HEALTH SYSTEM:

Three models of healthcare organisations

The “standard tripartite classification” [Freeman and Frisina 2010] which many authors have shared and
used in their research. Healthcare systems – at least in industrialized countries – are referable to one of
three basic models:

1) voluntary health insurance

2) social health insurance

3) national health service

1. Voluntary health care:

- Citizens can freely choose whether buy HI policy with private insurance company
- Each single citizen may design a custom-made insurance policy with HI company
- Insurers
• apply risk-rated premiums
• Risk pooling among subscribers of the same insurer
• elderly & sick pay higher premiums
- Custom-made policies (income, health condition & inclination to risk)
- provision of hc services entrusted to providers
• providers are independent from insurance companies
• insurance companies reimburse providers
- In many countries, private HI policy holders have great freedom in choice of health providers
- Part of population could be left without hc coverage

2. Social health insurance

- government may require certain occupational groups to take HI policy

- state doesn’t act directly as insurer

- several different private sickness funds (not-for profit)

• collect workers' insurance/payroll contributions on a territorial/occupational basis -> group rated

• Risk pooling among occupational groups

- providers are separate legal entities, amongst which citizens may choose
- Less freedom of choice

• majority of citizens cannot choose whether/not to insure themselves (being obliged to do so)
• classic SHI model: citizens do not have freedom to choose sickness fund to subscribe to, as workers
are assigned to funds automatically on basis of profession/residency
- Disparities of treatment among funds

- Part of population could be left without hc coverage

- Germany (1883): Bismarckian legislation, 1st country

 • Beginning: obligation concerned only limited # of occupational groups
• Later: extension
▪ ever-greater # of occupational groups
▪ individual subscribers -> their families
▪ pensioners

- many countries included vast majority of population in mandatory insurance schemes by time
3. National health services

- Sir William Beveridge

- Funding: general taxation

- Government-run health system: gathers & manages resources needed to finance hc provision

- guarantee healthcare to entire population: All citizens (at least in principle) have a right to same medical
treatment which is judged to be essential

• Risk pooling across entire population, meaning the system is based on solidarity (the risk of getting
ill is covered by the entire population. The State is going to cover the risk)
• Limited freedom of choice
• Most equality
- provision of services: mostly publicly owned hospitals; mostly publicly employed physicians
New Zealand was the first one to adopt Beveridge model. The first one in Europe was UK. States not only
finances care but provides healthcare services which rent a basic package of health care that is considered
essential.
Seven fundamental models:

1. Simple market
2. Voluntary insurance
3. Targeted programs
4. Social health insurance
5. Mandatory residence insurance
6. Universalist model
7. Medical Savings Accounts

*The idea is not of three models but of seven fundamental ones.

1.Simple market/direct market system

It includes:
-providers - and by providers we mean all entities who or which provide healthcare services, i.e., hospitals,
clinics, healthcare professionals
• Providers are free to set the price of their services
-healthcare service users
• users, whenever they are provided a service, pay the relative fee directly to the provider, paying
from their own pockets.
=>In such a system, there are no entities that play the role of insurers.
* Moral hazard in the context of health insurance refers to the idea that individuals may alter their behavior
when they have insurance coverage, leading to increased risk-taking or utilization of healthcare services.
Cons: Innovation can be disrupted bc if the individuals are not able to pay for that treatment, the insurer
will not invest bc treatment is too expensive.

2. Voluntary insurance
-Citizens are free to choose whether or not to sign up for private health insurance.

• those who do not/cannot pay for insurance =>pay healthcare services out of their own pockets
• Those who opt for insurance=> provided with cash or tax

-Private insurers are in competition with one another. Insurers may be for-profit insurance companies or
non-profit institutions and funds.

• For profit insurance, there is the application risk-rated premiums ( i.e., calculated on the basis of the
individual risk of each single subscriber).
• Non-profit insurance entities often prefer community rated or group rated premiums.

=>The difference is that actors are not two but three. Role of the insurer who are actors that collect money.

Pros Cons
- Financial support bc one the premium has been - Adverse selection
paid the individual does not have to worry about - Moral Hazard: increase in demand,
unexpected expenditure bc the insurance company overconsumption
is going to pay for that premium • Less avoidance of risky behaviour
- Risk-sharing, the idea that you share risk with
other people
- Solidarity element: Healthy finance hc
expenditures of sick
- Tailored insurance policies

3.Targeted programs/residual wealther state

In countries where either voluntary or social health insurance prevails, there often are programs that can be
defined as “targeted” or "residual” [Wilensky and Lebeaux 1958; Titmuss 1974].

-The targeted programs are those that are financed by general taxation and intended for particular target
populations.
 • The beneficiaries of these programs are generally the most vulnerable categories, those that are
most exposed to health risks: low-income individuals, the elderly and minors, persons suffering
from serious illnesses, prisoners, and refugees.
• Various countries have targeted programs not only for the "weaker groups", but also for certain
professional categories considered particularly worthy of protection by the state, such as the
military or civil servants.

A key difference between targeted programs and other financing models is that in the latter those who
pay earn the right to benefit from the program being financed. In the case of targeted programs, this is
not necessarily true: beneficiaries coincide only in part (or not at all) with those who finance such
programs. Targeted programs are programs financed by the entire community, but only available to
particular categories.

