Health Care Systems: Three International Comparisons
Maryann Baribault and Carey Cloyd
Poverty & Prejudice: Social Security at the Crossroads

The troubling state of health care in the United States has drawn policymakers, business leaders, and health experts to search for viable ways to reform a system that, by most accounts, was in the throes of an unprecedented crisis. In 1993 and 1994, the U.S. government engaged in a massive conflict over reform of the nation's health care system. Unlike many other issues, the polls of American health care could be defined simply: health care costs too much and too many Americans go without needed care. Yet agreeing on a cure for those ills proved to be exceedingly difficult.

America's interest in other nation's health care systems has been spurred by growing discontent over the seemingly inverse relationship between health care expenditures and the access to necessary services in the U.S. health care system. Every other advanced industrial nation has virtually universal access to decent medical care, at much lower cost than in the United States. Escalating U.S. health care costs are linked inextricably to the particular system of health care organization, delivery, and financing that has evolved in the United States. The United States is caught in the paradox of committing ever more financial resources to health care while leaving large numbers of the population uninsured or underinsured. The United States is to look to other nations for possible cures to what ails the U.S. system.

Guaranteeing access to and controlling the costs of health care is an extremely difficult and complex undertaking that is risky and uncertain. To successfully reform American health care, we must first realize that no health care system is perfect. Any proposal w~l have flaws. Therefore the right question is whether measures exist that can improve conditions substantially within a reasonable amount of time. Diii erent neaith care systems meet different needs and set different priorities. Each health care system tries to meet priorites, and in doing so each has disadvantages and advantages.

Reforming American health care does not mean that the United States could or should copy any country's institutions exactly. Americans cannot adopt another country's structure but they can adapt those approaches to America's inherited conditions; adaptation is clearly the key, for it is not possible to import one nation's health care system into another. Those involved in the health care reform debate are interested in specific features of other systems that could be adapted for use in the U.S. system - not unlike the way American companies have become more efficient in part by adapting Japanese manufacturing and quality-management techniques.

The United States can learn from other countries because, from popular culture to technology, modem life testifies to the ways ideas and practices flow across borders. People who face the same difficulties, for the same reasons, can count on some of the same responses to help. Thus, the search for solutions has become global in scope, as the United States looks beyond its borders to examine how other industrialized nations provide and finance health care. Such lessons from abroad are made possible by cross-national comparisons and analyses of the extensive comparative data and information available.

The challenges currently facing the American health care system certainly are not unique; health care systems around the world are buckling under the pressures of aging populations, exploding medical cost increases, and reliance on expensive high-tech solutions and procedures. Industrialized nations all battle to balance the three shared concerns in modern health care: cost, access, and quality.

Industrialized countries have chosen different approaches to addressing their shared concerns. in this paper, we examine the health care systems of three industrialized democracies: the United States, Canada, and the Netherlands. By comparing the U.S. health care system to these others, we hope to discover ways in which the U.S. might adapt to strengthen our own health care system. Different methods have been devised to simplify the comparative analysis of international health care systems. One way of grouping health care Systems is according to the private to public spectrum. These three systems fall at different points along the spectrum, demonstrating three different approaches, as shown in Figure 1. Health care in the United States is offered mostly through the private sector; in Canada it is administered through a provincial government system; and in the Netherlands a social insurance program is used, with less administration by government or private companies [Iglehard, 1991]



The United States

The United States is primarily a capitalist society, where goods and services are provided in exchange for money. Health care delivery has followed this model in a fee for service system. In other words, the patient directly pays the doctor who provides the service. There have been increasing numbers of health insurance systems, however, because most people cannot afford the cost of new high-technology services. While being called "health" insurance, it is actually "illness 'insurance, which pays some or all of the costs of medical care in case of illness. About 85% of the U.S. population is covered by insurance plans, and insurance now pays the majority of health care costs. Insurance pays about 90% of the money spent on hospital care, and 74% of the money paid to doctors [Iglehart, 1992a].

