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Healthcare History & Philosophy - United States
Healthcare History & Philosophy - Britain
Healthcare History & Philosophy - France
Healthcare History & Philosophy - Canada
Healthcare History & Philosophy - Japan
Healthcare History & Philosophy - China

Healthcare & Employment - United States
Healthcare & Employment - Britain
Healthcare & Employment - France
Healthcare & Employment - Canada
Healthcare & Employment - Japan
Healthcare & Employment - China

History & Philosophy

Historical Background and Evolution

The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlen from the Peter Chamberlen family. In the late 19th century, early health insurance was actually disability insurance, in the sense that it covered only the cost of emergency care for catastrophic injuries that could (and often did) lead to a disability. This artifact of history persisted right up to the start of the 21st century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance. Patients were expected to pay all other health care costs out of their own pockets, under what is known as the fee-for-service business model.

As the Industrial Revolution matured during the middle to late 20th century, traditional disability insurance evolved into modern health insurance as both employers and governments recognized the value of preventive care by encouraging patients to seek regular checkups from primary care physicians. It is usually much cheaper to treat diseases like cancer if they are diagnosed early.

Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case.

United States:

Although the United States health care system has been described as a "tradition of laissez-faire practices which have emerged over time," in fact both the system itself and numerous proposed reforms embody a tension between the values of freedom and equality which permeates American history and culture. On the one hand, the United States has a higher level of both privatization and inequality in health care than any other developed nation. Those who can afford it receive and expect what is arguably the best medical care in the world and enjoy the benefits of the latest innovations in treatment while those that are uninsured or underinsured remain vulnerable and often at the mercy of charity. However, the United States system is by no means an exclusively private system; in fact, forty four cents out of every dollar spent on health care come from the government, which also provides free health care to certain groups such as the elderly and very poor. Thus, proposed reforms also reflect one model of reform suggests that less government regulation and increased competition for patients between self-interested providers will restrain prices, insure quality and encourage innovation as it does in other industries. Others, however reject the idea that a free market ideology can be applied to health care, arguing that competition will always operate imperfectly within health markets, the results of too much competition will be socially unacceptable and reform should focus on greater equality. In addition, the system of employer-sponsored health insurance may further distort the market because the actual consumers do not purchase health care directly (as they now often do with pension plans), and are provided with limited choice and information by employers. Predictably, patients themselves seem divided which philosophy should guide health care policy: as Americans have done throughout history when confronted with the choice between the competing values of freedom and equality, despite widespread dissatisfaction with the system as it is, we are unwilling or unable to choose.

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Britain:

Under the ‘Panel System’ set up by Lloyd George in 1911, by the 1930’s 90% of the British workforce had social insurance covering GP services and sick pay while all dependents and the other 10% had private insurance or made full out-of-pocket payments. At the suggestion of the Beveridge Report the National Health Service Act was passed in 1948, providing free hospital and physician services to all citizens through a predominantly tax-based system. The change was met with little opposition from either the general population or vested interests and was apparently considered by many to be an improvement over the "patchwork of services" which had preceded it. Created in the aftermath of WWII, the system is guided by the philosophy that society should provide equal medical treatment to all citizens. This philosophy is expressed in a "comprehensive system, based on clinical need, and not ability to pay, and free at point of use." Thus unlike other systems which use reimbursements the British system does not require patients to pay an initial out-of-pocket fee to visit a general practitioner. Despite the overall philosophy of equality, in practice the system is only partially egalitarian and has always included benefits such as more comfortable and private "amenity beds" and private wards in hospitals for patients who are able to pay more. However, the fact that public medicine is widely regarded as prestigious shows that to a large extent the philosophy of the British health care system does reflect national attitudes toward health care. Since 1948 the system has been amended but remains largely intact.

