Publicly-funded health care

Publicly-funded health care is a health care system that is financed entirely or in majority part by citizens' tax payments instead of through private payments made to insurance companies or directly to health care providers (health insurance premiums, copayments or deductibles).

Financing of health care in public systems

Publicly-funded health care systems are financed in one of two ways: tax-based financing or social security financingIn some systems, taxation is the primary means of financing health care. Everyone receives the same level of coverage regardless of their ability to pay, their level of taxation, or risk factors social health insurance "sickness fund" finances health care through premiums determined by a percentage of a person's wage[http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/bp438-e.htm" target="_blank" >^*

Delivery of health care in public systems

Health care in publicly-funded systems is provided primarily by public-sector practitioners in some countries and private-sector practitioners in othersIn Denmark, Finland, Norway, Sweden, public agencies are responsible for the delivery of health care; whereas in Canada, France, Germany, Japan, Netherlands, United Kingdom, private agencies provide services[http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/bp438-e.htm.

Varieties of public systems

Most developed countries currently have publicly funded health systems that cover the great majority of the population. The notable exception is the United States. For some examples, see the United Kingdom's National Health Service (NHS), or the Medicare systems in Canada and in Australia. The role of the government in healthcare provision is a source of continued and sharp debate.

Even among these countries, different approaches exist to the funding and provision of medical services. Systems may be funded from general government revenues (as in Italy and Canada), or through a government social security system (as in France, Japan, and Germany) with a separate budget and hypothecated taxes. The proportion of the cost of care covered also differs: in Canada, all hospital care is paid for by the government, while in Japan patients must pay 10 to 30% of the cost of a hospital stay. Services provided by public systems vary. For example, the Belgian government pays the bulk of the fees for dental and eye care, while the Australian government covers neither.

Publicly funded medicine may be administered and provided by the government, as in the United Kingdom; in some systems, though, medicine is publicly funded but most health providers are private entities, as in Canada. The organization providing public health insurance is not necessarily a public administration, and its budget may be isolated from the main state budget. Some systems do not provide universal healthcare, or restrict coverage to public health facilities. Some countries, such as Germany, have multiple public insurance organizations linked by a common legal framework.

Every health care system faces funding problems. Innovations in heath care can be very expensive. Population aging generally implies more health care, at a time when the taxed working population decreases.

Two-tier health care

Almost every country that has a publicly funded health care system also has a parallel private system, generally catering to private insurance holders. While one goal of public systems is to provide equal service to all, this egalitarianism is often partial. Every nation either has parallel private providers or its citizens are free to travel to a nation that does, so there is effectively a two-tier healthcare system that reduces the equality of service. Private hospitals often get newer and better equipment and facilities, and since private providers are typically better paid, some medical professionals motivated by remunerative concerns migrate to the private sector.

From the inception of the NHS model (1948), public hospitals in the United Kingdom have included "amenity beds" which would typically be siderooms fitted more comfortably, and private wards in some hospitals where for a fee more amenities are provided. These are predominantly used for surgical treatment, and operations are generally carried out in the same operating theatres as NHS work and by the same personnel. These amenity beds do not exist in other socialized healthcare systems, such as the Spanish one. From time to time, the NHS pays for private hospitals (arranged hospitals) to take on surgical cases for which NHS facilities do not have sufficient capacity. This work is usually, but not always, done by the same doctors in private hospitals.

In some cases, doctors are well paid in both systems, and prestige is more important than remuneration. In the United Kingdom, private medicine is generally seen as less prestigious than public medicine. British usage of private healthcare is generally for prompt, convenient treatment, rather than better clinical care.

