April 2008

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Health Care Around the World: Portugal

April 21, 2008 in Health Care Around the World, International Health Care Systems | 3 comments

Portugal is similar to Norway in that it is a very centralized health care system. Despite the fact that Portugal ranks highly according to the WHO, there is widespread discontent with the Portuguese system.

Most individuals in Portugal are insured by the state-run, single-payer National Health System. However, 25% of the population is insured through an occupation based insurance scheme. These occupation based schemes include most government, military and telecommunication workers. “These plans were originally intended to be incorporated into the NHS, but their powerful constituencies have prevented that from occurring.”

Funding. Financing of the health care system is generated from general tax revenues. Health care spending accounts for 13% of government revenues. The National Health System (NHS) has an annual global budget, but it is often exceeded by a significant amount. Individuals in the occupation-based insurance schemes pay a premium of about 1% of their salary.

Private Insurance. About 10% of the population has private insurance. Private insurance pays for hospital stays and specialist care. Because there is no guaranteed renewability, premiums are often significantly raised or customers are dropped when they have very high claims amounts.

Physician Compensation. About half of primary care doctors are government employees and the other half work in private practice. Most specialists elect to go into private practice and are paid on a contractual basis by NHS.

Physician Choice. Patients must choose doctors from a list and can only change GPs with a written application. GPs act as gatekeepers. Referrals from the patient’s GP is needed to access specialist care.

Copayment/Deductibles. For most services, there is no or little copayments. For diagnostic tests, hospital admissions, specialists visits and prescription drugs, however, copayments can run up to 40% or more.

Technology. Portugal is seriously lacking in medical technology. The U.S. has 7 times more MRI units per person than Portugal and 20% more CT scanners.

Waiting Times. Waiting times are very long in Portugal. Further, there are often long waits for specialist visits. The European Observatory on Health Systems says the Portugal is heading towards “de facto rationing.” Because of this, many Portuguese either go to Spain for treatment or head to the emergency department. In fact, “at least 25 percent of emergency room patients do not need immediate treatment.”

Benefits Covered. On paper, all benefits are covered, but in reality, many benefits–such as dental care and rehabilitation–are rarely provided.

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P4P: Be careful what you measure

April 20, 2008 in Quality, Supply of Medical Services | Permalink

Simon Caulkin, management editor of The Guardian, has a great article titled “The rule is simple: be careful what you measure.”  The article discusses the fact that measuring performance leads to better performance on the dimensions measured, but can often lead to significantly worse performance on the unmeasured dimensions.  For instance,

What happens when bad measures drive out good is strikingly described in an article in the current Economic Journal. Investigating the effects of competition in the NHS, Carol Propper and her colleagues made an extraordinary discovery. Under competition, hospitals improved their patient waiting times. At the same time, the death-rate following emergency heart-attack admissions substantially increased. Why? As targets, waiting times were and are measured (and what gets measured gets managed, right?). Emergency heart-attack deaths were not tracked and therefore not managed. Even though no one would argue that the trade-off – shorter waiting times but more deaths – was anything but a travesty of NHS purpose, that’s what the choice of measure produced.

Hat tip to DB’s Medical Rants for this one.

The Retired Doc’s Thoughts has an interesting post as well.

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Health Care Around the World: Norway

April 18, 2008 in Health Care Around the World, International Health Care Systems | 27 comments

All Norwegians are insured by the National Insurance Scheme. This is a universal, tax-funded, single-payer health system. Compared to France, Italy, Spain and Japan, Norway has the most centralized system.

Percent Insured. 100%. All Norwegian citizens and residents are covered.

Funding. The National Insurance Scheme is funded by general tax revenues. There is no earmarked tax for health care. The Norwegian tax burden is 45% of GDP. The government sets a global budget limiting overall health expenditures and capital investment.

Private Insurance. Norwegians can opt out of the the government system and pay out-of-pocket. Many pay out-of-pocket and travel to a foreign country for medical care when waiting lists are long.

Physician Compensation. Hospital and nonhospital physicians generally are paid on a salaried basis. Some specialists can receive an annual grant and fee-for-service payments. Reimbursement rates, however, are set by the government and, unlike in France, the physician can not charge higher rates than the centrally-set reimbursement rate.

Physician Choice. Patients choose general practitioners (GPs) from a government list. These GPs then act as gatekeepers for specialist services. Patients can only switch GPs twice per year and only if there is no waiting list for the requested GP.

