Policy and Management
The Canadian provinces and territories set much of their own health care policy and manage their own health services delivery, although the federal government oversees care for certain components and populations. Canada’s health care system is highly decentralized. The country’s ten provinces and three northern territories are primarily responsible for health care in Canada, collectively called the Medicare systems. They set social policy regarding health, education and social assistance, and other social services. The provinces and territories also govern their respective single-payer systems for universal hospital and medical services, paying for hospitals either directly or through global funding for regional health authorities. In addition, the provincial governments negotiate physician fee schedules with the provincial medical associations. However, rarely do the provinces directly deliver health care. Most of the health services organization and delivery in Canada are through the regional health authorities.
The federal government does retain jurisdiction over certain aspects of the health care system, notably regulating prescription drugs and financing and administering health benefits for indigenous peoples, the armed forces and the Royal Canadian Mounted Police, veterans, and inmates in federal penitentiaries. Health Canada, the federal department of health, also plays a critical role in health services research and public health and protection.
Canada finances its health system primarily through tax revenues, but copayments and reimbursements from private insurance also make a significant contribution. Tax revenues at the provincial, territorial and federal governments account for nearly 70% of total health expenditures. These general revenue funds generally come from income, consumption, and corporate taxes. The provincial and territorial governments set the tax rates of their respective jurisdictions. Patient out-of-pocket copayments and private insurance reimbursements cover much of the remainder at 15% and 12%, respectively. The final 3% comes from myriad sources, including social insurance funds, such as workers compensation, and charitable donations.
In 2004, the C$130 billion spent on health care went to:
• 43% on hospital (30%) and physician (13%) services
• 23% on provincial social service programs
• 30% on private health care services
• 4% to direct federal services
Canada spent approximately C$4548 per capita on health care in 2006. However, spending varies throughout the country. Per capita spending in Alberta and Manitoba in 2006 was higher than in any other province or territory at C$4924 and C$4901, respectively. Yet Prince Edward Island and Québec spent the least per capita in 2006, only C$4225 and C$3976, respectively.
Regional health authorities purchase most health services, but private insurance pays for services that Medicare does not cover. The regional health authorities have become the primary payor of health care services. The regional authorities organize services and allocate a global budget for the defined population. Funding methods vary among the provinces and territories. Regional authorities have great freedom in allocating funds to best serve the particular needs of their population.
Private health insurance mostly covers goods and services not covered by Medicare. Private insurance covered 33.8% of all prescription drugs, 21.7% of all vision care, and 53.6% of all dental care in 2004. Six of the provinces—British Columbia, Alberta, Manitoba, Ontario, Québécois and Prince Edward Island—go so far as to outlaw insurance that attempts to provide alternative or faster access to health care already covered by Medicare. Most private health insurance is group-based, sponsored by employers, unions, or other like organizations. Although employer-based insurance is part of the benefits package, this insurance is mandatory and thus most provinces do not tax those benefits.
General practitioners as well as regional health authorities act as providers in the Canadian system. The regional health authorities manage the delivery of care. They hire salaried staff at a majority of acute care facilities. They also contract with some private providers for specialized ambulatory care services. However, most of Canada’s 1.5 million general practitioners and specialists work under fee-for-service arrangements. Fee-for-service payments account for 79.5% of physician income. Providers are discouraged from performing services in both the public and private spheres, although it is not illegal to do so.
Hospital funding comes from global budgets transferred by regional health authorities. Although hospitals historically have been private, not-for-profit institutions, hospitalization has created a substantially integrated relationship between hospitals and provincial governments. Most hospitals rely almost entirely on the global budget monies allocated by the regional health authorities.