Public systems around the world

In Australia the current system, known as Medicare, was instituted in 1984. It coexists with a private health system. Medicare is funded partly by a 1.5% income tax levy (with exceptions for low-income earners), but mostly out of general revenue. An additional levy of 1% is imposed on high-income earners without private health insurance. As well as Medicare, there is a separate Pharmaceutical Benefits Scheme that heavily subsidises prescription medications.
Canada has a federally-sponsored, publicly funded Medicare system. Each province may opt out, though none currently do. Canada's system is known as a single payer system, where basic services are provided by private doctors, with the entire fee paid for by the government at the same rate. Other areas of health care, such as dentistry and optometry, are wholly private.
Cuba has a wholly government-controlled system that consumes a large proportion of the nation's GDP. The system does work on a for profit basis in treating patients from abroad. Cuba attracts patients mostly from Latin America and Eastern Europe by offering care of comparable quality to a developed nation but at much lower prices. While the government system is free to all, patients frequently pay out of pocket for drugs that are in short supply in the public system.
In Finland, the publicly funded medical system is funded by taxation and every citizen has state-funded health insurance. The system is comprehensive and compulsory, like in Sweden, and a small patient fee is also taken.
In France, most doctors remain in private practice; there are both private and public hospitals. Social Security consists of several public organizations, distinct from the state government, with separate budgets that refunds patients for care in both private and public facilities. It generally refunds patients 70% of most health care costs, and 100% in case of costly or long-term ailments. Supplemental coverage may be bought from private insurers, most of them nonprofit, mutual insurers. Until recently, social security coverage was restricted to those who contributed to social security (generally, workers or retirees), excluding some poor segments of the population; the government of Lionel Jospin put into place the "universal health coverage". In some systems, patients can also take private health insurance, but choose to receive care at public hospitals, if allowed by the private insurer.
In Ghana, most health care is provided by the government, but hospitals and clinics run by religious groups also play an important role. Some for profit clinics exist, but they provide less than 2% of health services. Health care is very variable through the country. The major urban centres are well served, but rural areas often have no modern health care. Patients in these areas either rely on traditional medicine or travel great distances for care.
In Hong Kong, both private and public clinics are common, while public hospitals account for the majority of the market.
In Israel, the publicly funded medical system is universal and compulsory. Payment for the services are shared by labor unions and the government.
In the Netherlands, a system of standardised and mandatory health insurance is in place, meant to encourage competition between healthcare providers and insurers. The insurance policies are paid for through a system of levies and subsidies as well as a premium paid by the insured, from which children under 18 are exempt.
In New Zealand hospitals are public and treat citizens or permanent residents free of charge and are managed by District Health Boards. Under the curent Labour coalition governments, 1999 - present, there are plans to make primary health care available free of charge. At present government subsidies exist in health care. This system is funded by taxes. The New Zealand government agency PHARMAC subsides certain pharmaceuticals depending upon their category. Co-payments exist however these are ignored if the user has a community health services card or high user health card.
In South Africa, parallel private and public systems exist. The public system serves the vast majority of the population, but is chronically underfunded and understaffed. The wealthiest 20% of the population uses the private system and are far better served.
In Sweden, the publicly funded medical system is comprehensive and compulsory. Physician and hospital services take a small patient fee, but their services are funded through the taxation scheme of the County Councils of Sweden.
In 1948, the United Kingdom passed the National Health Service Act that provided free physician and hospital services to all people resident in the United Kingdom. Most doctors and nurses are on contracts, and receive salaries, a fixed fee for each patient assigned, and enhanced payments for specialized treatments or skills. The National Health Service has been amended from time to time, but is largely intact. Around 86% of prescriptions are provided free. Prescriptions are provided free to people who satisfy certain criteria such as low income or permanent disabilities. People that pay for prescriptions do not pay the full cost. For example, in 2004 most people in will pay a flat fee of £6.40 (€9.64, ^*]11.76) for a single drug prescription regardless of the cost (average cost to the health service was £11.10--about €16.70, US$20.40--in 2002). (Charges are lower in Wales, and the administration there is committed to their eventual elimination.) Funding comes from a hypothecated health insurance tax and from general taxation. Private health services are also available. Private health care continued parallel to the NHS, paid for largely by private insurance, but it is used only by a small percentage of the population, and generally as a top-up to NHS services.
The United States has been virtually alone among developed nations in not implementing a universal healthcare system. However, the U.S. health system does have significant publicly funded components. Medicare and Medicaid coverage is financed from taxation, but care is generally provided by privately owned hospitals or physicians in private practice. Medicare is a federal government program providing coverage to people age 65 or older. Medicaid is a federal and state program providing coverage to low-income and disabled persons. The Department of Veterans Affairs directly provides health care to U.S. military veterans through a nationwide network of government hospitals. However, a significant number of people exist who do not obtain health insurance through their employer, are unable to afford individual coverage or elect not to purchase it, and are not elderly or poor enough to qualify for Medicare or Medicaid coverage. Currently, it is estimated that 17% of the U.S. population is uninsured. A few states have taken serious steps toward universal health care coverage, most notably Minnesota and Massachusetts. Other states, while not attempting to insure all of their residents, cover large numbers of people by reimbursing hospitals and other health-care providers using what is generally characterized as a charity care scheme; New Jersey is perhaps the best example of a state that employs the latter strategy.

