Single-Payer

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The Development of Universal Health Care in Sweden

December 6, 2011 in International Health Care Systems | 2 comments

Sweden adopted universal health coverage in 1955.  How did the universal health coverage develop?  A 2004 World Health Organization report provides the answer.

Health insurance in the 19th century mostly occurred through mutual aid organizations, which paid out sickness benefits if their members became ill.  By 1885, about 10% of workers had joined “Friendly Societies.”  In the latter half of the 19th century, employers and unions began to create sickness funds for their workers.  Employers wanted to attract more workers; unions hoped to increase their member’s independence by reducing their reliance on employer-based schemes.  In 1891, the government not only recognized these societies, but began to offer subsidies to help finance their operations.

“Over  the next 40 years, government legislation moved steadily toward realizing the goal of universal effective health insurance coverage.  Early regulations sought to reduce the number  of societies so that they could achieve economies of scale. The government also gradually increased the number and categories of individuals who were required to  have coverage. A gap emerged between professionals with individual contracts and  manual workers with collective contracts, with the former enjoying a higher level of insurance coverage, particularly with regard to sick pay. Sweden almost enacted a universal insurance system in 1935, but the economic crisis in that period forestalled adoption.  The legislation establishing a universal system was finally passed in 1946 and implemented in 1955.”

The CIA World Factbook provides some additional facts on the Swedish healthcare system:

  • Health Spending: 9.9% GDP
  • Taxes: 53% of GDP.
  • Health Revenue derived from county taxes: two-thirds
  • Share of local budget dedicated to health: 85%
  • Life Expectancy: 81.07 years
  • Total Fertility Rate: 1.67

Source: William Savedoff, Tax-Based Financing for Health Systems: Options and Experiences, WHO Discussion Paper, 2004.

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Scottish NHS pay £23 million in compensation, but U.S isn’t doing any better.

September 15, 2009 in International Health Care Systems, Malpractice | No comments

The Scotland Sun reports that the Scottish NHS paid £23 million ($40 million) to patients for subpar care. Is this due to the inherently substandard quality of care in a single-payer system?

The answer is likely no. This figure only amounts to about £4.50 ($7.34) for every person in Scotland however. Drug-related errors in the U.S. cost patients $3.5 billion per year or $11.50 per patient. Thus, it matters not whether a health care system is single payer or not; single-payer and private health care systems both have significant room for improvement.

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Can a Multi-payer Financing reduce costs to Single-Payer Levels?

September 15, 2008 in Health Insurance, International Health Care Systems | 2 comments

This is the question asked by Newhouse and Sinaiko in their 2008 paper in the Forum for Health Economics and Policy. The answer is yes.

 

Single Payer
Country Health Exp as Share of GDP (2006)
Canada 10.0
Norway 8.7
Portugal 10.2
Spain 8.4
Sweden 9.2
United Kingdom 8.4
Average 9.2


Multi-payer
Country Health Exp as Share of GDP (2006)
Germany 10.6
Japan 8.2
Netherlands 9.3
United States 15.3
Average 10.9
Average (w/o US) 9.4

Source OECD

From the table above, we see that when we exclude the U.S., many multi-payer systems have similar health care costs as single payer systems. Further, Newhouse and Sinaiko find that states in the lower quintile of health care spending spend similarly to the single-payer nations cited above.

Specifically applying a single payer system to the U.S. might not reduce health care costs as much as conventional wisdom thinks. The paper wisely notes that “the dominant American fee-for-service reimbursement method is likely to generate greater billing costs than hospitals on fixed budgets, as in Canada, but it is not necessarily the case that implementing a single-payer regime in the United States would change how hospitals are paid.”

So is a single payer system right for the U.S? This question is still up for debate. A single-payer system is likely a sufficient condition for having lower health care spending levels, but it is not a necessary condition for reducing health care costs.

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