The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World

Cato Institute ^ | March 18, 2008 | Michael D. Tanner

[Conservative Coulter Fan]

Critics of the U.S. health care system frequently point to other countries as models for reform. They point out that many countries spend far less on health care than the United States yet seem to enjoy better health outcomes. The United States should follow the lead of those countries, the critics say, and adopt a government- run, national health care system.

However, a closer look shows that nearly all health care systems worldwide are wrestling with problems of rising costs and lack of access to care. There is no single international model for national health care, of course. Countries vary dramatically in the degree of central control, regulation, and cost sharing they impose, and in the role of private insurance. Still, overall trends from national health care systems around the world suggest the following:

• Health insurance does not mean universal access to health care. In practice, many countries promise universal coverage but ration care or have long waiting lists for treatment.

• Rising health care costs are not a uniquely American phenomenon. Although other countries spend considerably less than the United States on health care, both as a percentage of GDP and per capita, costs are rising almost everywhere, leading to budget deficits, tax increases, and benefit reductions.

• In countries weighted heavily toward government control, people are most likely to face waiting lists, rationing, restrictions on physician choice, and other obstacles to care.

• Countries with more effective national health care systems are successful to the degree that they incorporate market mechanisms such as competition, cost sharing, market prices, and consumer choice, and eschew centralized government control.

Although no country with a national health care system is contemplating abandoning universal coverage, the broad and growing trend is to move away from centralized government control and to introduce more market-oriented features.

Excerpts

"There are several reasons to be skeptical of these rankings. First, many choose areas of comparison based on the results they wish to achieve, or according to the values of the comparer. For example, SiCKO cites a 2000 World Health Organization study that ranks the U.S. health care system 37th in the world, “slightly better than Slovenia.

This study bases its conclusions on such highly subjective measures as “fairness” and criteria that are not strictly related to a country’s health care system, such as “tobacco control.” For example, the WHO report penalizes the United States for not having a sufficiently progressive tax system, not providing all citizens with health insurance, and having a general paucity of social welfare programs. Indeed, much of the poor performance of the United States is due to its ranking of 54th in the category of fairness. The United States is actually penalized for adopting Health Savings Accounts and because, according to the WHO, patients pay too much out of pocket.19 Such judgments clearly reflect a particular political point of view, rather than a neutral measure of health care quality. Notably, the WHO report ranks the United States number one in the world in responsiveness to patients’ needs in choice of provider, dignity, autonomy, timely care, and confidentiality.

Difficulties even arise when using more neutral categories of comparison. Nearly all cross-country rankings use life expectancy as one measure. In reality though, life expectancy is a poor measure of a health care system. Life expectancies are affected by exogenous factors such as violent crime, poverty, obesity, tobacco and drug use, and other issues unrelated to health care. As the Organisation for Economic Co-operation and Development explains, “It is difficult to estimate the relative contribution of the numerous nonmedical and medical factors that might affect variations in life expectancy across countries and over time.”21 Consider the nearly threeyear disparity in life expectancy between Utah (78.7 years) and Nevada (75.9 years), despite the fact that the two states have essentially the same health care systems.22 In fact, a study by Robert Ohsfeldt and John Schneider for the American Enterprise Institute found that those exogenous factors are so distorting that if you correct for homicides and accidents, the United States rises to the top of the list for life expectancy.

Similarly, infant mortality, a common measure in cross-country comparisons, is highly problematic. In the United States, very low birth-weight infants have a much greater chance of being brought to term with the latest medical technologies. Some of those low birthweight babies die soon after birth, which boosts our infant mortality rate, but in many other Western countries, those high-risk, low birth-weight infants are not included when infant mortality is calculated.24 In addition, many countries use abortion to eliminate problem pregnancies. For example, Michael Moore cites low infant mortality rates in Cuba, yet that country has one of the world’s highest abortion rates, meaning that many babies with health problems that could lead to early deaths are never brought to term.25

When you compare the outcomes for specific diseases, the United States clearly outperforms the rest of the world. Whether the disease is cancer, pneumonia, heart disease, or AIDS, the chances of a patient surviving are far higher in the United States than in other countries. For example, according to a study published in the British medical journal The Lancet, the United States is at the top of the charts when it comes to surviving cancer. Among men, roughly 62.9 percent of those diagnosed with cancer survive for at least five years. The news is even better for women: the five year-survival rate is 66.3 percent, or two-thirds. The countries with the next best results are Iceland for men (61.8 percent) and Sweden for women (60.3 percent). Most countries with national health care fare far worse. For example, in Italy, 59.7 percent of men and 49.8 percent of women survive five years. In Spain, just 59 percent of men and 49.5 percent of women do. And in Great Britain, a dismal 44.8 percent of men and only a slightly better 52.7 percent of women live for five years after diagnosis.26

Notably, when former Italian prime minister Silvio Berlusconi needed heart surgery last year, he didn’t go to a French, Canadian, Cuban, or even Italian hospital—he went to the Cleveland Clinic in Ohio.27 Likewise, Canadian MP Belinda Stronach had surgery for her breast cancer at a California hospital.28 Berlusconi and Stronach were following in the footsteps of tens of thousands of patients from around the world who come to the United States for treatment every year.29 One U.S. hospital alone, the Mayo Clinic, treats roughly 7,200 foreigners every year. Johns Hopkins University Medical Center treats more than 6,000, and the Cleveland Clinic more than 5,000. One out of every three Canadian physicians sends a patient to the Unites States for treatment each year,30 and those patients along with the Canadian government spend more than $1 billion annually on health care in this country.31

Moreover, the United States drives much of the innovation and research on health care worldwide. Eighteen of the last 25 winners of the Nobel Prize in Medicine are either U.S. citizens or individuals working here.32 U.S. companies have developed half of all new major medicines introduced worldwide over the past 20 years.33 In fact, Americans played a key role in 80 percent of the most important medical advances of the past 30 years.34 As shown in Figure 2, advanced medical technology is far more available in the United States than in nearly any other country.35

The same is true for prescription drugs. For example, 44 percent of Americans who could benefit from statins, lipid-lowering medication that reduces cholesterol and protects against heart disease, take the drug. That number seems low until compared with the 26 percent of Germans, 23 percent of Britons, and 17 percent of Italians who could both benefit from the drug and receive it.36 Similarly, 60 percent of Americans taking anti-psychotic medication for the treatment of schizophrenia or other mental illnesses are taking the most recent generation of drugs, which have fewer side effects. But just 20 percent of Spanish patients and 10 percent of Germans receive the most recent drugs.37

Of course, it is a matter of hot debate whether other countries have too little medical technology or the Unites States has too much.38 Some countries, such as Japan, have similar access to technology. Regardless, there is no dispute that more health care technology is invented and produced in the United States than anywhere else.39 Even when the original research is done in other countries, the work necessary to convert the idea into viable commercial products is most often done in the United States.40

By the same token, not only do thousands of foreign-born doctors come to the United States to practice medicine, but foreign pharmaceutical companies fleeing taxes, regulation, and price controls are increasingly relocating to the United States.41 In many ways, the rest of the world piggybacks on the U.S. system."---Pages 3-5

France

"France provides a basic level of universal health insurance through a series of mandatory, largely occupation-based, health insurance funds. These funds are ostensibly private entities but are heavily regulated and supervised by the French government. Premiums (funded primarily through payroll taxes), benefits, and provider reimbursement rates are all set by the government. In these ways the funds are similar to public utilities in the United States.

In 2006, the health care system ran a €€10.3 billion deficit. This actually shows improvement over 2005, when the system ran an €€11.6 billion deficit.49 The health care system is the largest single factor driving France’s overall budget deficit, which has grown to €€ 49.6 billion, or 2.5 percent of GDP, threatening France’s ability to meet the Maastricht criteria for participation in the Eurozone.50 This may be just the tip of the iceberg. Some government projections suggest the deficit in the health care system alone could top €€29 billion by 2010 and €€ 66 billion by 2020.51

Most services require substantial copayments, ranging from 10 to 40 percent of the cost. As a result, French consumers pay for roughly 13 percent of health care out of pocket, roughly the same percentage as U.S. consumers. 53 Moreover, because many health care services are not covered, and because many of the best providers refuse to accept the fee schedules imposed by the insurance funds, more than 92 percent of French residents purchase complementary private insurance.54 In fact, private insurance now makes up roughly 12.7 percent of all health care spending in France, a percentage exceeded only by the Netherlands (15.2 percent) and the United States (35 percent) among industrialized countries.55

Much of the burden for cost containment in the French system appears to have fallen on physicians. The average French doctor earns just €€ 40,000 per year ($55,000), compared to $146,000 for primary care physicians and $271,000 for specialists in the United States. This is not necessarily bad (there is no “right” income for physicians) and is partially offset by two benefits: 1) tuition at French medical schools is paid by the government, meaning French doctors do not graduate with the debt burden carried by U.S. physicians, and 2) the French legal system is tort-averse, significantly reducing the cost of malpractice insurance.64 The French government also attempts to limit the total number of practicing physicians, imposing stringent limits on the number of students admitted to the second year of medical school.65

Of more immediate concern, global budgets and fee restrictions for hospitals have led to a recurring lack of capital investment, resulting in a shortage of medical technology and lack of access to the most advanced care. For example, the United States has eight times as many MRI units per million people and four times as many CT scanners as France.69 This partially reflects the more technology-reliant way of practicing medicine in the United States, but it has also meant delays in treatment for some French patients. Also, strong disparities are evident in the geographic distribution of health care resources, making access to care easier in some regions than others.70 Thus, while the French system has generally avoided the waiting lists associated with other national health care systems, limited queues do exist for some specialized treatments and technologies. In some cases, hospitals in danger of exceeding their budgets have pushed patients to other facilities to save money.71

Finally, the government has tried to curtail the use of prescription drugs. The French have long had an extremely high level of drug consumption. French general practitioners (GPs) prescribe on average €€ 260,000 worth of drugs a year.72However, the National Health Authority has begun de-listing drugs from its reimbursement formulary.73 Many French patients have responded by switching to similar, reimbursable drugs, but some patients may not be getting the medicine they need. For example, one study found that nearly 90 percent of French asthma patients are not receiving drugs that might improve their condition.74---Pages 8-10

Italy

"Italy’s national health care system is rated second in the world by the WHO.89 Yet a closer examination shows the system to be deeply troubled, plagued with crippling bureaucracy, mismanagement and general disorganization, spiraling costs, and long waiting lists.

The Italian government does not provide official information on waiting lists, but numerous studies have shown them to be widespread and growing, particularly for diagnostic tests. For example, the average wait for a mammogram is 70 days; for endoscopy, 74 days; for a sonogram, 23 days.104Undoubtedly, this is due in part to a shortage of modern medical technology. The United States has twice as many MRI units per million people and 25 percent more CT scanners.105 Ironically, the best-equipped hospitals in northern Italy have even longer waiting lists since they draw patients from the poorer southern regions as well.106

Italy has imposed a relatively strict drug formulary as well as price controls, and has thereby succeeded in reducing pharmaceutical spending, long considered a problem for the Italian health care system. In 2006, Italian drug prices fell (or were pushed) 5 percent, even as drug prices rose in the United States and much of the rest of the world. However, the savings came at a cost: the introduction of many of the newest and most innovative drugs was blocked.107

Conditions in public hospitals are considered substandard, particularly in the south. They lack not just modern technology, but basic goods and services; and overcrowding is widespread. Conditions are frequently unsanitary. For example, one of the largest public hospitals in Rome was recently found to have garbage piled in the hallways, unguarded radioactive materials, abandoned medical records, and staff smoking next to patients.108 Private hospitals are considered much better and some regions have contracted with private hospitals to treat NHS patients.

Dissatisfaction with the Italian health care system is extremely high, by some measures the highest in Europe.109 In polls, Italians say that their health care system is much worse than that of other countries and give it poor marks for meeting their needs. Roughly 60 percent of Italians believe that health care reform is “urgent,” and another 24 percent believe it is “desirable.” In general, Italians believe that such reform should incorporate market-based solutions. More than two-thirds (69 percent) believe that giving patients more control over health care spending will improve the system’s quality. And 55 percent believe that it should be easier for patients to spend their own money on health care.110"---Pages 12-14

Spain

"Spain’s national health care system operates on a highly decentralized basis, giving primary responsibility to the country’s 17 regions. The Spanish Constitution guarantees all citizens the “right” to health care, including equal access to preventive, curative, and rehabilitative services; but responsibility for implementing the country’s universal system is being devolved to regional governments. The degree and speed of devolution is uneven, however, with some regions only recently achieving maximum autonomy.111

Not surprisingly, health care spending varies widely from region to region. The differences in expenditures, as well as in spending priorities, lead to considerable variance in the availability of health resources. For example, Catalonia has more than 4.5 hospital beds per 1,000 residents, while Valencia has just 2.8.113

Waiting lists vary from region to region but are a significant problem everywhere. On average, Spaniards wait 65 days to see a specialist, and in some regions the wait can be much longer. For instance, the wait for a specialist in the Canary Islands is 140 days. Even on the mainland, in Galacia, the wait can be as long as 81 days. For some specialties the problem is far worse, with a national average of 71 days for a gynecologist and 81 days for a neurologist.114 Waits for specific procedures are also lengthy. The mean waiting time for a prostectomy is 62 days; for hip replacement surgery, 123 days.115

Some health services that U.S. citizens take for granted are almost totally unavailable. For example, rehabilitation, convalescence, and care for those with terminal illness are usually left to the patient’s relatives. There are very few public nursing and retirement homes, and few hospices and convalescence homes.116

There are also shortages of modern medical technologies. Spain has one-third as many MRI units per million people as the United States, just over one-third as many CT units, and fewer lithotripters.121 Again, there is wide variation by region. For example, two regions, Ceuta and Melilla, do not have a single MRI unit.122 The regional variation is important because Spaniards face bureaucratic barriers in trying to go to another region for treatment.

As a result, Spain has fewer physicians and fewer nurses per capita than most European countries and the United States. The lack of primary care physicians is particularly acute.124"---Pages 14-15

Norway

"Norway has a universal, tax-funded, singlepayer, national health system. All Norwegian citizens, as well as anyone living or working in Norway, are covered under the National Insurance Scheme. Norwegians can, however, opt out of the government system by paying out of pocket. In addition, many Norwegians go abroad for treatment to avoid the waiting lists endemic under the government program.151

The Norwegian health care system has experienced serious problems with long and growing waiting lists.161 Approximately 280,000 Norwegians are estimated to be waiting for care on any given day (out of a population of just 4.6 million).162 The average wait for hip replacement surgery is more than four months; for a prostectomy, close to three months; and for a hysterectomy, more than two months.163 Approximately 23 percent of all patients referred for hospital admission have to wait longer than three months for admission.164"---Pages 18-19

Great Britain

"Almost no one disputes that Britain’s National Health Service faces severe problems, and few serious national health care advocates look to it as a model. Yet it appears in Moore’s movie SiCKO as an example of how a national health care system should work, so it is worth examining.

