Scott reports.

    The system is designed to encourage patients to use health care services appropriately, Vox reports. Patients do not have to pay out of pocket for primary care visits, but they do pay a fee, which goes toward their deductible, for a hospital visit. The system generally caps annual deductibles at $429, but residents have the option to pay higher deductibles in exchange for lower premiums. On average, a Dutch citizen pays $1,615, in U.S. dollars, annually for health insurance. The government provides financial assistance to individuals with lower incomes.

    Quality of care: To keep non-emergent patients out of the ED, the Netherlands relies on general practitioner co-ops, in which doctors share the duty of providing round-the-clock care, seven days a week. The concept was devised by general practitioners themselves. As co-op members, providers could be tasked with conducting home visits, staffing in-person clinics, or taking queries from patients on a hotline number.

    According to Scott, Dutch patients were wary of the system at first because it meant receiving care from someone who may be less familiar with their medical history. But after a dedicated education program, patients have seen benefits: According to Scott, only about 25% of Netherlands patients say it is somewhat or very difficult to get after-hours care without going to the ED, compared with 51% of Americans.  

    Does the system work? The country's health system has its challenges, Vox reports. Doctors, particularly primary care doctors who serve as the backbone of the system, have said they feel strained. In 2001, nearly every physician in the Netherlands went on strike because they felt they did not have enough support to provide after-hour care. Some physicians complain about being underpaid, too.  

    Still, the Netherlands ranks third globally on the HAQ Index. In the Netherlands, more than 99% of residents have insurance.

    Taiwan's single-payer health care system

    In the 1990s, Taiwan transitioned to a government-run, single-payer health care system. Under the Taiwanese health care system, Taiwanese residents carry a national health insurance card, which allows providers to access a patient's medical records on a computer using a chip reader.

    How is the system funded: The Taiwanese health care system is funded through income taxes; payroll-based premiums, which include contributions from employers and employees; and tobacco and lottery levies. Premiums have been increased twice in the past 18 years—including a 14% increase in 2010—and premiums are likely to increase again, Scott reports.

    About 1% of the Taiwanese health care system's funds are spent on administration, according to a 2015 review. In comparison, private insurers in the United States spend an estimated 12% on administration, and U.S. hospitals spend about 25% on administration. Experts have credited Taiwan's advanced IT infrastructure for keeping administrative costs low.  

    To control costs, Taiwan in the early 2000s adopted a global budget to pay for the country's health care. The global budget requires government officials and private providers to negotiate payment rates for services and establish annual caps on total payments to hospitals and physicians.

    Coverage costs: Taiwanese residents are insured under the National Health Insurance Administration (NHIA). Their health care benefits include hospital care, primary care, prescription drugs, and traditional Chinese medicine.

    But not everything is covered, including costly treatments for rare diseases. Patients have to make copays when they see a physician, visit the ED, or fill a prescription, but the cost is typically less than about $12, and varies based on patient income.

    Quality of care: Though a majority of Taiwanese citizens initially disapproved of the transition to single-payer system, today the system has the approval of eight and 10 citizens. Still, it may spread doctors too thin, Vox reports: In Taiwan, the average number of physician visits per year is currently 12.1, which is nearly twice the number of visits in other developed economies. In addition, there are only about 1.7 physicians for every 1,000 patients—below the average of 3.3 in other developed countries. The shortages are particularly acute in Taiwan's less urban regions.

    As a result, Taiwanese physicians on average work about 10 more hours per week than U.S. physicians. Physician compensation can also be a problem, Scott reports. One physician said the demanding nature of his pediatric practice led him to practice cosmetic medicine—which is more lucrative and paid privately by patients—on the side, Vox reports.

    And patients have complaints of their own. For instance, patients note they experience delays in accessing new medical treatments under the country's health system. Sometimes, Taiwanese patients wait five years longer than U.S. patients to access the latest treatments.

    Does the system work? Taiwan's score on the HAQ Index shows the marked improvement in health outcomes among Taiwanese residents since the single-payer model's implementation. Before Taiwan implemented the single-payer model, the country had a rating of 60, while by 2016, Taiwan's rating had risen to 85.

    But while Taiwanese residents are living longer, the system's impact on physicians and growing costs presents challenges and raises questions about the system's financial substantiality, Scott reports.

    United Kingdom's government-run system

    The U.K. health system provides health care through single-payer model that is both funded and run by the federal government. The result, as Vox's Ezra Klein reports, is a system in which "rationing isn't a dirty word."

    How is the system funded: The U.K.'s system is funded through taxes and administered through the National Health Service (NHS), which was established in 1948.

    To keep costs low and determine how coverage and prices in the country are set, the U.K. created the National Institute for Care Excellence (NICE) to determine the cost-effectiveness of treatments NHS considers covering. NICE makes its coverage decisions using a metric known as the QALY, which is short for quality-adjusted life years.

    Generally, treatments with a QALY below $26,000 per year will receive NICE's approval for coverage. The decision is less certain for treatments where a QALY is between $26,000 and $40,000, and drugs with a QALY above $40,000 are unlikely to get approval, according to Klein.

    While the system is often praised for its transparency, it does face backlash for rejecting coverage of costly drugs. NICE has faced particular criticism over its approval process for new costly cancer drugs, resulting in the establishment of a public fund to help cover the cost of these drugs.

    Coverage costs: U.K. residents covered by NHS do not pay premiums and instead contribute to the health system via taxes. Patients can purchase supplemental private insurance, but they rarely do so: Only about 10% of residents purchase private coverage, Klein reports.

    Quality of care: When compared with Americans, U.K. residents are less likely to skip necessary care because of costs—with 33% of U.S. residents reporting they've done so, while only 7% of U.K. residents said they did the same. But that's not say U.K. residents don't face hardships getting a doctor's appointment. U.K. residents are three times as likely as Americans to say that had to wait over three months for a specialist appointment.

    In addition, there's controversy in the U.K. regarding NICE's handling of certain cancer drugs. According to Klein, "backlash to NICE's rejections [of the cancer drugs] and slow-moving process" resulted in the creation of a separate public fund to cover cancer drugs that NICE hasn't approved or evaluated.

    Does the system work? The U.K. scores 90.5 on HAQ index, higher than the United States but lower than Australia. While Klein notes that the U.K. system is "underfunded," research has shown that residents largely support the system. "[NICE] has made the UK system uniquely centralized, transparent, and equitable," Klein writes. "But it is built on a faith in government, and a political and social solidarity, that is hard to imagine in the US."(Scott, Vox, 1/15; Scott, Vox, 1/17; Scott, Vox, 1/13; Scott, Vox, 1/29; Klein, Vox, 1/28; The Lancet, accessed 2/13).

     

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.

    X
    Cookies help us improve your website experience. By using our website, you agree to our use of cookies.