Commentary
Comparing Health Care Systems
Can the United States Learn from Other Countries?
By Lesley Weaver, Elizabeth Donohue, Brenda Hedtke, Jennie Anderson, Hilarie Martin, Danushka Wanduragala, Kristin Hamre, William Woywod, Kristin Eide, Spencer Rudolf, Kerry Landry, Elizabeth Karan, Samuel Lee, and Caleb Schultz, M.D., and Christine Gille (eds)
Editor’s note: Lynn Blewett, Ph.D., associate professor in the University of Minnesota School of Public Health’s Division of Health Policy and Management asked graduate students enrolled in her International Comparative Health Systems course to describe and evaluate the health care systems in the United Kingdom, Canada, Switzerland, Germany, and Japan, and compare them with the U.S. system as part of a class project. The following article, the result of their efforts, provides a useful international perspective on health care reform.
The World Health Organization (WHO) defines the purpose of national health care systems as promoting, restoring, or maintaining the health of a population.1 Often, a nation’s health care system is a reflection of its culture and values. The way health care is administered, regulated, and paid for is frequently built on those tenets. The quality of a country’s system is typically assessed in terms of population health as indicated by mortality rates and life expectancy, and the system’s ability to help people manage chronic disease.
This article compares the governance, financing, and outcomes of the health care systems in the United Kingdom, Canada, Switzerland, Germany, and Japan. We chose those systems because they represent the key models of health care financing around the world and because of the availability of recent comparable health system data from the Organisation for Economic Co-operation and Development (OECD), a data and policy organization.
United Kingdom
In 1946, the British parliament passed the National Health Service Act, creating the National Health Service (NHS) to provide health care for all. Administered by the Ministry of Health, the NHS is funded by income and sales tax revenues and pays the salaries of medical care providers, who are government employees.2
The NHS is organized similarly, but not identically, throughout the four countries that make up the United Kingdom—England, Northern Ireland, Scotland, and Wales. In this section we focus on the NHS in England, which accounts for more than 80% of total health care expenditures in the United Kingdom.
Governance
Designed to achieve universal access to health care, the NHS provides free care to citizens of England at the point of service. Providers bill the government for services after treatment is provided, and patients pay out of pocket for eyeglasses, contact lenses, dental services, and, in some cases, prescription drugs. The law prohibits pharmacies from charging children, pregnant women, the chronically ill, and those older than 60 years of age for prescription drugs. Thus, more than 85% of all prescription drugs are dispensed for free. Private health insurance can be purchased for services not covered by the NHS; however, very few citizens opt for additional coverage.2
England’s Department of Health establishes budgetary and health policies and priorities that are implemented by regional Strategic Health Authorities (SHAs). The geographic reach and budget of each SHA is determined by population size and needs. The SHAs oversee primary care trusts that pay for the care provided to citizens within their geographic jurisdiction.2,3
The National Institute for Health and Clinical Excellence (NICE) is a special authority within the NHS that serves England and Wales. It reviews the quality and cost of clinical care to determine its value. Every three years, NICE advisory bodies conduct systemic reviews of the cost effectiveness and cost per quality-adjusted life year (QALY) gained with new procedures before deciding whether they should be covered. The NHS covers procedures that cost less than $45,900 per QALY gained. Individuals can have procedures that cost more per QALY but must pay for them out of pocket or through private insurance.4,5
In 2007, the United Kingdom had 2.5 practicing physicians per 1,000 population. Providers receive a capitation payment per citizen each month and can receive incentive payments of up to $125,000 a year for offering preventive services.2 Primary care providers regulate access to specialty care. Once specialty care is approved, however, wait times can be long; 38% of patients wait more than four months for elective procedures.2
Financing
In 2007, health care expenditures accounted for 8.4% of the United Kingdom’s gross domestic product (GDP), or approximately $189 billion (Table 1). This amounted to expenditures of $2,992 a year per capita. The government paid for 81.7% of total health expenditures, and private insurance and out-of-pocket payments accounted for the remaining 12.5%.6 Health care is paid for by income taxes. On average, 6% to 7% of salaries go to finance the NHS.7 In the United Kingdom, the ratio of health care providers’ wages to the average wage rate is 4.3 for specialists and 4.2 for general practitioners.6
Outcomes
In the United Kingdom, the infant mortality rate has decreased by 64% since 1978 to 4.8 deaths per 100,000 live births in 2008 (Table 2).8 Life expectancy from birth is 79.5 years, similar to the OECD average of 79.1. Life expectancy at age 65 is 17.4 years for men and 20.1 for women, about the same as the OECD average of 16.9 and 20.1, respectively.