Health insurance is available from several sources. Private health insurance is provided by private companies. Subscribers pay health insurance companies a monthly fee for health insurance. In return, the company agrees to pay the doctor and hospital costs if the subscriber gets sick. There are different levels of coverage that a subscriber can purchase, but the cost of a health insurance policy is also set by the amount of risk the subscriber is willing to take. The more expense the subscriber is willing to pay, as either deductible or co-payment, the less the insurance company will charge for the insurance. Some Americans purchase their own health insurance, but most employers pay for the health insurance of its workers [Iglehart, 1992M. Often this insurance is considered an employment benefit in addition to the employee's salary. A third provider of insurance is the United States government by designating part of its budget for health care which flows into two main programs for medical insurance.

The Medicare system provides medical coverage for those over age 65. In addition, younger people with certain disabling illnesses or injuries are eligible for Medicare coverage. Those who are under age 65, but do not have health insurance because they are too poor to afford it, are eligible for medical coverage through Medicaid. Medicare is funded by federal income taxes, while Medicaid is funded by a mixture of state and federal taxes. Thus, medical insurance for those who cannot obtain it elsewhere is actually paid for by the more affluent citizens--not directly, but through taxes.

In order to get Medicaid assistance, someone must apply for and prove that he or she is poor enough to qualify for the program. Furthermore, only 42 percent of qualified people receive Medicaid assistance. Medicaid programs vary from state to state, but the low fees and administrative bureaucracy can be so difficult that some doctors refuse to see patients with Medicaid insurance [Igl&nart; 1992a; Grumet, 198~ij.

Freedom of choice is one of the great advantages of the American health care system. Doctors can choose where to practice medicine, and patients can choose the doctor from whom they want to receive care Because of the combination of government and private insurance funding for medical care and research, medical care of high technical sophistication is available.

However, the outrageous cost of medical care in the United States is one of the greatest disadvantages of our system. Costs are rising at a faster pace than most other expenses. Total health care expenses in the United States were about $666 billion in 1990, accounting for 12% of the gross domestic product, the highest percentage in the world [Iglehart, 1992M. In 1990, health costs were rising at 12% per year. Many Americans believe this rate of growth is out of control and must be slowed [Igiehart, 1992aj. Even with this large expenditure, 36 million Americans 17 percent of the total population who have no health insurance. The only options available to these people for medical care are hospital emergency rooms, public clinics, or physicians offices where they pay out of pocket or are treated as charity patients. Uninsured Americans often do without preventive care for manageable conditions, such as treatment for chronic illnesses like high blood pressure or maternity care, but this is something that they are denied [Iglehart, 1992a].

Administrative costs of health care are also high because of the multiplicity of funding sources, insurance carriers, payment mechanisms, and hospital administration systems., 19911. Managed care systems were created to reduce costs, and these meant that physicians no longer are autonomous practitioners in their own independent offices. Health maintenance organizations (HMO's) and preferred provider organ17~tion~ (PPO's) are the most common examples. In a HMO, subscribers pay a set fee to be a patient in return for an agreement that the HMO will cover all the patient's medical care at no additional cost. The doctor who works for the HMO is paid a salary by the HMO. The HMO makes money if it does not spend all of the fee on health care; thus, the HMO has an incentive to keep the patient as healthy as possible by providing preventive health care [Iglehart, 1992cj. The problem, however, results from the fact that the HMO makes the most profits when its patients are healthy. As a result, HMO's try to cover younger, healthy subscribers who are less likely to become sick.

The other main organization, PPO, contracts with physicians who become "preferred providers." Patients who enroll in the PPO receive better coverage if they are to see only doctors who belong to the PPO. Physicians who join the PPO remain independent practitioners and receive fees for their services, but are paid lower fees than by other insurers. While the doctors are paid lower fees, they are guaranteed to have patients who are covered by PPO.



Canada also has a capitalist economy and its health care uses a fee-for-service system, but its plan is administered by government entities. In this system, there is universal coverage for health care services; moreover, all Canadian citizens are covered! Each of Canada's 10 provinces manages itself, but there are very few differences. Furthermore, most of the cost of the plans is paid by the provincial governments through subscriber premiums and through taxes. The Canadian government provides additional funds to the provinces through a system of grants and the transfer of funds generated from personal and corporate income tax revenues [Iglehart, 1986aJ. For example, all residents of Ontario are entitled to participate in the health plan regardless of age, health status, or financial means. A payroll tax on employers pays 13 percent of the provincial expenditures, and general taxation provides the rest of the province's contribution. The benefits covered in the plan include doctors' services in the office and in the patients' home, hospital care in a ward of four or more patients, prescription drugs in the hospital, and care in long-term facilities such as nursing homes. However, the plan does not cover drugs taken at home, dental care, or cosmetic surgery.