And that level of services leaves much to be desired. Waiting lists are a major problem. As many as 750,000 Britons are currently awaiting admission to NHS hospitals. These waits are not insubstantial and can impose significant risks on patients. For example, by some estimates, cancer patients can wait as long as eight months for treatment.236 Delays in receiving treatment are often so long that nearly 20 percent of colon cancer patients considered treatable when first diagnosed are incurable by the time treatment is finally offered.237

In some cases, to prevent hospitals from using their resources too quickly, mandatory minimum waiting times have been imposed. The fear is that patients will flock to the most efficient hospitals or those with smaller backlogs. Thus a top-flight hospital like Suffolk East PCT was ordered to impose a minimum waiting time of at least 122 days before patients could be treated or the hospital would lose a portion of its funding.238

The problem affects not only hospitals. There are also lengthy waits to see physicians, particularly specialists. In 2004, as a cost-cutting measure, the government negotiated low salaries for general practitioners in exchange for allowing them to cut back the hours they practice. Few are now available nights or weekends.240 Problems with specialists are even more acute. For example, roughly 40 percent of cancer patients never get to see an oncology specialist.241

The government’s official target for diagnostic testing is a wait of no more than 18 weeks by 2008. In reality, it doesn’t come close.242 The latest estimates suggest that for most specialties, only 30 to 50 percent of patients are treated within 18 weeks. For trauma and orthopedics patients, the figure is only 20 percent. Overall, more than half of British patients wait more than 18 weeks for care.243

Explicit rationing also exists for some types of care, notably kidney dialysis, open heart surgery, and some other expensive procedures and technologies.244 Patients judged too ill or aged for the procedures to be costeffective may be denied treatment altogether."---Pages 23-25

Canada

"Canada is another country that did not make the top 20 health care systems in the WHO rankings (it finished 30th), and few serious advocates of universal health care look to it as a model. As Jonathan Cohn puts it, “Nobody in the United States seriously proposes recreating the British and Canadian system here—in part because, as critics charge . . . they really do have waiting lines.”312 However, since the press still frequently cites it as an example, it is worth briefly examining.

Although Canada is frequently referred to as having a “national health system,” the system is actually decentralized with considerable responsibility devolved to Canada’s 10 provinces and 2 territories. It is financed jointly by the provinces and the federal government, similar to the U.S. Medicaid program. In order to qualify for federal funds, each provincial program must meet five criteria: 1) universality—available to all provincial residents on uniform terms and conditions; 2) comprehensiveness—covering all medically necessary hospital and physician services; 3) portability—allowing residents to remain covered when moving from province to province; 4) accessibility—having no financial barriers to access such as deductibles or copayments; and 5) public administration—administered by a nonprofit authority accountable to the provincial government.

Waiting lists are a major problem under the Canadian system. No accurate government data exists, but provincial reports do show at least moderate waiting lists. The best information may come from a survey of Canadian physicians by the Fraser Institute, which suggests that as many as 800,000 Canadians are waiting for treatment at any given time. According to this survey, treatment time from initial referral by a GP through consultation with a specialist, to final treatment, across all specialties and all procedures (emergency, nonurgent, and elective), averaged 17.7 weeks in 2005.315 And that doesn’t include waiting to see the GP in the first place.

Defenders of national health care have attempted to discount these waiting lists, suggesting that the waits are shorter than commonly portrayed or that most of those on the waiting list are seeking elective surgery. A look at specialties with especially long waits shows that the longest waits are for procedures such as hip or knee replacement and cataract surgery, which could arguably be considered elective. However, fields that could have significant impact on a patient’s health, such as neurosurgery, also have significant waiting times.316 In such cases, the delays could be life threatening. A study in the Canadian Medical Association Journal found that at least 50 patients in Ontario alone have died while on the waiting list for cardiac catheterization.317 Data from the Joint Canada–United States Survey of Health (a project of Statistics Canada and the National Center for Health Statistics) revealed that “thirty-three percent of Canadians who say they have an unmet medical need reported being in pain that limits their daily activities.”318 In a 2005 decision striking down part of Quebec’s universal care law, Canadian Supreme Court Chief Justice Beverly McLachlin wrote that it was undisputed that many Canadians waiting for treatment suffer chronic pain and that “patients die while on the waiting list.”319

Clearly there is limited access to modern medical technology in Canada. The United States has five times as many MRI units per million people and three times as many CT scanners.320 Indeed, there are more CT scanners in the city of Seattle than in the entire province of British Columbia.321

Physicians are also in short supply. Canada has roughly 2.1 practicing physicians per 1,000 people, far less than the OECD average. Worse, the number of physicians per 1,000 people has not grown at all since 1990. And while the number of nurses per 1,000 people remains near the OECD average, that number has been declining since 1990.322

In addition, although national health care systems are frequently touted as doing a better job of providing preventive care, U.S. patients are actually more likely than Canadians to receive preventive care for chronic or serious health conditions. In particular, Americans are more likely to get screened for common cancers, including cancers of the breast, cervix, prostate, and colon.323

Canadians may jealously guard their system and resist “Americanizing” it, but even advocates of universal health care are coming to recognize that it does not provide a valid model for U.S. health care reform.---Pages 31-33

[businessprofessor]

You are proposing just status quo here. We have health care welfare (Medicaid, SCHIP, public clinics, emergency room treatment, and other programs) for those who cannot obtain insurance or pay for health care services. I would like to see substantial reform of health care welfare to focus on the most needy. I also want co pays and higher taxes on the lower classes to connect those receiving welfare with the costs.

The Democrats are proposing something very different. The Democrats want to impose their view of health insurance on everyone. They want to impose health care rights and price controls. They want to make the most productive individuals pay for the health care of the masses. The Democrat plans will simultaenouse increase demand and decrease supply leading to rationing of limited services.

[Monorprise]

You know if they simply outlawed preexisting condition as being an exception for health insurance with no individual mandate, they would help collapse the health insurance industry by making their cost necessarily go thou the roof until almost everyone is an out of pocket payer.

Thus reintroducing individual price selection to our health care market.

The problem is this is no more with in the power of the Federal government then any other aspect of health-care law and taxes. It is however within the power of the State governments.

So with that in mind I am against ending the barriers between the States on the health insurance market.

We can uses this against them, by crashing the health insurance market in our State. The only problem then is the Federal tax advantages to having such insurance.

The vast majority of the state’s population would be at a tax disadvantage compared to the rest of the states.

The silver lining being the health-care market in the state would go down in cost over time due to newly active individual price selection and health responsibility.

This works because of the pyramid of where health-care cost are going. The people who will keep the health insurance longest have the highest costs, thus driving up the cost of insurance exponentially, until very little of the population is on health insurance, and most are out of pocket consumers actively involved in price selection and health responsibility. Thus creating price competition again in the overall health-care system.

So unless the Feds want to end the tax benefits to having health insurance or their own insurance programs like Medicare and Medicare. I don’t want them doing anything at all. Cause its otherwise not constitutional and/or not helpful.

[socialismisinsidious]

Socialized Medicine aka Universal Health Care daily digest PING LIST

FReepmail me if you want to be added to or removed from this daily digest ping list (one ping per day of links to pertinent articles).

[reasonisfaith]

Maybe you don’t know what conservatism truly is. Like many others, in this country and in Europe.

I don’t know if this applies to you because I don’t know if you’re a progressive. But most progressives don’t understand precisely why they call themselves that.

[ConservativeStLouisGuy]

Next day BUMP!

[ConservativeStLouisGuy]

Full posting of PDF file for FR archives (now that health care seems to be "inevitable"....

Critics of the U.S. health care system frequently

point to other countries as models for

reform. They point out that many countries

spend far less on health care than the United

States yet seem to enjoy better health outcomes.

The United States should follow the lead of

those countries, the critics say, and adopt a government-

run, national health care system.

 

However, a closer look shows that nearly all

health care systems worldwide are wrestling with

problems of rising costs and lack of access to care.

There is no single international model for national

health care, of course. Countries vary dramatically

in the degree of central control, regulation,

and cost sharing they impose, and in the role of

private insurance. Still, overall trends from national

health care systems around the world suggest

the following:

 

• Health insurance does not mean universal

access to health care. In practice, many countries

promise universal coverage but ration

care or have long waiting lists for treatment.

 

• Rising health care costs are not a uniquely

American phenomenon. Although other

countries spend considerably less than the

United States on health care, both as a percentage

of GDP and per capita, costs are rising

almost everywhere, leading to budget

deficits, tax increases, and benefit reductions.

 

• In countries weighted heavily toward government

control, people are most likely to

face waiting lists, rationing, restrictions on

physician choice, and other obstacles to care.

 

• Countries with more effective national

health care systems are successful to the

degree that they incorporate market mechanisms

such as competition, cost sharing,

market prices, and consumer choice, and

eschew centralized government control.

Although no country with a national health

care system is contemplating abandoning universal

coverage, the broad and growing trend is

to move away from centralized government control

and to introduce more market-oriented features.

The answer then to America’s health care

problems lies not in heading down the road to

national health care but in learning from the

experiences of other countries, which demonstrate

the failure of centralized command and

control and the benefits of increasing consumer

incentives and choice.

 

Introduction

In his movie SiCKO, Michael Moore

explores problems with the U.S. health care

system and advocates the adoption of a government-

run, single-payer system. Moore

compares the U.S. system unfavorably with

those of Canada, Great Britain, and France.

 

Economist and New York Times columnist Paul

Krugman also thinks the health care systems

of France, Britain, and Canada are better than

that of the United States. Physicians for a

National Health Program points out that the

United States is the "only industrialized country

without national health care."

 

These and other critics of the U.S. health

care system note that countries with such systems

spend far less per capita on health care

than the United States does and, by some measures,

seem to have better health outcomes.

 

These critics contend that by adopting a similar

system the United States could solve many

of the problems that currently afflict its health

care system. As Krugman says, "The obvious

way to make the U.S. health care system more

efficient is to make it more like the systems of

other advanced countries."

 

There is no doubt that the United States

spends far more on health care than any

other country, whether measured as a percentage

of gross domestic product (GDP) or

by expenditure per capita. As Figure 1 shows,

the United States now spends close to 16 percent

of GDP on health care, nearly 6.1 percent

more than the average for other industrialized

countries. Overall health care costs

are rising faster than GDP growth and now

total more than $1.8 trillion, more than

Americans spend on housing, food, national

defense, or automobiles.

 

Health care spending is not necessarily bad.

To a large degree, America spends money on

health care because it is a wealthy nation and

chooses to do so. Economists consider health

care a "normal good," meaning that spending

is positively correlated with income. As

incomes rise, people want more of that good.

Because we are a wealthy nation, we can and

do demand more health care.

 

But because of the way health care costs

are distributed, they have become an increasing

burden on consumers and businesses

alike. On average, health insurance now costs

$4,479 for an individual and $12,106 for a

family per year. Health insurance premiums

rose by a little more than 6 percent in 2007,

faster on average than wages.

 

Moreover, government health care programs,

particularly Medicare and Medicaid, are

piling up enormous burdens of debt for future

generations. Medicare’s unfunded liabilities

now top $50 trillion. Unchecked, Medicaid

spending will increase fourfold as a percentage

of federal outlays over the next century.

 

At the same time, too many Americans

remain uninsured. Although the number of

uninsured Americans is often exaggerated by

critics of the system, approximately 47 million

Americans are without health insurance at any

given time. Many are already eligible for government

programs; many are young and

healthy; many are uninsured for only a short

time. Yet there is no denying that a lack of

insurance can pose a hardship for many

Americans.

 

Finally, although the U.S. health care system

can provide the world’s highest quality of care,

that quality is often uneven. The Institute of

Medicine estimates that some 44,000–90,000

annual deaths are due to medical errors, while

a study in The New England Journal of Medicine

suggests that only a little more than half of

American hospital patients receive the clinical

standard of care. Similarly, a RAND Corporation

study found serious gaps in the quality of

care received by American children.

 

Many critics of U.S. health care suggest that

the answers to these problems lie in a singlepayer,

national health care system. Under

such a system, health care would be financed

through taxes rather than consumer payments

or private insurance. Direct charges to patients

would be prohibited or severely restricted.

 

Private insurance, if allowed at all, would be

limited to a few supplemental services not covered

by the government plan. The government

would control costs by setting an overall

national health care budget and reimbursement

levels.

 

However, a closer look at countries with

national health care systems shows that those

countries have serious problems of their own,

including rising costs, rationing of care, lack of

access to modern medical technology, and

poor health outcomes. Countries whose

national health systems avoid the worst of

these problems are successful precisely because

they incorporate market mechanisms and

reject centralized government control. In other

words, socialized medicine works—as long as it

isn’t socialized medicine.

 

Measuring the Quality of

Health Care across

Countries

 

Numerous studies have attempted to

compare the quality of health care systems.

In most of these surveys, the United States

fares poorly, finishing well behind other

industrialized countries. This has led critics

of the U.S. health care system to suggest that

Americans pay more for health care but

receive less.

 

There are several reasons to be skeptical of

these rankings. First, many choose areas of

comparison based on the results they wish to

achieve, or according to the values of the comparer.

For example, SiCKO cites a 2000 World

Health Organization study that ranks the U.S.

health care system 37th in the world, "slightly

better than Slovenia."18

 

This study bases its conclusions on such

highly subjective measures as "fairness" and

criteria that are not strictly related to a country’s

health care system, such as "tobacco control."

 

For example, the WHO report penalizes

the United States for not having a sufficiently

progressive tax system, not providing all citizens

with health insurance, and having a general

paucity of social welfare programs. Indeed,

much of the poor performance of the United

States is due to its ranking of 54th in the category

of fairness. The United States is actually

penalized for adopting Health Savings

Accounts and because, according to the WHO,

patients pay too much out of pocket. Such

judgments clearly reflect a particular political

point of view, rather than a neutral measure of

health care quality. Notably, the WHO report

ranks the United States number one in the

world in responsiveness to patients’ needs in

choice of provider, dignity, autonomy, timely

care, and confidentiality.

 

Difficulties even arise when using more

neutral categories of comparison. Nearly all

cross-country rankings use life expectancy as

one measure. In reality though, life expectancy

is a poor measure of a health care system.

Life expectancies are affected by exogenous

factors such as violent crime, poverty, obesity,

tobacco and drug use, and other issues unrelated

to health care. As the Organisation for

Economic Co-operation and Development

explains, "It is difficult to estimate the relative

contribution of the numerous nonmedical

and medical factors that might affect

variations in life expectancy across countries

and over time." Consider the nearly threeyear

disparity in life expectancy between

Utah (78.7 years) and Nevada (75.9 years),

despite the fact that the two states have

essentially the same health care systems. In

fact, a study by Robert Ohsfeldt and John

Schneider for the American Enterprise

Institute found that those exogenous factors

are so distorting that if you correct for homicides

and accidents, the United States rises to

the top of the list for life expectancy.

Similarly, infant mortality, a common measure

in cross-country comparisons, is highly

problematic. In the United States, very low

birth-weight infants have a much greater

chance of being brought to term with the latest

medical technologies. Some of those low birthweight

babies die soon after birth, which

boosts our infant mortality rate, but in many

other Western countries, those high-risk, low

birth-weight infants are not included when

infant mortality is calculated. In addition,

many countries use abortion to eliminate

problem pregnancies. For example, Michael

Moore cites low infant mortality rates in Cuba,

yet that country has one of the world’s highest

abortion rates, meaning that many babies with

health problems that could lead to early deaths

are never brought to term.

 

When you compare the outcomes for specific

diseases, the United States clearly outperforms

the rest of the world. Whether the disease

is cancer, pneumonia, heart disease, or

AIDS, the chances of a patient surviving are far

higher in the United States than in other countries.

For example, according to a study published

in the British medical journal The Lancet,

the United States is at the top of the charts

when it comes to surviving cancer. Among

men, roughly 62.9 percent of those diagnosed

with cancer survive for at least five years. The

news is even better for women: the five year-survival

rate is 66.3 percent, or two-thirds. The

countries with the next best results are Iceland

for men (61.8 percent) and Sweden for women

(60.3 percent). Most countries with national

health care fare far worse. For example, in Italy,

59.7 percent of men and 49.8 percent of

women survive five years. In Spain, just 59 percent

of men and 49.5 percent of women do.