Canada provides universal, medically necessary care for its residents free of charge, but its essentially single-payor system has created a bottleneck for timely access to services. The Canada Health Act makes all residents of a province or territory eligible for medically necessary services without charge. Insured services include virtually all hospital, physician, and diagnostic services as well as primary care services covered under the provincial Medicare plans. Although financial barriers to care have essentially disappeared with the elimination of most Medicare user fees, access to timely care is a problem with which the provincial and territorial governments continue to struggle. On the one hand, a single-payor system is much more administratively efficient than a multi-payor one. On the other hand, it can create a bottleneck for access to services. Organizations within the country, such as the Western Canada Waiting List Project and the Canadian Medical Association, have developed waiting time benchmarks. Under the federal Wait Time Guarantee Trust Fund, each province and territory had to specify a patient wait time guarantee in order to qualify for federal funding.
Other Health-Related Social Welfare Services
Canadian provinces and territories provide long-term care and other social services benefits to their populations. Options range from residential care facilities, which provide some assisted-living services, to chronic care facilities, which provide intensive services for patients with high-needs. Home-based care is also available in both the public and private sectors.
Canada struggles with administrative efficiency and service quality. Waiting lists are a point of dissatisfaction with care and erode public confidence in the system. The country as a whole also must address the rising costs of health care to ensure the sustainability of its programs.
The French government provides health care for all 64 million residents under its jurisdiction, nearly 60.9 million of whom live in France proper; the remainder live in French Guiana, Guadeloupe, Martinique, and Réunion. France has implemented several statutory changes in the past decennial that have substantially changed its health care system. First, the 1996 Juppé reforms changed the funding scheme from a tax on earned income to a tax on total income. In addition, the reforms increased the oversight of the parliament, which set definitive health policy and finance goals, and created regional hospital agencies (agences regionales hospitales). France now provides universal health coverage to all its residents.
Policy and Management
Responsibility for health services is split between the national, regional, and departmental levels of government. At the state level, the parliament sets the national ceiling for health insurance expenditures every year and adopts new provisions regarding benefits and regulation through the Act on Social Security. The Ministry of Health regulates much of the health care system. See Figure 3 for a list of its most important functions. At the regional level, regional hospital agencies are responsible for allocating funds to public hospitals, adjusting taxes for private for-profit hospitals, and planning for all types of hospitals. These agencies report to the Minister of Health. Finally, the general councils provide social, health, and public health services at the departmental level.
Tax revenues from a variety of sources fund the bulk of the French health care system. The vast majority of health insurance revenue, 88.1% in 2000, came from the general social contribution tax and the contributions of employers and employees. Contributions to the social security system differ according to the source of the income. Each resident pays a general social contribution (contribution sociale général) based on total income. The health insurance rate for earned income, capital gains, and gambling winnings is 5.25%, while benefits such as pensions or social allowances are taxed at a rate of 3.95%. Earnings-based contributions are levied at 0.75% of gross earnings. The remaining funds are provided through state subsidies and specifically earmarked taxes, such as car usage and alcohol and tobacco consumption. Pharmaceutical companies also contribute, mainly via a tax on advertising. See Figure 4 for a breakdown of the source contributions in 2000.
French insurance schemes are organized according to employment type. Working together under the umbrella of the national union health insurance fund (Union nationale des caisses d’assurance maladies—UNCAM), three insurance funds make up the French health care system: (1) the national health insurance fund for salaried workers (Caisse nationale d’assurance maladie des travailleurs salariés—CNAMTS); (2) the agricultural scheme (Mutualité sociale agricole—MSA); and (3) the national health insurance fund for independent professionals (Caisse nationale d’assurance maladie des professions indépendentes—CANAM). Each national health insurance fund distributes monies to regional and local funds. The funds contract for services with self-employed providers and negotiate the level of charges.
CNAMTS covers approximately 85.6% of the population. Members include both employees in commerce and industry and their families (84%), as well as those eligible under the Universal Health Care Act (1.6% as of 2001). The agricultural scheme, MSA, covers farmers and agricultural employees, amounting to approximately 7.2% of the population. Non-agricultural self-employed people, about 5% of the population, are covered under CANAM.
Under the statutory health insurance plan, the reimbursement of health care costs accounts for 84.9% of total expenditures. The remaining 15.1% is paid out as cash allowances for maternity, illness, work-related injuries, or disability. Reimbursements are made either to the patient, who paid out-of-pocket, or to the provider. Increasingly, pharmacy and laboratory benefits are being paid directly by the insurers.