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France:

In the 1930’s, a compulsory heath insurance system for low-earning workers covering two thirds of the population by 1939 replaced the benefit associations that preceded it. National health insurance was introduced after WWII and expanded to cover the entire population. In 1978, government of Lionel Jospin put universal health care coverage into place in France. The philosophy of French health care is expressed in how the system is funded, though national trust funds which citizens contribute to according to ‘social justice’ rather than actual risk (supplementary insurance is provided by non-profit mutelles.) Similarly, the cost of services is determined by agreement between ‘social partners:’ those who provide care, and those who pay (funds, contributors and consumers). In keeping with these policies the system includes a ‘strict income policy’ for providers and according to one French citizen "the whole idea is for people not to make money off you" a doctor is not a businessman." Reforms have sought both to expand the concept of social justice and to control escalating costs. The ‘Juppe Reforms’ of the 1990’s laid down detailed ceilings for total health expenditure, not just government health expenditure, and put strict in place strict controls on intake to medical schools to reduce an excess supply of providers which needlessly drive up costs. A provision introduced in 2000 called CMU (couverture maladies universelle) covers the health care expenses of every individual legally living in France with no health insurance. In the French system those who are too poor to pay for health services are paid for by the rest through the Sickness funds, rather than by the government directly. The policy fulfills the principle of solidarite, roughly translated as ‘common good,’ which underlies the French system as a whole.

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Canada:

The Canadian health care system is based on the philosophy of collective responsibility to protect all citizens on according to need, not ability to pay. Most Canadians consider public health care as an intrinsic element of their national identity. Although national health care had been discussed in Canada since 1919, no real action was taken until 1944. Following the Great Depression the necessity of federal- provincial cooperation became clear and the Saskatchewan government (led by Tommy Douglas’ Co-operative Commonwealth Foundation) became the first province to adopt public hospital insurance. In 1966, The Medical Care Act came into effect, mandating that health care be administrated by provincial governments or non-profit organizations and be portable between provinces. In 1984 the Canada Health Act of 1984 became law, imposing financial sanctions for provincial non-compliance. By 1972 all provinces had a medical insurance plan. Based on a universal ‘Right to Health Care,’ the Canadian system strongly emphasizes the equality of all citizens in its policies. Not only does the Canadian government require that health insurance cover "all medically necessary services," but Canada is the also the only country that forbids any private administration of health care services which are provided publicly. In keeping with the philosophy that the health care system exists to provide a basic right rather than to make a profit, hospitals in Canada are independent non-profit organizations, overseen by a board of trustees.

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Japan:

Japan’s health care system reflects the philosophy that providing universal health care is a pragmatic economic decision. In fact, health insurance was created in Japan for manual laborers in 1922 because of employers’ belief that a healthy and productive work force is essential to achieve national wealth and was gradually extended to white collar workers and dependents. After WWII Japan’s constitution officially made health care a constitutional right for all citizens and in 1966 Japan became the first non-western country to provide universal coverage. The pragmatism of Japan’s health care system is reflected in various measures designed to both control cost and insure equal access. Compulsory payroll deductions (as well as taxes and co-pays) finance various insurance plans and providers are paid by a nationally uniform method and rate decided by a council of insurers, providers and citizens. Price increases are limited by a ceiling set by the government and a uniform fee schedule has contributed to effectively controlling cost.

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China:

The Chinese health care philosophy "emphasizes the building of a healthy population through preventative healthcare programmes and the promotion of healthy living." A central element of the Chinese philosophy is the idea of "individual responsibility:" citizens are encouraged to take responsibility for both their actual health and for the cost of health care. In practice, however, the government seems to have little faith in its citizens to exercise this responsibility. Under Medisave, every worker is mandated by law to set aside 6-8% of their income for future hospitalization expenses for themselves or their families. The Chinese health care policy explicitly states that even patients in the most subsidized government hospitals and public clinics are expected to pay a co-payment to avoid "the pitfalls of providing ‘free’ medical service," and that the basic medical package will "not provide the latest and best of everything." Of course, this may be the case in many countries but few seem to proclaim it so proudly as an integral part of their healthcare philosophy. Although regulations restricting foreign investment and strict quotas limiting the amount of foreign medical professionals have limited the quality of the Chinese health care system, since the SARS epidemic of 2003 the Chinese government has expressed interest in increased coordination and collaboration with foreign international organizations, foreign governments and foreign industry to implement reforms in the health care system.