 

And in Great Britain, a dismal 44.8 percent of

men and only a slightly better 52.7 percent of

women live for five years after diagnosis.26

Notably, when former Italian prime minister

Silvio Berlusconi needed heart surgery last

year, he didn’t go to a French, Canadian,

Cuban, or even Italian hospital—he went to the

Cleveland Clinic in Ohio. Likewise, Canadian

MP Belinda Stronach had surgery for her breast

cancer at a California hospital. Berlusconi and

Stronach were following in the footsteps of

tens of thousands of patients from around the

world who come to the United States for treatment

every year. One U.S. hospital alone, the

Mayo Clinic, treats roughly 7,200 foreigners

every year. Johns Hopkins University Medical

Center treats more than 6,000, and the

Cleveland Clinic more than 5,000. One out of

every three Canadian physicians sends a

patient to the Unites States for treatment each

year, and those patients along with the

Canadian government spend more than $1 billion

annually on health care in this country.

 

Moreover, the United States drives much

of the innovation and research on health care

worldwide. Eighteen of the last 25 winners of

the Nobel Prize in Medicine are either U.S.

citizens or individuals working here. U.S.

companies have developed half of all new

major medicines introduced worldwide over

the past 20 years. In fact, Americans played

a key role in 80 percent of the most important

medical advances of the past 30 years.

 

As shown in Figure 2, advanced medical technology

is far more available in the United

States than in nearly any other country.

The same is true for prescription drugs.

 

For example, 44 percent of Americans who

could benefit from statins, lipid-lowering

medication that reduces cholesterol and protects

against heart disease, take the drug.

 

That number seems low until compared with

the 26 percent of Germans, 23 percent of

Britons, and 17 percent of Italians who could

both benefit from the drug and receive it.

Similarly, 60 percent of Americans taking

anti-psychotic medication for the treatment

of schizophrenia or other mental illnesses are

taking the most recent generation of drugs,

which have fewer side effects. But just 20 percent

of Spanish patients and 10 percent of

Germans receive the most recent drugs.

Of course, it is a matter of hot debate

whether other countries have too little medical

technology or the Unites States has too much.

 

Some countries, such as Japan, have similar

access to technology. Regardless, there is no dispute

that more health care technology is invented

and produced in the United States than anywhere

else. Even when the original research is

done in other countries, the work necessary to

convert the idea into viable commercial products

is most often done in the United States.

 

By the same token, not only do thousands of

foreign-born doctors come to the United States

to practice medicine, but foreign pharmaceutical

companies fleeing taxes, regulation, and

price controls are increasingly relocating to the

United States. In many ways, the rest of the

world piggybacks on the U.S. system.

 

The United States

drives much of

the innovation

and research on

health care

worldwide.

 

Obviously there are problems with the U.S.

system. Too many Americans lack health

insurance and/or are unable to afford the best

care. More must be done to lower health care

costs and increase access to care. Both patients

and providers need better and more useful

information. The system is riddled with waste,

and quality of care is uneven. Government

health care programs like Medicare and

Medicaid threaten future generations with an

enormous burden of debt and taxes.

Health care reform should be guided by the

Hippocratic Oath: First, do no harm. Therefore,

before going down the road to national health

care, we should look more closely at foreign

health care systems and examine both their

advantages and their problems.

 

Many of the countries with health systems

ranked in the top 20 by the World Health

Organization, such as San Marino, Malta, and

Andorra, are too small to permit proper evaluation,

or their circumstances clearly limit the

applicability to the U.S. health care system.

Accordingly, this study will look at 12 countries

that appear to hold lessons for U.S. health

care reforms: 10 ranked in the top 20 by the

WHO and 2 others frequently cited as potential

models for U.S. health care reform.

 

Types of National Health

Care Systems

 

National health care, or universal health care,

is a broad concept and has been implemented in

many different ways. There is no single model

that the rest of the world follows. Each country’s

system is the product of its unique conditions,

history, politics, and national character, and

many are undergoing significant reform.

 

Single-Payer Systems

 

Under a single-payer health care system, the

government pays for the health care of all citi-

zens. It collects taxes, administers the supply of

health care, and pays providers directly. In

effect, this replaces private insurance with a

single government entity. Typically, the government

establishes a global budget, deciding

how much of the nation’s resources should be

allocated to health care, and sets prices or reimbursement

rates for providers. In some cases,

providers may be salaried government employees.

In others, they may remain independent

and be reimbursed according to the services

and procedures they provide. In the strictest

single-payer systems, private insurance and

other ways to "opt out" of the system are prohibited.

This is the type of system advocated by

Michael Moore, Paul Krugman, Dennis

Kucinich, and Physicians for a National Health

Program, among others.

 

Employment-Based Systems

 

Countries with employment-based systems

require that employers provide workers with

health insurance, often through quasi-private

"sickness funds." These insurance funds may

operate within or across industry sectors, with

benefits and premiums set by the government.

 

Often premiums are simply a form of payroll

tax paid directly to the fund. Providers remain

independent and reimbursement rates are

negotiated with the funds, sometimes individually,

sometimes on a national level. Germany

has long been the model for an employmentbased

system.

 

Managed Competition

 

Managed competition leaves the provision

of health care in private hands but within an

artificial marketplace run under strict government

control and regulation. In most cases,

the government mandates that individuals

purchase insurance, though this is often paired

with a requirement for employers to provide

insurance to their workers. Individuals have a

choice of insurers within the regulated marketplace

and a choice of providers. Although the

government sets a standard benefits package,

insurers may compete on price, cost sharing,

and additional benefits. Switzerland is the

clearest example of a managed-competition

approach to universal coverage, although the

Netherlands has also recently adopted a similar

system. The 1993 Clinton health plan, the

2006 Massachusetts health care reform, and

most of the proposals advocated by the current

Democratic presidential candidates are variations

of managed competition.

 

Within these broad categories are significant

differences. Some countries, such as

France and Japan, impose significant cost sharing

on consumers in an effort to discourage

overutilization and to control costs. Other

countries strictly limit the amount that consumers

must pay out of pocket. Some countries

permit free choice of providers, while others

limit it. In some countries there is widespread

purchase of alternative or supplemental private

insurance, whereas in others, private insurance

is prohibited or used very little. Resource allocation

and prioritization vary greatly. Japan

spends heavily on technology but limits reimbursement

for surgery, while France has exceptionally

high levels of prescription drug use.

 

Outcomes also vary significantly. Canada,

Great Britain, Norway, and Spain all heavily

ration health care or have long waiting lists for

care, while France and Switzerland have generally

avoided waiting lists. At the same time,

France, Italy, and Germany are struggling with

rising health care costs and budget strain, compared

with Canada and Great Britain which

have done better at containing growth in

expenditures. And some countries such as

Greece have fallen far short of claims of universal

coverage.

 

With all of that in mind, consider the following

prominent national health care systems.

 

France

 

Some of the most thoughtful proponents

of national health care look to France as a

model of how such a program could work.

Jonathan Cohn of theNew Republic has written

that "the best showcase for what universal

health care can achieve may be France." Ezra

Klein of the American Prospect calls France "the

closest thing to a model structure out there."

 

Some countries,

such as France

and Japan,

impose

significant cost

sharing on

consumers in an

effort to

discourage

overutilization

and to control

costs.

 

The French system ranks at or near the top of

most cross-country comparisons and is ranked

number one by the WHO.

 

Although the French system is facing looming

budgetary pressures, it does provide at least

some level of universal coverage and manages

to avoid many of the problems that afflict

other national health care systems. However, it

does so in large part by adopting market-oriented

approaches, including consumer cost

sharing. Other aspects of the system appear to

reflect French customs and political attitudes

in such a way that would make it difficult to

import the system to the United States.

 

France provides a basic level of universal

health insurance through a series of mandatory,

largely occupation-based, health insurance

funds. These funds are ostensibly private entities

but are heavily regulated and supervised by

the French government. Premiums (funded

primarily through payroll taxes), benefits, and

provider reimbursement rates are all set by the

government. In these ways the funds are similar

to public utilities in the United States.

 

The largest fund, the General National

Health Insurance Scheme, covers most nonagricultural

workers and their dependents,

about 83 percent of French residents. Separate

insurance plans cover agricultural workers, the

self-employed, and certain special occupations

like miners, transportation workers, artists,

clergy, and notaries public. Another fund covers

the unemployed. These larger insurance

schemes are broken down into smaller pools

based on geographic region. Overall, about 99

percent of French citizens are covered by

national health insurance.

 

The French health care system is the world’s

third most expensive, costing roughly 11 percent

of GDP, behind only the United States (17

percent) and Switzerland (11.5 percent). Payroll

taxes provide the largest source of funding.

Employers must pay 12.8 percent of wages for

every employee, while employees contribute an

additional 0.75 percent of wages, for a total payroll

tax of 13.55 percent. In addition, there is a

5.25 general social contribution tax on income

(reduced to 3.95 percent on pension income and

unemployment benefits). Thus, most French

workers are effectively paying 18.8 percent of

their income for health insurance. Finally, dedicated

taxes are assessed on tobacco, alcohol, and

pharmaceutical company revenues.

 

In theory, the system should be supported

by these dedicated revenues. In reality, they

have not been sufficient to keep the program’s

finances balanced. The National Health

Authority sets a global budget for national

health care spending, but actual spending has

consistently exceeded those targets.

 

In 2006, the health care system ran a €€10.3

billion deficit. This actually shows improvement

over 2005, when the system ran an €€11.6

billion deficit. The health care system is the

largest single factor driving France’s overall

budget deficit, which has grown to €€ 49.6 billion,

or 2.5 percent of GDP, threatening

France’s ability to meet the Maastricht criteria

for participation in the Eurozone. This may

be just the tip of the iceberg. Some government

projections suggest the deficit in the health

care system alone could top €€29 billion by

2010 and €€ 66 billion by 2020.

 

In general, the funds provide coverage for

inpatient and outpatient care, physician and

specialist services, diagnostic testing, prescription

drugs, and home care services. In most

cases, the services covered are explicitly specified

in regulation. However, some "implicit" benefit

guarantees occasionally result in conflicts over

what benefits are and are not fully covered.

 

Most services require substantial copayments,

ranging from 10 to 40 percent of the

cost. As a result, French consumers pay for

roughly 13 percent of health care out of pocket,

roughly the same percentage as U.S. consumers.

 

Moreover, because many health care

services are not covered, and because many of

the best providers refuse to accept the fee schedules

imposed by the insurance funds, more

than 92 percent of French residents purchase

complementary private insurance. In fact, private

insurance now makes up roughly 12.7 percent

of all health care spending in France, a percentage

exceeded only by the Netherlands (15.2

percent) and the United States (35 percent)

among industrialized countries.

 

The combination of out-of-pocket and

insurance payments means that nongovernment

sources account for roughly 20 percent

of all health care spending, less than half the

amount spent in the United States but still

more than most countries with national

health care systems.

 

The private insurance market in France is in

many ways less regulated than the U.S. market.

For example, while 20 U.S. states require some

form of community rating or put limits on

health insurance premiums, private health

insurance in France is largely experience rated.

No regulations specify what benefits must be

included in coverage or mandate "guaranteed

issue"; and pre-existing conditions may be

excluded. The only significant restriction

requires "guaranteed renewability" after two

years of coverage. More than 118 carriers currently

offer some form of private health insurance

coverage.

 

In general, French patients pay up front for

treatment and are then reimbursed by their

government health insurance fund and/or private

insurance. The amount of reimbursement,

minus the copayment, is based on a fee

schedule negotiated between health care

providers and the national health insurance

funds. These fee schedules operate similarly to

the diagnostic-related groups (DRGs) under

the U.S. system.

 

Although reimbursement levels are set by

the government, the amount physicians charge

is not. The French system permits providers to

charge more than the reimbursement schedule,

and approximately one-third of French

physicians do so. In some areas, such as Paris,

the percentage of physicians who bill above

reimbursement schedules runs as high as 80

percent. In general, however, competition

prevents most physicians from billing too far

outside negotiated rates; and physicians

employed by hospitals, as opposed to those in

private practice, do not have the same ability to

charge more than the negotiated rate.

 

The government also sets reimbursement

rates for both public and private hospitals,

which are generally not allowed to bill beyond

the negotiated fee schedules. While fees are

restricted, private hospitals (called cliniques),

which account for 37 percent of all short-stay

hospital beds and half of all surgical beds, control

their own budgets, whereas public hospitals

operate under global annual budgets

imposed by the Ministry of Health.

Health care technology that the National

Health Authority has categorized as "insufficient

medical service rendered" cannot be purchased

by public hospitals, and its use at cliniques

is not reimbursable through national insurance

schemes. Yet in denying reimbursement for

such technology, the French government

admits that when a product with an insufficient

medical service rendered is de-listed from reimbursement,

this does not imply that it is not efficient

for a given pathology, but simply that the

government prefers to commit its resources to

other reimbursements which it deems more

useful from a collective point of view."

 

In general, the quality of French health care

is high, but there are problem areas. Until very

recently, the French have generally had quick

access to their primary care physician of

choice. Now, a growing problem, nomadisme

medical, wherein patients go from one doctor

to another until they find one whose diagnosis

they prefer, is driving up costs to the system.

 

The government has responded by

increasing copayments and attempting to

limit physician reimbursements.

Much of the burden for cost containment

in the French system appears to have fallen on

physicians. The average French doctor earns

just €€ 40,000 per year ($55,000), compared to

$146,000 for primary care physicians and

$271,000 for specialists in the United States.

 

This is not necessarily bad (there is no "right"

income for physicians) and is partially offset by

two benefits: 1) tuition at French medical

schools is paid by the government, meaning

French doctors do not graduate with the debt

burden carried by U.S. physicians, and 2) the

French legal system is tort-averse, significantly

reducing the cost of malpractice insurance.

 

The French government also attempts to limit

the total number of practicing physicians,

imposing stringent limits on the number of

students admitted to the second year of medical

school.

 

The private

insurance market

in France is in

many ways less

regulated than

the U.S. market.

 

However, French physicians have shown

growing resistance to efforts at limiting

physician reimbursement with several recent

strikes and protests. In the face of growing

budgetary problems, future conflict may well

be brewing.

 

More significantly, the government has

recently begun imposing restrictions on access

to physicians. A 2004 study by the High

Council on the Future of Health Insurance

raised questions about "the legitimacy of the

complete freedom enjoyed by health professionals

in setting up their private practice."

 

And in 2005, the government adopted a system

of "coordinated care pathways." Under the new

system, which operates very much like managed

care in the United States, patients are

encouraged to choose a "preferred doctor" and

to follow the "pathway" suggested by that doctor.

The effect is both to lock patients into a

choice of primary care physician and to establish

a "gatekeeper" who limits access to specialists,

tests, and some advanced treatment options.

 

So far, the new system has been more of a

gentle push than a mandate. If the new system

is not used, copayments may be slightly higher

or reimbursements slightly lower, much like

going "out of network" in the United States.

But if costs continue to rise, the new system

may be extended and made more rigorous.

Of more immediate concern, global budgets

and fee restrictions for hospitals have led

to a recurring lack of capital investment, resulting

in a shortage of medical technology and

lack of access to the most advanced care. For

example, the United States has eight times as

many MRI units per million people and four

times as many CT scanners as France. This

partially reflects the more technology-reliant

way of practicing medicine in the United

States, but it has also meant delays in treatment

for some French patients. Also, strong

disparities are evident in the geographic distribution

of health care resources, making access

to care easier in some regions than others.

 

Thus, while the French system has generally

avoided the waiting lists associated with other

national health care systems, limited queues

do exist for some specialized treatments and

technologies. In some cases, hospitals in danger

of exceeding their budgets have pushed

patients to other facilities to save money.

 

Finally, the government has tried to curtail

the use of prescription drugs. The French have

long had an extremely high level of drug consumption.