Doctors are paid according to fees which are determined by negotiations between the provincial government and an association of doctors. Hospital expenditures are also regulated by the government. In other words, all expenses regarding expenditures are monitored and approved by the government.

Canada also has its advantages and disadvantages. The main advantage is that there is universal health care coverage. Health care costs are also rising ~n Canada, but because each province has only one payment source, the administrative costs are appreciably lower. As disadvantages, the control of hospital expenditures has created a situation where some forms of technology such as cardiac surgery have led to increasing waiting lists and delays faced by patients. The physical condition of some hospital facilities have also deteriorated because they lack sufficient funding for maintenance[Iglehart, 1990; Orford, 1991].

The Netherlands

The Netherlands has adopted a third system which is socially administered. Three sources of health-care funding exist in the Netherlands: the sickness funds, private health insurance, and the Exceptional Medical Expenses Act [Kirkinan-Liff, 1991]. Approximately 62 percent of the public receives health services from the sickness funds. There are about 35 regional funds, and they serve all individuals and their families whose income is below a specified level. A national "general fund" supports the sickness funds which is itself supported by contributions from employers, employees, retirement funds, and unemployment funds. The rest of the population (38 percent) purchases private insurance. The cost of the insurance is based on the age and sex of the purchaser, and employees who purchase insurance receive a contribution from their employer. Finally, the Exceptional Medical Services Act, covers the cost of long-term care and maternal and child health services. This fund is supported by government contributions and mandatory contributions by employers [Kirkman-Liff, 1991].

Doctors in the Netherlands are either family doctors or specialists who are paid on a fee-for service basis. Family doctors are paid by private insurance or by the sickness funds, and family doctors are the ones who decide when a patient needs to see a specialist. Hospitals are all nonprofit, and they annually receive income from the sickness funds and the private insurers in their area. Similar to the U.S. and Canada, rising health care costs and administrative costs in the Dutch system are genuine concerns [Kirkirian-Liff, 1991].



When these three systems are compared using 1989 data, per capita health expenditures were $2,354 in the U.S., as compared to $1,683 in Canada and $1,135 in the Netherlands. Personal health services consumed 11.8 percent of the gross domestic product in the U.S., compared to 8.7 percent in Canada, and 8.3 percent in the Netherlands [ Schieber, Poullier, and Greenwald, 1991]. It should be noted that the GDP of the United States is higher than that of the other countries; therefore, the United States' higher percentage of health care expenditures is significant.

While it is difficult to compare how well health care is working in relation to other countries, the easiest way to measure differences is by reviewing statistics such as life expectancy, infant mortality (deaths in the first year of life), and perinatal mortality (deaths within seven days of birth). Life expectancy at birth in the U.S. is 71.5 years for men and 78.3 years for women; in Canada, 73 years for men and 79.7 years for women; and in the Netherlands 73.3 years for men and 79.9 for women. Infant mortality is 10 percent in the US, 7.2 percent in Canada, and 6.8 percent in the Netherlands. Perinatal mortality has been suggested as a better measure of the effect of medical intervention; it is 9.7 percent in the US, 7.6 percent in Canada, and 9.2 percent in the Netherlands [Schieber et al., 1991]. What these outcomes show i5 that better health care does not necessarily result from higher expenditures on care.