The asthma admission rate for persons 15 years of age and older is significantly worse than the OECD average. However, in terms of diabetes complications, the United Kingdom’s rate of lower-extremity amputations was 9 per 100,000 individuals ages 15 years and older in 2007, lower than both the OECD average of 15 per 100,000 and the U.S. average of 36 per 100,000. In 2007, the United Kingdom had a better renal dialysis rate than the OECD average and a similar rate for kidney transplantation. The renal dialysis rate was 40 per 100,000 population, and the kidney transplant rate was 35 per 100,000. The OECD average rates were 65 and 34 per 100,000, respectively.
Canada
Canada provides its citizens with publicly sponsored, comprehensive insurance that covers privately delivered care.
Governance
Health Canada is the federal governing body responsible for overseeing the Canadian health care system. Each of the 10 provinces and three territories is responsible for insuring their populations, negotiating physician fees, and paying for services.
The federal government allocates funds to the provincial governments on a per capita basis. In turn, the provinces allocate funds (federal and provincial) to Regional Health Authorities, usually through a population-based method using a global budget. Each authority then organizes and purchases health services.
In 2003, 91% of the total public funding of health care came from the provincial governments. Thus, the system is characterized by strong local control.9
All basic services are covered by the national insurance, but select services such as vision care, pharmaceuticals, dental care, and independent living services are excluded.10 In most cases, children, seniors, and low-income individuals are eligible for public assistance through their provincial governments to pay for these noncovered services. Others must either pay for them directly or be covered by supplemental private insurance, most often provided by employers as a benefit. In addition to excluding prescription drug coverage as a benefit, the government controls cost by requiring Canadian insurance companies to limit self-promotion.10
In 2000, Health Canada developed a Public Involvement Unit to encourage public engagement in health policy decisions. The aims of the unit are to ensure that Canadians are well-informed about health care legislation and to enable them to voice their opinions on government decisions. The Public Involvement Unit helps assess how responsive the national health system is to citizens’ needs.
In 2006, Health Canada created the Public Health Agency of Canada, which operates under the auspices of the federal Minister of Health.11 The goals of the agency are health promotion, disease prevention, control of chronic and infectious diseases, emergency response, and response to changing demographics and health inequities.12 This population-based health focus is relatively new.
Financing
Health Canada is financed by income and sales taxes. Three provinces (British Columbia, Alberta, and Ontario) charge an additional fixed monthly premium. The federal income tax rate ranges from 15% to 29%, depending on income bracket.13
Total health care spending in 2009 was an estimated $183.1 billion, representing 10.1% of Canada’s GDP (Table 1).6 Only five other OECD countries spend a higher proportion of their GDP on health care (the United States, France, Switzerland, Germany, and Belgium). Total per capita annual health expenditures were $3,895.6 Of Canada’s total health expenditure, 14.9% comes from out-of-pocket payments, 12.8% from private insurance, and the remainder from the national insurance plan.6 The majority of health care spending (29.9%) goes to hospitals, pharmaceuticals (17.5%), and physicians (12.8%).10 Canada has nearly an equal number of primary care and specialty physicians. Primary care physicians (including general practitioners and family physicians) earn 3.1 times more than the average Canadian does, while specialists earn 4.7 times the national average.10
In order to keep physician costs low, provinces set expenditure caps for physician services; if a physician increases his or her patient load, the fee per visit may be reduced to keep total payments below the cap.14 Hospital costs are also contained using provincially allocated global budgets.14
Outcomes
The Canadian infant mortality rate of five deaths per 1,000 live births was higher than the OECD average of 3.9 but lower than the U.S. rate of 6.7 (Table 2). However, Canada’s life expectancy at birth was 80.7 years, slightly higher than the OECD average of 79.1 and the U.S. average of 78.1 years. Life expectancy at age 65 was also slightly higher than the OECD average, with males living an additional 18.2 years and females an additional 21.4 years on average.
