Many Americans [think we have] the best health care in the world, even though the U.N. ranks the U.S. system 37th, based on a broad range of measurements. Reid, a former Washington Post correspondent, decided to take his reporter’s curiosity and examine the health-care systems of higher-ranked nations to determine what works and what doesn’t.
He also took his aching shoulder. To give him more movement and less pain, an American surgeon had recommended replacing it with one made of titanium—major surgery with all the attendant risks. The cost, though covered, would be astronomical, and there was no guarantee he would feel any better. So Reid got opinions from top orthopedists in Britain, Canada, France, Germany, India, Japan, Switzerland, and Taiwan. None recommended such a radical solution.
And Reid’s shoulder? His U.S. doctors recommended extensive reconstruction, at likely cost of “serious pain, months of rehabilitation, and tens of thousands of dollars.” In the other countries, reconstruction was often offered as an option, but doctors told him he’d be much better off with steroid injections (Japan); physical therapy (France, where insurance will pay for a spa); acupuncture (Taiwan); a regimen of herbs, yoga, massage, and spiritual meditation (India); and merely learning to live with it (the U.K.). Reid opted not to get reconstruction, had some success with the steroids, and got no relief from acupuncture. The only treatment that led to “significant improvement,” oddly, was the folk medicine in India, for which he paid out of pocket. Reid does not make too much of this, and neither should you.
4 Major forms of international health care systems:
1. The Bismarck Model
This is the model followed in Germany and in its rudimentary form was laid out by Otto von Bismarck. The system uses private initiatives to provide the medical services. The insurance coverage is also mainly provided through private companies. However, the insurance companies operate as non-profits and are required to sign up all citizens without any conditions. At the same time all citizens (barring a rich minority in case of Germany) are required to sign up for one or the other health insurance. Government plays central role in determining payments for various health services, thus keeping a decent control on cost. The Bismarck model is found in Germany, of course, and France, Belgium, the Netherlands, Japan, Switzerland, and, to a degree, in Latin America.
2. The Beveridge Model
This model adopted by Britain is closest to socialized medicine. Here almost all health care providers work as government employees and government acts as the single-payer for all health services. The patients incur no out-of-pocket costs. This tends to be the cheapest system. Countries using the Beveridge plan or variations on it include its birthplace Great Britain, Spain, most of Scandinavia and New Zealand. Cuba represents the extreme application of the Beveridge approach; it is probably the world’s purest example of total government control.
3. The National Health Insurance (NHI) Model
Canadian model has a single-payer system like Britain, however the health care providers works mostly as private entities. The system has done a good job of keeping costs low and providing health care to all. The classic NHI system is found in Canada, but some newly industrialized countries — Taiwan and South Korea, for example — have also adopted the NHI model.
4. The Out of Pocket Model
Only developed, industrialized countries, about 40 of the world’s 200 countries, have any kind of insurance like the above three systems. Most of the nations on the planet are too poor. In these countries the rich get medical care; the poor get little or none and stay sick or die. Hundreds of millions of people in poor countries go their entire lives without seeing a doctor. People mostly pay for the services they receive ‘out of pocket’. However, this leaves many underprivileged not getting essential health care. Almost all these countries have much lower life expectancy and high infant mortality rates. The author gives his experience with the system in India, and a brief description of ancient medical system of Ayurveda. It is inexpensive and mostly provided by practitioners without much formal education in healthcare.
The American Model for Health
The United States follows all four of the international systems in bits and pieces.
- For most working people under sixty-five: The model is closest to Bismarck system [#1] adopted by Germany and Japan. Unlike in Germany and Japan, health insurance companies can be for-profit enterprises in America.
- For Native Americans, military personnel, and veterans: America follows the Beveridge Model [#2] of Britain, where the government acts as both the payer and provider.
- For those over sixty-five: The American model here is very close to Canadian single-payer model [#3] . The government ends up acting as the insurer, while the private sector provides the medical service.
- For uninsured Americans: Americans with no health insurance experience the health care world of poor people in various underdeveloped countries who pay out of pocket [#4] . Much medical care is too expensive for these people and they are left with little or inferior health care.