EXAMPLES of targeted programs: Medicare covers Americans over age 65 and younger people with long
term disabilities. Medicaid is a mean-tested program, for low income persons. Chip (Children’s Health
Insurance Program) provides insurance to children of low-income families whose earnings exceed the
Medicaid ceilings. Others public schemes cover: war veterans, members of the Armed Forces, federal
government employees, Native Americans and Alaska Natives, prisoners, and other “weak” group (e.g.
people affected with HIV/AIDS). Overall, public programs cover – completely or only in part – about one
third of US population.

Pros Cons
-more equality -States obliges the individual to pay taxes, no
voluntary choice

4. Social health insurance

-The basic principle behind the SHI model is that the state requires certain categories of workers to pay
contributions from their salary into a health insurance fund.

-Health insurance funds are managed by quasi-public, non-profit organisations subject to strict
governmental regulation, appointed to collect their subscribers’ contributions; in exchange, insurance fund
subscribers receive total or partial reimbursement of the medical expenses incurred. The contributions to
be paid into a health insurance fund – which may be co-paid by employee and employer – are not
calculated as a percentage of the overall income, but only of the earned income.

*Many sickness funds but not in competition.

FRANCE

-Entire population with basic health coverage

• Financing of sickness funds: partly by taxes & employees’ contribution

• Plurality of sickness funds with compulsory registration
Cons: Less freedom of choice

• majority of citizens cannot choose whether/not to insure themselves (being obliged to do so)
• classic SHI model: citizens do not have freedom to choose sickness fund to subscribe to, as workers
are assigned to funds automatically on basis of profession/residency

5. Mandatory residence insurance

-Mandatory residence insurance is defined as the principle according to which the state requires all
residents to take out a private health insurance policy covering essential healthcare services, using
individual resources.
-This is therefore a multipayer-system

• no single public scheme into which contributions can be paid

• citizens can choose insurers o different
• for-/non-profit insurers are in competition with one another

- role of government

• provide subsidies for low-income citizens

• impose a strict regulation of insurance market

*States obliges all the residents to pay with their own money a basic health insurance. State sets a %
(contribution rate) that is the same for the whole population and it goes in the common pool. The mandate
is that you should be insured. 96 mandatory residence insurance policy: covering at least the basic services

SWITZERLAND

Since the introduction of the HI Law in 1996, each person living in Switzerland is obliges to purchase a
health insurance policy. Basic insurance is offered by over 80 health insurers or health funds. Insurers are
strictly regulated and are not allowed to make a profit on mandatory health insurance. Rates must be
identical within each company for all applicants (open enrolment). Income-based subsidies. If you reside in
Switzerland. Multi payer system: there is competition in order to attract as many patients as possible.
Insurance companies in competition with one another.

6. The Universalist model

-Universalist systems are financed, not by payroll contributions or voluntary insurance premiums, but
through general taxation.

-the state which takes up the task of gathering and managing the resources needed to finance healthcare
provision.

• The right to healthcare is not linked with payment of a premium or a contribution, but to residing in
a given country

-it guarantees healthcare to the entire population: all citizens thus have a right to medical treatment which
is judged to be essential.

-it is defined as a single-payer insurance scheme (one for the entire population) covering all residents and
financed through taxation.

• taxes are paid with respect to income, universal schemes turn out to be typically progressive
financing systems.

Unlike the SHI model, the universalist system envisages taxation not only on earned income, but on all
forms of income. The universalist system is not synonymous with the National Health Service.

CANADA:
-Has a universalist single-payer public insurance scheme

• called Medicare which is regionally administered and it is designed to be universal, comprehensive,

publicly administered and mostly free at the point of use.

-The provision of healthcare services is publicly funded, but privately run (physicians are not salaries by the
government; public hospital facilities do not belong to Medicare).

-Hospitals are mix of public and private, predominantly not-for-profit, organizations.

• They are often owned by religious orders, universities, municipalities.

 Canada is Universalist but not national service.

SWEDEN:

-Has a typical universalist system

• funded through general taxation.

-The public system covers the entire population.

• The majority of care is provided by public facilities belonging to the NHS.

• A minority of specialist care is provided by private hospitals contracted with the NHS.
-There are co-payments for visits to the family doctor, specialist visit, access to the emergency room and
hospitals admissions.

Pros Cons
-Equality: all the population is granted the same -Everyone has to pay the same premium despite of
basic treatment package different annual income.

*Instead, in SHI if there is a difference in the annual income the individual is going to pay a different rate. All
the other models accept inequality in quality:

-Switzerland: Bismark model=> sickness funds

-In Germany, sickness fund is autonomous, disparities of treatment according to sickness funds.

7. Medical Saving Accounts

-individual deposit accounts into which workers periodically pay a fixed amount or a percentage of their
salary.

-benefit from favourable tax treatment.

-The reserves/money on these deposit accounts can only be used to reimburse healthcare costs, and the
holder of an MSA can only draw from the account to pay for medical care obtained for him/herself or for a
household member.