Canada does better than average compared with other OECD countries in terms of managing chronic diseases. Hospital admission rates for asthma-related complications were well-below the OECD average. Diabetes-related lower extremity amputation rates were also lower than the OECD average.6 The Canadian rates of dialysis and kidney transplantation were 64 and 43 per 100,000 population, respectively, compared with the OECD averages of 65 and 34.6
Switzerland
In 1994, the Swiss government, viewing health care as a human right, introduced sweeping reforms that assure universal coverage by requiring individuals to purchase health insurance coverage.
Governance
The Swiss health care system is governed both at the confederation (federal) and canton (similar to a U.S. county) levels. The Swiss Federal Office of Public Health and the Federal Office of Social Insurance (FOSI), both part of the Federal Department of Home Affairs (FDHA), and canton-level public health departments and authorities regulate the offering, pricing, and nonprofit or for-profit status of insurance plans.15
The Swiss government mandates insurance coverage through approved insurers that offer standard nonprofit plans that cover a designated set of services. This mandatory health insurance system (known as loi federale sur l’assurance- maladie or LAMal) is part of a broader social insurance scheme that also includes mandatory employer accident insurance (similar to workers compensation in the United States), disability insurance, and military insurance.16 Private or supplemental insurance is sold for profit and covers such things as illness-related loss of income, dental services, or private hospital rooms. The LAMal system offers different plans with annual deductibles that range from $279 to $2,328 and varying premiums. In addition to plans that provide coverage for services rendered by any willing provider, insurers may also offer two types of managed care plans: one that uses general practitioners as gatekeepers to specialty care (these account for two-thirds of the market) and another HMO-style plan that uses a restricted network of providers.16,17 Premiums are community-rated by canton with three separate risk pools: one for residents younger than 18 years of age, another for those 18 to 25, and a third for those older than 25 years.17 Although LAMal allows insurers to set their own premiums within these parameters, the FOSI can audit insurers and limit excessively high premiums.
Financing
Generally, LAMal pays more than one-third of total health care expenditures, and out-of-pocket payments cover more than 30%. The remaining expenditures are financed by the government, other components of the social insurance scheme, and private insurance. The public share of total expenditures on health care for 2007 was 59.3%, with social insurance entities accounting for 42.8% of total health expenditures (Table 1). General government financing goes toward canton and confederation cofinanced LAMal subsidies to cover premiums that exceed 8% of a person’s income, with 35% to 40% of individuals receiving some sort of subsidy. As of 2007, the total health expenditure per capita was $4,417 per year, third among OECD countries.6
Switzerland spends 10.8% of its GDP on health care, which is second only to that spent by the United States (16% of GDP).6 The Swiss government has taken several steps to control health costs. It provides incentives for people to choose gatekeeper-regulated health insurance policies. Additionally, the FDHA uses a uniform fee schedule and sets maximum prices for prescription medications.
The Swiss health care system is considered one of the most regressively financed in the developed world because of its non-income-related cost-sharing and premiums. Its significant cost-sharing is believed by some to discourage overuse of the medical system; but it is unclear whether it actually contains costs.
Outcomes
In Switzerland, life expectancy at birth and at age 65 is high compared with other OECD countries (Table 2). The infant mortality rate is the same as the OECD average. Measures of chronic disease management show mixed success, with asthma admission rates well below the OECD average but diabetic amputation rates slightly above the average.
Although the Swiss value the fact that their system allows for provider choice and offers timely care, its high costs have raised questions about value, which has led to calls for reform. Some say the decentralized delivery of care by canton results in varying outcomes across the nation. Moreover, there is a lack of national quality and value benchmarks and standardized, outcome-measure tracking systems.
Germany
Germany’s health care system, known as the Bismarck model, is widely regarded as the oldest and most influential publicly sponsored system in the Western world.18 Elements of this model, in which employers and employees contribute to the cost of care, can be found in the United States, Japan, France, Switzerland, and former Eastern Bloc countries.2
Governance
The German Statutory Health Insurance (SHI) is regulated by the federal government and financed by employer and employee contributions. The Ministry of Health sets rules surrounding financing and contribution rates, subsidizes insurance for the poor and unemployed, regulates mandatory insurance and the private insurance market, authorizes negotiations between sickness funds and providers, and provides guidance if parties cannot resolve differences or meet goals.18,19
Individuals must join one of more than 200 nonprofit “sickness funds” that compete for members. Sickness funds receive a fixed amount of money based on the number of members they serve. Some elements of risk adjustment have been introduced to transfer payments across funds based on the health risk profile of their patient populations. Provider reimbursement is determined through negotiations between regional physicians’ associations and the independent sickness funds. Sixteen state health ministries implement federal policy and oversee the health needs of their regional constituencies, administer state-run hospitals, and monitor the activities of providers and sickness funds.
