Universal Health Care in Different Countries, Pros and Cons of Each
or Why America Is the Only Rich Country Without Universal Health Care
by Balance December 24, 2018
Universal health care is a system that provides quality medical services to all citizens. The federal government offers it to everyone regardless of their ability to pay, which is what makes it “Universal.”
Despite some similarities, Affordable Care Act/ Obamacare is not universal health care. Instead, the ACA contains what is called a “Universal Mandate,” the purpose of which is to require all Americans to have health insurance, and noncompliance is punishable by fines. Citizens pay these fines, not the health insurance companies.
Instead, most Americans advocate for a type of universal health care often called “Medicare for All.” Polls show 70% of American citizens – including even a majority of Republican voters – favor the implementation of this policy.
The sheer cost of providing quality health care makes universal health care a large expense for governments. Most universal health care is funded by general income taxes or payroll taxes. Some countries mandate that everyone buy health insurance. While Obamacare had a mandate, it had too many exceptions to be truly universal. A few countries rely on pre-payment. Most universal health care systems are funded by more than one of these funding methods.
In most countries, the government pays for health care provided by private companies. These include the systems in Australia, Canada, France, Germany, Singapore, and Switzerland. U.S. examples are Medicare, Medicaid, and TRICARE. The United States also provides subsidies to health insurance companies through Obamacare.
When the government both pays for and provides the services, this is called “socialized medicine.” The United Kingdom has this. The United States has it within the Department of Veterans Affairs and the armed forces.
Countries often combine universal health coverage with other systems to introduce competition. These include pay-as-you-go, pre-pay, and private insurance models. These options can lower costs, expand choices, or improve care.
When governments pay for health care, they work to ensure doctors and hospitals provide quality care at a reasonable cost.
They must collect and analyze data. They also use their purchasing power to influence health care providers.
The demand for universal health care began in 1948, the year the World Health Organization declared health care a basic human right.
Universal health care lowers health care costs for an economy. The government controls the price of medication and medical services through negotiation and regulation.
It eliminates the administrative costs of dealing with different private health insurers. Doctors only deal with one government agency. U.S. doctors must deal with many private insurance companies, Medicare, and Medicaid. It standardizes billing procedures and coverage rules. Companies don’t have to hire staff to deal with different health insurance company rules.
It forces hospitals and doctors to provide the same standard of service at a low cost. In a competitive environment like the United States, health care providers focus on new technology. They offer expensive services and pay doctors more. They try to compete by targeting the wealthy. They charge more to get a higher profit. This leads to higher costs.
Universal health care creates a healthier workforce. Studies show preventive care reduces the need for expensive emergency room usage.
Before Obamacare, 46 percent of emergency room patients went because they had no other place to go. They used the emergency room as their primary care physician. This health care inequality is a big reason for the rising cost of medical care.
Early childhood care prevents future social costs. These include crime, welfare dependency, and health issues. Health education teaches families how to make healthy lifestyle choices, preventing chronic diseases.
Governments can impose regulations and taxes to guide the population toward healthier choices. Regulations make unhealthy choices, such as drugs, illegal. Sin taxes, such as those on cigarettes and alcohol, make them more expensive.
Universal health care forces healthy people to pay for others’ medical care. Chronic diseases, like diabetes and heart disease, make up 85 percent of health care costs.
These diseases can often be prevented with lifestyle choices. The sickest 5 percent of the population consumes 50 percent of total health care costs. The healthiest 50 percent consume only 3 percent of the nation’s health care costs.
With free universal health care, people may not be as careful with their health. They don’t have the financial incentive to do so. Without a copay, people might overuse emergency rooms and doctors.
Most universal health systems report long wait times for elective procedures. The government focuses on providing basic and emergency health care.
Governments limit payment amounts to keep costs low. Doctors have less incentive to provide quality care if they aren’t well paid. They might spend less time per patient to keep their costs down. They have less funding for new life-saving technologies.