French general practitioners (GPs)

prescribe on average €€ 260,000 worth of drugs a

year. However, the National Health Authority

has begun de-listing drugs from its reimbursement

formulary. Many French patients have

responded by switching to similar, reimbursable

drugs, but some patients may not be

getting the medicine they need. For example,

one study found that nearly 90 percent of

French asthma patients are not receiving drugs

that might improve their condition.

 

Government regulation and bureaucracy

have also been blamed for rigidity in the

French system, preventing it from reacting

quickly to changing circumstances. For example,

mismanagement and the inability of the

system to cope with emergencies were blamed

in part for the deaths of 15,000 elderly individuals

in the summer of 2003 during the

European heat wave; and a shortage of hospital

beds occurred in 2004 when a nationwide

flu and bronchitis epidemic broke out.

 

Although the changes made so far do not

amount to rationing, 62 percent of French

citizens report that they "have felt the effects"

of the new restrictions. Slightly less than

half consider the waiting time between diagnosis

and treatment to be acceptable.

 

Valentin Petkantchin, a scholar with the

Institut Economique Molinari, warns that

France is in danger "of joining the group of

countries [such as] the UK and Canada, where

the existence of rationing of health care and

waiting lists raises serious questions of access

to treatments by those who need them." And

some French health professionals have suggested

that waiting times for care have begun

to lengthen.

 

The impact of all these cost containment

measures is alleviated to some degree by the

ability of French patients to privately contract

for care outside the public system. If a drug is

removed from the national formulary, patients

may still purchase it if they are willing to pay

for it themselves. The same is true for technology.

Likewise, patients may ignore the "coordinated

care pathway" and accept higher prices,

paying more for immediate access.

 

In addition, the added resources from

payments by private insurance have

increased the supply of health care technology

and services. By increasing the overall

amount of capital available for investment

above and beyond the restrictions imposed

by the government system, private insurance

payments increase the number of hospital

beds and the amount of technology available

within the system. The capital infused

through private insurance may also increase

the number and training of physicians.

 

In essence, the French system avoids widespread

rationing because, unlike true singlepayer

systems, it employs market forces. Even

the OECD says that the "proportion of the

population with private health insurance"

and the degree of cost sharing are key determinants

of how severe waiting lists will be:

 

Waiting lists for elective surgery generally

tend to be found in countries which

combine public health insurance (with

zero or low patient cost sharing) and

constraints on surgical capacity. Public

health insurance removes from patients

the financial barriers to access leading to

high potential demand. Constraints on

capacity . . . prevent supply from matching

this demand. Under such circumstances,

non-price rationing, in the form

of waiting lists, takes over from price

rationing as a means of equilibrating

supply and demand.

 

And Ezra Klein praises the French because

[France’s ability to hold down health

care costs] is abetted by the French system’s

innovative response to one of the

trickier problems bedeviling health-policy

experts: an economic concept called

"moral hazard." Moral hazard describes

people’s tendency to overuse goods or

services that offer more marginal benefit

without a proportionate marginal cost.

 

Translated into English, you eat more at

a buffet because the refills are free, and

you use more health care because insurers

generally make you pay up front in

premiums, rather than at the point of

care. The obvious solution is to shift

more of the cost away from premiums

and into co-pays or deductibles, thus

increasing the sensitivity of consumers

to the real cost of each unit of care they

purchase.

 

However, the benefits of private insurance

are not equally distributed. The wealthy are

more likely to be able to pay privately to escape

the government system, creating in essence a

two-tier system. That has resulted in a disparity

in health outcomes based on income.

 

While this is certainly the case in the United

States and elsewhere—and there is nothing

wrong with the wealthy being able to pay more

to receive better care—it demonstrates that the

professed goal of entirely equal access is largely

unattainable even under this government-run

health system.

 

A 2004 poll showed that the French had the

highest level of satisfaction with their health

care system among all European countries.

This is partly because their hybrid system has

avoided many of the biggest problems of other

national health care systems. Yet it also stems

from French social character. For example, by a

three-to-one margin, the French believe the

quality of care they receive is less important

than everyone having equal access to that

care.85 This means the French experience may

not be easily transferable to the United States,

which has a far less egalitarian ethic.

While satisfied with their care today, the

French do express concern about the future.

In particular, they acknowledge the need for

greater cost control. This leads to the standard

contradiction inherent in government

services: most people are opposed to paying

more (either through higher taxes or out of

pocket), yet they worry that cost-control

measures will lead to a deterioration of care

in the future. There is no consensus on what

French health care reform would look like.

Still, some 65 percent of French adults

believe that reform is "urgent," and another

20 percent believe reform is "desirable."

 

Moreover there is growing dissatisfaction

with the French welfare state—of which the

health care system is a significant part—and

the level of taxes necessary to support it. The

recent election of French president Nicolas

Sarkozy is widely regarded as a reflection of

this new attitude. Indeed, the new French

government has made a crackdown on health

care spending one of its top priorities..

 

To sum up: the French health care system

clearly works better than most national health

care systems. Despite some problems, France

has generally avoided the rationing inherent in

other systems. However, the program is threatened

by increasing costs and may be forced to

resort to rationing in the future.

 

The French system works in part because it

has incorporated many of the characteristics

that Michael Moore and other supporters of

national health care dislike most about the

U.S. system. France imposes substantial cost

sharing on patients in order to discourage

over-utilization, relies heavily on a relatively

unregulated private insurance market to fill

gaps in coverage, and allows consumers to pay

extra for better or additional care, creating a

two-tier system.

 

This is clearly not the commonly portrayed

style of national health care.

 

Italy

 

Italy’s national health care system is rated

second in the world by the WHO. Yet a closer

examination shows the system to be deeply

troubled, plagued with crippling bureaucracy,

mismanagement and general disorganization,

spiraling costs, and long waiting lists.

Generally, the Italian system is similar to

the British National Health Service but enjoys

more decentralization. The central government

sets goals on how money should be

spent, monitors the overall health status of the

nation, and negotiates the labor contracts of

medical staff. The Italian Constitution was

changed in 2001 such that the national government

now sets the "essential levels of care"

regions must meet, but regional governments

still control their own autonomous budgets

and distribute resources to the local level.

In theory, under the "fiscal federalist" provisions

of this reform, discretionary central

transfers should have dropped sharply, local

tax bases and tax sharing should have

increased, and "equalizing" transfers should

have been standardized and linked to objectives

for controlling costs and increasing quality.

However, poorer regions and powerful special

interests have strongly resisted these

changes. Reform therefore remains incomplete,

and financial transfers from the central

government are still based on historical spending

patterns.

 

Thus, while the national Ministry of Health

continues to outline funding needs based on

weighted capitation and past spending, recent

reforms have shifted more and more power

and responsibility to regional governments

who set their own budgets. The regions establish

one or more Local Health Authorities,

which are responsible for the provision of care

either through government-run hospitals and

clinics or by contracting with private providers.

 

It should be noted that governance in

Italy is often as much art as science, and

regions frequently fail to implement rules,

guidelines, reimbursement schedules, and

budgets set by the central government.

 

Financing comes from both payroll taxes

and general revenues. Payroll taxes have a

regressive structure, starting at 10.6 percent of

the first €€ 20,660 of gross income and decreasing

to 4.6 percent of income between €€20,661

and €€ 77,480. The remainder of funding comes

from both federal and regional general taxation,

including income and value-added

taxes. The central government redistributes

resources to compensate to some degree for

inequalities among regions. Even so, most

regional health authorities run significant

deficits. Overall, regional deficits top 1.8 percent

of GDP.

 

Although Italy

spends a

relatively low

percentage of

GDP on health

care, expenditures

have been rising

rapidly in recent

years and have

consistently

exceeded

government

forecasts.

 

Inpatient care and primary care are free at

the point of treatment. However, copayments

are required for diagnostic procedures, specialists,

and prescription drugs. The size of such

copayments has crept steadily upward over the

past decade and now runs as high as 30 percent

for some services. Several attempts have been

made to impose copayments for a broad range

of services, including primary care, but have

collapsed in the face of public protests. In

addition, nearly 40 percent of the population

(the elderly, pregnant women, and children)

are exempt from copayments.

 

Italians have limited choice of physician.

They must register with a general practitioner

within their LHA. They may choose any GP in

the LHA but may not go outside it. Except for

emergency care, a referral from a GP is required

for diagnostic services, hospitalization, and

treatment by a specialist. Despite these limits,

Italians enjoy more choice of physician than do

the British or Spanish.

 

Most physicians are reimbursed on a capitated

basis (i.e., according to the number of

patients served over a given time period rather

than the services actually provided), although

some hospital physicians receive a monthly

salary. Hospitals are generally reimbursed

according to DRGs, with rates set by the central

government—though regions sometimes

disregard those rates and set their own.

Private health insurance is available in Italy

but is not widespread. Where offered, it is usually

provided by employers. About 10 percent

of Italians have private health insurance, below

the percentage in most OECD countries.

 

According to the insurance industry, this is

partly because it is not possible to opt out of

the National Health System and because

health insurance premiums are not tax

deductible. Private health insurance allows

free choice of doctors, including specialists,

and treatment in private hospitals. Even without

private insurance, however, many Italians

use private health resources (and presumably

pay out of pocket). Estimates suggest that as

much as 35 percent of the population uses at

least some private health services.

 

Although Italy spends a relatively low percentage

of GDP on health care, expenditures

have been rising rapidly in recent years and

have consistently exceeded government forecasts.

 

Between 1995 and 2003, total health

care spending rose by 68 percent. The Italian

government has taken various steps to try to

control costs, such as reducing reimbursement

rates, increasing copayments, reducing capital

expenditures, contracting with private providers,

and limiting prescription drugs. All of

these measures have met with protests, including

physician strikes, and many have been

repealed after only a short time.

 

The Italian government does not provide

official information on waiting lists, but

numerous studies have shown them to be

widespread and growing, particularly for diagnostic

tests. For example, the average wait for

a mammogram is 70 days; for endoscopy, 74

days; for a sonogram, 23 days. Undoubtedly,

this is due in part to a shortage of modern

medical technology. The United States has

twice as many MRI units per million people

and 25 percent more CT scanners. Ironically,

the best-equipped hospitals in northern

Italy have even longer waiting lists since they

draw patients from the poorer southern

regions as well.

 

If delays become excessive, patients may

seek permission from the regional government

to obtain treatment from private doctors

or hospitals at NHS expense. A recent

court decision allows patients whose life

would be endangered by delays under the

NHS to seek treatment in private hospitals

even without prior permission from the

regional government.

 

Italy has imposed a relatively strict drug

formulary as well as price controls, and has

thereby succeeded in reducing pharmaceutical

spending, long considered a problem for

the Italian health care system. In 2006,

Italian drug prices fell (or were pushed) 5 percent,

even as drug prices rose in the United

States and much of the rest of the world.

However, the savings came at a cost: the

introduction of many of the newest and

most innovative drugs was blocked.

 

Conditions in public hospitals are consid-

ered substandard, particularly in the south.

They lack not just modern technology, but

basic goods and services; and overcrowding is

widespread. Conditions are frequently unsanitary.

For example, one of the largest public hospitals

in Rome was recently found to have

garbage piled in the hallways, unguarded

radioactive materials, abandoned medical

records, and staff smoking next to patients.

 

Private hospitals are considered much better

and some regions have contracted with private

hospitals to treat NHS patients.

 

Dissatisfaction with the Italian health care

system is extremely high, by some measures the

highest in Europe.109 In polls, Italians say that

their health care system is much worse than

that of other countries and give it poor marks

for meeting their needs. Roughly 60 percent of

Italians believe that health care reform is

"urgent," and another 24 percent believe it is

"desirable." In general, Italians believe that

such reform should incorporate market-based

solutions. More than two-thirds (69 percent)

believe that giving patients more control over

health care spending will improve the system’s

quality. And 55 percent believe that it should

be easier for patients to spend their own money

on health care.

 

However, given the general dysfunction of

the Italian political system, and the entrenched

opposition of special interest groups, substantial

reform is not likely anytime soon.

 

Spain

 

Spain’s national health care system operates

on a highly decentralized basis, giving primary

responsibility to the country’s 17 regions.

The Spanish Constitution guarantees all citizens

the "right" to health care, including equal

access to preventive, curative, and rehabilitative

services; but responsibility for implementing

the country’s universal system is being

devolved to regional governments. The degree

and speed of devolution is uneven, however,

with some regions only recently achieving

maximum autonomy.

 

Coverage under the Spanish system is nearly

universal, estimated at 98.7 percent of the

population. The system provides primary

health care, including general health and pediatric

care, outpatient and inpatient surgery,

emergency and acute care, long-term disease

management, and prescription drugs (although

some drugs may require a copayment).

Many mental health services, particularly outpatient

services, are excluded, as is cosmetic

surgery.

 

The federal government provides each

region with a block grant. The money is not

earmarked: the region decides how to use it.

The block grant itself is based primarily on a

region’s population with some consideration

given to other factors such as the population’s

demographics. Regions may use their own

funds to supplement federal monies.

 

Not surprisingly, health care spending

varies widely from region to region. The differences

in expenditures, as well as in spending

priorities, lead to considerable variance in the

availability of health resources. For example,

Catalonia has more than 4.5 hospital beds per

1,000 residents, while Valencia has just 2.8.

 

Spanish patients cannot choose their physicians,

either primary care or specialists. Rather,

they are assigned a primary care doctor from a

list of physicians in their local community. If

more specialized care is needed, the primary

care physician refers patients to a network of

specialists. Unlike U.S. managed care, it is not

possible to go "out of network" unless the

patient has private health insurance (see

below). This has sparked an interesting phenomenon

whereby sick Spaniards move in

order to change physicians or find networks

with shorter waiting lists.

Waiting lists vary from region to region but

are a significant problem everywhere. On average,

Spaniards wait 65 days to see a specialist,

and in some regions the wait can be much

longer. For instance, the wait for a specialist in

the Canary Islands is 140 days. Even on the

mainland, in Galacia, the wait can be as long as

81 days. For some specialties the problem is far

worse, with a national average of 71 days for a

gynecologist and 81 days for a neurologist.

 

Waits for specific procedures are also lengthy.

 

Spanish patients

cannot choose

their physicians,

either primary

care or

specialists.

 

The mean waiting time for a prostectomy is 62

days; for hip replacement surgery, 123 days.

 

Some health services that U.S. citizens take

for granted are almost totally unavailable. For

example, rehabilitation, convalescence, and

care for those with terminal illness are usually

left to the patient’s relatives. There are very few

public nursing and retirement homes, and few

hospices and convalescence homes.

 

As with most other national health care systems,

the waiting lists and quality problems

have led to the development of a growing private

insurance alternative. About 12 percent of

the population currently has private health

insurance. (This amounts to double coverage

since opting out of the government system is

not allowed.) In larger cities such as Madrid

and Barcelona, the number of privately insured

reaches as high as 25 percent. Overall, private

insurance payments account for 21 percent of

total health care exenditures. More commonly,

Spaniards pay for care outside of the

national health care system out of pocket. In

fact, nearly 24 percent of health care spending

in Spain is out of pocket, more than any

European country except Greece and Switzerland,

and even more than the United States.

 

Here again, a two-tier system has developed,

with the wealthy able to buy their way

around the defects of the national health care

system, and the poor consigned to substandard

services.

 

There are also shortages of modern medical

technologies. Spain has one-third as many

MRI units per million people as the United

States, just over one-third as many CT units,

and fewer lithotripters. Again, there is wide

variation by region. For example, two regions,

Ceuta and Melilla, do not have a single MRI

unit. The regional variation is important

because Spaniards face bureaucratic barriers in

trying to go to another region for treatment.