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Healthcare & Employment

United States:

The Unites State’s healthcare system is predominantly privately funded, with 55% of the revenue from private sources. Individuals can purchase private health insurance or it can be funded by voluntary premium contributions shared by employers and employees on a negotiable basis. It covers 58% of the population. Public funds, (payroll taxes, federal revenues and premiums) fund Medicare, a social insurance program for the elderly, the disabled and end stage renal patients. It covers 13% of the population and accounts for 20% of total health expenditure. Medicaid, a joint federal-state health insurance program covers certain groups of the poor. It covers 17 % of the population and accounts for 20% of total health expenditures.

Strengths:

• High-quality services are available for those with good insurance.
• Market incentives encourage the development of new drugs and high tech treatments
• The US is at the forefront of clinical research.
• Major technological breakthroughs have occurred in treating numerous diseases.
• There are large numbers of physicians, especially specialists, in certain parts of the country.
• High income for physicians creates incentive for society’s most skilled people to enter the health care profession.

Trade Offs:

• Fifteen percent of the population, or 37 million persons, have no health insurance or coverage (the highest in the industrialized world), one-third are children under 18.
• The cost of health care in the US is the highest per person in the industrialized world and growing the fastest.
• Administrative overhead is high - 19 to 24 percent of all health care costs, versus 11 percent in Canada. The US spends greater % of GDP on health care mainly b/c of higher labor, administrative & malpractice insurance costs.
• US health outcomes compare poorly with those of other developed countries - 20th in the world in infant mortality, 29th in low-birth-weight babies, and 6th in life expectancy.
• Many individuals and small groups are denied insurance, primarily because of pre-existing conditions or prohibitively high premiums.
• To shift costs, hospitals charge smaller payers more in order to make up for uncompensated costs from the uninsured and reduced fees by larger payers (large insurance plans).
• Hospital marketing jobs in the US increased 71 percent, and administrative jobs 20 percent (1983-89), but the clinical work force expanded very little.
• The US has more physicians per capita than most other industrialized nations, but they are distributed unevenly both geographically and by specialty. Office-based primary care physicians have nearly disappeared in low-income areas.
• Some hospitals are able to "cream" the wealthiest and privately funded patients, while those that care for the poor are suffering significant financial losses and closing.
• Financial incentives encourage expensive high-tech diagnosis, treatment, and specialization; there is not enough primary care.
• Low public confidence in the health care system. 33% percent of Americans believe that the entire system should be rebuilt.
• The US health care system exhibits the greatest inequality of any developed country
• Due to lack of government price controls on the industry and enforcement of intellectual property rights limiting the availability of generic drugs prescription drugs are considerably more expensive in the US than most other countries.

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Britain:

The United Kingdom’s healthcare system is predominantly public sector with the majority of the funds coming from general taxation and from some national insurance contributions. About 11.5% of the population has supplementary private medical insurance, usually for reason of faster access. National Health Service care is free at the point of delivery, but charges are levied on prescription drugs, ophthalmic services and dental services. There are exemptions for example, for children, elderly and unemployed and 85% of prescriptions are exempt from the charge.

Strengths:

• Relatively low taxes (compared to France, for example) due to GP salaries fixed by the government.
• Relative equality between public and private care; The British tend to use private health care to avoid waiting lists rather than believing that they will receive better care. Furthermore, because public medicine is seen as more prestigious than private medicine many of the best doctors spend the majority of the time working in the public system.
• A mixed public/private system insures that citizens can enjoy the benefits of private healthcare while not worrying about providing the cost of more basic needs or paying for children. Also citizens with a chronic illness which would be excluded from a private policy have a system to fall back on.

Trade Offs:

• Low costs come from limiting the availability of technical resources and expensive drugs. Facilities are often outdated and no use of CT scanners or MRI machines is permitted unless deemed absolutely necessary.
• Long waits for elective care plague the system and have contributed to the rise of a parallel system of more expensive private medicine. Higher remuneration for private treatment in a mixed system cause waiting times to increase further.
• Low public satisfaction in the system. (Partially due to an aging population and advances in treatment and cost that have lead to rising expectations).
• System is entirely state financed and thus vulnerable to political fluctuations. Pressure to get elected and reelected gives politicians incentive to keep down taxes by minimizing public expenditure on health care. .