Copayment/Deductibles. There are no copayments for hospitals stays or drugs. There are small copayments for outpatient treatment.

Waiting Times. There are significant waiting times for many procedures. Many Norwegians go abroad for medical treatments. The average weight for a hip replacement is more than 4 months. “Approximately 23 percent of all patients referred for hospital admission have to wait longer than three months for admission.” Also, care can be denied if it is not deemed to be cost-effective.

Benefits. Very generous. The program also provides sick pay.”  As Michael Moore has noted, the Norwegian system will even pay for ‘spa treatments’ in some cases.”

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Health Wonk Review: 16 April 2008 Edition

April 17, 2008 in Carnivals | Permalink

The latest edition of the Health Wonk Review has been posted on Maggie Mahar’s Health Beat website.

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Health Care Around the World: Japan

April 17, 2008 in Health Care Around the World, International Health Care Systems | 5 comments

Japan has universal health insurance based around a mandatory, employment-based insurance. “The Employee Health Insurance Program requires all companies with 700 of more employees to provide workers with health insurance among some 1,800 ‘society-managed’ plans. Nearly 85% of these plans cover a single company…Most of the rest of the [health insurance plans] are industry-based.” Small business workers join a government-run small business national insurance plan. The self employed and retirees are covered by the Citizens Insurance Program administered by municipal governments.

Japan has very generous health insurance benefits, significant provider choice, and high quality medical technology, but costs are not as high in the U.S. One reason for this is a significant level of cost sharing. The average Japanese household spends $2300 per year on out-of-pocket health care expenses (this figure excludes the payroll taxes used to finance health insurance premiums). Other reasons for lower health care costs is a healthy life-style, a lower incidence of disease and a general Japanese cultural aversion towards invasive procedures.

Another reason for lower costs is that the Japanese government sets a reimbursement fee schedule for all physician services. This has resulted in “assembly line medicine” where “two-thirds of patients spend less than 10 minutes with their doctor; 18 percent spend less than 3 minutes.”

Funding. The health insurance plans are funded by an 8.5% (for large business) or an 8.2% (for small-businesses) payroll tax . The small business national health insurance program is also supplemented by government funds. The payroll taxes are split almost evenly between the employer and the employee. Sometimes these funds are not sufficient to cover costs. In 2003, more than half of the insurance plans at large firms lost money and many companies are now joining industry-based plans. Those who are self-employed or retired must pay a self-employment tax. The Roken is financed by contributions from the Employee Health Insurance Program, the small-business national health insurance, and the Citizens Insurance Program. The elderly do not contribute to this plan.

Private Insurance. Very few Japanese use private, supplemental insurance. Private supplemental insurance pays for less than 1% of health care costs.

Physician Compensation. Hospital physicians are salaried employees but nonhospital physicians are paid on a fee-for-service basis. Hospitals and clinics are privately owned but the government sets the fee schedule, just as it does for private physicians. The fee-setting system, however, is very corrupt since there are over 3000 procedures whose price needs to be set. For instance, “[i]n 2004, a group of dentists was indicted for bribing the fee-setting board.”

Physician Choice. There are no restrictions on physician or hospital choice and no referral requirements.

Copayment/Deductibles. Copayments are 10% to 30%, but generally closer to 30%. Copayments are capped at $677 per month for the average family.

Technology. Japan has high levels of technology. Patients have just as much access to MRI and CT units as in the U.S. Further, because the government imposes a fee schedule, competition is based solely on technology (there is no price competition).

Waiting Times. Waiting times are a significant problem at the best hospitals. Since the best hospitals can not charge higher prices there will be a queue. Many hospitals have been known to accept “under the table” payment to see patients quicker. Thus, the market may be working, whether or not policy makers want it to do so.

Benefits covered. Very generous.

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Health Care Around the World: Spain

April 16, 2008 in Health Care Around the World, International Health Care Systems | 4 comments

The Spanish have one of the most centralized health care systems in the world. Patients have no choice of provider and there is almost no cost sharing. Like most centralized systems without cost-sharing, there are significant waiting times for procedures. This has resulted in a 2 tiered system where 12% of the population receives higher quality care by purchasing private insurance.

Spain ranks #7 on the WHO health care rankings and the Spanish are the second-most satisfied with the quality of their health care in Europe (behind France).