All hospital-based physicians and approximately

75 percent of all other physicians are

considered quasi–civil servants and are paid a

salary rather than receiving payment based

on services provided. Compensation is based

on years of practice or the attainment of certain

professional credentials, with across-theboard

annual increases unrelated to merit,

performance, or patient satisfaction.

 

As a result, Spain has fewer physicians and

fewer nurses per capita than most European

countries and the United States. The lack of

primary care physicians is particularly acute.

 

Even so, Spaniards are generally happy

with their system. Nearly 60 percent describe

their system as good, the second highest favorability

rating in Europe. (France was first.)

 

Accordingly, health care reform does not rank

high on the average Spaniard’s political agenda.

One observer described health care as

"conspicuous by its absence as a major issue"

in recent elections. Only about 46 percent of

Spaniards describe the need for reform as

"urgent," while 35 percent see reform as "desirable."

And Spaniards are less inclined toward

market-based reforms than most other

European countries. Only 42 percent of

Spaniards believe that it should be easier for

patients to spend their own money on health

care, and only 58 percent believe that giving

patients more control over spending will

improve quality. However, Spaniards do want

more choice of doctors and hospitals, and

they want the government to do a better job of

dealing with waiting lists.

 

Japan

Japan has a universal health insurance system

centered primarily around mandatory,

employment-based insurance. On the surface,

Japan’s national health insurance program

defies easy description, comprising some

2,000 private insurers and more than 3,000

government units. However, in a broader

sense, the system encompasses four principal

insurance schemes.

 

The Employee Health Insurance Program

requires companies with 700 or more

employees to provide workers with health

insurance from among some 1,800 "societymanaged

insurance" plans. Nearly 85 percent

of these plans cover a single company and

can be thought of as similar to the self-insurance

plans operated by many large U.S com-

panies. Most of the rest are industry-based.

About 26 percent of the population participates

in these plans.

 

Such plans are financed through mandatory

employer and employee contributions,

effectively a payroll tax. The total contribution

averages around 8.5 percent of wages. It

is generally split evenly between employer

and employee, although some companies

assume slightly more than half the contribution.

As a result, workers contribute about 45

percent of payments overall. It should be

noted that studies have found that the

majority of the burden of the employer’s contribution

to health insurance is borne by the

employees in the form of reduced wages.

 

These contributions are frequently insufficient

to operate the insurance plans. In

2003, more than half lost money. A number

of companies have responded by dissolving

their individual plans and entering larger

industry-based plans. However, growing

costs continue to pressure many businesses.

 

Workers in businesses with fewer than

700 workers must enroll in the governmentrun,

small-business national health insurance

program. This plan covers about 30 percent

of the population and is funded primarily

through mandatory contributions,

around 8.2 percent of wages, and supplemented

by government funds.

 

The self-employed and retirees are covered

under the Citizens Insurance Program administered

by municipal governments. Funding

comes primarily from a self-employment tax,

but additional revenues come from an assessment

on the society-managed insurance programs

discussed above and the small business

program. General revenue contributions from

the national government are used to plug

shortfalls.

 

Finally, the elderly are covered through a

fund financed by contributions from the other

three schemes, as well as contributions from

the central government. The elderly do not pay

directly into this plan, known as the Roken, but

contribute to the plan they were enrolled in

while employed. The Roken is simply a costsharing

mechanism.

 

A number of small programs exist to handle

special populations such as farmers, fishermen,

and government workers. The unemployed

remain under their former employers’

plan, although they are not required to continue

contributing. Private supplemental insurance

exists, but very few Japanese carry it.

 

Private health insurance pays for less than 1

percent of total Japanese health care spending.

Benefits under all four schemes are

extremely generous, including hospital and

physician care, as well as dental care, maternity

care, prescription drugs, and even some transportation

costs. There are no restrictions on

hospital or physician choice and generally no

preauthorization or gatekeeper requirements.

Significant copayments accompany most services,

ranging from 10 percent to, more commonly,

30 percent (capped at $677 per month

for a middle-income family). As a result, the

average Japanese household pays about $2,300

per year out of pocket. Overall out-of-pocket

expenditures amount to roughly 17 percent of

total health care spending.

 

The vast majority of hospitals and clinics in

Japan are privately owned, but because the government

sets all fee schedules, the distinction

between privately and publicly owned is irrelevant

for patients. Reimbursement for both

hospitals and clinics is on a fee-for-service

basis, with the government setting fees and

prescription prices.

 

The fee schedule is identical for inpatient

and outpatient treatment. Because hospitals

must absorb both physician and capital costs

from the same level of reimbursement, the tendency

has been to shift patients to outpatient

services. Recently, some attempts have been

made to introduce alternate reimbursement

mechanisms for hospitals, including DRGs

and Diagnosis and Procedure Combinations—

classification systems that tie reimbursements

more closely to the resources that a particular

patient consumes. But the medical establishment

has resisted, and only about 80 hospitals

participate in the experiment.

 

Hospital physicians are salaried employees.

Nonhospital physicians work in the private

sector, and the government sets their reim-

bursement schedules. Generally, reimbursement

is on a fee-for-service basis, although

recently some chronic conditions have been

"price bundled" into a single fee. Reimbursement

schedules are set within the context of an

overall global budget on health spending, but

the division of resources is the subject of extensive

negotiation with providers.

 

The fee schedule reflects both the Japanese

style of medicine and attempts to contain

costs. For example, because of a strong cultural

bias against invasive procedures, surgery

tends to be reimbursed at a much lower rate

than nonsurgical procedures.

 

The fee-setting system has had serious corruption

problems. Because the fees for each of

more than 3,000 procedures or services are set

individually and adjusted every two years on an

individual basis, it is possible to manipulate

particular fees without attracting much attention.

 

In 2004, a group of dentists was indicted

for bribing the fee-setting board.

 

In addition, the reimbursement schedule

for physicians creates an incentive for them to

see as many patients as possible. The result is

assembly line medicine. Two-thirds of patients

spend less than 10 minutes with their doctor;

18 percent spend less than 3 minutes.

 

On the other hand, the Japanese, like

Americans, practice a very technology-intensive

style of medicine. Capital investment in

technology has been given high priority, and

the Japanese have at least as much access to

technology such as MRI units, CT scanners,

and lithotripters as patients in the United

States. Because the government imposes

uniform fee schedules on hospitals, there is no

price competition. Instead, hospitals attempt

to lure patients by having the best technology.

 

While this can benefit patients, it has also led

to queues at the best hospitals and a black

market with "under the table" payments for

faster access.

 

Some restrictions have been added in the

last few years, capping the number of diagnostic

imaging procedures that a hospital can

perform in a calendar month, as well as reducing

the fees for those services. These

changes have not led to visible rationing yet

but could in the future.

 

To date, Japan has done a fairly good job

of controlling costs without resorting to the

rationing common in many universal care

systems. This is due in part to factors outside

the health care system, such as generally

healthy lifestyles, low vehicle accident rates,

low crime rates, low rates of drug abuse, and

other cultural factors. One study estimated

that 25 percent of the difference in health

care spending between the United States and

Japan is attributable to a lower incidence of

disease and 15 percent to less aggressive practice

styles. But rationing has also been

avoided through the management of the

health care system and the imposition of significant

consumer cost sharing.

 

Nonetheless, spending is beginning to

escalate, especially in government-managed

programs such as the Roken, where there has

been less of an attempt at cost sharing and

cost containment. As one observer explained:

We Japanese have a tendency to go to the

hospital even when we have only minor

ailments such as the flu, headaches, or

stomach aches. If medical expenses are

not high and we do not feel well, then

why not go see a doctor and get some

medication. . . . The result, of course, is

that waiting rooms of clinics and hospitals

are full of people. Everyone is welcome

and there are, in fact, regular customers.

 

Sometimes elderly people come

to see a friend and the hospital waiting

room becomes a sort of salon.

 

This problem is aggravated by the demographics

of a rapidly aging society. By some

estimates, the elderly are responsible for 90 percent

of the aggregate increase in Japan’s health

care costs. If current trends continue, Japan

will almost triple its government spending on

health care in the next 20 years. And the situation

will only grow less stable with time.

 

Japan is expected to lose 35 million workers by

2050, with 35 percent of its population in

retirement. This raises questions of how a

system that relies on payroll taxes for funding

can continue to fund rising costs even as its

payroll base shrinks.

 

Norway

 

Norway has a universal, tax-funded, singlepayer,

national health system. All Norwegian citizens,

as well as anyone living or working in

Norway, are covered under the National Insurance

Scheme. Norwegians can, however, opt out

of the government system by paying out of

pocket. In addition, many Norwegians go

abroad for treatment to avoid the waiting lists

endemic under the government program.

 

The system is financed through general

tax revenues, with no earmarked or dedicated

tax for health care. Thus, health care

becomes one large contributor to a tax burden

that consumes 45 percent of GDP.

 

Among industrialized countries, only Sweden

has a higher tax burden.

 

Benefits are extensive and include inpatient

and outpatient care, diagnostic services,

specialist care, maternity services, preventive

medicine, palliative care, and prescription

drugs. At public hospitals, there are no

charges for stays or treatment, including

drugs. However, small copayments may be

charged for outpatient treatment and for

treatment by a general practitioner, psychologist,

or psychiatrist. The program also provides

"sick pay" and disability benefits. As

Michael Moore has noted, the Norwegian system

will even pay for "spa treatments" in

some cases.

 

Although the central government retains

overall responsibility for and authority over the

system, some management and funding

responsibilities have devolved to regional and

municipal governments. In general, municipal

governments are responsible for primary

health care, while four regional health authorities

are responsible for specialist care. Prior

to 2002, public hospitals were run by local or

county governments. In the face of chronic

problems, notably long waiting lists and rising

costs, the central government took direct control

of all public hospitals in January 2002. A

small number of private hospitals do exist outside

the public system.

 

The government sets a global budget limiting

overall health expenditures, and setting

capital investment expenditures for hospitals.

Most general practitioners and physician specialists

outside hospitals receive a fixed salary,

although some specialists working on a contract

basis receive both an annual grant and

fee-for-service payments. Reimbursement rates

are set by the government and balance-billing

is prohibited. Most other health care personnel

are salaried government employees.

 

Patient choice of physician is constrained.

All Norwegian citizens must choose a general

practitioner from a government list. The GP

acts as a gatekeeper for other services and

providers. Patients may switch GPs, but no

more than twice per year and only if there is no

waiting list for the requested GP. Specialists

may only be seen with a referral from the GP.

The Norwegian health care system has experienced

serious problems with long and growing

waiting lists. Approximately 280,000 Norwegians

are estimated to be waiting for care on

any given day (out of a population of just 4.6

million). The average wait for hip replacement

surgery is more than four months; for a

prostectomy, close to three months; and for a

hysterectomy, more than two months.

 

Approximately 23 percent of all patients referred

for hospital admission have to wait longer than

three months for admission.

 

The Norwegian government has responded

by repeatedly and unsuccessfully attempting to

legislate waiting lists out of existence. For example,

under the 1990 Patients’ Rights Act,

patients with a condition that would lead to

"catastrophic or very serious consequences"

have a right to treatment within six months, if the

treatment is available. In 2001, after several

government reports had documented repeated

violations of this policy, the government passed

a new mandate requiring that a patient’s medical

condition be at least "assessed" within 30

days. Despite these paper guarantees, waiting

lists have not been substantially reduced.

 

Moreover, such delays may represent only

the tip of the iceberg when it comes to

rationing care in Norway. In some cases, care

may be denied altogether if it is judged not to

be cost-effective. As Knut Erik Tranoy,

Professor Emeritus at the Centre for Medical

Ethics of the University of Oslo and an original

member of the government’s Health Care

Priorities Commission, explains:

 

It is important to see (a) that, in a public

health service of the Nordic type, any

given amount of resources always has

alternative uses. And (b) it is neither

medically nor morally defensible to put

scarce resources to uses which will foreseeably

yield less favorable outcomes

than other uses—save fewer lives, cure

fewer patients.

 

Tranoy differentiates between Norwegianstyle

systems of national health care and "a

health care system where patients buy services

in a market, and where justice means

equality of opportunity to buy what you

need. Decisions about alternative use are

then (largely) patients’ decisions."

 

While Norwegians generally report that

they are "fairly satisfied" with the way their

health care system is run, there has been growing

discontent over such issues as the ability to

choose a health care provider, involvement in

decisions regarding care or treatment, and

waiting times—which has been an ongoing

issue in Norwegian politics. However, at this

time there doesn’t appear to be any widespread

movement for larger reform.

 

Portugal

 

The Portuguese health care system is a classic,

universal, centrally run National Health

System, a single-payer system funded through

taxes with comprehensive benefits provided

free or with little cost at the point of service.

 

Also, a number of occupation-related health

insurance schemes—originally intended to be

integrated into the NHS—now coexist with it.

The primary source of care is the NHS,

which is funded primarily through general tax

revenues, accounting for approximately 13 percent

of all government expenditures. In theory,

the NHS operates within an annual global

budget for health care spending. In reality, it

regularly exceeds this budget by a wide margin,

necessitating supplemental funding. Portugal

is one of the few OECD countries where public

health care spending has been rising as a proportion

of total health spending, up more than

four percentage points since 1997.

 

Theoretically, benefits under the NHS

include all necessary inpatient and outpatient

health care services including specialists, diagnostic

tests, mother and child care, and prescription

drugs. On paper, no health-related

expense is specifically excluded from coverage

by the NHS, though in reality services such as

dental care and rehabilitation therapy are seldom

provided. Copayments are required for

diagnostic tests, hospital admissions, consultations

with specialists, and prescription

drugs, where copayments can run to 40 percent

or higher.

 

Primary care physicians and hospitalbased

physicians are public employees, paid

directly by the NHS. However, NHS doctors

are permitted to practice privately as well,

and roughly half do so. Specialists are

often in private practice and are reimbursed

by the NHS on a contractual basis.

 

About 25 percent of the population, mostly

government workers, military, telecommunication

workers, and their families, remain

under a series of industry or occupation-based

insurance schemes, known collectively as "subsystems,"

which are a legacy of the country’s

pre-NHS health care system. These plans

were originally intended to be incorporated

into the NHS, but their powerful constituencies

have prevented that from occurring.

 

Participants in the subsystems pay a premium

equal to approximately 1 percent of their

salary. Benefits are generally superior to those

offered through the NHS. Not surprisingly,

premiums fall far short of what is needed to

finance benefits. The resulting shortfall is

shifted to the NHS.

 

In addition, approximately 10 percent of

the population has private insurance, usually

through their employer.179 Private insurance

generally pays for hospital and specialty care

but not for primary care physicians. Policies

are medically underwritten and have no

requirement for renewability, meaning insurers

can raise premiums or drop customers

with extremely high claims.

 

Choice of provider is heavily constrained

under the NHS. Every citizen must choose a

primary care physician from a list of those

available within a specified geographic area.

This area is usually based on the person’s

area of residence but may be based on the

area of employment. The average general

practitioner serves as many as 1,500 people,

though some may have more than 2,000

patients, leading to long waits and difficulties

in getting appointments. People may

change GPs only by applying in writing to

the NHS and explaining their reasons.

 

Access to specialists or hospital care, except

in emergencies, requires referral from the

patient’s GP. Since this is often difficult to

secure in a timely manner, patients often seek

care through hospital emergency rooms. By

some estimates, at least 25 percent of emergency

room patients do not need immediate

treatment.

 

Despite guarantees of "universal coverage,"

access to care remains a serious problem.

Waiting lists are so long and so prevalent that

the European Observatory on Health Systems

says that they veer toward "de facto

rationing." Currently, more than 150,000

Portuguese are on waiting lists for surgery, out

of a population of just 10.6 million. However,

that may understate the problem in poorer

and rural areas, which have fewer health

resources and less access to care. Modern

health technology is far less available than in

the United States. The United States has

almost seven times more MRI units per million

people, and 20 percent more CT scanners.

