Global Healthcare Systems, Put Simply


By Managing Director Matt Gillow

Healthcare, and the state of our NHS, is a topic that is never far from the front pages. Introduced during Clement Attlee’s welfare revolution of the 1950’s (he nationalised 20% of the British economy), the tabloid press have claimed on numerous occasions that the NHS is on its last legs.
One of the great popular myths surrounding healthcare is the notion that there is the UK system, or the US system. This is far from the truth. You’d be hard-pressed to find two healthcare systems that work absolutely identical – each nation has varying levels of cost, competition, government control and universality. However, as laid out by T.R Reid in his 2009 journal on healthcare systems, all states can be broadly tucked into one of four categories.

The Beveridge Model

Case in point; the NHS. Named after social liberal reformer, William Beveridge, the NHS and other Beveridge Model health systems can be categorised as ‘single payer universal healthcare.’ Healthcare is provided and financed through a ‘single payer,’ the government, which collects the means to do so through general taxation.
In the UK, single payer universal healthcare has become almost religious, and for many voters, funding of the NHS is a key issue when at the ballot box. In Hong Kong, when the former colony passed into Chinese hands, citizens flat out refused to renege on their own universal health system.

Indeed, for most treatments, the patient will never so much as sniff a bill for payment. However, with the government controlling many aspects of the system, a level of competition and innovation is lost – as well as consumer choice.

The Bismarck Model

Named for the Prussian Chancellor at the time of German Unification – the Bismarck model uses an insurance based system jointly financed by employers and employees alike. This is done through deductions from an individual’s wages upon pay.

This may, at first, seem remarkably similar to the US based insurance schemes – with the key difference that insurers have to cover everyone without discrimination, whereas US schemes have greater flexibility. Although, under the Bismarck model, hospitals and staff tend to be private, they tend to not make a profit.

The Bismarck model could be referred to easily as ‘multi-payer universal healthcare’ when compared with the Beveridge model. Benefits are similar to that of the Beveridge model – tight regulation means costs are easily controlled. Indeed – as the Bismarck model is multi-payer, it requires far lower levels of taxation to run.

The National Health Insurance Model

The National Health Insurance Model (see: Canada) uses private-sector providers, but payment comes from a government-run insurance program that every citizen pays into through taxation, in a similar vein to the UK’s NHS.

With no need for marketing or much of a profit motive, these universal insurance programs are cheaper and more efficiently run than, for example, American style insurance schemes. The NHIS scheme is popular with newly industrialised economies such as South Korea, because it combines consumer flexibility and choice with considerable market power to negotiate low prices, as well as maintaining the premise of ‘free at the point of use’ healthcare. However, much like the Beveridge model, it does require a certain level of taxation.

The US Model

Often slammed in the UK due to horror costing stories, the US healthcare system is best described as multi-payer healthcare. Unlike many Western healthcare systems, the US system prioritises consumer flexibility and choice over universality and the ‘free at the point of use’ concept. The majority of hospitals and facilities are owned and run by the private sector – though 64% of health spending comes through the government (2013.) Like the Bismarck system, insurance is provided by an employer or through a family member’s employer.

Where do you stand on healthcare? Let us know your thoughts – and your preferred system!

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