Debate

Issues regarding publicly-funded health care is frequently the subject of political debate^*." target="_blank" >In the United States, whether or not a publicly-funded universal health care system should be implemented is one such example [http://www.upenn.edu/pnc/ptbok.html.

Claims made in support of publicly-funded health care

Supporters of publicly-funded health care claim that is has several advantages:

universal access to health care,
better health care,
reduced administrative spending,
more effective health care planning,
increased emphasis on preventative and primary health care,
improved ability to negotiate pharmaceutical prices,
improved population-based health outcomes,
equality in matters of life and death, and
the creation of uniform standards of care.
profitability of medical research is removed as a factor in Research and Development

According to a 2000 study of the World Health Organization ^*, publicly funded systems of industrial nations spend less on health care, both as a percentage of their GDP and per capita, and enjoy superior population-based health care outcomes.

Claims made in opposition to publicly-funded health care

Opponents of publicly-funded health care claim that it has several disadvantages:

subjection of the health care system to greater political pressures,
a greater likelihood of lower-quality health care than privately funded systems,
less motivation for medical innovation and invention,
long waiting lists for access to some medical treatments (particularly those of an advanced or specialized nature), and
less financial motivation for the most able people to enter health care professions.

Doctors' salaries tend to be lower in public systems; for example in 1996, the average U.S. physician income was $199,000 while the comparable OECD median physician income was $70,324.Ezra Klein: On Doctor's Salaries (Retrieved 15 May, 2006) Opponents claim that higher salaries constitute an incentive to enter the profession and attract more qualified individuals who would otherwise choose a different profession.

Another possible criticism cites the fairness of paying for people's poor individual decisions (obesity, smoking, drinking, drugging, etc.) as they relate to health care costs. It is argued that these costs should be incurred solely by those making those poor decisions.

In 2006, Sylvia Lott, aged 72, made headlines in the UK after it was reported that she had been waiting thirteen years for a hip replacement surgery from the Swansea NHS Trust, South Wales' publicly-funded health provider'I've Waited 13 Years For Op' This is South Wales/Evening Post (Retrieved 15 May, 2006). Critics cite these kind of bureaucratic mistakes as inherent in a system where bureaucrats do not have market driven incentives to ensure that patients receive high-quality treatments, or any at all.

Role of the free market

Some argue that the free market is better able to allocate discretionary spending where consumers value it the most. There is variation amongst individuals about how much they value peace of mind and a lower risk of death. For example, a public-funded system, based on cost efficiency, might limit access to a pap smear only once every five years if the patient was not positive for the human papilloma virus. In a private system, a consumer can choose to be screened more often, and enjoy the luxury of greater peace of mind and reduced risk, if they value this more than other luxury items. Such "luxury" discretionary spending might be moved to non-medical luxury goods and should not be viewed as available to fund a public system as is assumed in some analyses.

Aspects of the United States health system

Whether publicly funded healthcare can adequately deliver health care more cost effectively than the free market is a matter of much debate. Of all developed nations, the healthcare system of the United States has the highest degree of privatization. Consequently, it is frequently cited by those favoring or opposing universal healthcare.

The cost and quality of care in the United States are frequently the two major issues of discussion. Although the United States is below the average for developed countries in health measures such as infant mortality maternal death life expectancy ^*," target="_blank" >or cancer survival rates, relevant statistics include people not covered by any insurance and those covered by the system get what is arguably the best health care in the world. Access to advanced medical treatments and technologies is greater than in most other developed nations and waiting times are substantially shorter for treatment by specialists[http://www.nytimes.com/2006/02/26/international/americas/26canada.html?ex=1142053200&en=06d7eacb3aa96155&ei=5070. Also many foreign citizens visit the U.S. to obtain treatments unavailable or available only with long waiting lists in their home countries.

