International Health Insurance

International Health InsuranceAs the United States undergoes significant changes to its health care insurance system, you may be wondering how the insurance benefits and costs compare to other countries around the world. This article will provide you with a snapshot of the international health insurance system in four other countries: Canada, United Kingdom, Japan, and China.

U.S. health insurance infographic >


Canada Health Act

During the American debate over health insurance, Canada is frequently referenced as an example of socialized medicine. But, how exactly does the program work?

Rather than a single, nationalized system, the Canadian government has handed over control of the finances and administration to each of the 10 provinces and three territories. As stated by the Health Canada website, “Canada does not have a single national health care plan, but rather a national health insurance program, which is achieved by a series of thirteen interlocking provincial and territorial health insurance plans, all of which share certain common features and basic standards of coverage. Under the Canada Health Act, our national health insurance program is designed to ensure that all residents of Canada have reasonable access to medically necessary hospital and physician services on a prepaid basis, and on uniform terms and conditions.”

Therefore, if you are legally allowed to live in Canada, and reside in one of the provinces or territories for at least 183 days per year, then you are eligible to have the insurance.

The government has outlined specific health services which are required to covered under the provincial insurance programs, including:

  • In-patient and out-patient hospital services
  • Services medically necessary to maintain health
  • Disease prevention
  • Diagnosis for injuries, illnesses, and disabilities
  • Physician services

The provinces/territories have the option of including additional benefits, especially for children and the elderly, such as prescription drugs and ambulance services. However, it is up to the province to make that decision.

Since the programs do not include all services, like dental and eye coverage, two-thirds of Canadians purchase supplementary insurance. Of those with supplementary insurance, 60 percent were covered by employee-sponsored plans and 35 percent paid out of pocket.

Canada spent 11.4 percent of its Gross Domestic Product (GDP) on health care in 2011, compared to the United States, which spent 17.4 percent. This is partly due to the fact that medical services cost less in Canada, as well as lower administrative costs.

While the Canadian health care system has received high marks for its cancer survival rates, primary care, and low costs for chronic conditions, it does not fare well on wait times. Often, patients have to wait up to four weeks for an appointment with a specialist, compared to two weeks in the American system. Also, since the provinces use different methods for financing their health care, some regions have to pay premiums. Others use payroll taxes, sales takes, and/or provincial revenues. However, there is financial assistance for qualifying, low-income residents who are required to pay premiums.

United Kingdom

United Kingdom's National Health Service (NHS)

Shortly after World War II, the United Kingdom developed the National Health Service (NHS). It was created on the principle that all people should have health care from “cradle to grave”. Citizens have the option of purchasing their own private insurance instead, which about ten percent of the population does.

During its 60-plus years of operation, the NHS devolved into four separate systems, one for each nation within the UK: England, Scotland, Wales, and Northern Ireland. According to Gill Morgan, the NHS Confederation boss, “We basically have four different systems albeit with the same set of values.”

So what are the differences?

In England, hospitals and services must compete with the private sector for patients. The idea is that choice and competition will drive improvements to the system. Fortunately for consumers, this has resulted in sharp drops in appointment wait times.

In Scotland, personal health care is completely free of charge, doctors have a stronger voice in services, less tension between doctors, and there is little involvement from the private sector. Unfortunately, little contestation between the public and private sector means longer wait times.

In Northern Ireland, financial support has been reorganized and NHS has been better integrated into pre-existing social care programs.

In Wales, the local government works closely with NHS. This has meant innovations to public health, free prescriptions, and praise from England.

Read one woman’s experience living under NHS:

“A massive advantage of living here is the National Health Service. If an American could understand it, they would be amazed by its magnificence.

In this past week I have seen an ENT consultant surgeon and have had surgery scheduled in a few weeks’ time. There was no direct cost to me.

Tonight my GP (family doctor) rang at 8pm to check in on another health issue. She is chasing a consultant to authorise a new medication and will ring me back next week. This did not cost me a penny.

So, three doctors and one medical procedure without a form to fill in or a bill to pay…I know it is in our taxes but the system works well. It is ‘from birth to grave’ care all woven together into one service—ambulance to GP to hospital to nursing care. There are all kinds of synergies created by such a system. It is to be deeply respected, emulated, and not feared.”

Though each nation has control under their own NHS system, there are some commonalities, including:

  • Free ambulance services for emergencies
  • Dental services
  • 24-hour phone services
  • Low or free prescription costs
  • Broad network of general practitioners and specialists

While patients do not pay directly for many health care services they receive, they do pay indirectly through taxation. Most NHS funding comes from general taxation. In England, the UK Parliament sets an overall budget for their expenditures. For the other three nations, they are given a block grant to cover local needs. The local parliaments then decide how much of that block grant to allocate to their health care system.

