Comparative Systems - 2

1. Comparative Systems - 2 © Allen C. Goodman, 1999

2. The United Kingdom - National Health Service Great Britain's National Health Service (NHS) was established in 1946, and provides health care to all British residents. It is financed largely (about 85%) through general revenues, with capital and current budget filtering from the national down to the regional, and then to the district level. The plan pays physicians on a capitation basis and hospital staff largely on a salaried basis. Doctors may, however, receive additional payments for many services, including maternity services, treatment of temporary residents, the training of assistants, and treatment of the elderly.

3. UK - NHS Services are not entirely free. Patients desiring private rooms pay extra, and there is a small surcharge for drug prescriptions filled outside the hospitals. Dental care and eyeglasses also require patient copayments. The general practitioner, or GP, serves as the "gatekeeper" to the health care system. Contrary to U.S. perceptions of the NHS, GPs are not government employees. Rather they are self-employed and receive about half their incomes from capitation contracts with a Family Practitioner Committee. Referring to Table, we can see that share in the United Kingdom in 1997 was less than half of the United States. How does the United Kingdom keep its health care expenditures this much lower while providing universal access to health care? Though patients have relatively easy access to primary and emergency care, elective services are rationed either through long waiting lists and by limiting the availability of new technologies.

4. Health Expenditure Shares

5. Performance Under the NHS On the one hand, the effect of a system such as the NHS that depends on queuing for access to care is often to postpone, or simply not provide, certain services. On the other hand, the NHS devotes considerable resources to such high return services as prenatal and infant care. To these populations served, and to the larger public concerned with equitable provision of care to these segments of the population, the universal nature of the service is particularly beneficial. Over the years, the United Kingdom has spent considerably less on health care than the United States and many other countries. By most measures of mortality and morbidity, the United Kingdom does about as well. Certainly, there are many nonmedical factors that are involved in determining disease and death rates in a population, and these factors will also vary across countries.

6. Performance Under the NHS In addition, despite universal access to care in the United Kingdom, historically there have been considerable regional disparities in funding and in the use of health care. There is evidence showing that upper class patients have received substantially more care for a given illness than have lower class patients. Thus, even where access is universal, the results are not necessarily equal. The experience of the United Kingdom's National Health Service in the area of cost containment, however, seems fairly clear. Rationed care cuts money costs! holds some opportunities for the United States.

7. The Canadian Health Care System The Canadian system of financing and delivering health care is known as Medicare, although it should not be confused with the U.S. Medicare program developed for the elderly. In Canada, each of the 10 provinces and three territories administers a comprehensive and universal program which is partially supported by grants from the federal government. Various criteria established by the federal government with respect to coverage must be met. Coverage must be universal, comprehensive and portable, meaning that individuals can transfer their coverage to other provinces as they migrate across the country. There are no financial barriers to access, and patients have free choice in the selection of providers.

8. Material from SSA • http://www.ssa.gov/statistics/ssptw99.html

9. The Canadian Health Care System Canada's Medicare is not the same as Britain's NHS. Most Canadian physicians are in private practice and have hospital admitting privileges. They are reimbursed by the provinces on a fee-for-service basis under fee schedules negotiated by the provinces and physician organizations. Hospitals are also private institutions although their budgets are approved and largely funded by the provinces. Canadian and US health care systems also evolved similarly until the 1960s. Even as recently as 1971, both countries spent approximately 7.5% of their GNPs on health care. Since 1971, however, the health care systems have moved in very different directions. While Canada has had publicly funded national health insurance, the United States has relied largely on private financing and delivery (although governments have been heavily involved through Medicare, Medicaid and numerous regulatory programs).

10. Fuchs and Hahn Somewhat dated, but indicative. Let’s look at a couple of slides from Table 22.5. IOWA MANITOBA

14. Administrative Costs The centralized system of health care control in Canada has led to attention on the possible economies associated with administrative and other overhead expenses. Almost all patients in the United States are familiar with the extensive paperwork and complex billing practices. For providers and third-party payers, the paperwork is more than an inconvenience; it involves major administrative expenses. Table 22.6 contains estimates of various categories of administrative expenses for 1987. The total expenses were approximately $300 more per capita in the US than in Canada. This figure accounts for a substantial portion of the difference in per capita spending between the countries. Woolhandler and Himmelstein (1991) found that administrative costs in the United States increased from 21.9 to 23.9% of health care spending between 1983 and 1987, while declining in Canada from 13.7% to 11%.

15. So … The data presented above suggest that the Canadian system appears to do better than the U.S. system in several respects. Costs are lower, more services are provided, there is universal access to health care without financial barriers, and health status as measured by mortality rates is superior. Canadians have higher life expectancies and lower infant mortality rates than the United States residents. However, some have argued that a system which is manageable for a population of about 25 million cannot be easily emulated in a more pluralistic country with a population ten times that level.

16. So … (2) Critics of the Canadian system charge that health care is rationed in the sense that all the care that patients demand, or would be provided to meet their best interests, cannot be supplied on a timely basis. Though specific estimates of such shortages are not available, there is a consensus that the limits on capacity and on new technology result in longer waiting periods for hospital services. The "safety valve" of a private system, as in the United Kingdom, for those who are willing to pay more, is not readily available, although some Canadians (particularly those near large U.S. border cities such as Buffalo and Detroit) use the United States facilities for this purpose.

17. So … (3) Defenders of the U.S. approach claim that the waiting and queues found in Canada would be unacceptable to many U.S. patients. There is a greater level of amenities in the United States and the greater availability of specialized care together with high-tech medicine is often taken as an indicator of superior quality. Finally, there are those who believe that the differences between health care spending between the two countries is not nearly as great as it appears. Krasny and Ferrier (1991) suggest that the following factors represent much of the gap: - the failure to account for capital costs in Canadian hospitals, - the larger proportion of elderly in the United States, and - the higher level of spending on research and development in the United States.