By Travis Pillow
The United States spend 16 percent of its GDP on health care – far more than any other country, but has some of the worst health stats in the industrialized world. Here’s a look at the lessons we can learn from other countries:
Japan
Percentage of GDP spent on health care: 8.1
How does it work?
Under the social insurance model, people get health coverage either from their employers or through non-profit cooperatives, contributing a share of the costs themselves. The government helps provide coverage to those who can’t afford it. The government holds down costs by continually negotiating ever-lower prices on treatments. The Japanese get twice as many MRIs per capita as Americans, but MRIs cost more than a third less because of government mandates. The lower cost puts the squeeze on Japanese MRI makers, but each time they figure out how to produce more efficient machines, they can profit handsomely by exporting them.
What’s good?
The Japanese system takes care of everyone and allows people to get all the care they want at extremely low prices without excessive bureaucracy. At the same time, the pressures of government price controls have helped turn Japan into a dominant player in the global market for health care technology — a potentially attractive benefit for American cities like Gainesville, where medical research and innovation are a major source of well-paying jobs.
What’s bad?
Nearly half of Japanese hospitals operate at a deficit. Many observers wonder whether the government’s strict price controls have gone too far, creating shortages that will only get worse as the population ages. But the Japanese spend half as much on health care as America does. It’s likely they will have to either curb health care consumption or spend more money, which could mean raising prices or increasing government subsidies.
Lessons to learn
With for-profit insurance companies out of the way, a social insurance system can take care of everyone and also be good for business. Another important factor that helps keep the Japanese healthy — and health care cheap — is their diet, which includes lots of fish and vegetables and a fraction of the red meat and corn syrup that clog American arteries. If the U.S. government is more invested in the health of its people, it will have an incentive to make healthy foods more affordable, rather than subsidizing the empty calories churned out by factory farms and sold at depressed prices by convenience stores and fast-food chains.
United Kingdom
Percentage of GDP spent on health care: 8.4
How does it work?
When people try to demonize government-run health care, there’s a good chance they refer to Britain’s National Health Service, a government-run, taxpayer-funded system that resembles the medical services American soldiers receive through the Department of Veterans Affairs. Patients have a choice of hospitals, which compete for patients by providing better service with lower wait times. Government funding is tied to the amount of patients treated by doctors and hospitals.
What’s good?
The system takes care of everyone, and patients don’t have to pay doctors’ bills because their taxes take care of the tab. As a result, doctors have an incentive to keep people healthy and prevent costly health problems from ever occurring, rather than trying to profit from expensive treatments.
What’s bad?
One word: bureaucracy. Like its American analogue at the VA, the British NHS routinely draws complaints from people frustrated with long wait times for major operations like organ transplants and hip replacements.
Lessons to learn
Britain’s answer to its bureaucratic inefficiency has been creeping privatization, which has drawn widespread protests. People like government health care because they want the guaranteed coverage it entails. Indeed, depending how the question is asked, polls show that between half and two thirds of Americans favor government-run health care for everyone in the country, even if it leads to higher taxes. But government-run systems like Britain’s continue to struggle with big-ticket and optional treatments.
Switzerland
Percentage of GDP spent on health care: 10.8
How does it work?
In 1994, the same year the last American attempt at health care reform fell apart in the Hillarycare debacle, the Swiss approved universal coverage by referendum. People are required to buy health insurance, and people who can’t afford it get government assistance. Insurance companies aren’t allowed to profit from basic care, but they can make money offering compensation for lost wages, nicer hospital beds and the rest of the perks you hear about on Aflac commercials.
What’s good?
The Swiss system proves that it’s possible to cover everyone with a system largely driven by market competition in a country with large pharmaceutical and insurance industries. The reform originally passed by a narrow margin but now is widely popular across the political spectrum in one of Europe’s most individualistic countries.
What’s bad?
The Swiss system is the second most expensive in the world in terms of GDP, surpassed only by the U.S. More than 90 percent of the Swiss were already covered when the reform passed in the ’90s, and many insurers were already nonprofit. These are some of the reasons the liberal Swiss government succeeded where the Clintons failed. Our entrenched interests are stronger and the transition will be more dramatic.
Lessons to learn
To cover everybody in America, politicians are going to have to shaft the insurance and pharmaceutical companies that fund their campaigns in a way the Swiss were never forced. The Obama administration’s back-room deal to prevent Medicare from driving a harder bargain with drug companies, combined with insurance companies’ recent threats to raise premiums if reform passes, illustrate the pitfalls of taking on powerful industries and raise questions about whether simple market-based reform like that passed by Switzerland could ever succeed in the U.S.
China
Percentage of GDP spent on healthcare: 5.6
How does it work?
China had a health care system run by the government after the Communist Party took power. In urban areas, the Chinese received health care at government-funded hospitals, and in rural areas, they received it from roving “barefoot doctors” and at village clinics run by the commune-based Cooperative Medical System. In the early 1980s, however, the system began to disintegrate. Once the government transferred responsibility to provincial governments, a domino effect of increased privatization has left the Chinese with an expensive health care system that few can afford. They are taking steps to help the uninsured, however, and by 2020 hope to once again have universal health care.
What’s good?
For the vast majority of Chinese, not so much. Many wealthy urbanites have access to modern medical facilities. However, China’s healcare spending encompasses less than 5% of its Gross Domestic Product.
What’s bad?
Today, only 29 percent of Chinese have health insurance. Information on the state of Chinese health care is sparse because of a lack of government transparency, but the system resembles those of other developing nations more than that of a growing economic powerhouse. The Chinese health care system now ranks 144 out of 191 countries ranked by the World Health Organization.
Lessons to learn
After the Communist takeover, China’s system provided its people with government-funded health care and dramatically improved the quality of medical care available in the country. Granted, Chinese life expectancy was in the mid-thirties at the time of the Maoist revolution, so there was plenty of room for easy improvements. Since the reforms of the 1980s, they’ve gone in the opposite direction of industrialized nations, as their fledgling health system disintegrated into a shoddy, decentralized, increasingly privatized system plagued by inequality. Sometimes, government-run health care just works better.
Canada
Percentage of GDP spent on health care: 10.1
How does it work?
Canada has a single-payer system, in which the government is the insurance provider for everyone, but people get health care from mostly private doctors and hospitals. Currently, healthcare costs encompass near 10% of the Gross Domestic Product.
What’s good?
Everyone is covered for almost all treatments deemed medically necessary. The combined market heft of 33 million Canadians allows the government to negotiate lower prices with drug companies, and because the government doesn’t have to worry about denying people coverage, selling people plans or making profits for shareholders, Canada’s insurance system has significantly lower overhead than the U.S. system, meaning more money is spent on actually keeping people healthy.
What’s bad?
Because everyone is covered for most services, there are long wait times to see a physician. The system is under attack for inefficiency and insufficient funding. Many Canadians think that they should be able to pay for better or faster health care if they have the money, but this is mostly not allowed because it could undermine the government monopoly that helps keep drugs cheap for Canadians. There is also a fear that the best physicians will leave for more lucrative jobs in other countries.
Lessons to learn
In a perfect world, people would not go without health care. That can’t be achieved by a free market system alone. Canada has the opposite problem: the lack of market mechanisms has left patients frustrated by a lack of choices and limited the incentives to become a doctor or develop new medicines. It’s hard to give patients the choices they want under a strict government monopoly. Still, the complaints of rich Canadians unable to get softer hospital bedding at any price ring rather hollow compared to those of poor American families who can’t afford to treat life-threatening diseases.