-At the end of the year, any amounts left unused accrue interest and are left in the deposit account for the
years to follow.
Mandatory vs. voluntary MSA

Unlike voluntary insurance or SHI, MSAs do not imply any solidarity among subscribers, and do not provide
for any form of risk pooling with other people. With MSAs, each account holder only accumulates resources
for him/herself. The MSA model is still scarcely widespread. It has been adopted in Singapore, the United
States, South Africa and China. However, the MSA system is not autonomous in any of these countries: it is
always combined with some other form of insurance coverage.

SINGAPORE:

-Medisave: compulsory saving scheme

• Managed by Singapore’s pension fund

• Employee contributes 8-10% of his/her monthly salary to Medisave account
• Income put aside into MSA to meet future healthcare needs (hospitalisations, day surgery, long
term care)

-Medishield Life: mandatory health insurance, covering “catastrophic” healthcare costs (such as dialysis and
chemotherapy).

• Medishield covers all Singapore residents

-Medifund: targeted program for the poor

• Financed by the government

*Voluntary: Free to choose to buy or not to purchase
*Multi payer: Free competition
*Risk rated premium: Calculated on your individual risk profile
*Mandatory for those financing the system, voluntarily for the beneficiary of the scheme
*There is one insurer that is the State there is no competition. However, we have different target programs.
*Social health insurance: are sickness funds, established by law (quasi public). System is mandatory, only
the worker are obliged to pay for the contribution=> Bismark model.
-Multi payer even though it is not in competition there are several sickness funds for each working
categories. Forced to pay a part based on your salary, meaning that it is the same weight fir the same
working categories despites of the individual conditions.
*Mandatory residence insurance: Swiss case Insurer are private insurance company. Competing one with
the other. It is mandatory all the residence have to buy a basic package. What you pay is a premium not a
percentage of the salary.

Lecture 3: financing healthcare – hybrid systems

Identikit and hybrid systems:
PREPHASE: Ideal types mean that they are pure attraction and the elements should be internally consistent
with a small regulation by the state the premiums are risk rated. Now we are going to move to a concrete
application of the model. In every country the seven models are mixed up.

Identikit: is a toolbox, of which you can combine different parts to make a whole. You get a patchmark of
healthcare. Every individual national system is different from each other.
The segmentation of healthcare systems
There are not any national systems that use only one of the models discussed above. All national health
systems are hybrids.
It is thus necessary to introduce the segmentation of healthcare systems.
 Segmentation: the presence of dividing lines according to which the overall national system is
broken up into subsystems to which different models of healthcare organisation/financing are
applied. And pick different subsystems to create the ideal patchwork.

There are two basic segmentation principles

1. Segmentation of healthcare services
It involves subdividing the entire range of healthcare services into different ‘packages’. An example of
segmentation of healthcare services can lead to distinguish between
1) essential care package
2) supplementary procedures/package
3) catastrophic procedures
=> there is always the possibility to choose
The Netherlands has subdivided healthcare into three distinct sectors:
1) exceptional medical expenses: related to care for disabled and long term care, are covered by a single
compulsory national scheme, which covers the entire population and is financed through mandatory
income-related contributions
2) the basic package for essential care: all citizens residing in the NL are required to have an insurance
policy covering essential healthcare. All citizens residing in the NL are required to have an insurance policy
covering essential healthcare. There are about 40 (for profit and non-profit) insurers to choose from, in
competition with one another.
3) supplementary procedures. Subsidies are given to less well off population. But they also have some
segmentation of the population, for example: military and people who refuse insurance.
2. Segmentation of the population
It involves the subdivision of citizens into distinct groups associated with different insurance schemes.
Common criteria are: occupation (employee vs. self-employed e.g.), earned income, age, etc.
The US is an excellent example of this segmentation. It has medicare (elderly), Medicaid (low income), Chip
(children), and more. Other public schemes cover war veterans, members of the Armed Forces, federal
government employees, Native Americans and Alaska Natives, prisoners other “weak” group.

 The idea is that in a country you can blend these two segmentations
Healthcare systems in 27 OECD
countries

Germany is shifting from SHI to MRI, more like

Switzerland and the Netherlands
US is definitely an outlier on everything
concerning healthcare.
Most of the population and healthcare
systems are covered
Ancillary model that covers other subgroups or
packages
In RED (bismark model): the coverage is universal like in Belgium, Poland. In which target program is less
generous, part of the population is with no coverage (Austria, France, Japan, Korea).
The BLUE countries are universalistic: Australia and Canada are separated universalist countries while other
are integrated. In Finland and Portugal in addition to the universalist scheme there is a mandatory
universalistic scheme with a double mandatory package. In Spain there is the possibility that a small % each
year can decide to go out of the public system and choose a social health insurance system.
-In Greece: it was a problematic system. Always a Mix. Universalist component is larger than the SHI.