Germany’s health care system has undergone multiple reforms during the past 20 years; but the public has been largely excluded from the policy debates.20 As a result, Germans citizens perceive that they have limited choice in their health care and are dissatisfied with patient-physician communication. Despite their lack of satisfaction, Germans seem to trust the system, their providers, and even their government.21
Financing
Germany’s insurance system is a mix of publicly financed and regulated social insurance plans with elements that simulate a market-based system.22 In 2009, employers and employees paid 7% and 8%, respectively, of gross wages into a general health fund that finances the local sickness funds.23 Germany finances 67.9% of care through the sickness funds; an additional 13.1% comes from out-of-pocket expenses; and 9.3% from private health insurance. The German federal government finances the remaining 9% through general tax revenues (Table 1). In 2009, Germany spent 10.4% of its GDP on health care.
Recently passed legislation attempts to intensify competition among sickness funds and among health care providers and increase competition in the private insurance market and pharmaceutical sector.24 Additional cost-containment strategies include use of diagnosis related groups (DRGs); fixed budgets for ambulatory care, hospital care, and pharmaceuticals; and spending caps and target volumes for individual practices.20
Outcomes
German citizens enjoy excellent health outcomes. Germany’s asthma admission rate is well below the OECD average and five times below the U.S. rate of 120 admissions per 100,000 population. In addition, rates of acute complications and lower-extremity amputations in patients with diabetes are low in Germany. Germany’s rate of renal dialysis treatment of 81 per 100,000 population is above the OECD average of 65 per 100,000, and Germany’s kidney transplant rate of 30 per 100,000 population is slightly less than the OECD average of 34 per 100,000 population (Table 2).
Japan
Japan provides universal access to health care for its citizens and has a single-payer system that uses a tightly maintained fee schedule to control costs.
Governance
Japan’s Ministry of Health, Labour, and Welfare is the government body that administers national health insurance; regulates food, drugs, and medical devices; and sets standards for medical care.25 Japan aggressively regulates health care, primarily through a government mandate for all citizens to have health insurance and by controlling health care prices.26 A uniform fee schedule, negotiated biennially with providers, sets prices for treatment and drugs.27 Many tout the national fee schedule as being primarily responsible for the low cost of health care in Japan.27 Japan’s increasingly affluent and aging population is placing new demands on its health care system.28 As a result, health care costs in Japan are projected to double by 2020.29
Critics of the system’s sustainability have proposed that reforms will be necessary, and some are already happening.
In 2008, the federal government implemented a law regulating citizens’ waist circumferences. Japan’s so-called “metabo laws” set standards for men ages 40 and older to have a maximum waistline measure of 33.5 inches and women of the same age to maintain a 35.4-inch waistline or smaller.30 Businesses and local governments whose employees or citizens fail to meet those requirements must participate in health programs or face financial penalties.31 Future reforms will likely emphasize healthy behavior, address wait times for care, and tackle the need for facilities in rural locations and services for people with mental health disorders.32
Financing
Japan has three main health insurance schemes: 1) employer-based social health insurance, 2) national health insurance for those who are not covered by the employer-based model, and 3) a retiree insurance program.30 All are financed by a combination of taxes and insurance premiums (Table 1). Premiums are based on income, not actuarial data, and costs are split between employers and employees.25
Health care expenditures in Japan amount to 8.1% of GDP and $2,581 a year per capita. Because of the national fee schedule, the annual growth rate of Japan’s health care spending is approximately 0.1%. Providers are prohibited from billing patients for expenses not covered by insurance, and insurance will only pay as dictated by the fee schedule.33 The system discourages overutilization because the regulated price will drop during the next round of negotiations if a service is overutilized. The fee schedule also deters doctors from encouraging patients to have needlessly expensive procedures and serves to increase access, as patients can go to any provider for a standard price.34
Outcomes
Japan enjoys the longest life expectancy and one of the lowest infant mortality rates in the world (Table 2). Japan also has the largest percentage of population age 65 and older (21.5%), well above the OECD average of 14.7%.34
Despite a top ranking by the World Health Organization for their combination of good health, fair financing, and responsiveness, the Japanese do have problems. One is related to treatment of patients with end-stage renal disease.6 In addition to having more patients being treated for renal disease than the United States (190 per 100,000 compared with 169 per 100,000 in the United States), Japan also limits transplants and maintains a significant portion of patients on dialysis.1 Japan’s asthma admission rate is 58 per 100,000, above the 51 per 100,000 OECD average.35
And the percentage of Japanese adults reporting to be in good health is 32.7%, far below the OECD average of 69.1%.6
Discussion
The one factor that has been found to lower cost, improve quality, and promote equity in various countries’ health systems is universal coverage. Unlike the United States, the United Kingdom, Canada, Germany, Switzerland, and Japan have long assured their citizens access to health care. The Canadian system, criticized by some in the United States for its long wait times for elective care, clearly identifies health care as a right for its citizens, as law requires that health care in Canada must be universal, portable, comprehensive, accessible, and publicly administered. The United Kingdom takes that commitment a step further by providing every resident with health care that is free at the point of service. And Germany guarantees continuity in coverage, regardless of employment status or ability to pay.