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France:

Public health finances come from taxes and compulsory social health insurance contributions from employers and employees. The Sickness Insurance Funds cover 99% of the pop. The population has no choice of insurer. They are automatically affiliated to a health insurance scheme on the basis of their professional status and place of residence. Mutual Insurance funds provide supplementary, voluntary insurance to cover cost-sharing arrangements and extra billings. Salaried workers purchase voluntary insurance from their employers, but this can be purchased on an individual basis. The mutual funds cover 80% of the pop., which means that for most of the pop., 100% of the cost of the majority of normal medical procedures are reimbursed. Private insurance is voluntary for those who do not contribute to the national health insurance system. There are patient contributions for ambulatory care, drugs and laboratory tests. Out-of-pocket expenditures account for 10% of healthcare expenditure.

Strengths:

• Coverage is universal with ample access to care and the same advanced technology and services as the US.
• High level of choice. Patients go to the doctor of their choice and then fill out forms for reimbursement by the social security system (except for the poorest for who are exempt from the initial payment.) Patients can see also see specialists without referral by a GP and are able to change doctors easily.
• Resources are allocated efficiently to finance the system.
• A high ratio of doctors and hospital beds per capita insures that patients are seen promptly and admitted to hospitals without a wait.
• Public and private doctors compete for patients, promoting excellent care.
• High public satisfaction and confidence in the system.
• The system of National Insurance Funds, though regulated by government is largely shielded from politics. Because the system is supplemented by patient co-pays and the population has ample access to care, healthcare spending is largely determined how much people are prepared to pay rather than outside political considerations.

Trade Offs:

• The system is expensive and financed by high taxes.
• Although the number doctors, nurses and hospital beds have increased due to demand, but under the strict income policy fees and charges have not. A greater increase in supply than demand for healthcare has increased competition further, driving down prices further. The result has been disgruntled health care workers and GPs and nurses striking in Jan 2002.
• Due to shortages of specialists and facilities in certain areas people in poor, rural and remote areas routinely receive less care. This is perceived as a huge problem in France due to the county’s large land area.
• Patients demand and receive more services than any other European population, some of them frivolous such as unnecessary second opinions. Some French patients ‘shop’ for doctors, visiting multiple specialists until they get the diagnosis they want.
• Overuse of prescription drugs and lack of government control of the pharmaceutical industry drive up the cost of an already expensive system. One fifth of healthcare spending goes toward prescription drugs.

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Canada:

National health insurance plans (Medicare) are funded by general and dedicated taxation and cover all medically necessary physician and hospital services. The majority of the population has supplementary private insurance coverage through group plans to include dental care, prescription drugs, rehabilitation services, private care nursing and private rooms in hospitals.

Strengths:

• The plan is simple and very easy to use.
• All citizens have access to care; no one may be denied services on the basis of income, age, or health status. Coverage is "portable," meaning residents retain their health benefits wherever they move. Health care has no relationship to employment.
• Benefits are the same for all citizens.
• The plan relies extensively on primary care physicians; 63 percent of all active physicians in Canada are in primary care, versus one-third in the US.
• Canada achieves substantial administrative cost savings, since providers and insurers do not need to market themselves or employ vast staffs to process paperwork. Physicians bill the provinces directly and avoid the expense of verifying coverage, seeking approval to provide services, completing paperwork for multiple private insurers, or coping with double-billing and uninsured patients.
• Under a single payer, the provincial governments are able to set and enforce overall budgetary limits. Physician fee schedules are negotiated with the local medical associations and are binding; no additional billing is permitted.
• Private insurance for covered care is not permitted because this would defeat the purpose of spreading the risk over the entire population. However, insurance is allowed to fill available niches, such as for dentistry, pharmaceutical drugs, and certain hospital services (i.e., private room charges).