Health care costs overwhelm government budgets. For example, some Canadian provinces spend 40 percent of their budget on health care. That reduces funding for other programs like education and infrastructure.
To cut costs, the government may limit services with a low probability of success. It may not cover drugs for rare conditions. It may prefer palliative care over expensive end-of-life care. On the other hand, the U.S. medical system does a heroic job of saving lives, but at a cost. Care for patients in the last six years of life makes up one-fourth of the Medicare budget. In their last month of life, half go to the emergency room. One-third wind up in the intensive care unit and one-fifth undergo surgery.
Developed Countries With Universal Health Care
Out of the 33 developed countries, 32 have universal health care. They adopt one of the following three models.
In a single-payer system, the government taxes its citizens to pay for health care. Twelve of the 32 countries have this system. The United Kingdom is an example of single-payer socialized medicine. Services are government-owned and service providers are government employees. Other countries use a combination of government and private service providers.
Six countries enforce an insurance mandate. It requires everyone to buy insurance, either through their employer or the government. Germany is the best example of this system.
The nine remaining countries use a two-tier approach. The government taxes its citizens to pay for basic government health services. Citizens can also opt for better services with supplemental private insurance. France is the best example.
Summary of Seven Countries’ Universal Health Plans
Australia: Australia adopted a two-tier system. The government pays two-thirds, and the private sector pays one-third. The public universal system is called Medicare. Everyone receives coverage. That includes visiting students, people seeking asylum, and those with temporary visas. People must pay deductibles before government payments kick in. Half of the residents have paid for private health insurance to receive a higher quality of care. Those who buy private insurance before they reach 30 receive a lifetime discount. Government regulations protect seniors, the poor, children, and rural residents.
In 2016, health care cost 9.6 percent of Australia’s gross domestic product. The per capita cost was US$4,798. The Organization for Economic Cooperation and Development disclosed that 22.4 percent of patients reported a wait time of more than four weeks to see a specialist. On the other hand, only 7.8 percent of patients skipped medications because the cost was too high. In 2015, the Australian life expectancy was 84.5 years.
Canada: Canada has a single-payer system. The government pays for services provided by a private delivery system. The government pays for 70 percent of care. Private supplemental insurance pays for vision, dental care, and prescription drugs. Hospitals are publicly funded. They provide free care to all residents regardless of the ability to pay. The government keeps hospitals on a fixed budget to control costs. It reimburses doctors at a fee-for-service rate. It negotiates bulk prices for prescription medicine.
In 2016, health care cost 10.6 percent of Canada’s GDP. The cost per person was US$4,752, and 10.5 percent of patients skipped prescriptions because of cost. A whopping 56.3 percent of patients waited more than four weeks to see a specialist. As a result, many patients who can afford it go to the United States for care. In 2015, the life expectancy was 82.2 years. Canada has high survival rates for cancer and low hospital admission rates for asthma and diabetes.
France: France has an excellent two-tier system. Its mandatory health insurance system covers 75 percent of health care spending. That includes hospitals, doctors, drugs, and mental health. Doctors are paid less than in other countries, but their education and insurance is free. The French government also pays for homeopathy, house calls, and child care. Of that, payroll taxes fund 40 percent, income taxes cover 30 percent, and the rest is from tobacco and alcohol taxes. For-profit corporations own one-third of hospitals. Patients give care consistent high ratings.
In 2016, health care cost 11 percent of GDP. That was US$4,600 per person. In 2013, 49.3 percent of patients reported a wait time of more than four weeks to see a specialist. But only 7.8 percent of patients skipped prescriptions because of cost. In 2015, the life expectancy was 85.5 years.
Germany: Germany has mandatory health insurance sold by 130 private nonprofits. It covers hospitalization, outpatient, prescription drugs, mental health, eye care, and hospice. There are copays for hospitalization, prescriptions, and medical aids. There is additional mandatory long-term care insurance. Funding comes from payroll taxes. The government pays for most of the health care. It limits the amount of the payments and the number of people each doctor can treat. People can buy more coverage.