 

To avoid waiting lists, Portuguese patients

frequently pay out of pocket to see physicians

in private practice. In some cases, Portuguese

patients have crossed the border to receive

treatment in Spain.

 

While there appears to be a consensus in

Portugal that the system needs some kind of

reform, weak governments and strong structural

interest groups have combined to prevent

the development of any consensus over

the direction reform should take. For the

moment, Portugal drifts.

 

Greece

 

Although ostensibly an employer-based system,

the Greek system operates more like a single-

payer system in that it is highly centralized

and regulated. Virtually every aspect of health

care financing and provision is strictly controlled

by the Ministry of Social Health and

Cohesion. Some attempts have been made

to decentralize decisionmaking, with 17 regional

organizations having some responsibility for

implementing policy and managing the delivery

of health care, but most power remains

with the central government.

 

Greek employers must enroll their workers

in one of 35 "social insurance funds,"

funded in part through a payroll tax and in

part through general tax revenues. Unlike

Germany, where employers have a choice

among competing sickness funds, Greek

social insurance funds are specific to industry

sectors. The range of benefits offered by

each fund, the contribution rates, and the

types of providers that the insured can access

are all determined by the Ministry of Social

Health and Cohesion.

 

Certain funds known as "noble funds," primarily

used by government workers, the banking

sector, and public utility workers, offer

more extensive benefits and require smaller

worker contributions. The powerful unions

representing workers from these sectors have

consistently blocked attempts to merge these

funds with other social insurance funds or to

allow buy-ins from other industry sectors.

 

Social insurance funds reimburse doctors in

two ways. Some providers are employed directly

by the funds at fund-operated clinics and are

effectively salaried employees. Others practice

privately but contract with funds to provide

care. Contract physicians are reimbursed on a

fee-for-service basis, but reimbursement rates

are extremely low. Balance-billing is prohibited.

In theory, funds provide first-dollar coverage,

with no deductibles and low copayments

for only a few services. However, as discussed

below, most physicians demand "informal"

payments in exchange for treatment.

 

In addition to the social insurance funds,

the National Health Service employs physicians

and operates hospitals. The NHS operates parallel

to the social insurance funds, acting essentially

as a back-up mechanism, although it may

be the principal provider of health services in

some rural areas. It also provides health care for

the uninsured and the elderly.

 

In addition to NHS hospitals, other public

hospitals contract with the social insurance

funds. In both cases, the Ministry of Social

Health and Cohesion determines not only the

hospital’s budget, but the number of personnel,

the specialties of the personnel, salary levels,

number of beds, and the purchase of technology.

Budgets are rigidly monitored and hospital

administrators have little leeway.

 

Hospitals are reimbursed on a per diem payment

system, a type of a fixed charge.

 

NHS hospitals in particular are considered

substandard. Most suffer from severe staffing

shortages caused by low pay and poor living conditions

in rural areas. It has been estimated that

less than half of authorized medical positions are

actually filled. Low salaries have also led to personnel

shortages in public hospitals associated

with social insurance funds.

 

A series of reforms implemented in 2005

imposed a referral requirement for hospital

admissions. Patients seeking free treatment in

a public NHS hospital must have a referral

from a general practitioner, who acts as a gatekeeper.

Private practice physicians may not

make referrals to public or NHS hospitals.

Unfortunately, general practitioners are in

severely short supply. Greece needs an estimated

5,000 general practitioners to meet demand.

In actuality it has only around 600.

 

Despite overlapping health plans, the Greek

system falls short of universal coverage. About

83 percent of the population is covered for primary

care (on par with the United States), and

about 97 percent for hospital care. In theory,

the uninsured can always receive treatment by

walking into an NHS clinic or hospital. Only

about 8 percent of Greeks have private supplemental

health insurance, although this percentage

has risen substantially in the past few

years and further growth is predicted.

 

Accurate information on waiting lists is

difficult to come by. According to the WHO,

"although ‘patient registries’ at the hospital

level do exist, there is no systematic data processing

available at any level of care," to provide

adequate analysis. However, most

observers agree that waiting lists are a severe

problem at almost every level of care, and particularly

bad at both NHS and public hospitals.

 

An examination of waiting lists at Athens

hospitals by the Ta Nea newspaper found the

wait for surgery was as long as six months; for

an outpatient appointment with either the

hypertension or neurology departments, 150

days. Even simple blood tests required a

month-long wait.

 

The Greek system has developed a level of

endemic corruption as patients have sought

ways around the system’s rationing, bureaucracy,

and inefficiencies. For example, Greeks routinely

provide physicians with "informal" payments

for seeing a patient from a sickness fund

that has not contracted with the doctor, for

moving a patient up in the queue, or for providing

treatment outside government guidelines.

In addition, physicians actively attempt

to persuade patients to move from a doctor’s

sickness fund contract to the doctor’s private

practice. Patients who switch pay out of pocket

but receive faster and better care. Even NHS

physicians see private patients on the side.

(This practice was illegal until 2002 but went

on despite the prohibition). Physicians also

receive payments for referrals to private hospitals

or diagnostic centers. Such informal outof-

pocket payments made up 42 percent of

total health expenditures in 2002, fully 4.5 percent

of GDP. Essentially, the Greek health

care system is funded through payroll taxes,

general tax revenue, and bribery.

 

In addition, the health care bureaucracy has

become highly politicized. Every staff appoint-

ment in the public health sector must be

approved at the ministry level. All hospital

administrators and other health officials are

appointed on the basis of political affiliation

with the governing party, often with little regard

for relevant training or other qualifications.

 

Not surprisingly, Greece has far less modern

health care technology than the United

States. The United States has more than twice

as many MRI units per million people and 20

percent more CT scanners. Much of the

state-of-the-art equipment that does exist is

clustered in the country’s small number of private

clinics and hospitals. Indeed, the vast

majority of high technology biomedical tests

are performed by the private sector.

 

One study summed up the problems with

the Greek health care system this way:

The Greek health system does not yet

offer universal coverage and has fragmented

funding and delivery. Funding is

regressive, with a reliance on informal

payments, and there are inequities in

access, supply and quality of services.

 

Inefficiencies arise from an over reliance

on relatively expensive inputs, as evidenced

by the oversupply of specialists

and undersupply of nurses. Resource

allocation mechanisms are historical and

political with no relation to performance

or output; therefore providers have little

incentive to improve productivity.

 

That would appear to be a fairly accurate

summary.

 

Netherlands

 

Aside from Switzerland, the Netherlands

has perhaps the most market-oriented national

health care system in Europe. That was the

case even before 2006, when a series of reforms

introduced even more market mechanisms.

The old pre-2006 Dutch system resembled

Germany’s. Dutch workers with incomes

below €€ 32,600 were required to enroll in one of

30 government-controlled "sickness funds."

 

Those with higher incomes had the option of

enrolling in the funds if they wished, or opting

out of the government system and purchasing

private insurance. Sickness funds were

financed through a payroll tax and a flat-rate,

per-capita premium.

 

The funds provided a uniform package of

benefits including physician and hospital

care, specialist care, diagnostic tests, prescription

drugs, and dental care for children.

 

While consumers could switch funds annually,

there was little competition between funds

and few consumers actually switched.

The new Dutch system operates on the theory

of managed competition like Switzerland

(see below). Both the social health insurance

program and the alternative private health

insurance option were replaced by a requirement

that all Dutch citizens purchase a basic

health insurance plan from one of 41 private

insurance companies. Although a fine may be

imposed for failure to comply, there is no

comprehensive system for identifying citizens

who do not meet the mandate. An estimated

1.5 to 2 percent of the population is currently

uninsured.

 

The required plan, which covers minimum

benefits set by the government,

includes general practitioner and specialist

care, hospital stays, some dental care, prenatal

care, some medicines, and travel expenses.

In one interesting innovation, most of the

required benefits are specified in terms of

"functions of care" rather than by provider

category. Thus, "rehabilitation care" is

required, but no particular type of rehabilitation

provider is mandated. This may mean

that the benefits package will be less susceptible

to manipulation by provider interest

groups, but it is much too early to tell.

The Health Ministry sets premiums, which

average around €€ 100 per month for an individual.

Insurance companies can offer varying

deductibles, ranging from €€ 150 to €€1,000 per

year, allowing for a small level of price competition.

 

Policies can also offer rebates of up to

€€225 if a policyholder uses no health services

in a given year beyond seeing a primary care

physician. About 90 percent of the popula-

tion also buys supplemental insurance covering

services over and above the required standard

benefits package.

 

Employers generally pay half of insurance

premiums, with individual workers picking up

the other half. Individual premiums are tax

deductible. Subsidies, or care allowances, that

help low- and middle-income income workers

purchase the basic insurance plan are extensive

and reach well into the middle class. Currently, 5

million Dutch citizens qualify for some level of

subsidy on a sliding scale based on income.

 

Those subsidies are financed through a tax on

salaried workers. Because of the high levels of

subsidy, the Dutch government remains a large

source of health spending, one area of significant

difference with the Swiss system.

Insurers negotiate quality, quantity, and

price of services with providers. Notably,

many insurers require providers to document

the quality of the care they provide, frequently

relying on evidence-based guidelines

and performance metrics.

 

Some insurers provide care directly, using

their own staffs and their own facilities, such

as primary care centers and pharmacies.

Other insurers contract with a network of

providers similar to U.S. preferred provider

organizations (PPOs). Patients can go out of

network but will receive only partial reimbursement.

Most insurers require a referral

from a primary care provider before a patient

can see a specialist. Pharmaceutical prices

are capped nationwide at the average price of

medicines in a therapeutic class. Individuals

may choose more expensive drugs but must

pay the difference out of pocket.

The new system has been in place for only

two years, which is not enough time to permit

a thorough evaluation. However, preliminary

indications suggest that it is an

improvement over the pre-2006 system.

 

Dutch consumers appear to have embraced

the reforms. Consumer organizations

are participating in negotiations with providers,

insurers, and lawmakers. The system is

becoming more transparent, with far greater

information available regarding both price

and quality. Consumers seem willing to make

decisions and change insurers on the basis of

price and quality.

 

Price competition under the new system has

increased significantly and at least 20 percent of

Dutch consumers have switched insurers.

 

When the system was initiated, the Dutch government

predicted premiums would cost

€€1,106 on average. However, competition has

forced the average premium down to €€1,028,

097.6 percent below the prediction. Overall,

the new system is estimated to have increased

the purchasing power of Dutch households by

as much as 1.5 percent. However, not everyone

has been a winner. The community rating

requirement has resulted in steep increases in

premiums for younger workers who were more

heavily subsidized under the old system.

 

Under the old system, waiting lists were

widespread—for example, more than three

months for a hip replacement and two months

for a prostectomy or hysterectomy. One

study estimated that at least 100 heart patients

died each year while on waiting lists. Early

evidence suggests that some improvement has

come as a result of the 2006 reforms.

 

Hospitals are beginning to compete by

expanding services such as neurosurgery and

radiation therapy. Although some experts

have expressed concern that smaller hospitals

offering these services may not have sufficient

utilization rates to ensure quality and efficacy,

the expanded availability of services will likely

increase access to care and reduce queues.

 

The new system may even be having a positive

impact on health care costs. Since the

new system took effect, health care costs have

been growing at an annual rate of just 3 percent,

compared to more than 4.5 percent in

the year before the reforms.

 

The jury is still out, and the Dutch system

still falls well short of a true free market, but

the Netherlands appears to have taken a big

step in the right direction.

 

Great Britain

 

Almost no one disputes that Britain’s

National Health Service faces severe prob-

lems, and few serious national health care

advocates look to it as a model. Yet it appears

in Moore’s movie SiCKO as an example of

how a national health care system should

work, so it is worth examining.

 

The NHS is a highly centralized version of

a single-payer system. The government pays

directly for health care and finances the system

through general tax revenues. Except for

small copayments for prescription drugs,

dental care, and optician services, there are

no direct charges to patients. Unlike many

other single-payer systems such as those in

Canada and Norway, most physicians and

nurses are government employees.

 

For years, British health policy has focused

on controlling spending and in general has

been quite successful, with the system spending

just 7.5 percent of GDP on health care.

 

Yet the system continues to face serious financial

strains. In fiscal year 2006, the NHS faced

a deficit of £700 million, according to government

figures, and as much as £1 billion,

according to outside observers. This comes

despite a £43 billion increase in the NHS

annual budget over the past five years. By

some estimates, NHS spending will have to

nearly triple by 2025 just to maintain the current

level of services.

 

And that level of services leaves much to be

desired. Waiting lists are a major problem. As

many as 750,000 Britons are currently awaiting

admission to NHS hospitals. These waits are

not insubstantial and can impose significant

risks on patients. For example, by some estimates,

cancer patients can wait as long as eight

months for treatment. Delays in receiving

treatment are often so long that nearly 20 percent

of colon cancer patients considered treatable

when first diagnosed are incurable by the

time treatment is finally offered.

 

In some cases, to prevent hospitals from

using their resources too quickly, mandatory

minimum waiting times have been imposed.

The fear is that patients will flock to the most

efficient hospitals or those with smaller backlogs.

Thus a top-flight hospital like Suffolk

East PCT was ordered to impose a minimum

waiting time of at least 122 days before

patients could be treated or the hospital would

lose a portion of its funding. As the Daily

Telegraph explained:

 

In a real competitive market, increased

demand can allow prices to rise, thus

increasing profits, which allow the market

to grow. Efficient producers can then

reduce their unit costs and their prices,

and so give a better deal to the consumer.

 

The prevailing logic is that the

more customers who are served—or

products that are sold—in a given period

of time, the better the business does.

 

But PCTs have budgets that are

predetermined by Whitehall spending

limits, and there is no way for

them to conjure extra revenue out of

the air or to grow their market. As a

result, the hospitals that are most

successful in providing prompt treatment

are running through the finite

resources of their PCTs at an unacceptably

rapid rate.

 

The problem affects not only hospitals.

There are also lengthy waits to see physicians,

particularly specialists. In 2004, as a cost-cutting

measure, the government negotiated low

salaries for general practitioners in exchange

for allowing them to cut back the hours they

practice. Few are now available nights or

weekends. Problems with specialists are

even more acute. For example, roughly 40

percent of cancer patients never get to see an

oncology specialist.

 

The government’s official target for diagnostic

testing is a wait of no more than 18

weeks by 2008. In reality, it doesn’t come

close. The latest estimates suggest that for

most specialties, only 30 to 50 percent of

patients are treated within 18 weeks. For trauma

and orthopedics patients, the figure is only

20 percent. Overall, more than half of British

patients wait more than 18 weeks for care.

 

Explicit rationing also exists for some

types of care, notably kidney dialysis, open

heart surgery, and some other expensive procedures

and technologies. Patients judged

too ill or aged for the procedures to be costeffective

may be denied treatment altogether.

 

Recently, the British government introduced

some tiny steps toward market-based

reforms. Under the experimental London

Patient Choice Project, patients who have been

waiting longer than six months for treatment

are offered a choice of up to four alternate

providers. This experiment has been extended

nationwide for coronary heart patients who

have been waiting longer than six months.

 

Some proposed solutions are far more radical.

David Cameron, leader of the Conservative

Party, has proposed that the NHS be allowed

to refuse treatment to individuals who don’t

practice healthy lifestyles, for example, who

smoke or are overweight. Then again, he has

also proposed that the government pay for

gym memberships and subsidize the purchase

of fresh fruit and vegetables.

 

A small but growing private health care system

has emerged in the UK. About 10 percent

of Britons have private health insurance. Some

receive it through their employer, while others

purchase it individually. In general, the insurance

replicates care provided through the NHS

and is purchased to gain access to a wider

choice of providers or to avoid waiting lists.