Private health insurance/Primary private coverage: no other compulsory coverage

Glossary
Private health insurance plays different roles in different contexts. It is possible to identify three distinct
roles:
1. Substitutive/primary: a private policy is taken out instead of the mandatory coverage. In this case,
those who subscribe to the private policy do not have any other form of basic insurance coverage
2. Complementary: provides coverage for services excluded or not fully covered by the statutory
health insurance.
3. Supplementary/duplicate: usually covers the same range of services as statutory health insurance.
In Italy most are supplementary, Italians use private insurance to skip waiting list and choose a
specific doctor. => Double Insurance.
Its main purpose is to increase the choices of provider, and level of inpatient hotel amenities. By
increasing the choices of provider, it may also provide faster access to healthcare. It does not
exempt individuals from contributing to the compulsory insurance scheme.

Group/community rated premiums: premiums are priced on the basis of the average expenditure incurred
by a working category or a ‘community’
Risk-rated premiums: premiums are priced according to the individual’s risk.
Opting out: a situation in which individuals are allowed to choose between statutory and private health
insurance coverage; if they choose the latter, they are exempt from contributing to the former.
-In Germany and Spain there is the opting out (choosing for a private insurance and escape from a
mandatory scheme)
Risk selection: a process whereby an insurer tries to attract people with a lower-than-average expected risk
and deter those with a higher-than-average expected risk.
-Public regulation to limit the risk selection regulated with different tools/ strategies. To reduce
opportunistic behabiour
Open enrolment: a regulatory requirement that prevents health insurers from rejecting application for
coverage. Insurers must accept all applications
-Forced to accept all the individuals that ask for a coverage. Company cannot reject individuals based on
their individual risk.

Cost sharing
There are two main reasons for introducing cost sharing: first, to reduce excessive use of health services
facilitated by health insurance, second, to raise revenue for the health system, particularly in countries
where public budgets are under pressure.
Forms of cost sharing are the following:
Copayment: the user is charged a flat rate per item or service received
-Copayment means paying a flat rate regardless of the actual cost of the treatment.
Co-insurance/co-sharing: the user pays a fixed proportion/percentage of the total cost, the insurer pays
the rest.
-Co-insurance calculated as the % of the overall cost. France are expected to pay 20% (example of co-
insurance). % reinsured by the insurance company. The part that is charged is calculated as a % not a flat
rate.
Deductible: the user pays a fixed quantity of the costs, the insurer the remainder. Deductibles can apply to
specific cases or a period of time
-there is a ceiling and you are expected to pay out of pocket all the money below this threshold that is
reimbursed by the insurance company.
-If I reach a level of 1000 euros than that is reimbursed.
Extra billing: an additional fee the provider levies in addition to the payment received from the third payer.
Gap between what the insurance wants to pay and what the provider wants is payed by the consumer.

Lecture 4: health care provision

Two rival models
Separated model: actors enjoy a high degree of autonomy, pluralism, contractual relations and ample
freedom of choice
 Germany and France have a separated model. Separated from organisational level but they work
together.
Integrated model: actors belong to the same organization, stable and biunique relationships,
hierarchy/internal rules and limited freedom of choice (patient the choice of the provider is limited, even
providers they are limited in the choice of the organisations).
Organizational vs clinical integration
Organizational integration concerns the formal contractual agreements that bind healthcare providers
together. Formal structure. In the structure we are in the same organisation, same identity, same rules,
same structures.
Clinical integration evaluates to what extent different providers treating the same patient actually
coordinated their efforts. Actual interaction among providers. It concerns the coordination around a
patients.
Being in a certain organizational system does not necessarily imply that you are cooperating, you just have
the same employer. Clinical integration is hard to measure, no indicators.

Insurers in a separated model simply reimburse providers, there is no specific contractual agreements.
Insurers and providers are the same organization. There is not necessarily a triangle formation, more like a
linear, with providers in the middle.
^^^ the 5 features characterizing the integrated model/separated model.
Vertical integration
The boxes are the boundaries of the organizations.
Box number one: within a country there is one insurers, and that one also owns all the
providers. This is an integrated model. State acts as insurer and providers are managed
and employed by the stage.
-Insurers and providers belong to the same organisations (Denmark, Finland, Ireland,
Italy, UK)
Visualization two: just one insurer (single payer scheme) managed by the state. The
individual providers are not employers and/or managed by the insurer/state. The lines
visualize contracts. Consumers can choose between multiple providers.
-Insurers and providers are independent entities (Australia, Canada)
Third situationship: more insurers (multi-payer), both private and public insurance
companies. The consumer can choose. The insurers do not own the providers, they just
reimburse the providers. This one is very usual.
- (Austria, Belgium, France, Germany, Hungary,US, Turkey, Korea, Switzerland)
Visualization four is not just theoretical. Within a country different insurers have within
their organizations providers (integration of insurers and providers). An example is the
HMO: healthcare management organizations – only reimbursement for contracted
organizations
You can’t always find the exact model, but a combination of these models
 Insurer and providers relationship
Horizontal integration
Primary care: basic procedures performed in response to the most common illnesses and
problems. Primary care is provided in the consulting rooms of general practitioners, in
outpatient clinics, at the patient’s home. GPs follow the patient from a continuous and
broad-spectrum perspective. Do not require sophisticated technology or settings.
First contact. (mostly) continuous/chronic care.
Secondary care is medical care of a specialized nature. Secondary care requires more
sophisticated equipment. It is provided by medical specialists who have a more sectorial
approach to illnesses and whose relationships with patients are usually limited to single
pathological episodes.
No focus now on relation by insurers and providers – but primary and secondary care.
Visualization 1 multiple GPs and hospitals are in the same organization.
Visualization two, multiple organizations organizing care, but in every organization there is
one hospital for secondary care and one GP for secondary care.
Third visualization is based on different all separated hospitals and GP’s, that can
communicate.
Last one has many GPs, but all providers are in the same organization that are all specialized
in primary care. Totally detached from hospitals.
*Integrated model GPS and hospitals belong to the same organisations. GPs are authonomous and
independent contractors, they are self-employed- They are not properly integrated but GPs are considered
similar to an integrated system. They work for the public sector.
-Denmark, Italy, Uk GPs are self-employed professionals but they have a really stron contract
-Finland, Greece, Portugal: GP’s employees of the State
Separated model Primary and secondary care are provided by separate entities
(1) Single organisation
(2) Case of horizontal integration
(3) Extreme separation no relation between GPs and providers
(4) Horizontal separation Many GPs work together, Organisations managing many healthcare facilities
at the same time. It is a case of partial integration among same level of care

