Class 10 – HEALTHCARE SYSTEMS IN OTHER COUNTRIES

Canada, West Germany, and United Kingdom, all provide universal health care coverage, guaranteeing to their populations financial access to medical services

Some of the managed care principles now being implemented in the United States are used in other countries. For example, United Kingdom uses capitation method of payment to compensate General Practitioners along with “fund-holding” which is like the reserve funds. West Germany uses spending caps for their ambulatory care physicians and hospitals are paid a per diem. Canada as a general rule uses the referral system by General Practitioner to specialist, because the specialists want to be compensated at a higher rate as compared to a rate used for a patient’s self referral.

These three countries, Canada, West Germany, and United Kingdom, all provide universal health care coverage, guaranteeing to their populations financial access to medical services.

A. GERMANY

Germany was the first nation to enact compulsory health insurance legislation that required certain employers and employees to make payments to existing voluntary sickness funds, which would pay for the covered employees’ medical care. Accordingly, health insurance in Germany, as in the United States, is employment based, but German health insurance, unlike in the United States, must continue to cover its members whether or not they change jobs or stop working for any reason. Over 1200 sickness funds exist in Germany. The funds collect money from their members and their members’ employers and pay for the care of their members. About 90% of Germans now receive their health insurance through the mandatory sickness funds, 8% opt for private insurance where they pay substantially higher fees to physicians as compared to sickness funds often allowing these policyholders to receive preferential treatment when seeing a physician, 2% receive services as members of armed forces or police and 0.2% receive no coverage.

Two criticisms of Germany’s financing system include: (1) with the large number of sickness funds, the overhead costs associated with administering health insurance are higher than in the United States; and (2) the method of financing tends to be regressive so that the higher the average wage level of a sickness fund’s members, the lower the percentage of payroll needed to cover medical expenses so that lower wage employees tend to pay a greater proportion of their wages for healthcare than higher wage employees.

German medicine maintains a strict separation of ambulatory care physicians and hospital based physicians. Most ambulatory care physicians are prohibited from treating patients in hospitals and most hospital based physicians do not have private offices for treating outpatients. Specialty visits increasingly require a referral from the primary care physician. Fifty-five percent (55%) of the physicians are generalists.

Ambulatory care physicians are required to join their regional physicians’ association. Rather than paying physicians directly, sickness funds pay a global sum each year to the physician’s association in their region, which in turn pays physicians on the basis of a detailed fee schedule. Since 1986, physician’s associations in an attempt to stay within their global budgets, have reduced fees on a quarterly basis if the volume of services delivered by their physicians was too high (these are spending caps).

Sickness funds pay hospitals on a per diem basis which includes the salary of hospital based physicians. German health care costs went out of control from 1965 and 1975. The government intervened and passed the 1977 Cost Containment Act and created a body called Concerted Action made up of the nation’s health providers, sickness funds, employers, unions and different levels of government. Every spring the Concerted Action sets guidelines for physician fees, hospital per diem rates, and the prices of pharmaceuticals and other supplies. Costs kept going up and another strict law came about in 1993 for cost control.

B. CANADA

The Canadian government implemented the Hospital Insurance Act in 1961 to publicly finance a universal hospital insurance program but it did not cover physician services. The government passed universal medical insurance and it became fully operation by 1971. Canada has a tax-financed, public, single-payer health care system. In each Canadian province the single payer is the provincial government. Everyone contributes through the tax structure and everyone receives benefits, though the benefits may vary from province to province. Canada, unlike Germany, has severed the link between employment and health insurance.

Canadian health care system is unique in its prohibition of private health insurance coverage of services included in the provincial health plans. Hospitals and physicians that receive payments from the provincial health plans are not allowed to bill private insurers for such services, thereby avoiding the preferential treatment of privately insured patients seen in many health care systems. However, there fairly recently have been some articles about how the National Health Care System is faltering because the government is trying to reduce large budget deficits, in part by cutting back on health spending, and patients increasingly making up the difference. There has been a proliferation of private services that has led to fears that Canada is headed toward a “two-tiered” health care system based on wealth.

Fifty-five percent (55%) of Canadian physicians are General Practitioners or family practitioners who act as gatekeepers to the medical delivery system. Canadians have free choice of physician. As a rule, Canadians visit specialists only through referral by the General Practitioners. Specialists are allowed to see patients without referral, but only receive the higher specialist fee if they include a referral slip in their billing.

Also, in Canada, high technology services such as coronary artery bypass surgery are performed in only a few hospitals in Canada. A comparison of medical technologies between the United States and Canada in 1991 shows that 32 hospitals in Canada had MRI’s as compared to over 1000 hospitals in the U.S.

In some regions of the country, waiting lists (queues) exist for some services. A 1990 study of queues of cardiovascular surgery in Canada’s largest province, Ontario, found no waiting period for emergency surgery, a maximum of one month’s wait for urgent surgery, and a maximum of six (6) months’ wait for elective surgery. While Canadian patients are rumored to come to the United States for more prompt treatment, in fact very few do so.

Physicians in Canada, General Practitioners and specialists, are paid on a fee-for-service basis, with fee levels negotiated between provincial governments and provincial medical associations. Canadian hospitals, most of which are private nonprofit institutions, negotiate a global budget with the provincial governments each year. Hospitals must receive approval from the provincial health plan for new capital projects such as the purchase of expensive new technology or the construction of new facilities.

Canada achieved its lower cost position by constraining new technology, eliminating duplication of facilities and services, simplifying prepayment, and minimizing administrative overhead.

Lower costs in Canada as compared to the United States comes from:

(1) administrative costs, which are 300% greater in the United States per capita;

(2) cost per patient day in hospitals, which reflects a greater intensity of service in the United States; and

(3) physician fees, which are 234% higher in the United States.