In the United States, one reason why efforts to mandate universal health insurance coverage have failed is the potential cost. However, in terms of percentage of GDP, countries that have universal coverage spend less per capita on health care than the United States, which spends $7,290 per person per year.
Additionally, the fear of rationing and lack of choice that have been associated with “socialized medicine” are not supported by observations from other countries. As exhibited by OECD data, citizens of Japan and Germany enjoy greater freedom of choice in terms of health care providers than the average U.S. citizen. In Japan, utilization of outpatient care and the length of hospital stays are both higher than in the United States. This is hardly an indication of rationed care.
Waiting times in the United Kingdom and Canada are longer than those in the United States, but not significantly so. However, medically necessary services are never denied or rationed, unlike in the United States, where medically necessary services are sometimes denied based on ability to pay. Ultimately, the fragmented nature of the U.S. health care system coupled with disparities in access result in the disturbingly poor outcomes shown in Table 2.
Another factor that affects outcomes is commitment to public health and preventive medicine. Typically, countries that have universal coverage also have a strong public health and prevention component to their health systems. The ability to achieve reform may stem from the perception of a country’s government by its citizens. In Germany, citizens trust the government to provide many essential services, including maintenance of the health system, and are willing to pay higher taxes to finance them. On the other hand, many in the United States distrust government, a sentiment that is rooted in the reason why the country was founded. Even in the midst of the Great Depression, when the government provided safety-net services to more than 25% of the population, efforts to include provisions for a national health system and universal access to coverage failed to be included with the 1935 Social Security Act. Further, many argue that Medicare and Medicaid only became law in 1965 because they were pushed through by a hard-nosed Democratic President, Lyndon Baines Johnson, who had a Congress controlled by Democrats and a supermajority in the Senate.
Most other efforts to reform health care in the United States have been incremental. In contrast, major proposed overhauls to the health care system pass almost annually in Germany despite contentious debate, high-stakes politics, wealthy special interests, and a demanding public.
Concern about government involvement in the U.S health care system makes the implementation of a public plan or even universal coverage unlikely. Efforts to implement a national fee schedule to control costs similar to the one used in Japan, assess cost-effectiveness in the way the United Kingdom does, or heavily regulate the private insurance industry as Switzerland does would be met with opposition here. Further, laws that target lifestyle choices, such as Japan’s metabo law, would be met with an enormous outcry in the United States, despite the fact that the cost of obesity-related diseases may eventually bankrupt our health care system. One statistic, however, should inspire Americans to move toward improving their health care system: the number of adults who die each year because they lack health insurance. In the United States, more than 44,000 die annually as a result of not having coverage. In Canada, Japan, the United Kingdom, Germany, and Switzerland, that number is zero.6 MM
Christine Gille and Caleb Schultz served as editors for this article. Lesley Weaver, Elizabeth Donohue, and Brenda Hedtke wrote the section about the United Kingdom; Jennie Anderson, Hilarie Martin, and Danushka Wanduragala wrote about Canada; Kristin Hamre, Caleb Schultz, and William Woywod wrote about Switzerland; Kristin Eide and Spencer Rudolf wrote about Germany; and Kerry Landry, Elizabeth Karan, and Samuel Lee wrote about Japan.
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