Gatekeeping role of the GP

Gatekeeping is the principle by which access to specialist healthcare is possible – apart from accidents and
emergencies – only through referral by general practitioners. This means that patients do not have direct
access to secondary care.
Gatekeeper GPs are given a fundamental role in sorting and filtering healthcare needs. GPs must ensure
access to specialist care to only those patients who have a real need for it. The GP has to recommend the
most suitable specialist to the patient.
The gatekeeper physician is also assigned an additional task: advising and guiding patients throughout their
care process within the health system. The family doctor should coordinate the different specialist services,
ensuring continuity of treatment.
GPs have a function of integrator. Guiding patient through process.
• Gatekeeping systems: patients must have a referral from their GP to access a specialist
• Non-gatekeeping systems: GP referral is optimal. Possible to book directly a specialist appointment
(Austria, Belgium, Turkey, US, Germany, Greece, Switzerland)
You also have a mixed. If you want it to be reimbursed – you need to have a referral (Canada, Hungary,
Poland)
-Canada not compulsory to have a referral on paper but they are used to have a referral
-Poland some categories that do not have gatekeepers
-Hungary some specialist services are linked to the referral by GPs
GPs have different ‘roles’ across healthcare. Very important role if there is gatekeeping. In these countries,
having a family doctor is absolutely necessary. Without necessity of GP referral, they are less important. In
the gatekeeping systems, you see a higher density of GPs.
Solo vs group practice – primary care physician
General practitioners may work in solo practice or in group practice.
In solo practices it may be difficult for GPs to provide a broad range of services around the clock and to
coordinate with care provided by others. Larger practices can hire ancillary staff, purchase equipment more
efficiently and have regular meetings for coordination and joint policy-making.
This dimension is mostly focused on GPs but in some countries also on primary care physicians (e.g.
dentists)

Patient freedom of choice

Patient access to different types of healthcare varies among countries, reflecting different levels of patient
choice
• Complete freedom of choice: patients are allowed to choose any provider, both public and
private (Australia, Austria, Belgium, Canada, France)
• Free choice among public and approved private providers (Denmark, Finland, Greece, Israel)
• Limited choice: freedom of choice out of a small group of hospitals (Hungary, NZ, Portugal)
Countries are scored on the five dimensions. For integrated option, score of 1 is given. Thus, countries with
a higher score, have a highly integrated health system.
Social health insurance are all separated
Mandatory residence insurance countries are all separated
Universalist countries can both be separated and integrated (national health service).

Lecture 5: The US healthcare system

Public spending in terms of GDP is on the low side of average, but is only covering 1/3th of the population.
Private health expenditure is 9.1 percent, which is very high.
Health insurance coverage is also relatively low with 90 percent.

The American ‘healthcare patchwork’ in the US is not so much a system as a collection of systems that span
the full range of organised models previously described. They range from a publicly funded, fully
centralised system with salaries…(LOOK AT THE SLIDES)

Medicare – public programs

Administered by the US government. Funded mainly by payroll taxes. Medicare covers Americans over age
65 and younger people with long term disabilities (such as end stage renal disease)
Part A (hospital insurance); part B (outpatient care); since 2006, part D (drug coverage). Each component is
financed differently.
The program contains premiums (enrolling for part B), deductibles (for part A), out-of-pocket payments.
Medicare covers approximately 75% of health care costs for enrolees.
In 2022, it provided insurance to 60.2 million Americans (18,4 % of the US population) Medicare spending
accounted for about 15% of the federal budget.
 It is for everyone, even for wealthy people. Even wealthy people they have Medicare but they
might have a futher supplementary coverage. When it is your 65 birthday you are pushed to enjoy
the program. The idea id to pay every year. It is conveniently to immediately enroll.
Medicaid – public programs
Jointly funded by the state and federal governments, and managed by the states
It’s a mean-tested program, for low income and disabled persons. Poverty alone not necessarily quality
someone for Medicaid. Medicaid eligibility and the effectiveness of coverage for the poor vary widely
across the states.
In 2021, Medicaid provided coverage to 61,9 million low income and disabled people (18% of US
population).
Medicaid covers a wider range of health services than Medicare. Cost-sharing requirements are minimal.
Medicare is single and homogenious for every country. Medicaid is at state level in terms of the extension
of the coverage. Medicaid all treatments are for free (it is intended for the poor). The freedom of choice of
the provider is free meanwhile in medicare it is not

It is possible to be covered by both public programs. More usual is to have a complementary private
insurance beside the public one. E.g. if a certain favoured doctor is not covered in Medicare.