A major difference between the American model and most poor countries is the EMTALA law passed by Ronald Reagan which guarantees all people, regardless of legal status and ability to pay, the right to emergency care in emergency rooms and once someone is admitted, they cannot be discharged until their life is no longer in immediate danger. This law also specifically covers all women in labor. Most poor countries do not mandate that virtually all their hospitals must provide universal emergency treatment because it is largely an unfunded mandate and hospitals in poor countries could not afford it. There are a few boutique hospitals in the US that specialize in wealthy clients that can legally refuse to care for indigent patients, but any hospital that receives Medicare or Medicaid must accept everyone under EMTALA, and most hospitals could not survive without funding from Medicare and Medicaid which pay the vast majority of hospital revenues in the US.
Singapore has a unique system that is largely organized around a fifth category of health financing:
5. The forced-savings model.
In Singapore between 6% and 9% of most workers’ salary is automatically deducted and put in mandatory government-run health savings accounts that cannot be touched except to pay for government-approved expenses so that every worker has money to pay for healthcare out of pocket. This is similar to the Health Savings Accounts (HSAs) in the US except that Singapore’s HSAs are directly funded through government mandated payroll deductions into government accounts. It works just like the automatic Medicare payroll deduction in the US except that individuals can choose what kind of healthcare they buy with it. The HSA system in the US has expanded rapidly since 2004 when the government created policies to make them possible and subsidized their use with tax benefits, but because contributions are voluntary, most people have very little money in them. By 2016, nearly a third of American employees had a HSA. But at the beginning of that year, the average balance was only $1,604 which is insufficient to cover the high deductibles of the health insurance that must accompany a HSA. Ninety-eight percent of Americans have their HSA funds invested in a demand-deposit account (“cash”) that bears no significant interest because most people treat their HSA not as an investment for saving money, but as a checking account that they only have to avoid paying income taxes. One study found that 55% of Americans spend down everything they deposit into their HSA within the same year. In contrast, in 2014, the average Singaporean HSA had about sixteen thousand dollars (US) in it.
In addition to Singapore’s forced-savings model, their health system also has elements of the Bismark, Beveridge, and NHI models.
The CATO Institute has recommended that we repeal Obamacare and replace it with larger HSA contribution limits to fix healthcare in the US. The more radical part of their plan is to eliminate the existing system of employer health insurance and force employers to pay that money into individual HSAs instead. Then employees could choose whether to use it to buy health insurance or to just pay out of pocket.
Expanding HSAs would give workers a $9 trillion effective tax cut, without cutting spending or increasing the deficit, and would drastically reduce government control over Americans’ health decisions. Most important, “large” HSAs would spur innovations that make health care better, cheaper, and more secure — particularly for the most vulnerable.
Because Congress does not tax employer-paid health insurance premiums, the vast majority of Americans with private coverage get it through an employer. Yet employers finance such coverage with money they would otherwise pay workers — an average of $12,000 per worker with family coverage, for a total of $735 billion this year, and $9.1 trillion over 10 years.
Large HSAs would let workers take that money as a tax-free HSA contribution, and thereby let taxpayers own and control $9 trillion of their earnings that someone else currently controls. That’s an effective tax cut equal to all of the Reagan and Bush tax cuts combined, and nine times more than taxes would fall by repealing Obamacare. Workers could use those funds to remain in their employer plan, purchase better coverage elsewhere, buy medical care directly, or save for future medical needs. All tax-free.
Moreover, Large HSAs involve no income redistribution and create no dependence on government. They would bring health care within reach of those with low-incomes by turning hundreds of millions of other Americans into cost-conscious consumers who force prices downward.
…For decades, prominent conservatives advocated an individual mandate. The left then picked up the idea and gave us Obamacare. …Expanding HSAs is more compassionate and provides a direct route toward freedom and better health care.
This is an interesting idea and it might work for replacing employer-based health insurance. CATO just hasn’t provided enough details here to know how well this proposal might work. But the idea that this plan would especially help “vulnerable” individuals with “low incomes” is ridiculous. The most vulnerable Americans have never had employer-based health insurance and wouldn’t get any employer contributions into HSAs. And low-income people certainly won’t benefit from the ability to contribute more money into their HSAs because only a few percent of Americans are so wealthy they are currently maxing out their tax-free contribution limits. Most middle class Americans can’t even put enough money into their HSAs to cover the deductible on their health insurance, much less max-out their tax benefits from making contributions.