In order to control costs, Canada is experimenting with Germany’s system of expenditure caps for physician services.

C. UNITED KINGDOM

In 1948, the National Health Service (NHS) began, which is a system of health insurance to cover the entire British population. Forty percent of NHS comes from employer-employee contributions similar to social security payments in the U.S. and the remaining 60% comes from general taxes.

As in Canada, United Kingdom completely delinks health insurance from employment, but unlike Canada, United Kingdom allows private insurance to sell health insurance for services also covered by the NHS so that a number of affluent people receive preferential treatment such as “hopping over” the queues for service. Some employers offer such supplemental insurance as a perk.

Specialty and hospital services (except in emergencies) are available only by referral from a General Practitioner. There is free choice of General Practitioners. Most of the hospitals which had been primarily nonprofit institutions or run by the government were nationalized and arranged into administrative regions. Regional health authorities were created, whose members included lay people, local governmental representatives, physicians, and nurses. Funds collected by the national government are distributed to the regions based on population, standardized mortality rates, and utilization rates within each region. Traditionally, most specialists have offices in hospitals and as in Germany, General Practitioners do not provide care in hospitals. General Practitioners have a tradition of working closely with social service agencies in the community and home care is highly developed in the United Kingdom.

The major method of payment for British General Practitioners has been capitation and the NHS added some fee-for-service payments as an encouragement to provide certain preventive services and home visits. Consultants (specialists) are salaried employees of the NHS, though some consultants are allowed to see privately insured patients on the side, whom they bill fee-for-service.

While Canada has a single payer system, it pays most physicians fee-for-service and only recently has moved towards physician expenditure caps (like Germany). By the United Kingdom using capitation for General Practitioners and salary for consultants (specialists), payment can more easily be controlled by limiting increases and the NHS tightly restricts the number of consultants (specialists) slots, including those for surgeons. As a result, queues have developed for non-emergency consultant visits.

In 1990, major changes to NHS were enacted, to address problems such as waiting times for elective surgery. Basically what they have done is gone to a “fund-holding” system that is like a United States managed care organization’s reserve fund and Hospitals are no longer assured global budgets under the NHS, but must now market their services to local NHS district health agencies that may negotiate contracts with different hospitals in an attempt to obtain the best quality of care at the best price for the populations in their district.

In looking at the behind the scenes of the British NHS, Britains wait hours to see a general practitioner, months for elective surgery, and years for reform of the system. Partisan politics play leading role in the health care system. As one administration would hammer out hotly contested reforms, only to watch the opposing party shelve the reports upon entering office without taking action. There are problems with the British system such as no coherent information system that counts the number of patients treated rather than the number of procedures to confirm increased efficiency under the latest reforms. It has been said that spending on administrative affairs rather on patient treatment may increase, though not as high as the United States.

D. POLICY SOLUTIONS

Studies have found changes and trends in Germany, United Kingdom and other European counties healthcare systems parallel those in the Untied States. It has been suggested that as the United States attempts to develop innovative solutions to healthcare delivery and financing issues that the United States should not ignore developments abroad.

The two most important problems judged by physicians in the United States, Canada, and West Germany (this article did not include England) were:

o United States – lack of access to care for indigent patients and high cost of care.

o Canada – overuse or abuse of healthcare system by patients and limited access to health care facilities.

o West Germany – high cost of care and administrative burdens.

In Canada patients can go to any hospital they choose. Canada is a tax financed single payer system that uses plastic identification cards. Canada gives good care, though there are waits for hospital beds behind more serious cases. This decision would be based on medical not economical grounds. Germany uses sickness funds started in 1883 and uses a social solidarity principle where the rich pay for the poor, the young for the old, the well for the sick. Both Canada and Germany are market based economies that have taken healthcare out of the marketplace. Unlike England, where there is socialized medicine so that the government controls overall spending and hospitals and doctors operate independently of the government. The United States has inferior care for the poor, spiraling costs, problems with insurance and bureaucracy which are products of market medicine. Any health care system ultimately comes down to the basic relationship between the doctor and patient. Administrative and financial simplicity for less bureaucratic paperwork is an advantage in Canada and Germany (less than ½ than U.S.).

There are different models of organizing care. The Dawson model uses a regionalization approach where different types of personnel and facilities are assigned to distinct tiers in the primary, secondary and tertiary structure. This model emphasizes primary care base and is used in the British National Health Service and some HMOs in the U.S. Another model is the dispersed model. The dispersed model allows for more fluid role for caregivers and free flow of movement of patient across levels of care. This model is more common in the United States. British may not self-refer to specialists. There is an organizational challenge in the delivery of care to ensure that each patient gets the “right service at the right time and in the right place by the right caregiver.”

British General Practitioners are expected to achieve targeted rates of vaccinations among all children enrolled in the practice. In Britain, the medical care and public health systems collaborate in tracking and performing outreach for immunizations. This is a population oriented model of primary care. Some say this approach does not work in the United States because the United States is a fee for service, multipayor system with an ill defined gatekeeper responsibility.

In examining the United States health care situation and considering suggestions on how to proceed, it has been suggested that the United States realize it is a nation where its social needs are great and its fiscal resources are limited. Some say, complex issues do not necessarily need complex answers. For example, consider the following: shift from specialist to generalist, suburban to inner-city and rural, community health centers, migrant health centers, reinvigorate National Health Services Corporation.

Providing solutions at the government level is not always easy. Sometimes the government’s solutions may make matters better. Sometimes the government’s solution may make matters worse. Sometimes there is no way of knowing. However, we do know that managed care techniques are here to stay in some form or manner and that they will have a major impact on how providers get compensated. Since managed care is a dynamicfield, the framework for analysis based on the different perspectives and laws and public policy as presented throughout this course should help.

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