Percent Insured. 98.7%

Funding. The Spanish health care system is decentralized; health care is run independently by each of the regions (comunidades autónomas). Thus results in wide variations in health care spending and quality across each for the regions. The central government gives block grants to each region based on its population and demographics. These funds are raised from general revenues.

Private Insurance. About 12% of the population has private health insurance (about 25% of people living in Madrid or Barcelona have private health insurance). Like in other countries, we see evidence of a two-tiered system. Private insurance payments account for 21% of total heat care expenditures. Further, a fair number of Spaniards pay out-of-pocket for care outside the national healthy system.

Physician Compensation. Most physicians are quasi-civil servants and are paid a salary based on seniority and credentials. The fact that doctors are paid a salary reduces their incentive to under- or over-treat, but the fact that there is no merit pay may decrease physician effort levels. Because of lower physician pay, Spain has fewer doctors and nurses per capital than most OECD countries.

Physician Choice. Spaniards can not choose their physician. They are assigned a primary care doctor who must refer the patient in the case that specialist services are needed. Patients are not allowed to change doctors unless they have private insurance. According to Tanner, “This has sparked an interesting phenomenon whereby sick Spaniards move in order to change physicians or find networks with shorter waiting lists.”

Copayment/Deductibles. There are few copayments except for prescription drugs.

Technology. Spain has about one third as many MRI and CT units as the U.S.

Waiting Times. Waiting lists are a significant barrier to care in Spain. The average wait to see a specialist in Spain is 65 days. Waiting times for procedures are also long, up to 62 days for a prostectomy and 123 days for a hip replacement.

Benefits not covered. Rehabilitation and convalescence are not covered. Those with terminal illnesses are generally the responsibility of the patient’s relatives.

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Health Care Around the World: Italy

April 15, 2008 in Health Care Around the World, International Health Care Systems | 3 comments

While France may have the highest rated health care system in the world, Italy is second according to the WHO. The Italian health care system is a decentralized version of the British NHS. Despite the high rankings by the WHO, Italians are dissatisfied with the quality of their care. Italians believe more patient choice will improve quality, but “given the general dysfunction of the Italian political system, and the entrenched opposition of special interest groups, substantial reform is not likely anytime soon.”

Cost: Health care spending rose by 68% between 1995 and 2003.

Funding. Funding is based on a regressive payroll tax. The tax starts at 10.6% of income for the first €20,660 and drops to 4.6% of income between €20,51 and €77,480. The rest of the funding comes from federal and regional general taxation (i.e.: income and value-added taxes). The regions are responsible for health care provision. The Ministry of Health funds these regions according to a formula based on weighted capitation and past spending. Then the regions allocate these funds to Local Health Authorities (LHA).

Private Insurance. Private health insurance in Italy is uncommon, but is occasionally offered by employers. It is not possible to opt out of the National Health Insurance system and insurance premiums are not tax deductible. Many Italians do pay for private health care. It is estimated that about 35% of Italians use at least some private health services, but the public sector certainly dominates the private in terms if its relative importance.

Physician Compensation. Physicians are paid via capitation. Hopsitals are paid via DRGs.

Physician Choice. Italians have limited choice of their physician but more than in the UK or in Spain. They must register with a general practitioner (GP) in their LHA. For any specialist services, patients must get a referral from their GP.

Copayment/Deductibles. Inpatient and primary care are free. For tests, diagnostic procedures and prescription drugs, copayments are as high as 30%. However, 40% of the population (e.g.: the elderly, pregnant women, kids) are exempt from these copayments.

Technology. There is a shortage of medical technology in Italy. The U.S. has twice as may MRI units per million than Italy and 25% more CT scanners.

Waiting Times. Waiting times are fairly long for diagnostic tests. The average wait for a mammogram is 70 days, for endoscopy 74 days. Tanner notes that: “Ironically, the best-equipped hospitals in northern Italy have even longer waiting lists since they draw patients from the poorer southern regions as well.”

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Increased Copays for high priced drugs

April 14, 2008 in Health Insurance, Medicaid/Medicare, Pharmaceuticals | Permalink

Consumers are starting to pay a larger share for high priced drugs.  According to the N.Y. Times (“Co-payments“), insurance companies “…are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.”  Medicare’s drug plans have introduced new fee schedules where patients pay larger copayments for Tier 4 and Tier 5 drugs.  Private insurers now followed Medicare’s lead.