There are also many factors that affect health, including social and cultural conditions, social and economic status, and different priorities. The traditional way of assessing health status is to analyze age-adjusted, statistical data on mortality, life expectancy, and morbidity or illness. A major problem in using vital statistics to make international comparisons of health arises from differences in reporting and compiling the statistics, especially in the timing of recording births and deaths. There are limitations in using only mortality data as the indicator of health status; with more people living longer than ever before, measures of health other than death are necessary to characterize the disease and disability patterns of an aging population. Similarly, there are limitations in using only disease incidence as the indicator of health status; as more people receive medical care it is likely that more people will be diagnosed, thereby increasing the number of conditions reported in health surveys. Yet despite the problems involved in sole reliance on mortality data to compare national levels of health, mortality data are the most

comparable measures available. We should keep in mind that measurements of health are complex, influenced by a variety of interpretations world-wide, and that traditional measurements of health such as mortality data have their limitations.

Regardless of the system that each country has invoked, the goal is to produce a system that will provide the highest quality of health care to the greatest number of people. Bill Clinton is trying to make health care policy improvements within the United States, and his goal is to create a system that will provide health care for all Americans while simultaneously reducing costs. The largest battle, however, is that Clinton is fighting conflicting opinions about claims to medical treatment. Health care is viewed as a privilege in America rather than a right, and policymakers are encountering problems because it is difficult to form a universal health care plan when people have different views on distributing services.


Health Care: A Right or a Privilege

Presently, health care in the United States is a privilege because only people who are wealthy enough to pay for the services have access to medical care. When people make the argument that health care should be a right, it is critical to note that there is a difference between a legal right and a moral right. Moral rights come from humanitarian feelings and reasonings (Ricardo-Campbell 29) They are based on what individuals think that they should do for another person; however, moral rights do not require others to do anything for an individual. Legal rights, in relation to health care, are often based on needs of individuals and the economic capacity of a nation to support their economy. For example, there is no law which requires a physician to treat a person in need of care, unless the physician is responsible for creating the circumstances from which relief is sought. There are very few legal laws regarding health care because fulfilling one individual's needs often results in the abridgment of another person's thoughts. Policymakers in the United States have to be careful not to infringe upon an individual's Constitutional Rights, and this reveals the fundamental difference between the philosophy behind the health care system in the United States and the health care systems in other countries. The three things that the United States emphasizes the most are individual responsibility, free choice, and pluralism. On the contrary, the overriding goals for other nations is access to health care for the entire population. Based on this ideological difference, it is easy to understand why the government plays a greater role in providing health care in other nations.

The predominant example of a thriving system that considers health care a "moral right" is Sweden. As one of the most highly developed health care systems in the world, Sweden is a strong welfare state which has a minimal role for private sector funding. The public sector finances and owns the facilities that administer services. The results of privatization and marketization, from the example of the United States, have shown that the ethos behind health care does not exist. This system does not believe that any profit should be made from meeting basic social needs. A strong welfare state may sound like an easy solution, but it 15 one that has been suggested and rejected ~n the United States. In order for the United States to create a welfare state, money would need to be raised through taxes in order to pay for medical services. People in the United States like the theory behind provided health care for all Americans; however, most individuals are unwilling to pay taxes in order to fund all forms of health care to everyone in the United States. We believe that there are major cultural differences between Sweden and the United States because Americans are more concerned about the individual rather than the whole.


World Health Organization

In the early 19th and 20th centuries, international discussions recognized the need for creating an international health organization. The international community founded the World Health Organization in 1948, dividing the globe into six regions, and over the past 50 years it has gathered data in order to make assessments of global health and to project future health trends. The cross--national analyses they provide enable us to consider lessons from abroad, and to compare ourselves to our global neighbors The World Health Organization's focus has shifted from infectious diseases to developmental progress, but the present global situation has forced WHO to focus on reforming health care systems because of a decrease resources, both economic and supplemental. WHO works with the various countries in order to noticeable improvements, and the organization's role takes on two main forms: direction and coordination of international health work and technical cooperation with countries. The organization works with each country in order to create a strategy that will best support their needs. In order to suggest reforms that will yield successful results, WHO gathers statistical information, which includes vital statistics and disease surveillance. It can then carefully analyze the data in order to endorse a health care program that will support a country's strategy. The main goals of WHO are to strengthen national health services, promote and protect health, prevent and control specific health problems, and promote medical health research in an effort to foster a healthier global environment.