In 2016, health care cost 11.3 percent of GDP. That averaged US$5,550 per person. Only 3.2 percent of patients skipped prescriptions because of cost. Also, 11.9 percent of patients reported a wait time of more than four weeks to see a specialist. But most Germans can get next-day or same-day appointments with general practitioners. In 2015, the life expectancy was 83.1 years.
Singapore: Singapore’s two-tier system is one of the best in the world. Two-thirds is private and one-third public spending. It provides five classes of hospital care. The government manages hospitals that provide low-cost or free care. It sets regulations that control the cost of the entire health care system. People can buy higher levels of deluxe care for a fee. Workers pay 20 percent of their salary to three mandated savings accounts. The employer pays another 16 percent into the account. One account is for housing, insurance, or education investment. The second account is for retirement savings. The third is for health care. The Medisave account collects 7 to 9.5 percent of income, earns interest, and is capped at the $43,500 income. More than 90 percent of the population enrolls in Medishield, a catastrophic insurance program. The Medifund pays for health costs after the Medisave and Medishield accounts are exhausted. Eldershield pays for nursing home care. Once an employee turns 40, a portion of income is automatically deposited into the account.
In 2009, Singapore spent 4.9 percent of its GDP on health care. That’s US$2,000 per person. In 2015, life expectancy was 83.1 years.
Switzerland: The country has mandatory health insurance that covers all residents. Quality of care is one of the best in the world. Coverage is provided by competing private insurance companies. People can buy voluntary insurance to access better hospitals, doctors, and amenities. The government pays for 60 percent of the country’s health care. Dental care is not covered. Vision is only covered for children. The government subsidizes premiums for low-income families, about 30 percent of the total. There is a 10 percent coinsurance cost for services and 20 percent for drugs. These out-of-pocket costs are waived for maternity care, preventive care, and child hospitalization. The government sets prices.
In 2016, health care spending was 12.4 percent of GDP. It was US$7,919 per person. There were 11.6 percent of patients who skipped prescriptions because of cost. Also, 20.2 percent of patients reported a wait time of more than four weeks to see a specialist. In 2015, life expectancy was 83.4 years.
United Kingdom: The United Kingdom has single-payer socialized medicine. The National Health Service runs hospitals and pays doctors as employees. The government pays 80 percent of costs through general taxes. It pays for all medical care, including dental, hospice care, and some long-term care and eye care. There are some copays for drugs. All residents receive free care. Visitors receive care for emergencies and infectious diseases. Private insurance for elective medical procedures is available.
In 2016, health care costs were 9.7 percent of GDP. The cost was US$4,193 per person. Only 2.3 percent of patients skipped prescriptions because of cost. But 29.9 percent of patients reported a wait time of more than four weeks to see a specialist. To keep prices low, some expensive and uncommon drugs aren’t available. Hospitals can be crowded with long wait times. In 2018, the flu outbreak extended wait times to 12 hours. But most measures of health, like infant mortality rates, are better than average. In 2015, life expectancy was 81.2 years.
Comparison to the United States
The United States has a mixture of government-run and private insurance. The government pays most of the cost, but also subsidizes private health insurance through Obamacare.
One-third of costs is for administration, not patient care. Health care service providers are private. Sixty percent of citizens get private insurance from their employers. Fifteen percent receive Medicare for those 65 and older. The federal government also funds Medicaid for low-income families and the Children’s Health Insurance Program for children. It pays for veterans, Congress, and federal employees. Despite all these, there are 28 million Americans who have no coverage. They either are exempt from the Obamacare mandate or can’t afford insurance.
In 2016, health care cost 18 percent of GDP. That was a staggering US$9,892 per person. Exactly 18 percent of patients skipped prescriptions because of cost. But only 4.9 percent of patients reported a wait time of more than four weeks to see a specialist. In 2015, life expectancy was 79.3 years. The third leading cause of death was a medical error. The quality of care is low. It ranks 28th according to the United Nations.
