Healthcare Reform: Overview of Healthcare Systems in Non-U.S. Countries

I’ve been thinking about the U.S. healthcare system for several years: How can we make it better? Provide more access? Make it less expensive? This has led me to consider systems in other countries. Up front, I’ll tell you I’m not a world traveler. I made a couple shallow excursions into Mexico years ago when you didn’t even need a passport. I only got my passport four months ago. Haven’t used it yet. My wife wants to go to Italy. I’m interested in Ireland (my sister say’s we’re 75% Irish) and have developed an unexpected interest in Russia.

Don’t worry, I’m not going to review healthcare in all 195 countries. I’ll focus on mostly high-income countries.

Feel free to correct me in the comments section.

First, lets’ consider the broad types of healthcare financing.

• Private insurance

• Public insurance: In some countries workers have social insurance, also called public insurance. Usually government withholds part of their wage (a payroll tax), which is divided between employee and employer. Additional funds may come from other taxes.
• Single-payer healthcare: One entity (public or quasi-public) collects funds and pays for healthcare on behalf of an entire population.
• Out-of-pocket

Many countries, like the U.S., are a blend of these financing mechanisms. For instance, the U.S. Veterans Health Administration is single-payer socialized medicine. Medicare is public insurance. Purely cosmetic surgical procedures and insurance deductibles are paid out-of-pocket. Employer-provided insurance is private insurance.

Note that I haven’t defined “socialized medicine” yet. Universal Health Coverage (UHC) is often defined as coverage for all members of a population for any kind of medical care that does not result in a significant financial burden to individuals. UHC could be single-payer or socialized medicine. While socialized medicine is strictly integrated with the government, the government may or may not play a role in single-payer systems. In a socialized system, the government owns the buildings where care is rendered and it employs those who provide care. In a single-payer system, one entity pays for health care while hospitals, primary care clinics and other health care services are run by separate organizations, and doctors, nurses, and other health care providers are often employees of those organizations. “Single-payer” doesn’t necessarily mean the government: the payer could be any insurance company that obtained the entirety of the health insurance market.

Other than the U.S., nearly all high-income countries provide Universal Health Coverage. So do Singapore, South Korea, and Malaysia, which I mention because they rank highly in several “best healthcare systems” lists. While the U.S. does not provide universal coverage, it covers 91% of the population.

Here’s an over-simplified overview of healthcare financing systems in a few high-income countries and Malaysia (upper-middle-income):