To cover the cost of “copayments”—i.e., the cost of coverage that is not reimbursed under the statutory health insurance scheme, 86% of the population purchased voluntary health insurance in 2000. However, only 43% opt for voluntary insurance of their own initiative—employers purchase most coverage through a group contract.
The French health care system supports both public and private providers. Approximately 4000 hospitals operate in France. Public hospitals account for about 25% of all hospitals (1000). Non-profit private hospitals number 1400, about one-third of all French hospitals. Private for-profit hospitals are most numerous at 1750, but tend to specialize in particular medical, surgical, or obstetric procedures.
Although all hospitals receive a per diem, the services covered in that rate vary based on hospital type. Public hospitals receive a single per diem rate that covers all services provided, while private for-profit hospitals bill medical fees and other items, such as prostheses, separately. Patients also contribute ˆ10.67 per day of hospital stay.
The number of general practitioners and specialists in France is almost evenly split—of the 194,000 physicians in France in 2000, 51% were specialists and 49% provided primary care.
One-half of specialists and 29% of general practitioners are salaried, both working mostly in the hospital setting. Notably, private general practitioners in France still make home visits, which account for about 25% of their care activities. Providers receive payment from patients at the time of service; thus, providers negotiate with insurance schemes over the unit value to apply to the fee schedule to determine the rate of each procedure.
French residents may consume as much health care as they like; however, to increase their price sensitivity, they pay for their care upon receipt and do not receive full reimbursement. Although France provided nearly all of its residents with health insurance prior to 2000, the Universal Health Care Act (Couverture Maladie Universelle) expanded coverage to all French residents. Single residents whose taxable income falls below a certain amount per year (ˆ8774 for 2008-09) are entitled to free coverage
The system is quite liberal in that patients may choose to see any licensed practitioner at any time without limit. The French average 4.7 contacts with a general practitioner, and not necessarily the same one, each year. To make consumers price sensitive at the time the service is provided, most patients pay the full cost of services out-of-pocket and request reimbursement from the statutory plan, with the exception of those requiring hospitalization and low-income beneficiaries under the Universal Health Care Act. Typically, patients receive only partial reimbursement and thus pay the equivalent of a copayment for services. Patients without supplementary insurance typically receive a reimbursement rate of 70% for physician and dentist services and 60% for auxiliary and laboratory services. There are exemptions for patients with a certain chronic or debilitating health status, those receiving a certain type of care, or due to the status of the patient (such as pregnant women or those injured in the workplace). Out-of-pocket payments accounted for 11.1% of total health care expenditures in 2000.
France also provides services for other health-related services. France provides expansive coverage for those with mental illness and addictions as well as for the elderly and disabled. The local authorities have the primary responsibility for administering these types of services.
Like other health systems, the French scheme must overcome issues related to increasing health care costs and increased demand due in part to the aging population. The WHO has ranked France as the best health care system in the world. Yet even France must address challenges relating to sustainable financing and meeting growing demand due to aging populations.
The German system, known as the Bismarck model, is the oldest in the world and was established in 1883. Although it has undergone many substantial changes since then, the basic structure remains. Within this framework, Germany enacted another significant reform (Gesundheitsreform) to its healthcare system in 2007. The reform had four target goals: (1) mandatory universal health insurance coverage; (2) improvement of medical care; (3) modernization of sickness funds; and (4) reform of the health fund, the base of health care financing in Germany. As different parts of the reform will take effect at different times, this section describes both the previous system and the impact of the new reform.
Policy and Management
The German government controls most of health policy development and health care delivery. The Ministry of Health (Bundesministerium für Gesundheit) introduces and executes health policy for the country. Major policies require approval of both houses of government—he First Chamber (Bundestag or Parliament) and the Second Chamber (Bundesrat, which represents the German states or Länder). The current policy emphasizes solidarity, i.e., the idea that all citizens should have equal access to high quality health care, regardless of ability to pay. he Ministry also administers the health solidarity fund, which will be reorganized as of January 1, 2009, under the 2007 reform. The Social Health Insurance system, a coalition of sickness funds that provide a standardized package of benefits, also falls under government regulation.