Why does the United States have such high costs and such low quality? Most patients don’t pay for their medical services. As a result, they can’t price-shop doctors and hospital procedures. There is no competitive reason for providers to offer lower costs. The government can negotiate lower prices for those covered by Medicare and Medicaid. But competing health insurance companies don’t have the same leverage.
Insurance and drug companies want to maintain the status-quo. They don’t want the government restricting prices. They lobby to prevent universal health care. But 60 percent of Americans want Medicare for all. California, Ohio, Colorado, Vermont, and New York are moving toward universal health care in their states.
Universal Health Care Comparison Chart
|Country||Type||% of GDP||Per Capita||Wait 4+ wks||Infant Mortality Rate||WHO Ranking|
Brief History of Universal Health Care in America
In 1993, President Clinton pushed for universal health care to lower the Medicare budget. First Lady Hillary Clinton led the initiative. Hillarycare used a managed competition strategy to achieve its purpose. The government would control the costs of doctor bills and insurance premiums. Health insurance companies would compete to provide the best and lowest cost packages. The plan encountered too much resistance from doctors, hospitals, and insurance companies to pass Congress.
In the 2008 presidential campaign, Senator Barack Obama proposed universal health coverage. Obama’s health care reform plan proposed a publicly-run program, similar to that enjoyed by Congress. People could purchase the government-run “public option” or they could buy private insurance on an exchange. No one could be denied health insurance because of a pre-existing condition. The federal government would expand funding for Medicaid. It would provide subsidies for those who made too much to qualify for Medicaid. Despite all these benefits, many people were afraid of this intrusion of the federal government into their lives. They said it was leading down the path toward socialized medicine.
Once elected in 2009, Obama proposed universal health care called the Health Care for America Plan. It provided medical insurance similar to Medicare for everyone who wanted it. Those who were happy with their existing health insurance could keep it. The federal government’s size meant it could bargain for lower prices and reduce inefficiencies. By pooling the uninsured together, it decreased insurance risk.
Monthly premiums were $70 for an individual, $140 for a couple, $130 for a single-parent family, and $200 for all other families.
It gave employers a choice, as well. If they provided health insurance that was at least as good as Obama’s plan, they just kept what they had. If not, employers paid a 6 percent payroll tax, similar to unemployment compensation, to help pay for the Obama plan. Self-employed workers paid a similar tax.
It covered mental, maternal, and child health. It limited annual out-of-pocket costs paid by enrollees and provided direct drug coverage. A federally-managed exchange regulated health care information. Obama also promised to modernize health care patient information under an all-electronic system.
The plan promised to lower health care costs by 1.5 percent per year. The federal government could bargain for lower prices and reduce inefficiencies. Lower health care costs translated to $2,600 more savings per family in 2020 and $10,000 by 2030. It reduced the budget deficit by 6 percent of GDP by 2040. This would lower unemployment by 0.25 percent per year, creating 500,000 jobs.
Obama’s 2009 health care plan would have reduced visits to the emergency room by the uninsured. This would have saved $100 billion, or 0.6 percent of GDP, per year. Government-sponsored health insurance removed this burden from small businesses. It would have allowed them to be more competitive and attract higher-skilled workers.
Again, too many people were afraid of universal health care. In 2010, Congress passed the Patient Protection and Affordable Care Act. More than half or 57 percent of Americans incorrectly think the ACA is universal health care. It attempted to enforce mandatory health insurance, similar to Germany’s plan. But it allowed too many exemptions. It also allowed states to decide whether they would expand Medicaid. As a result, 13 million people have no insurance. Trump’s tax plan removes the mandate in 2019.
(Editor’s note: the information in this article has been edited and links to references added to improve the content and remove some of the implied biases of the original.)