Other public programs

CHIP (children’s health insurance program)
Created in 1997, it provides insurance to children of low-income families whose earnings exceed the
Medicaid ceilings. States are given flexibility in designing their CHIP eligibility. The federal government
finances 70% of SCHIP costs.
Chip covers approximately 9 million children. In 2021, however 5.6% of children under 19 remain
uninsured.
SCHIP: State children's health insurance program – just to underline that it is managed by the
states.
Combination of chip and Medicaid in many states.
 Insurance coverage extended to childer under 18 if one of the parents posses the insurnace
Other programs are
• Veterans Health administration (VA/CHAMPVA): completely paid, but only admissible in healthcare
services that are directly managed within the insurance. These hospitals are only attended for
veterans. External patients are okay if there is space left. Ambulatory, hospitals are dedicated
entirely to veterans.
• Military Health System (TRICARE): military pay partly.
• Indian Health Service (HIS): very underfunded, so very poor in coverage: it is considered as non-
insured or underinsured.
• Targeted programs covering individuals with particular diseases (e.g. HIV/AIDS)
• The federal employees health benefits program (FEHB): Civilian government employees pay 1/3 of
the cost of insurance; the government pays the other 2/3.

Employer-based insurance – private insurance

Employers are not legally required to provide insurance to their workers, except in Hawaii and
Massachusetts.
  It is purchase through the enterprise/firms that workers work for. Large firms offer health
insurance
 Small firms are able to provide health care coverage.
About 178 million individuals (54,3% of population) hold employer sponsored insurance coverage. 98% of
large firms (200 or more workers) offer health insurance. Only 43% of employees of small firms are covered
by employer-sponsored insurance.
In 2021, the average premium across all employer sponsored plan types is $7,556 for single coverage and
$22,463 for family coverage (increase of 22 percent over the last five years, and almost 50% over the last
10 years.
The larger the firm, the better you can negotiate good prices with the provider.
You pay less taxes, if it is paid by your employer.

Individual insurance policies – Private insurance

A large number of health insurance companies sell non-group policies to individuals who pay the premiums
themselves.
Direct-purchase health insurance: 9.9% (almost 33 million) - almost one third of direct-purchase policies are
bought through a marketplace.
Traditional indemnity plans (grant you larger freedom of choice of the providers, private, non-group
insurance), but the premiums for these policies tend to be higher than those for employer group policies.
Cadillac plans: luxury plans. In this plan you can use any medical provider, and the insurer will pay for it. So
no contracted healthcare.
Overall, 36,1% of population is covered by public programs. 66% of population by private insurance (54.5%
covered by employed-based insurance and 9.9% direct purchased. But more than 20% of the population
with health insurance has multiple coverage. Thus, 8.3 percent(27,2 million) is uninsured (2021)
If you’re under 26 – you’re under your parents insurance.

The uninsured
A large number of individuals meet none of the above criteria – they are not over 65, they do not meet the
eligibility requirements for Medicaid, they are not veterans, neither they nor their family members are
employed in a firm that offers health insurance nor can they afford to purchase the employer-linked
insurance.
Many of these individuals – 27,2 million in 2021 – remain uninsured.
Individuals who do not have health insurance receive medical care from country hospitals, community
health centres, migrant health centres, and free clinics.
State funds and charities cover partly the unpaid bills.

Insurer-provider relationships
Indemnity insurance: reimbursement of billed charges. No restrictions on the patient choice – but very
expensive: small part of citizens can pay this.
Health maintenance organizations: Vertical integration. HMO’s directly provide, or contract for, medical
care. Capitation payment, and GP’s as gatekeepers. The patients pay no co-payment as long as care is
obtained from the HMO’s affiliated physicians and hospitals.
Preferred provider organizations:
-do not have their won facilities and their own staff but they have their own preferred providers lists.
-if you choose providers within the list the service is free.
currently the favoured insurance plan, mixing indemnity and HMOs. The PPO presents financial incentives
for its enrollees to seek care within the PPO network of physicians and hospitals. PPOs offer the option of
going to a non-contracted physician, but with a higher co-payment. PPO is the most common plan type,
enrolling around 58% of covered workers.

Problems of the US Health care system

Fragmentation and conflictual relationships
• Insurers vs doctors: high administrative costs. Due to issues in the past, now, whenever a patient is
coming in, somebody has to call the insurer to make sure whatever they are going to do is insured.
• Patients vs physicians: malpractice claims
• Patients vs insurers: pre-existing conditions. Not letting the insurers know about pre-existing
conditions, so the insurers don’t want to pay anything because the patient was negligent in filling
out the documents.

