Variations on a Theme: A Look at Universal Health Coverage in Eight Countries
Last week, the Commonwealth Fund released an interactive tool to help people compare recent congressional bills aimed at expanding health insurance coverage and lowering the cost of health care in the United States. Using the tool allows you to see how much each bill would expand the nation’s public health insurance system, or those aspects regulated or run by state and federal government.
While “Medicare for All” has captured the most attention, a comparison of the reform proposals reveals that their approaches to achieving universal coverage are far more nuanced than this term would suggest. “Single payer,” meanwhile, is generally used to describe how other wealthy countries organize their health systems. But a closer look similarly shows a wider variety of approaches than this catchall term implies. Other high-income nations manage to insure all their residents and spend less per capita than the U.S. But some of them do that by covering everyone through a regulated system of health plans, while others truly have a single public plan for everyone.
Countries also diverge in their approaches to financing health care — relying on different combinations of taxes, premium contributions, and cost-sharing — and in how they control growth in overall costs. Finally, while nearly all the health systems feature a role for private insurance — a fact that might surprise many in the U.S. — its size varies considerably.
Let’s take a closer look at how eight of our peer countries get to universal coverage, how much they pay for their health care, and what role private insurance plays in each.
A Regulated System of Health Plans
One way to achieve universal coverage is through a system of competing private health insurance carriers. In the Netherlands and Switzerland, people are legally required to buy private insurance or else pay a fine. The Dutch choose between plans offered on a national marketplace, while the Swiss shop on regional marketplaces. These systems resemble the marketplaces introduced in the U.S. by the Affordable Care Act (ACA).1
But there are key differences. In the Netherlands, financing is shared between individuals and their employers, and insurance plans also cover dependents. But the Swiss pay the entirety of their plan costs, and children require the purchase of separate plans.
The Dutch also pay lower premiums, averaging around $115 to $150 per month, compared to $385 per month in Switzerland. In comparison, average employee premiums in the U.S. in 2017 were $118 for single-person plans and $435 for family plans. Approximately 40 percent of the Dutch, moreover, receive tax subsidies to purchase insurance, similar to the subsidies introduced by the ACA.
Cost-sharing is also lower in the Netherlands: there is none for primary care and preventive services, while copayments for other services are capped at $475 per year, after which they are free. By contrast, the Swiss face copayments for all services up to a deductible of their choosing, between $248 and $2,065. After this, 10 percent to 20 percent coinsurance applies on all services, capped at $579 per year for adults. All told, average annual out-of-pocket costs in Switzerland are nearly four times higher than those in the Netherlands ($2,313 vs. $605).
A Single Public Plan
In countries that have public insurance systems, also known as “single payer” systems, national, regional, or local governments are the main payer of health care. In the United Kingdom, the National Health Service is funded by national taxes, while other systems are decentralized, with revenues raised through regional taxes (Canada) or local taxes (Sweden). In Norway, funding is split: primary care is funded through municipal taxes, while national taxes pay for hospital and specialty care.
The House and Senate bills that would introduce a single public plan for the U.S., however, differ from the approaches taken in other countries in two important ways.
First, many of these proposals would impose no patient cost-sharing. This is in contrast to Scandinavia, where patients pay copayments for most services. Norwegians pay $17 (U.S.) for primary care visit, $39 for specialist visits, and up to $51 for prescription drugs. At the same time, total annual out-of-pocket spending is capped at $221 per year (as of 2017), after which services are free; also, vulnerable populations such as children and pregnant women are exempt from most cost-sharing. Even in countries where physician and hospital services are free, such as the U.K. and Canada, patients pay some portion of prescription drug costs.
Second, the single public plans that have been proposed in the U.S. so far would provide everyone with a wide range of benefits, including vision, dental, and long-term care. Most countries with universal coverage, however, cover vision and dental benefits only for targeted populations such as children and low-income adults. Similarly, long-term care is not typically covered. Instead, these services are financed separately, whether through national long-term care insurance or local taxes.
Private Coverage: A Bit Part or a Featured Role?
In all countries with universal coverage, at least some portion of the population has secondary private insurance, either to help pay for noncovered services like dental and vision care or physiotherapy or to provide quicker access to elective care or private providers.
While less common in England and Norway — where only one in 10 has private coverage — private insurance plays a large role in several other countries. In Canada, the majority of residents have private insurance for prescription drugs — which the national program doesn’t cover — and other benefits, paid mostly through employers.2
In Australia, the federal government has introduced strong financial incentives for adults to purchase private hospital insurance, such as premium discounts for younger adults, financial penalties for high-income earners who don’t purchase coverage, and rebates on premiums. As a result, approximately half of Australians have purchased such coverage.
One country allows its residents a choice between two systems. In Germany, everyone is mandated to have coverage, and the majority choose among 110 nonprofit insurers known as “sickness funds.” This type of coverage is financed by individuals and their employers through payroll contributions (cost-sharing is relatively low). But the government allows people to opt out of this system entirely.
About one in 10 Germans choose instead to get private coverage from for-profit and nonprofit carriers; they pay for it entirely themselves through contributions. This option is particularly attractive to higher earners and to younger adults, to whom insurers typically offer generous benefit packages and lower premiums.
Several members of Congress have proposed — or plan to propose — ways to cover the remaining 28 million uninsured Americans, reduce the number who are underinsured, and lower the overall rate of cost growth. The health systems described here all get to universal coverage while paying less for health care — and often with better health outcomes — than the United States. If we as a nation aim to achieve similar results, it will be informative for lawmakers to carefully consider the full range of options these other systems represent.
1. Their insurance requirement also resembles the ACA’s individual mandate, although the penalty for not having coverage was eliminated by the Trump administration and Congress beginning January 2019.
2. Most Canadian provinces and territories also operate public prescription drug plans for targeted populations such as children, the elderly, or people receiving social assistance.