Trade Offs:

• Financing of Canada's health plan has been generous during periods of growth and tight when government must control its deficits - a major problem recently, since payments have been frozen for the last several years.
• Access to some high-tech procedures has been limited by a shortage of some equipment and hospital beds.
• Canada has far fewer magnetic resonance imaging machines and scanners per capita than the G7 avg.
• Benefits are basic - only procedures deemed "medically necessary," are covered (e.g. optometrists and dentists may not be covered.) Canada has the most limited publicly funded extended care coverage of OECD countries (excluding US). No coverage for drugs, glasses, dental, prostheses, private hospital care and sanatoria. 47% of Canadians say ‘it is very difficult for themselves or a family member to see a specialist or consultant.’
• Cost over-runs - primarily in physician services - prompt provincial governments to increase cost controls, resulting in outcries of "rationing" by providers and, on several occasions, political uproars.
• Some wealthy Canadians go to the US for care; similarly some highly skilled Canadian doctors practice in the US in order to charge higher fees.

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Japan:

Japan’s health care system is predominantly publicly funded. The majority of public finances come from the Employee’ Health Insurance System (Government and non-governmental bodies) and the National Health Insurance (self-employed, pensioners, trade associations and others not covered by workplace based insurance). Most employees and their dependents obtain health insurance through their employers, financed largely through mandatory payroll contributions from both employers and employees.

Strengths:

• Coverage is universal.
• Costs are controlled by a government-imposed national fee schedule with implicit limits on overall expenditure increases.
• Patients have freedom of choice among physicians and hospitals; there is no wait for needed care.
• Each physician is paid the same fee for a given procedure.
• Prescription drugs and dental care are covered.
• Healthcare system is not funded through general government revenues & is thus insulated from political ups and downs.

Trade Offs:

• Coverage excludes preventive health exams and normal deliveries (although preventive health measures are concentrated in mass screenings, and most people are screened once a year; in addition, medical exams for all pregnant women, infants, and young children are free and unlimited).
• Financial incentives encourage an excess use of lab tests, high-tech equipment, and prescription drugs - the highest per capita use in the world.
• Long hospital stays (40 days on average) are due in part to a lack of nursing homes for chronically ill elders, who are cared for in regular hospitals.
• Medical services are fragmented, and, in the absence of expenditure controls, both clinics and hospitals suffer from significant duplication of services and excess capacity.

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China:

The government heavily subsidizes basic medical services at public hospitals and government clinics. Patients contribute co-payments for any medical services they receive and pay more for a higher level of service than the basic package provides. Patients who choose receive basic services in public hospitals are subsidized up to eighty per cent by the government. Under MediSave every worker is required by law to set aside 6-8% of their income into a personal account to be used for hospitalization expenses incurred by themselves or their family. Medishield, a catastrophic illness insurance scheme, helps citizens pay for medical expenses from major and prolonged illnesses and Medifund acts as a safety net for the very poorest. Patients choose from providers within a dual system of delivery with 80% of primary care provided by the private practitioners and 20% by government polyclinics. By contrast, 80% of more costly hospital care is provided by the public sector and 20% by the private sector.

Strengths:

• Patients can choose providers within the public or private system and can walk in for a consultation at any private clinic or government polyclinic.
• Public health education programs raise awareness about the adverse consequences of habits like smoking and encourage a healthy life choices
• Child immunization and health screening programs are provided by the government free of charge Medishield helps cover the medical expenses incurred from major or prolonged illnesses
• Since the SARS outbreak in 2003 the government has expressed interest in increased coordination and collaboration with foreign international organizations, foreign governments and foreign industry to implement reforms in the health care system.
• The Chinese government has strengthened administration of medical services by establishing the Basic Medical Insurance List which establishes guidelines on standards of medical facilities and the qualifications of medical institutions and retail drugstores.

Trade Offs:

• Patients contribute co-pays for every medical service they receive and must pay more for "the latest and best" health care.
• The SARS outbreak revealed problems in the current system including "inadequate investment, slow response to public health crises, weak sanitation facilities, and a lack of health care in rural areas."
• Although the Ministry of Health has expressed interest in increased private investment the current investment regulations limit foreign investment and have resulted in few new hospitals and clinics. In addition the number of foreign medical professionals is subject to strict quotas and duty exemptions for imported health care equipment have been discontinued recently.
• Recent reforms have created challenges with the implementation of reforms for qualifications for medical insurance funds, expanding retail pharmacies and increasing competition among hospitals.
• Recent separation of hospitals and pharmacies and new financing methods have reduces hospitals’ dependence on drug sales.

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Posted on: 10/24/2005