The patient protection and affordable care act

On march 23, 2010, president Obama signed the patient protection and affordable care act into law. It
represents the most significant government expansion and regulatory overhaul of the US health care
system since the passage of Medicare and Medicaid in 1965.
The PPACA includes numerous provisions to take effect over several years beginning in 2010.

Obamacare
1. Individual mandate/ play or pay
All individuals are required to purchase an approved insurance policy or pay a penalty. Exemptions for
religious reasons and for low income households.
Penalties in 2016 are $695 individual or $ 2,085 for families. A $2,000 per employee penalty on employers
with more than 50 employees who do not offer health insurance to their full-time workers. These individual
penalties were abolished in 2019.The company penalty is still there.
2. Health insurance exchanges (2014)
State regulated marketplace where individuals and small businesses can compare policies and premiums,
and purchase insurance.
3. Federal subsidies
Low income individuals and families up to 400% of the poverty level will receive federal subsidies. Small
businesses will get subsidies if they purchase insurance through an exchange.
4. Regulation of insurance companies in 2014
Before one of the most profitable industries. Insurers must offer the same premium to all applicants of the
same age and geographical location without regard to gender or pre-existing conditions. Insurers are
prohibited from dropping policyholders when they get sick (2010). Insurers must spend 85% of premium
dollars on healthcare and claims – leaving only 15% for administrative costs and profits (2011).
5. Medicaid expansion (2014)
Medicaid will include all individuals and families up to 138% of the poverty level. In 2012, the supreme
court allows states to opt out of the Medicaid expansion.
• Restructuring of Medicare reimbursement from FFS to ‘bundled payments’.
• Temporary high risk pool (2010)
• Children permitted to remain on their parents’ insurance plan until their 26 birthday.
th

Lecture 6: health care systems in three countries

Germany
The German system of social insurance was first established in 1883 by the Bismarck government.
Around 78% of funding was derived from contributions to statutory health insurance, about 7% from
general taxation and 12% from OOP payments. Voluntary private insurance accounted for the remaining
3%.
Germany was one of the first countries that implemented competition among insurance companies. Since
2009, health insurance has been mandatory for all citizens and permanent residents (previously, certain
populations could choose not to have insurance, though few did so). It is provided by competing, not-for-
profit, nongovernmental health insurance funds (called ‘sickness funds’) in the social health insurance
scheme (SHI), or by substitutive private health insurance.

Coverage (Germany)
All employed citizens with a gross monthly income less than $5,362 are mandatorily covered by social
health insurance.
Employees whose gross wage exceed the threshold and the self-employed can choose either to remain in
the SHI scheme on a voluntary basis or to purchase private insurance (which should be as generous as the
mandatory scheme is).
An estimated 0.1% of the population does not have insurance due to administrative hurdles or problems
paying premiums.
1. Employees earning less than $66.000: compulsory SHI (75%)
2. Employees earning more than $66.000: 12% SHI, 5% opted out for private insurance (mostly
individuals, no family)
3. Self-employed: no SHI – mandate private insurance (as generous as mandatory scheme) (6%)
-self employed were excluded from the health insurance system. Starting from 2009 they have to
purchase a basic insurance but they have ton purchase a private health insurance system (
4. Other groups like soldiers, policemen, civil servant: special regimes (target funds) ( 2%). Funded by
states’ budget.
Most important line is between being a employee and being self-employed. But there is also differentiation
between normal and high earners.

Sickness funds
Sickness funds (which are currently around 100) are autonomous, not-for-profit, nongovernmental bodies.
Germans are free to choose their insure, and ‘open’ sickness funds must accept any applicant. Prior to
1996, the majority of Germans were assigned by law to specific insurance funds.
Since 2011, a uniform contribution rate has been set by the government. Employees currently contribute
7.3% of their gross wages, while the employer adds another 7,3% (plus a possible supplement rate of 1%.
Sickness funds contributions are centrally pooled and then reallocated to each sickness fund based on a
risk-adjusted capitation formula, taking into account the age, sex and serious illnesses.
Members of an employee’s family are also covered, usually non-earning spouse and children up to the age
of 18.
What is covered? The health insurance funds pay the cost of preventive services, inpatient and outpatient
hospital care, physician services, dental care, prescription drugs, rehabilitation and hospice care.
Co-payments: although German co-payments have risen recently, they remain modest by international
standards:
• GP’s, specialists, and dentist: $10 for the first visit per quarter
• Outpatient prescription: 5 to 10 euro’s
• $10 per day for hospital and rehabilitation stays
Provision
Hospitals: 40% public, 60% private (either not-for-profit or for-profit), regardless of ownership, hospitals
are staffed principally by salaried doctors.
Ambulatory care: ambulatory care is delivered by physicians who work in their own practices – around 60%
in solo practice, and 25% in dual practices. Ambulatory physician are reimbursed on a FFS basis, with a fee
schedule negotiated between sickness funds and medical association.
GPs: registration with a primary care physician is not required and GPs have no formal gatekeeping
function. Sickness funds may however offer financial bonuses to those who use GPs as gatekeepers to
specialist services.
*SHI system opportunity to switch from one sickness fund to another. From 2009 onwards the rule is that if
you reside in Germany you need to have an insurance policy. Mandatory social health insurance. Most
sickness funds became open sickness funds.

