B-b-b-b-but... OTHER countries have private insurance!

One of the arguments heard here in the US from incrementalists in the health care reform debate is that we don’t have to go with single-payer — lots of other countries have multiple, private insurance companies [see item 3 below]. We could just tweak our private insurers to be just as affordable and reliable as theirs!

Not so fast, subsidy-breath. The following is basically a c&p from an article I found at the PNHP site, but I’ve done a little editing and emphasizing of my own.

International Health Systems for Single Payer Advocates

By Dr. Ida Hellander
PNHP Executive Director

Health care systems in the Organization for Economic Cooperation and Development (OECD) countries primarily reflect three types of programs:

1. In a single-payer national health insurance system, as demonstrated by Canada, Denmark, Norway, Australia, Taiwan and Sweden, health insurance is publicly administered and most physicians are in private practice. U.S. Medicare would be a single payer insurance system if it applied to everyone in the U.S.

2. Great Britain and Spain are among the OECD countries with national health services, in which salaried physicians predominate and hospitals are publicly owned and operated. The Department of Veteran’s Affairs would be a U.S. single payer national health service system if it applied to everyone in the U.S.

3. Highly regulated, universal, multi-payer health insurance systems are illustrated by countries like Germany and France, which have universal health insurance via non-profit “sickness funds” or “social insurance funds”. They also have a market for supplementary private insurance, or “gap” coverage, but this accounts for less than 5 percent of health expenditures in most nations.

Sickness or social insurance funds do not operate like insurance companies in the U.S.;

• they don’t market,
• they don’t cherry pick,
• they don’t set premiums,
• they don’t set rates paid to providers,
• they don’t determine benefits,
• they don’t earn profits or have investors,

etc. In most countries, sickness funds pay physicians and hospitals uniform rates that are negotiated annually (also known as an “all-payer” system). Princeton economist Uwe Reinhardt calls Switzerland’s “sickness funds” quasi-governmental agencies**

There is no model similar to sickness funds *** operating in the U.S., although they are often confused with the Federal Employee Health Benefit Program (FEHBP), which is simply a group of for-profit private insurance plans with varying benefits, rules, regulations, providers, etc. The 1993 Clinton health plan was an attempt to regulate private insurance companies in the U.S. to behave more like sickness funds, but the insurance industry defeated it.

Bottom line: The most important point for single payer advocates is that every country with universal coverage has a non-profit insurance system. No country uses for-profit, investor-owned insurance companies such as we have in the U.S. (although they do have a small role in selling “gap” coverage).

Notes:

* The three basic models are general outlines, and there are many examples of “mixed models” (e.g. although Sweden has national health insurance, the hospitals are owned by county government, a feature more common to countries with a national health service).

** Many countries are tinkering with how sickness funds operate (e.g. Germany). The most extreme change is in the Netherlands, which since 2006 has allowed the non-profit regional sickness funds to become for-profit insurance companies, and new insurance companies to form, in the hope that “competition” would control costs. After just one year of experience, the country has experienced —

• a wave of anti-competitive mergers of the insurers
• emergence of health plans that “cherry pick” the young and healthy
• loss of universal coverage
• the emergence of 250,000 residents who are uninsured
• another 250,000 residents who are behind on their insurance payments.

All of the positive data from the Netherlands (on costs, infant mortality, quality, etc) is based on the system pre-2006 (personal communication, Hans Maarse).

*** In the film “Sick around the World” five nation’s health systems are shown. The U.K. is an example of a single payer national health service. Taiwan is an example of a single payer national health insurance. Germany, Japan, and Switzerland use multiple “sickness funds” that are non-profit and pay uniform rates to providers (“all-payer”)