The 1998 World Health Report makes predictions to the year 2025 which are generally optimistic It states that the socio-economic developments and major advances in health have benefitted people in most countries, and that these people will continue to prosper unless there is a major economic crisis. Ironically, the major problem lies within this statement because progress has not been universal. "While health globally has steadily improved over the years ,great numbers of people have seen little if any improvement at all." Dr. Nakajima says. "The prime concern of the international community must be the plight of those most likely to be left furthest behind as the rest of the world steps confidently into the future. These are the many hundreds of millions of men, women and children still trapped in the grimmest poverty. They live mainly in the least developed countries, where the burdens of illhealth, disease and inequality are heaviest, the outlook is bleakest, and life is shortest" (World Health Report-web). In fact, the statistics for life expectancy reveal this problem even further. By the year 2025, life expectancy in Japan will increase to 82 years, closely followed by the Netherlands with 81 years, but seriously impoverished nations like Africa will actually have life expectancies decrease to 51 years. Clearly, health care systems will become increasingly important to prosperous nations as the growing number of elderly people increases.

The 1998 World Health Report found that the progress and achievements of the past are excellent foundations for a healthier world. Although, we do not think that we are able to stop at the point where we presently are. Science has gotten to a point that satisfies the present situation, but new issues will appear in the future and our health care system needs to be able to adapt to the changes. WHO predicts that there will be more than 800 million people over 65 in the world, and this organization recognizes that population aging will have immense implications for all countries. The three main global trends that affect health are economic, population and social, and it is likely that there are going to be changes in at least one of these areas. Therefore, it is necessary for health care to have the ability to adapt to changes. One of the main goals of WHO is to provide health care to all individuals, and WHO is working with nations to endorse the necessary policies to achieve this goal. As health systems become more complex, WHO is working with countries to reorient existing policies and to enact new policies in order to create a successful health care system that will foster a healthy environment.



It is clear from the preceding analysis that no ideal health care exists and that each system examined has its shortcomings. The U.S. health care system is one of the most technologically advanced in the world, but increasing costs, declining access, and growing public dissatisfaction indicate that the system is in crisis.

The United States is distinguished from other nations in that ~t lacks a single system that provides universal health insurance coverage to the entire population. The U.S. approach to health insurance is a fragmented, uncoordinated patchwork of public and private programs. Resolving these ambivalent feelings will be an essential first step in the effort to reform the U.S. health care system.

The national debate over reform of the ailing U.S. health care system continues to focus on the roles of the private and public sectors in the health care arena. Should health care be treated like any other good or service and be competitively bought and sold, or should it be treated as a public good guaranteed and regulated by the government? Clinton's proposals for health care reform generally embrace an approach known as mangaged competition, providing for a combination of competition and regulation.

One suggestion is to bring health care down to a more manageable level. In Sweden, politicians are elected to a county council which is responsible for the health care of its geographic region. This has proven to be extremely successful because political leaders only have to worry about the health of a few thousand people instead of an entire country. The diversity within each region is relatively small; therefore, politicians are not trying to make a health care policy that will apply to individuals who live in the city versus those who live in the country. Another reason why this is a good idea is that the climate varies greatly in different parts of countries. Even in California, there are people who live in the mountains and there are people who live in the beach. Different kinds of diseases are going to appear in various regions based on climate, and this is something that is easier to accommodate on a smaller scale. We think that health care should be broken down into smaller units; thus, councils would be able to take into consideration different variables that are not universal.

Compelling universal coverage is necessary to guaranteed access. Within any insurance system, if people were guaranteed the right to join whenever they wished, the system would be subject to adverse selection - people would not contribute until they get sick. Compulsory participation can be justified as either a value or a pragmatic calculation. It is already the basis for American social security and medicare, and it must be part of American reform.

Every other advanced industrial country in the world has found a way to guarantee decent health care to all its citizens. In terms of policy challenges, the United States can look to the revelations of the key measures of international experience. We can adapt these measures, add some of our own, and create an American system that can make us secure in the new century.

The United States could guarantee health care to all Americans by choosing aspects of the framework that works in international experience. But doing so has always been difficult for reasons of ideology and interest The U.S. health care system will only be what we make of it. Even if the United States applies lessons learned from the experience of other nations, we will continue to have a unique system that reflects our cultural preferences.


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