 

Private health insurance is lightly regulated

and risk-rating is allowed. The British government

treats health insurance more or less the

same as other types of insurance.

 

The British public is well aware of the need

for reform. Nearly two-thirds of Britons (63

percent) say that the need for reform is

"urgent," while another 24 percent believe it is

"desirable." Fully 60 percent of Britons believe

that making it easier for patients to spend their

own money on health care would improve

quality. Yet Britons are also extremely proud

of their health care system and wary of any

reforms that would "Americanize" it.

 

Switzerland

 

Of all the countries with universal health

care, Switzerland has one of the most market-

oriented systems. Indeed, the Swiss government

actually pays for a smaller amount

of total health care expenditures than the

U.S. government, 24.9 percent versus 44.7

percent. (See Figure 3.)

 

The Swiss system is based on the idea of

managed competition, the same concept that

underlay the 1993 Clinton health care plan and

Mitt Romney’s reforms in Massachusetts.

 

Managed competition leaves the provision of

health care and health insurance in private

hands but creates a highly regulated artificial

marketplace as a framework within which the

health care industry operates.

 

Swiss law requires all citizens to purchase a

basic package of health insurance, an individual

mandate. Coverage is close to universal, estimated

at 99.5 percent. This level of compliance is due

in part to the Swiss national character and may

not be replicable in the United States where the

record of complying with mandates is much

more mixed (even if such a mandate were desirable).

 

For example, nearly 100 percent of Swiss

drivers comply with their country’s mandate for

automobile insurance, compared with only 83

percent of U.S. drivers.

 

The term "basic benefits package" is

somewhat misleading since the required benefits

are quite extensive, including inpatient

and outpatient care, care for the elderly and

the physically and mentally handicapped,

long-term nursing home care, diagnostic

tests, prescription drugs, and even complementary

and alternative therapies.

 

Insurance is generally purchased on an individual

basis. Few employers contribute to the

purchase or provide insurance. The policies

are provided by private insurers. Currently,

some 93 insurers operate in Switzerland,

although not every insurer operates in every

canton, or region. Originally, insurers were

required to be nonprofit entities, but that

restriction was eliminated in 2002.

 

Insurers cannot reject an applicant on the

basis of health status, and all policies are community

rated within a geographic area, meaning

that the healthier pay higher premiums to

subsidize the less healthy. One exception to

community rating is for nonsmokers, who can

receive premiums as much as 20 percent lower

than smokers. A formula adjusts premiums

based on sex and age. The geographic variation

can be significant, with premiums differing

as much as 50 percent between cantons.

 

Unable to compete on the basis of managing

and pricing risk, and required to offer

nearly identical basic benefits packages,

insurers compete primarily on price. Since

they cannot reduce costs by risk management

or benefit design, they generally manage

prices by varying the level of deductibles

and copayments. Individuals can purchase

expensive policies with very low deductibles

and copayments, or far less expensive policies

with high deductibles or extensive copayments.

Thus, premiums vary according to

their cost-sharing attributes and plan type,

running from $1,428 per year for a plan with

a deductible of approximately $2,000 to

$2,388 for a plan with a $250 deductible.

 

Because employers do not pay for workers’

health insurance, the Swiss are exposed to the

full cost of their insurance purchases. As a result,

many Swiss have opted for high-deductible

insurance. Thus, with high deductibles and

extensive copayments, the Swiss pay out of

pocket for 31.5 percent of health care, twice as

much as in the United States. (See Figure 4.)

 

Recently, there has also been a growing

market in managed care plans that, like those

in the United States, offer lower premiums in

exchange for limitations on access to specialists

and other services. Premiums for such

plans run around $1,900 per year.

 

The Swiss government offers subsidies to

low-income citizens to help them purchase a

policy. Subsidies are based on both income

and assets, and the maximum available subsidy

covers the cost of an average premium in

the individual’s canton. These subsidies are

designed to prevent any individual from having

to pay more than 10 percent of income

on insurance. They do not, however, pay the

entire cost of insurance because the Swiss do

not want to create an incentive for subsidized

individuals to choose the most expensive

plan with the lowest deductibles and copayments.

 

Roughly one-third of Swiss citizens

receive some form of subsidy, and approximately

19 percent of all health insurance premiums

are paid with government funds.

 

Swiss insurers operate as cartels to negotiate

provider reimbursements on a cantonal basis.

Providers must accept the negotiated payment,

and balance-billing is prohibited. If insurers and

providers are unable to reach agreement on a fee

schedule, canton governments are empowered to

step in and impose an agreement. There are no

restrictions on where physicians may set up practice,

so to some degree providers can vote with

their feet, moving to cantons that offer higher

reimbursements, a practice that has led to physician

shortages in some areas.

 

The system includes both public and private

hospitals. Private hospitals negotiate

reimbursement with insurance cartels and

physicians in the same manner. Public hospitals

are operated by cantons, which negotiate

reimbursement rates with insurers and provide

subsidies to the hospitals. In some cantons,

individuals with only the basic insurance

plan must use public hospitals; supplementary

insurance (see below) is required for

admission to private hospitals.

 

Recently some providers have begun operating

outside the negotiated fee schedules. A

separate supplemental insurance market is

starting to develop to cover the cost of these

providers, which are presumed to offer higher

quality or more advanced services. Supplementary

insurance also allows access to private

hospitals in those cantons that do not

permit access under the basic insurance plan.

Even within public hospitals, supplementary

insurance can be used to pay for services such

as private rooms that are not covered under

the basic plan. By some estimates as many as

40 percent of Swiss citizens have purchased

supplemental insurance.

 

The Swiss do not impose a global budget

on their health care system and have therefore

avoided the waiting lists common in other sys-

tems. In addition, the Swiss have a high degree

of access to modern medical technology, but it

has come at a cost. The Swiss spend 11.5 percent

of GDP on health care, second only to the

United States.

 

Since Swiss health care consumers are

exposed to the cost consequences of their

health care decisions, this trade-off between

access and cost can be presumed to reflect the

desires of Swiss patients. They have chosen

high quality care even though it costs them

more. Given that economists consider health

care to be a "normal good"—that is, consumption

rises along with income—and Switzerland

is a wealthy nation, such a decision seems

entirely reasonable.

 

At the same time, it is notable that Swiss

health care spending remains below that of the

United States for nearly comparable care.

Strong evidence suggests that the exposure of

Swiss consumers to the cost consequences of

their health care decisions has made them more

conscious consumers and helped limit overall

health care costs. As Regina Herzlinger and

Ramin Parsa-Parsi of Harvard have concluded,

"Cost control may be attributed to the Swiss

consumer’s significant role in health care payments

and the resulting cost transparency."

 

The transparency of the system also makes it

responsive to consumer preferences. The WHO

survey ranked Switzerland second only to the

United States in terms of responsiveness to

patients’ needs for choice of provider, dignity,

autonomy, timely care, and confidentiality.

 

The Swiss generally seem pleased with their

system. Earlier this year, Swiss voters overwhelmingly

rejected a proposal to replace the

current system with a single-payer plan; more

than 71 percent of Swiss voters turned down

the proposal in a nationwide referendum.

 

Nonetheless, the Swiss system has its own

problems, most of them predictable outgrowths

of the individual mandate and the regulation

inherent in managed competition. In most markets,

consumers impose a certain discipline on

prices because they can refuse to buy a product

if it costs too much. The individual mandate

removes this power since consumers must purchase

the product (in this case, insurance) even if

they believe the cost outweighs the value.

Moreover, the establishment of a governmentdefined

benefits package is an open-ended invitation

to special interests representing various

health care providers and disease constituencies,

who can certainly be expected to lobby for the

inclusion of additional services or coverage.

 

Public choice dynamics are such that

providers (who would make money from the

increased demand for their services) and disease

constituencies (whose members naturally have

an urgent desire for coverage of their illness or

condition) will always have a strong incentive to

lobby legislators for inclusion under any minimum

benefits package. The public at large will

likely be unaware of the debate or see resisting

the small premium increase caused by any particular

additional benefit as unworthy of a similar

effort—a simple case of concentrated benefits

and diffused costs.

 

That is exactly what has happened in

Switzerland, leading to a growing expansion

of the basic benefits package. In particular, a

powerful hospital and physician lobbying

coalition known as the "Blue Front" was able

to demand a significant expansion in covered

benefits in exchange for a relaxation of "any

willing provider" laws so as to permit managed-

care contracts.

 

The expansion of benefits has driven up

the cost of insurance, a cost only partially offset

by larger deductibles. Although the proportion

of health expenditures paid out of

pocket remains high, it has decreased by

roughly 10 percent in the past decade.

 

Moreover, the growth in covered benefits

has helped drive up costs for the system as a

whole, as the Swiss become more insulated

from the costs of their health care purchasing

decisions. If that trend continues, it could

undermine the cost transparency that is at

the heart of the Swiss system." As Uwe

Reinhardt has noted, "Over time, the growth

in compulsory benefits has absorbed an

increasing fraction of the consumers’ payment,

thus compromising the consumer-driven

aspects of the Swiss system."

 

Evidence shows that the community rating

requirements are creating distortions within

the Swiss market, leading to the over provision

of care to the healthy and the under provision

of care to the sick. In addition, the prohibition

on risk management discourages the

development of new and innovative products.

 

Peter Zweifel of the University of Zurich, a

member of the Swiss Competitive Committee

which oversees insurance regulation, believes

that a return to some degree of risk-rating is

essential to the long-term success of the Swiss

system. As Zweifel puts it, "Let competition

work its magic. Let those who are bad risks get

the message that they need to become better

risks, if possible. If not possible, [they would]

still get a subsidy which [keeps their costs]

down to little more than 8–10 percent of taxable

income."

 

Third, the cartel structure for negotiating

reimbursement schedules can create a number

of distortions. Effectively monopsony

purchasers, the cartels have enormous leverage

when it comes to negotiations. Not surprisingly,

physicians have tended to set up

practice in cantons with the highest levels of

reimbursement, leading to shortages in other

areas. Reimbursement rates have reportedly

created wasteful incentives—for example, hospitals

shifting patients from outpatient to

inpatient care. And the combination of

increased demand and low reimbursement

has led to the first signs of queues for the

most complex surgeries.

 

In addition, the negotiations freeze in

place a pricing structure that inhibits the

development of innovative approaches that

do not tie payments to specific benefits. This

includes both managed care approaches and

health services integration.

 

Finally, Switzerland has some of Europe’s

strongest regulation of nonphysician health

care professionals. As a result, patients are

often forced to use more expensive providers

where a less expensive professional would do.

All of the above combine to undermine the

consumer-driven nature of Switzerland’s

health system. Despite these problems, the

Swiss system provides a useful lesson for the

United States about the value of consumerdirected

health care. In particular, we can see

that when the cost of insurance becomes more

transparent, consumers shift their purchasing

preferences toward true insurance (spreading

catastrophic risk), rather than purchasing prepayment

for routine, low-cost services. That

gives consumers an overall incentive to make

cost-versus-value decisions when purchasing

health care, resulting in reduced costs while

maintaining individual choice and quality

care.

 

Germany

 

Germany ranked 25th in the WHO ratings.

 

Despite that low ranking, however, the

country is worth examining because it is frequently

cited as a model by advocates of

national health care.

 

National health insurance in Germany is

part of a social insurance system that dates

back to Bismarck. All German citizens with

incomes under €€ 46,300 (roughly $60,000) are

required to enroll in one of approximately 250

statutory "sickness funds." Those with higher

incomes may enroll in the funds if they wish, or

may opt out of the government system and

purchase private insurance. About threequarters

of workers with incomes above the

statutory limit choose to remain in the sickness

funds, which currently cover approximately

90 percent of the population. Overall,

insurance coverage is nearly universal.

However, the number of uninsured has been

rising, roughly tripling in the last 10 years to

300,000 people. About 9 percent of the population

purchases supplemental insurance to

cover items that are not included in the standard

benefits package.

 

Sickness funds are financed through a payroll

tax split equally between the employer and

employee. The size of the tax varies depending

on which fund the worker has chosen, but

averages around 15 percent of wages. Sickness

funds are supposed to be solvent and selfsupporting,

but in reality the system ran a €€ 7

billion deficit in 2006. The German government

has proposed a 1 percent increase in the

payroll tax, split evenly between employer and

employee, starting next year. In addition,

general tax revenues finance capital costs for

acute care hospitals and many rehabilitative

services, especially for retirees.

 

Benefits are extensive, covering physicians,

hospital and chronic care, diagnostic

tests, preventive care, prescription drugs, and

part of dental care. In addition to the medical

benefits, sickness funds provide sick pay to

those who cannot work due to illness, ranging

from 70 to 90 percent of the patient’s last

gross salary, for up to 78 weeks.

 

The central government and state governments

split the regulation of the health care

system. The central government establishes

the national global budget for health care

spending, defines any new medical procedures

to be included in benefit packages, and sets

reimbursement rates for physicians. Some of

this is accomplished through legislation, while

the rest is handled through negotiations

between the National Association of Sickness

Funds and the National Association of

Physicians. At the state level, state associations

of sickness funds and physicians negotiate

overall health budgets, reimbursement contracts

for physicians, procedures for monitoring

physicians, and reference standards for

prescription drugs. The bargaining power

in these negotiations clearly lies with the sickness

funds backed by the government, allowing

them to effectively impose fee schedules

and other restrictions on providers. The purchasing

power of a German physician’s wages

is now about 20 percent that of a U.S. physician.

 

This has led to physician strikes as

recently as 2005.

 

Although Germany spends less on health

care than the United States, both as a percentage

of GDP and per capita, expenditures have

been rising at an alarming rate in recent years.

Friedrich Breyer, an economist from Konstanz

University, estimates that health care spending

could reach 30 percent of GDP by 2020 unless

significant changes are made.

 

The German government has responded by

beginning to cut back on benefits. In 2004,

sickness funds stopped covering eyeglasses,

lifestyle medications, and all over-the-counter

drugs. Copayments were imposed for the first

time, such that Germans now pay €€ 10 per

quarter to see a general practitioner, €€ 10 per

day of hospital stay, €€10 per prescription, and

for certain specialty services. The highest

copayments are 10 percent for prescription

drugs. Overall, Germans pay out of pocket for

about 13 percent of total health care spending,

only slightly less than Americans. Preliminary

evidence suggests that the introduction

of cost sharing has slightly reduced utilization

and spending.

 

In 2006, Chancellor Angela Merkel proposed

a sweeping set of health care reforms

that included creating a centralized health

fund, shifting financing in part from payroll

taxes to general revenues, trimming benefits,

imposing greater cost sharing, and making the

system more transparent. She was forced to

abandon the package in the face of public and

political opposition.

 

The degree of health care rationing in

Germany is the subject of considerable debate.

Unlike many OECD countries, the German

government does not compile data on waiting

lists. One frequently cited study suggests

that Germans are no more likely than Americans

to wait more than four weeks to see a specialist.

 

The WHO says, "Waiting lists and

explicit rationing decisions are virtually

unknown."

 

However, at least one study concludes that

rationing is occurring for the elderly and those

with terminal illness, and concludes that "the

question remains as to whether lives at

advanced ages could be saved if age rationing

were discontinued and maximum medical

treatment were to be applied to everyone, irrespective

of their age." In addition, a survey of

German hospitals reported that "waiting times

were prolonged" due to both a lack of capacity

and hospital target budgets that make the

treatment of sickness fund patients with serious

conditions financially unattractive.