In a survey conducted in 2012, over 61 percent of British residents were satisfied with their health care system. This, compared to 28.9 percent of Americans, shows that even with longer wait times and higher taxes, socialized medicine can be perceived as beneficial in the long run.


Kaihoken - Japanese Healthcare

In a 2012 Bloomberg ranking of the countries with the most efficient health care, Japan ranked among the top three, along with Hong Kong and Singapore. There are many reasons to explain why this might be, such as tight governmental control over regulation and operations.

Established in 1961 and called kaihoken, Japan uses a mixture of universal and private health care. All citizens are required to participate and long-term care insurance is required for those 40 and over. While some may consider this to be an early age to being long-term care insurance, the benefits include nursing home stays, in-home care services, residence in Alzheimer homes, day-care stays, and care for immobility.

In order to make the system egalitarian and universal, the government sets flat rates for medications, procedures, and everything in between. Most hospitals are privately owned and operated, but need to adhere to these regulations. As a consequence, there is virtually no competition between insurance providers. If you are a Japanese citizen and need to visit the doctor, all you need to do is go to the nearest clinic, present your insurance card, pay a small co-payment, and receive care. There are no in-network and out-of-network doctors, and there are no cost differences between different clinics and hospitals.

Funding is gathered through payroll taxes by employers and employees, and income-based premiums by the self-employed. In 2012, the average family paid 300 dollars per month towards health care, but if you lose your job or cannot afford to pay, then the government will for you. The overall GDP spent on health care was only 8.5 percent, or $2,873 per capita in 2008. This is partially due to the flat rate system of fees for procedures, visits, and medications.

Of course, there are problems with the system too. As Japan’s population ages, there are fewer people employed and fewer people paying into the system. This will lead to a higher percentage of the GDP spent on health care, hospitals operating at a loss (because politicians are unwilling to raise taxes), and doctor shortages. As stated by The Economist, “The Japanese are justly proud of their health-care system. People get good basic care and are never bankrupted by medical bills. But kaihoken cannot take all the credit for the longevity of a people who eat less and stay trimmer than the citizens of any other rich country. And without deep cost-cutting and reform, the system will struggle to cope with the coming incredible shrinking of Japan.”


China’s health care system

While the last three health care systems mentioned in this article have fairly high success and approval rates, it is necessary to include at least one country that isn’t faring as well. While China has made significant attempts to overhaul its health care system since the end of World War II, it is far from succeeding.

China is currently undergoing its 12th Five Year plan by the Chinese Communist Party. While in the U.S., the reforms have been focused on improving access to health care insurance, China is most concerned with protecting people from high medical expenses. Most people in China save exorbitant amounts of money for future medical costs because they are typically expected to pay at the time of treatment.

There are several challenges currently facing China’s health care system:

  1. Over 95 percent of the population now has some form of health insurance, many of whom have never had insurance before. This has caused a strain on access to physicians either geographically or due to long waits. As stated by Wharton health care management professor, Lawton R. Burns, “everyone wants to go to the major academic health centers, which means there are enormous lines starting early in the morning to get in and see a specialist.”
  2. The government is now faced with higher costs of insuring so many additional people.
  3. Physicians tend to stay in the big cities where the salary and prestige is higher and the research opportunities are greater.
  4. The number of people over the age of 60 will double between now and 2050, increasing the strain on health care access and services. In addition, there is no long-term care or home health care system in place.
  5. Government appointees sit in the top hospital administration positions, leading to skewed opinions regarding reform.
  6. Corruption in the form of bribery, unnecessary fees, and overcharging for medications. According to one Beijing surgeon, ““If the government is really serious, all the Chinese doctors and drug companies will be found guilty because no drug manufacturer or doctor is innocent. If doctors are to be laid off for receiving hongbao [bribes], then every Chinese doctor will be laid off. But then who will take care of the patients?”

China is making some efforts to reverse these trends. The New Rural Cooperative Medical Care System (NRMCS) was established to make health care more affordable for the rural poor. However, there have been roadblocks, such as inadequate funding, low medical staff numbers, and out-patient visits still aren’t covered.

In the Healthy China 2020 initiative, the program seeks to provide universal health care and treatment for all Chinese by the year 2020. In particular, it seeks to improve the habits of people by encouraging dieting, healthy eating, and chronic disease prevention. However, it is centered on urban areas and is not focused on changing any laws.

Only time will tell how these programs will affect China’s health care system. For now, it is clear where America stands in comparison to Canada, the United Kingdom, Japan, and China. Once the Affordable Care Act is fully implemented, Americans are bound to see more similarities in both benefit and cost to many of these countries.

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