Summary Chapter 1, Introduction (Mattias Fritz)

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National Health Programs: Three Examples

The United Kingdom – The National Health Service (533-536)

Great Britain’s National Health Service (NHS) provides health care to all British residents. The general practitioner (GP) serves as gatekeeper to the health care system and purchase medical care for their patients. The GPs participate in primary care groups (PCGs), which receive capitated funding from the government and are responsible for most health care services for their patients (about 100 000 patient per PCG). The providers are mainly hospitals. The incentives for efficiency and a responsive system come as providers compete for contracts with purchasers. However, this purchaser/provider system does not work that well. In many market there are too few hospitals to allow meaningful competition.

The U.K. keeps its health care expenditures low due to limits on the availability of new technologies and waiting lists, which ration specialty care. Though, patients have relatively easy access to primary and emergency care.

Germany (536-540)

In the German system, all working persons are required to have health insurance with costs divided equally between employer and employee. Approximately 88 percent of Germans have social health insurance, 10 percent have private insurance, and the remaining 2 percent receive free care, for some reason.

Each level of government has specific responsibilities in the German system:

  • The central government passes legislation on policy and jurisdiction.

  • State government are responsible for hospital planning, managing state hospitals, and supervising the sickness funds and physician associations.

  • Local government manage local hospitals and public health programs.

German has achieved a favourable record along other criteria. It has a publicly funded system with virtually universal coverage but has avoided queues and extensive government intrusion.

However, costs per capita have been increasing faster than the income per capita, which lead to reforms. Since 1993 there is a supply-side competition and members can choose among a range of sickness funds.

South Korea (pp 540-541)

1977, less than 10 percent of the population had health insurance. 1989, however, South Korea had a universal coverage to a system that maintained private provision of health care with fee-for-service reimbursement.

In 1977, South Korea required all firms with more than 500 employees to establish insurance societies to provide specific health care benefits. A second scheme for government employees, teachers, dependents of soldiers, and pensioners was phased in under another law. Similarly, the self-employed, farmers, fishermen, and other occupational groups were phased in under a third program. Finally, low-income individuals were covered by public insurance similar to Medicaid.

The cost-containment strategies rely mainly on fee controls and high coinsurance rates (20 percent for hospital inpatient and 30 to 55 percent for outpatient care).

The copayments did not reduce spending of health care, because patients and providers reacted rationally by offsetting the reduced contacts with more service per visit.

The Canadian Health Care System (pp 541-548)

In Canada, each of the ten provinces and tree territories administer a comprehensive and universal program that is partially supported by grant from the federal government. Coverage must be universal, comprehensive, and portable, meaning patient can use the system anywhere in Canada. There are no financial barriers to access, and patients have free choice in the selection of providers. Though, Canada spends less money than the U.S., provides more service, and its mortality rate is superior. Proposed reasons for this are:

  • Physicians’ fees result from negation between physicians’ organisations and the provincial government. Physician cannot evade the fee controls by charging extra.

  • Hospitals costs are regulated by the provinces through budgets.

  • Occupancy rates are higher in Canadian hospitals.

  • The provinces have limited the capital costs associated with expensive new technologies.

  • The administrative cost were $300 more per capita in the U.S. than in Canada.

  • U.S. medical patients received 22 percent more tests despite similar technologies.

Defenders of the U.S. approach claim that the waiting and queues found in Canada would be unacceptable to many U.S. patients. The gap between U.S. and Canada may also be explained by a:

  • failure to account for Canadian hospitals´ capital costs

  • larger proportion of elderly in the U.S.

  • higher level of spending on research and development in the U.S.

Differences in Health Care Spending across Countries (pp 548-551)

Defining the share of national income spent on health care as s, the quantity as Q, the price as P and the national income as Y, we find that: s=PQ/Y

Copayments variables tend to be insignificant and this casts serious doubt on the ability of market-based methods to reduce costs.

Conclusions (p 551)

National health system appears to reduce health spending. However, careful analysis across alternative systems must impute the additional time costs, as well as the possibly lower quality of care in National Health Service systems, before deciding conclusively on the full costs of alternative systems.

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