Should consumers bear a larger burden of their health care costs?  On the one hand, moving towards more out-of-pocket costs will reduce premiums.  Further, higher co-payments will reduce moral hazard (i.e., the use of unnecessary medical care simply because insurance pays for it).  Also, this moves us closer toward insurance as a policy to insure people against catastrophic risk and not as a mechanism to pay for all medical care.

Still, health economist James Robinson from UC-Berkeley states that “It is very unfortunate social policy.  The more the sick person pays, the less the healthy person pays.”

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Health Care Around the World: France

April 14, 2008 in Health Care Around the World, International Health Care Systems | 18 comments

France is often seen by liberals as the ideal system. It has universal health care, with few waiting lists. France has the highest level of satisfaction with their health care among all European countries. How can this be? What is their secret?

France provides a basic, universal health insurances through large occupation-based funds. The General National Health Inusrance Scheme covers 83% of French workers, while other occupational specific (e.g.: for agricultural workers, for the self employed, for miners, etc.) cover the remainder. About 99% of individuals are covered by this universal health insurance system.

However, France utilizes more market-based ideas than most people realized. Copayment rates for most services are 10%-40%. About 92% of French residents have complementary private health insurance.

In essence, the French system avoids widespread rationing because, unlike true single-payer systems, it employs market forces. Even the OECD says that the “proportion of the population with private health insurance” and the degree of cost sharing are key determinants of how severe waiting lists will be.

Insured. About 99% of French residents are covered by the national health insurance scheme.

Cost. France is the third most expensive health care system (~11% of GDP). While the system has generally been well funded, in 2005 the health care system ran a €11.6 billion deficit and in 2006 the health care system had a €10.3 billion deficit. No centrally planned health insurance system will be immune from occasional (or even frequent) deficits.

Funding. Most of the funding is from a 13.55% payroll tax (employers pay 12.8%, individuals pay 0.75%). There is a 5.25% general social contribution tax on income as well. Thus, there is an approximately a 18.8% on employees for health insurance. There are also dedicated taxes which are assessed on tobacco, alcohol, and pharmaceutical company revenues.

Private Insurance. “More than 92% of French residents have complementary private insurance.” This insurance pays for additional fees in order to access higher quality providers. Private health insurances makes up 12.7% of French health care spending. These complementary private insurance funds are very loosely regulated (less than in the U.S.) and the only stringent requirement is guaranteed renewability. Private insurance benefits are not equally distributed so there is, in essence, a two-tier system.

Physician Compensation. French doctors are paid by the national health insurance system based on a centrally planned fee schedule, but doctors can charge whatever price they want. The fees are based on an up front treatment lump sum, which is similar to DRGs in the U.S. The patient–or their private insurance–must make up the difference between the fee charged by the doctor and the amount paid for by the universal health care system. The average French doctor earns only €40,000, although medical school is free for them and the French legal system is fairly tort-averse.

Physician Choice. The French have a fair amount of choice in which doctors they choose. However, recently the French have moved towards a more “managed care” practice style where patients have a “preferred doctors” who acts as a gatekeeper for specialists.

Copayment/Deductibles. 10% to 40% copayments.

Technology. The government does not reimburse new technologies very generously and because of global budgets and fee restrictions, there is little incentive to make capital investments in medical technology.

Waiting Times. France has generally avoided waiting lists, likely due to the fairly high coinsurance charges. Recent trends towards Increased restrictions, reduced reimbursement rates, and rationing has increased wait times however.

Tanner’s summary. “To sum up: the French health care system clearly works better than most national health care systems. Despite some problems, France has generally avoided the rationing inherent in other systems. However, the program is threatened by increasing costs and may be forced to resort to rationing in the future.”

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Health Care Around the World: An Introduction

April 14, 2008 in Health Care Around the World, International Health Care Systems | 6 comments

Recently I came across an article by Michael Tanner of the Cato Institute title “The Grass is Not Always Greener: A Look at National Health Care Systems Around the World.” I figured that the article would be a highly biased piece of writing which would show that the U.S. healthcare system is great and the universal health care systems of Western Europe are horrible.

While the article does tend to highlight some of the drawbacks of centralized, planned medical care, the article has a well-researched, thorough review of the health care systems of many countries.

For the next week or so, I will be summarizing the health care systems in some of these countries. How do these health care systems operate? Which countries have the “best” health care systems? What are the pros and cons of each system? I hope you find these summaries enlightening.

The link to all the summaries can be found here. The countries who’s health care systems I will discuss are:

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