The German model is currently in a state of transition, reorganizing its internal subsidy model to be more streamlined. Health care financing in Germany currently follows an internal subsidy model. In this system, consumers pay both their solidarity tax and health insurance premium directly to the applicable sickness fund. The sickness fund then remits the solidarity fund contribution to the government health fund, while the solidarity fund distributes premium subsidies to the sickness funds. At present, the government subsidizes premiums for certain low-income or special classes of residents, in keeping with the solidarity principle. Basically, the total government subsidy to the sickness funds equals the difference between the aggregate solidarity contributions and premium subsidies. The model is illustrated in Figure 6 below.
Under this current model, both employees and employers pay their contributions directly to the applicable sickness fund. Contributions are calculated based on a percentage of wage or salary, and differ among sickness funds. At the individual level, employers and employees divide the contribution payment equally. On average, though, employees contribute 7.6% of their salary for health insurance and employers contribute 6.6%. Premium subsidies are available for workers who earn less than US$60,000 per year, retired persons, students, and those who are unemployed, disabled, or homeless.
The 2007 reform will reorganize the financing system. Rather than a progressive percentage based on income contributed to a sickness fund, individuals and their employers will contribute a flat percentage rate directly to the health fund (Gesundsheitsfonds) starting on January 1, 2009. Federal subsidies also will be paid directly to the new fund. The fund will then distribute monies to the insurance plans on a capitation basis; however, payments will be risk-adjusted based on age, sex, and disease status. Well-managed, efficient insurance plans can remit excess monies back to the insured or provide additional benefits not included in the standard package. Insurance plans that run at a deficit have the option of levying an additional premium on the insured, but it is capped at 1% of gross income. However, if the plan imposes the second premium, the insured is immediately free to change plans. The 2007 reform model is displayed at Figure 7 below.
The 2007 financing reform has several goals. First, it attempts to increase transparency for consumers. It also standardizes the contribution rate for the mandatory insurance program. Flat rate contributions already exist for long-term care, retirement, and unemployment insurance; now they will exist for the mandatory insurance program. The reform also tries to ensure equitable risk-sharing by risk-adjusting capitation payments. More importantly, the reform increases competition among insurers. For example, insurers have additional tools, such as discount negotiation rights and optional contribution rates, to increase their ability to economize. Further, the expansion of consumer-choice through the immediate ability to change plans if the company imposes additional costs also incentivizes companies to use monies efficiently.
residents coverage through the statutory system with the option to purchase
supplemental private insurance. Germany had 253 nonprofit sickness funds in
Access2006, which is a substantial decrease from more than
To contain costs, patients may shoulder costs in addition to the premium and solidarity fund contributions. Copayments and direct payments are not uncommon, and are still allowed under the 2007 reform.
Health care in Germany is delivered in both the public and private sectors. Both public and private providers deliver in-patient hospital care. The majority of hospitals are enrolled in a hospital plan, which means that hospitals receive funding through the same mechanisms no matter the ownership (except psychiatric care, which is reimbursed on a per diem schedule). There are two primary channels of hospital financing. Sickness funds provide approximately Access93% of the total funds, covering recurrent expenditures and maintenance costs. In addition, the sixteen state governments plan investments in hospitals, which are financed by both the state and local governments. These investments cover the remaining 7% of hospital financing. Hospital reimbursements are based on the German diagnosis-related groups. DRG over- or underpayments are adjusted marginally, at 65% withholding in the subsequent year and 60% reimbursement at years end, respectively. Private, for-profit providers deliver ambulatory care in Germany. German physicians number Access133,000; of those, 118,000 are authorized providers in the Statutory Health Insurance system. Half of these providers are family practitioners, while the other 59,000 provide specialty care. Presently, seventeen regional associations of social insurance physicians (Kassenärztlichevereinigungen) negotiate annual contracts for ambulatory care on behalf of their members. Each association receives a lump sum, which it then parses into two funds—one for the primary care providers and one for specialists. Individual physicians receive payment based on an invoice of total services provided and calculated according to a relative value scale. The morbidity risk adjustment of the 2007 reform will decrease the disparity between services provided and reimbursement levels, but will not likely significantly change overall provider reimbursements.