• Australia: Single-payer, government-funded Medicare. Half of residents also buy subsidized supplementary insurance to pay for private hospital care and dental services.
• Canada: Single-payer, government-funded. Canadian Medicare covers 70% of healthcare costs; private insurance pays for 30%. Supplemental insurance is carried by 70% of residents. Two-thirds of Canadians have private insurance to pay for prescription drugs, dental care, etc.
• France: Social insurance. Statutory health insurance is mandatory, funded by various taxes, including payroll taxes paid by employers and employees. Nearly all residents buy private voluntary supplemental insurance to help with co-pays, balance billing, dental and vision care, etc. Employers may help pay for it. Private insurance pays for ~13% of total healthcare expenditures.
• Germany: Public-private social insurance. About 88% of residents are enrolled in compulsory not-for-profit insurance provided by “sickness funds.” Healthcare is funded for by payroll taxes shared equally by ensured employees and their employers. Germans above a certain income level can opt out of public insurance and buy private instead. Chancellor Otto von Bismarck’s Health Insurance Act of 1883 established the world’s first social health insurance system.
• Japan: Public insurance is mandatory (usually government withholds part of wage, divided between employee and employer). Citizens pay premiums and 30% co-insurance for most services. 60% of insurance is employment-based; the rest is “residence-based” (for the unemployed and/or elderly). The national government regulates nearly all aspects of the system. Health expenditures are funded by taxes (42%), mandatory individual contributions (42%), and out-of-pocket expenses (14%). Seventy % of residents have supplementary private insurance but it seems to function more as life or short-term disability insurance.
• Netherlands: Private insurance. Adults must purchase statutory insurance from nonprofit private insurers of their choosing. Otherwise they are fined. Children are automatically covered. Less than 1% of the population is uninsured.  Healthcare is financed through payroll taxes paid by employers, general taxation, insurance premiums paid by individuals, and copayments. A large majority of the population also purchases voluntary supplemental insurance to help with expenses not paid by statutory insurance.
• Malaysia: Public-private mix, two-tiered. The public system, funded by taxes, provides universal access. Most residents use the public system for a nominal fee. There is also a large and thriving private system that caters to higher-income residents and medical travelers from other countries. In 2020, there were more private than government-owned hospitals. Most physicians speak English. Many doctors, especially specialists, gravitate to the private system, presumably for better working conditions, lower patient volumes, and/or higher pay. The private system is sustained by out-of-pocket payments and private insurance. High-tech care and specialists are concentrated in the large urban centers, as they are in many high-income countries. The private system tends to provide nicer amenities and shorter wait times than the public counterpart.
• New Zealand: Single-payer, government funded. Government at national and regional levels is heavily involved. General taxes fund most healthcare. A third of the residents have private insurance to pay uncovered services and copayments. There are private hospitals but public hospitals predominate, providing all emergency and intensive care.
• Norway: Single-payer, government-funded by general and payroll taxes. A tenth of the population pays for private insurance, mainly for quicker access and broader choice of providers. Most hospital care is provided at public, state-owned hospitals. There is a small private supplemental insurance market, mostly provided by employers.
• Singapore: Mixed financing. MediShield Life is a statutory insurance system that covers large hospital bills and certain costly outpatient treatments. (In the U.S., we’d call this catastrophic care.) Premiums for MediShield Life are subsidized by the government based on income and funded by general taxation. Patients pay premiums, deductibles, and co-insurance. A second major program is called MediSave, a mandatory medical savings account that helps pay out-of-pocket expenses. MediSave accounts are tax-exempt and interest-bearing, funded by personal and employer contributions. Singapore utilizes regulation of supply and prices of health care services in the country to keep costs in check. There is a 50:50 mix of private and public hospital, the latter being government-owned. Sixty to 70% of citizens also have supplemental health insurance for coverage of private hospitals or private wards of public hospitals.
• South Korea: Single-payer, government-funded. Compulsory social insurance, called National Health Insurance, is funded largely by payroll taxes split equally between employers and employees. The national government also contributes. Co-payments for hospital care are 20% and outpatient services have co-payments ranging from 30 to 60%. Out-of-pocket payments are ~35% of national health expenditures, perhaps the highest of OECD countries. Out-of-pocket payments are capped, based on income. A large majority of the population also pays for private health insurance to help with co-payments. Low-income folks are in the Medical Aid Program and exempt from premiums and co-payments. Most hospitals are privately owned, but not-for-profit by law. Drug prices are set by the government.
• Sweden: Single-payer, government-funded. Nearly all hospitals are public. Only 15% of healthcare expenditures are private, mostly out-of-pocket for dental care and drugs. There’s a small market for supplemental insurance, mostly employer-provided, to gain quick access to specialists or to avoid wait lists for elective services.
• Switzerland: Mandatory private insurance bought from nonprofit insurers. Adults pay yearly deductibles and 10% coinsurance (with a cap) for all services. Care is largely decentralized, with system governance mainly at the cantonal level. Enrollees are offered several models of care (e.g., HMOs, Family Practice Gatekeeper, call-center before seeing physician) and a choice of deductibles. Funding is from enrollee premiums, taxes, other social insurance schemes (military, old-age, disability), and out-of-pocket. The Federal government and cantons subsidize premiums for lower-income individuals and households.
• United Kingdom: Single-payer socialized medicine. About 10% of residents have private supplementary insurance to gain more rapid access to elective care, choice of specialists, and better amenities.
• United States: Mixed public and private. Single-payer if 65 or older (Medicare). Public insurance for no- or low-income under 65 (Medicaid). Private insurance. Out-of-pocket. Government sources pay for ~45% of total healthcare expenditures.

For additional details of 20 high-income country healthcare systems, check out The Commonwealth Fund’s Country Profiles: International Health Care System Profiles. I note that many of these systems, perhaps a majority, provide free or very-low-cost medical education for physicians. They also limit the number of physicians trained, and limit the number of specialists. New graduates of U.S. medical schools average $200,000 USD in educational debt. That’s about 155,900 Pound sterling or 182,900 Euro. I also noticed that physicians in the U.S. tend to be paid significantly more than in many other top-tier countries.

Steve Parker, M.D.