The United States does spend more on health care, as an absolute dollar amount and per capita, than any other nation. It also spends a greater fraction of its national budget on health care than Canada, Germany, France, or Japan. In 2001 the United States spent $4,887USD per person on health care, more than double the rate of any other G7 country except Japan, which spent $2,627 per capita annually. Risk factors specific to the U.S. population, such as a relatively high prevalence of obesity, may partially explain increased health care spending; however, many other industrialized nations do share these problems to some extent. Although the U.S. Medicare coverage of prescription drugs is scheduled to begin in 2006, most patented prescription drugs are significantly more costly in the United States than in most other countries. Factors involved are the absence of U. S. government price controls, enforcement of intellectual property rights limiting the availability of generic drugs until after patent expiration, and the monopoly purchasing power seen in national single-payer systems. Many U.S. citizens obtain their medications, directly or indirectly, from foreign sources, to take advantage of lower prices.

The United States system does have substantial public components. Of every dollar spent on health care in the United States, 44 cents comes from some level of government. The elderly are covered by Medicare, the poor (those with assets of less than $2,000) are covered by Medicaid, merchant seamen are covered by the Public Health System, and retired railway workers and military veterans are also covered by the government. Government also affects private sector medicine through licensing and regulatory barriers to entry into health professions.

Most experts believe that the U.S. system is best described as exhibiting greater inequality than others, with covered people receiving a very high quality of care and the uninsured and underinsured receiving a lower standard of care. It is not clear that the lower standard of care received by the uninsured and underinsured in the United States is actually lower than that of other nations that provide complete publicly funded health care. Facilities, such as emergency rooms, hospitals, and urgent care facilities are often required to treat everyone by law.

Cost-cutting in the private sector

Some health economists assert that traditional private plans are not very good at limiting spending to cost-effective procedures and schedules, and that consumers exploiting this would view the transition to a public system as a reduction in their compensation or benefits.

Other health economists believe that with the growth of health maintenance organizations and other cost-cutting entities, private plans now limit spend, with consequences for paperwork and some needed treatments. A number of high-profile instances of Medicaid fraud have been uncovered among health care providers and medical device suppliers.

Market failure issues

Various healthcare analysts have asserted that market failure occurs in healthcare markets but some have suggested that it is result of too much government involvement rather than too little ^*.

The consumers of health care often lack basic information compared to the medical professionals they buy it from, and fully informed choices (particularly in emergencies) are often not plausible. Meanwhile, health insurance companies and care providers also suffer from information asymmetry, as patients are almost always more aware of their particular family histories and risky behaviors than the firms are. Price theory dictates that the risk cost associated with this lack of information gets passed on to consumers. Demand is likely to be inelastic. The medical profession potentially may set rates that are well above ideal market value, and they are controlled by licensing requirements, with some degree of monopoly or oligopoly control over prices. Monopolies are made more likely by the variety of specialists and the importance of geographic proximity. Private insurance has been perhaps the only stabilizing force as they pay a contractually fixed cost for a given procedure. With no more than one or two heart specialists or brain surgeons to choose from, competition for patients between such experts is limited so contractually pre-arranged pricing helps reduce supply-limited pricing.

Preventive medicine issues

There is much conflicting information about the role of preventive medicine in controlling medical costs and the improving the health of citizens. Advocates of publicly funded medicine claim that preventive care saves money and prolongs life ^*," target="_blank" >but opponents assert that it does neither ^*.

Difficulties of analysis

Cost-benefit analyses of various health care systems are frequently mentioned by advocates and opponents of publicly funded healthcare programs. Others caution that these analyses are difficult to do accurately due to the multifactoral nature of health, healthcare delivery, and healthcare financing, as well as the lack of consensus on what is "best" for a nation or its people.

References

External links

Devereaux PJ, Heels-Ansdell D, Lacchetti C, Haines T, Burns KEA, Cook DJ, et al. Payments for care at private for-profit and private not-for-profit hospitals: a systematic review and meta-analysis. CMAJ 2004;170(12):1817-24.
Devereaux PJ, Choi PT, Lacchetti C, Weaver B, Schunemann HJ, Haines T, et al. A systematic review and meta-analysis of studies comparing mortality rates of private for-profit and private not-for-profit hospitals. CMAJ 2002;166(11):1399-406.
Woolhandler S, Himmelstein DU. When Money is the Mission — The High Costs of Investor-Owned Care. N Engl J Med 1999;341:444-6.
Krauss, C. As Canada's Slow-Motion Public Health System Falters, Private Medical Care is Surging, New York Times, February 26, 2006.
Pipes, S. Border Crossings, Pacific Research Institute, October 17, 2003.

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