The 2007 reforms mandate universal coverage but look to past coverage to determine how individuals satisfy the mandate. Currently, certain classes of citizens are insured by law. Workers who earn less than US$60,000 per year as well as pensioners, students, and persons who are unemployed, disabled, poor, or homeless are covered under the Social Health Insurance system. All insured in this system have equal access to benefits and services—in fact, statutory plans cannot refuse any applicant.0 Benefits include inpatient and outpatient care, all necessary medication, rehabilitation therapy, and even dental benefits. These plans include family insurance, so unemployed spouses and children of workers are coinsured for no additional charge.
Access to private insurance is limited. Individuals who have made more than US$60,000 per year for three consecutive years or the self-employed may opt-out of social insurance and purchase private insurance instead. Civil servants are eligible for a 50% reimbursement on their health care costs if they purchase private insurance to cover the remainder. However, choosing private insurance coverage may be disadvantageous. In addition to risk-based premiums for all family members, opting for private coverage makes reenrolling in the social system difficult.
The German mandate for universal coverage takes effect intermittently. Plan eligibility depends on the type of plan the uninsured person was eligible for prior to coverage termination. Those eligible for the Social Health Insurance plans must have re-enrolled by April 1, 2007. Those who previously had private health insurance were guaranteed eligible for private health insurance starting July 1, 2007, and must have minimum coverage by January 1, 2009. The 2007 health reform also excludes children from the social insurance plans; however, children are not abandoned.
The reform merely switches funding for dependents to a different source —from social insurance financing to subsidies derived from federal taxes. The reforms attempt to keep solidarity ideals intact. Standard social insurance benefits will be similar to current ones. All eligible applicants must be accepted, and physicians have an obligation to treat. If patients are unable to pay their premiums, the welfare system will cover the payments. In addition, private insurance premiums will be capped at the average maximum contribution in the statutory system.
The transition to the universal mandate poses the most immediate challenge to the German system. Germany must vigilantly monitor the progress of the 2007 health reform implementation. Unexpected and unintended consequences may arise, and the health ministry must be prepared to meet unanticipated challenges. In addition, the Organization of Economic Cooperation and Development has criticized the plan for not doing enough to alleviate the rising costs of health care in Germany to the detriment of the population.
The American health care system
Like many of our institutions, the U.S. health care system relies on a wide variety of public and private resources. Health care is provided in several ways: by physicians in private practice; by municipal, county, state and federal institutions, such as the Veterans Administration; and by hospitals, which may be owned by religious orders or profit-making corporations, or may be financed through charitable or community efforts. The United States has more than half a million physicians, and they practice in a variety of settings: in solo, partnership or group practice; in prepaid clinics and organizations (HMOs); as hospital or governmental employees; and in surgicenters, immediate care facilities and emergency rooms. Health care may be financed by the individual, by private or employer-employee insurance plans, through Medicare and Medic-aid, or through other governmental programs.
The American health care system is large, employing more than 5 million people, handling more than 3.5 million patients a day, and absorbing over 10 per cent of our annual Gross National Product. For more than a quarter of a century the number of physicians per 100,000 population has been increasing and the common measurements of health - infant mortality, life expectancy at birth, and so forth - have been improving. As a result, the United States is today one of the healthiest among large nations with heterogeneous populations. And, scientifically, American medicine is often regarded as the best in the world.
This section contains answers to these questions and many more that you might ask. Reading it will help you maximize the benefits that the fine health care system of this country has to offer.
Voluntary care organizations
These voluntary associations are usually, but not always, nation-wide, state-wide or regional, with local chapters in cities and large towns. The activities of these groups include services such as providing the public with information about various conditions, working toward related legislation, providing information for patients and families, providing research funds, and supporting programs that supplement care already available.