 

Also, Germans have less access to modern

medical technology than Americans. The

United States has four times as many MRI

units per million people and twice as many

CT scanners. The situation would undoubt-

edly be worse without the existence of the

small private insurance sector. Although

small as a proportion of total health spending,

private insurance puts competitive pressure

on sickness funds, pushing them to

expand their quality and services. At one

time, CT scanners were even rarer in the public

system, available only under exceptional

circumstances and after long waits, yet relatively

common in the private sector.

 

Competition forced the public sector to add

more CT scanners.

 

Some analysts blame price restrictions

and reimbursement rates for increasing

bureaucratic interference in how German

physicians practice medicine. Physicians trying

to work within the maze of reimbursement

caps and budget restrictions have no

financial incentive to provide more than the

minimally necessary care. That has led to

questions of quality assurance, and the government

has responded with ever greater

micromanagement of practice standards.

The result has been a huge increase in red

tape for physicians and a general loss of innovation.

 

Germans seem aware of the need to

reform their health care system. In a 2004

poll, 76 percent of Germans thought health

care reform was "urgent," while an additional

14 percent thought it was "desirable."

 

However, Germans are split nearly down the

middle about what that reform should be.

Roughly 47 percent would like to see an

increase in private health care spending,

whereas 49 percent would not. Similarly, 45

percent of Germans believe that more patient

choice would improve health care quality,

whereas 50 percent do not. The reluctance to

fully embrace market reforms undoubtedly

stems from a long-standing German belief in

social solidarity. By a margin of 81 to 18 percent,

Germans believe that equal access to the

same quality of care for everyone is more

important than their own access to the best

possible care.

 

Costs and demographics will eventually

force changes in the German system.

However, given the failure of Chancellor

Merkel’s reforms, change is unlikely in the

near future.

 

A Few Thoughts on Canada

 

Canada is another country that did not

make the top 20 health care systems in the

WHO rankings (it finished 30th), and few serious

advocates of universal health care look to

it as a model. As Jonathan Cohn puts it,

"Nobody in the United States seriously proposes

recreating the British and Canadian system

here—in part because, as critics charge . . .

they really do have waiting lines." However,

since the press still frequently cites it as an

example, it is worth briefly examining.

Although Canada is frequently referred to

as having a "national health system," the system

is actually decentralized with considerable

responsibility devolved to Canada’s 10

provinces and 2 territories. It is financed

jointly by the provinces and the federal government,

similar to the U.S. Medicaid program.

 

In order to qualify for federal funds,

each provincial program must meet five criteria:

 

1) universality—available to all provincial

residents on uniform terms and conditions;

 

2) comprehensiveness—covering all medically

necessary hospital and physician services;

3) portability—allowing residents to remain covered

when moving from province to province;

 

4) accessibility—having no financial barriers

to access such as deductibles or copayments;

and

 

5) public administration—administered

by a nonprofit authority accountable to the

provincial government.

 

Federal financing comes from general tax

revenue. The federal government provides a

block grant to each province which amounts

to around 16 percent of health care spending.

However, most funding comes from

provincial taxes, primarily personal and corporate

income taxes. Some provinces also use

funds from other financial sources like sales

taxes and lottery proceeds. And some (British

Columbia, Alberta, and Ontario) charge premiums,

although health services cannot be

denied because of inability to pay. The health

care system is an enormous part of the

Canadian welfare state. On the provincial

level, the health care system amounts to

between one-third and one-half of all social

welfare spending.

 

Provinces must provide certain benefits,

including primary care doctors, specialists,

hospitals, and dental surgery. Other benefits,

such as routine dental care, physiotherapy,

and prescription drugs, are optional. Some

provinces offer substantial coverage for these

services, some cover them only partially, and

some do not cover them at all. Except for

emergencies, treatment by specialists or hospital

admission requires a referral from a primary

care physician.

 

Provider reimbursement is set by each

province, and some provinces restrict overall

physician income. In general, however, reimbursement

is on a fee-for-service basis. Hospitals

are paid a specific pre-set amount to cover

all noncapital costs. Capital expenditures must

be approved on a case-by-case basis.

 

An increasing number of Canadians also

carry private insurance, most often provided

through their employer. Originally this

insurance was designed to cover those few

services not covered by the national health

care system. At one time, all provinces prohibited

private insurance from covering any

service or procedure provided under the government

program. But in 2005, the Canadian

Supreme Court struck down Quebec’s prohibition

on private insurance contracting.

 

Litigation to permit private contracting is

now pending in several other provinces.

In addition to the public hospitals covered

by the government, many private clinics

now operate, offering specialized services.

Although private clinics are legally barred

from providing services covered by the

Canada Health Act, many do offer such services

in a black market. The biggest advantage

of private clinics is that they typically

offer services with reduced wait times compared

to the public health care system.

 

Obtaining an MRI scan in a hospital could

require a wait of months, whereas it could be

obtained much faster in a private clinic.

Waiting lists are a major problem under the

Canadian system. No accurate government

data exists, but provincial reports do show at

least moderate waiting lists. The best information

may come from a survey of Canadian

physicians by the Fraser Institute, which suggests

that as many as 800,000 Canadians are

waiting for treatment at any given time.

According to this survey, treatment time from

initial referral by a GP through consultation

with a specialist, to final treatment, across all

specialties and all procedures (emergency,

nonurgent, and elective), averaged 17.7 weeks

in 2005. And that doesn’t include waiting to

see the GP in the first place.

 

Defenders of national health care have

attempted to discount these waiting lists, suggesting

that the waits are shorter than commonly

portrayed or that most of those on the

waiting list are seeking elective surgery. A look

at specialties with especially long waits shows

that the longest waits are for procedures such

as hip or knee replacement and cataract

surgery, which could arguably be considered

elective. However, fields that could have significant

impact on a patient’s health, such as neurosurgery,

also have significant waiting

times. In such cases, the delays could be life

threatening. A study in the Canadian Medical

Association Journal found that at least 50

patients in Ontario alone have died while on

the waiting list for cardiac catheterization.

 

Data from the Joint Canada–United States

Survey of Health (a project of Statistics Canada

and the National Center for Health Statistics)

revealed that "thirty-three percent of

Canadians who say they have an unmet medical

need reported being in pain that limits

their daily activities." In a 2005 decision

striking down part of Quebec’s universal care

law, Canadian Supreme Court Chief Justice

Beverly McLachlin wrote that it was undisputed

that many Canadians waiting for treatment

suffer chronic pain and that "patients die while

on the waiting list."

 

Clearly there is limited access to modern

medical technology in Canada. The United

States has five times as many MRI units per

million people and three times as many CT

scanners. Indeed, there are more CT scanners

in the city of Seattle than in the entire

province of British Columbia.

 

Physicians are also in short supply.

Canada has roughly 2.1 practicing physicians

per 1,000 people, far less than the OECD

average. Worse, the number of physicians per

1,000 people has not grown at all since 1990.

And while the number of nurses per 1,000

people remains near the OECD average, that

number has been declining since 1990.

 

In addition, although national health care

systems are frequently touted as doing a better

job of providing preventive care, U.S. patients

are actually more likely than Canadians to

receive preventive care for chronic or serious

health conditions. In particular, Americans are

more likely to get screened for common cancers,

including cancers of the breast, cervix,

prostate, and colon.

 

Canada has been relatively effective at controlling

spending. The country spends about 9

percent of GDP on health care, a percentage

that has risen only slightly over the last decade.

Relative to average OECD expenditures,

Canadian health expenditures have declined

by 4 percent since 1997. That cost control,

however, has clearly come at the expense of

access to care.

 

Canadians’ dissatisfaction with the problems

in their system has been growing for

some time. One survey showed that some 59

percent of Canadians believe that their system

requires "fundamental changes," and

another 18 percent believe the system needs

to be scrapped and totally rebuilt. Still,

Canadians are reluctant to embrace market

reforms that are associated with the U.S.

health care system—a system that Canadians

disdainfully reject. As one observer put it:

 

Anxiety about Americanization and the

constantly reinforced strain of national

pride in Canadian health care coexist[s]

with considerable uneasiness about the

actual state of that care. It is as if, when

Canadians look south across the border

they swell with pride, but when they

look within they shrink back, seeing

many problems and feeling uncertainty

about the future.

 

Canadians may jealously guard their system

and resist "Americanizing" it, but even

advocates of universal health care are coming

to recognize that it does not provide a valid

model for U.S. health care reform.

 

Conclusion

 

The U.S. health care system clearly has

problems. Costs are rising and are distributed

in a way that makes it difficult for some people

to afford the care they want or need. Moreover,

although the number of uninsured Americans

is often exaggerated, far too many Americans

go without health insurance. And while the

U.S. provides the world’s highest quality health

care, that quality is uneven, and too often

Americans don’t receive the standard of care

that they should. But the experiences of other

countries with national health care systems

show that the answer to these problems lies

with more pro-market reform, not more government

control.

 

Of course, there is no single model for

national health care systems in other countries.

Indeed, the differences from country to

country are so great that the terms "national

health care" or "universal coverage" can be

misleading—as if one collective model shows

how other countries deal with health care

and health insurance. Each country’s system

is the product of its unique conditions, history,

politics, and national character. Those

systems range from the managed competition

approach of the Netherlands and

Switzerland to the more rigid single-payer

systems of Great Britain, Canada and

Norway, with many variations in between.

 

Some countries have a true single-payer system,

prohibiting private insurance and even

restricting the ability of patients to spend their

own money on health care. Others are multipayer

systems, with private competing insurers

and varying degrees of government subsidy

and regulation. Some countries base their sys-

tems around employment, while others have

completely divorced work from insurance.

Some require consumers to share a significant

portion of health care costs through either

high deductibles or high copayments. Others

subsidize virtually first-dollar coverage. Some

allow unfettered choice of physicians. Others

allow a choice of primary care physicians but

require referrals for specialists. Still others

restrict even the choice of primary care doctors.

In fact, about the only system one cannot

find is the type of system described by Michael

Moore, Physicians for a National Health

Program, and other national health care advocates—

a system that provides unlimited care

with no premiums, deductibles, or copayments,

from the physician of one’s choice. For

example, in SiCKO, Moore lambastes American

insurers for denying coverage for rare and

experimental treatments. And, during the

New Hampshire primary, John Edwards ran

television advertisements highlighting the

tragic death of a teenage girl whose liver transplant

was rejected by her father’s insurer.

 

These stories play effectively on the emotions

and drive a desire for change. Yet one searches

in vain for a national health care system anywhere

that regularly pays for experimental and

untested procedures.

 

Likewise, advocates for national health care

tap into the anger many patients (and doctors)

feel for the gatekeepers and prior approval

required under American managed care. But

many if not most foreign systems require similar

gatekeepers. Moreover, copayments and

other forms of cost sharing are commonplace.

It is also important to realize that no country’s

system would translate directly to the

United States. Americans are unlikely to accept

the rationing or restrictions on care and technology

that many countries use to control

costs. Nor are U.S. physicians likely to accept a

cut in income to the levels seen in countries like

France or Germany. The politics, economics,

and national cultures of other countries often

vary significantly from those of the United

States. Their citizens are far more likely to have

faith in government actions and to be suspicious

of free markets. And polling suggests

that citizens of many countries put social solidarity

and equality ahead of quality and choice

when it comes to health policy. American

attitudes are quite different. As pollster Bill

McInturff notes, "Never, in my years of work,

have I found someone who said, ‘I will reduce

the quality of the health care I get, so that all

Americans can get something.’"

 

Even so, some important lessons can be

drawn from the experiences of other countries:

 

• Universal health insurance does not

mean universal access to health care. In

practice, many countries promise universal

coverage but ration care or have

extremely long waiting lists for treatment.

 

Nor does a national health care

system necessarily mean universal coverage.

Some countries with ostensibly

universal systems actually fall far short

of universal coverage, and most leave at

least a small remnant (1–2 percent of

the population) uncovered. Although

this is certainly wider coverage than the

United States provides, it shows the difficulty

of achieving either truly universal

coverage or universal access to care.

 

• Rising health care spending is not a

uniquely American phenomenon. Other

countries spend considerably less than

the United States on health care, both as

a percentage of GDP and per capita,

often because they begin with a lower

base of expenditures. Nonetheless, their

costs are still rising, leading to budget

deficits, tax increases, and/or benefit

cuts. In 2004, the last year for which data

is available, the average annual increase

for per capita health spending in the

countries discussed in this study was

5.55 percent, only slightly lower than the

United States’ 6.21 percent. As the Wall

Street Journal notes, "Europeans . . . face

steeper medical bills in the future in their

cash-strapped governments." In short,

there is no free lunch.

 

• Those countries that have single-payer

systems or systems heavily weighted

toward government control are the most

likely to face waiting lists, rationing,

restrictions on the choice of physician,

and other barriers to care. Those countries

with national health care systems

that work better, such as France, the

Netherlands, and Switzerland, are successful

to the degree that they incorporate

market mechanisms such as competition,

cost-consciousness, market prices,

and consumer choice, and eschew centralized

government control.

 

• Dissatisfaction and discontent with a

nation’s health care system seems to be

universal. Undoubtedly, Americans are

unhappy with the current state of our

health care system. According to the

most recent Commonwealth Fund survey,

an astounding 82 percent of Americans

believe that our system either

requires fundamental change or needs to

be completely rebuilt. Not surprisingly,

polls suggest health care reform is the

top domestic policy issue in the upcoming

presidential election. Yet, that

same Commonwealth Fund study shows

large majorities in every country, ranging

from 58 percent in the Nether-lands to

78 percent in Germany calling for fundamental

reform or complete rebuilding of

their health care systems. Earlier

polling by the Stockholm Network

found similar levels of unhappiness.

 

Not as bad as in the United States, perhaps,

but certainly no ringing endorsement

of their systems.

 

• Although no country with universal coverage

is contemplating abandoning a

universal system, the broad and growing

trend in countries with national health

care systems is to move away from centralized

government control and introduce

more market-oriented features. As

Richard Saltman and Josep Figueras of

the World Health Organization put it,

"The presumption of public primacy is

being reassessed." Alan Jacobs of

Harvard points out that despite significant

differences in goals, content, and

strategies, European nations are generally

converging toward market practices in

health care.338 Thus, even as Americans

debate adopting a government-run system,

countries with those systems are

debating how to make their systems

look more like that of the United States.

 

Looking at other countries and their experiences,

then, can provide guidance to

Americans as we debate how to reform our

health care system. National health care is not

a monolithic idea, nor is it as disastrous as

U.S. critics sometimes portray. Some national

health care systems do some things well.

 

Yet, those systems do have serious problems.

In most cases, national health care systems

have successfully expanded insurance

coverage to the vast majority, if not quite all,

of the population. But they have not solved

the universal and seemingly intractable problem

of rising health care costs. In many cases,

attempts to control costs through governmental

fiat have led to problems with access

to care, either delays in receiving care or outright

rationing.

 

In wrestling with this dilemma, many

countries are loosening government controls

and injecting market mechanisms, particularly

cost sharing by patients, market pricing

of goods and services, and increased competition

among insurers and providers. As Pat

Cox, former president of the European

Parliament, put it in a report to the European

Commission, "We should start to explore the

power of the market as a way of achieving

much better value for money."

 

Moreover, the growth of the government

share of health care spending, which had

increased steadily from the end of World War

II until the mid-1980s, has stopped, and in

many countries the private share has begun

to increase, in some cases substantially. Some

evidence shows a growing shift from public

to private provision of health care. If the

trend in the United States over the last several

years has been toward a more Europeanstyle

system, the trend in Europe is toward a

system that looks more like America’s.

 

Therefore, if U.S. policymakers can take one

lesson from national health care systems

around the world, it is not to follow the road to

government-run national health care, but to

increase consumer incentives and control. The

United States can increase coverage and access

to care, improve quality, and control costs

without importing the problems of national

health care. In doing so, we should learn from

the successes—and the failures—of systems in

other countries.