Mandatory residence insurance, social health insurance system (huge part of the population).
Option of opting out. Gatekeeping is compulsory

Canada
Canada has a regionally administrated universal public insurance program, called Medicare.
The Canadian healthcare system is publicly funded by privately run (physicians are not salaried by the
government). About 70% of total health expenditure comes from general tax revenues (federal level).
The organization and delivery of health services is highly decentralized, with the provinces and territories
responsible for administering Medicare and planning health services.
*Federal gov has financial leverage to push provinces towards certain targets. Canda is not a national
services. Separated system bc all providers are separated from Medicare. It is highly decentralised, the idea
is that in Canada a basic package of healthcare is provided for all the population.

Medicare is a single payer system. There are some provinces that decided to finance even further with more
services.

US vs Canadian system:
-limitations: long waiting time that affects national services but even countries with Universalist separated.
Long waiting times are not a problem for Germany, France, US. Further problem is lack of doctors, shortage
of GPs.

-division of powers between provinces and federal government

Medicare
Universal coverage: the Canadian healthcare public scheme, known as Medicare, is designed to be
universal, comprehensive, publicly administered and mostly free at the point of use.
Provincial plans: rather than having a national healthcare plan, Canada’s health care is based on its 13
provinces and territories, each of which has its own health insurance plan. Despite some unifying
standards, individual provinces/territories have varying hospital wait times and access to private, for-profit
clinics.

Financing
While the provinces raise the majority of funds through own-source revenues, they also receive less than a
quarter of their health financing from the Canada Health Transfer, an annual cash transfer from the federal
government.
Basic package: the basic package that all provincial and territorial health insurance plans offer, include
hospital services, ambulatory care and preventing medicine. Additional services such as prescription drugs
and dental care may be offered under a provincial health insurance plan, funded and delivered on their
own terms and conditions. Dental care is generally not covered.

Private voluntary insurance

67% of Canadians buy coverage for extra benefits. VHI (voluntary health insurance) accounts for
approximately 15% of total health spending.
Private insurance is obtained mainly through employment-based group plans, which cover services such as
vision and dental care, prescription drugs, rehabilitation services and home care. Contributions to
employer-sponsored private insurance are deductible from income for tax purposes.
Private health insurance is relegated to services which are not included in the basic package provided by
Medicare. Almost all PHI (private health insurance) in Canada would thus be classified as complementary to
Medicare.
Supplementary private insurance (which attempts to provide a private alternative to Medicare or faster
access to Medicare services) is prohibited or discouraged by a complex array of provincial laws and
regulations.
Only country prohibiting supplementary private insurance

Provision
Hospitals are a mix of public and private, predominantly not-for-profit organizations. They are often owned
by religious orders, universities, municipalities, etc. Hospitals generally operate under annual, global
budgets, negotiated with the regional health authority. Hospital-based physicians generally are not hospital
employees and are paid FFS. Peculiarity of Canada is that each individual doctor has a contract
Secondary care: In Canada, most of specialist care is provided in hospitals. Specialists are paid mostly on a
fee-for-service basis.
Primary care
Most physicians are in private practices and are remunerated fee-for-service, although an increasing
number GPs receive alternative forms of payment such as capitation or salary.
Patients can access the specialist directly, but it is common for family physicians to refer patients to
specialty care because many provinces pay lower fees for non-referred consultations.
May of recent reforms focus on moving from the traditional physician-only practice to inter-professional
primary care teams that provide a broader range of primary health care services on a 24-hour, 7-day-a-
week basis. As consequences, most GPs work in group practice.

Switzerland
Since the introduction of the health insurance law in 1996, each person living in Switzerland is obliged to
purchase a health insurance policy.
Basic insurance is offered by over 80 health insurers or health funds. Although private, these are strictly
regulated and are not allowed to make a profit on mandatory health insurance.
The federal government and the cantons provide income-based subsidies to individuals or households to
cover mandatory insurance premiums. Overall, around 30% of residents benefit from public subsidies.

Mandatory health insurance

Mandatory health insurance can be purchased from a number of competing insures. Individual average
annual premiums for adults range from 3,000 to 5,200 dollars (from 250 euro’s and up)
Open enrolments: in order to avoid discrimination, insurers must accept all applicants (open enrolment)
and cannot vary premiums based on the health of each consumer. They are not allowed to make a profit on
basic care, but can on supplemental plans (they are also allowed to reject consumers). Only open
enrolments on mandatory basic care. No regulation on other/voluntary types of care.
Community-rated premiums: insurers must charge the same price to every individual that buys particular
health care plan: rates must be identical within each company for all insured persons in the same age
category and region, regardless of sex or state of health. There are three age levels: children (0-18), young
adult (19-25), and adults (26+)
In Switzerland there is high difference in GDP between provinces. The GDP can be twice as high in some
regions than neighbouring provinces. So each insurance company can set their own price within a
province.

Coverage
A risk-equalization system seeks to compensate insurers for the varying risk profiles of their membership.
Insurers with a fewer number of women and the elderly than the average must pay money into a common
pool, which is then redistributed to insurers with a greater than average number of women and the elderly
(elderly and women use more care)
Coverage is universal. Every individual intending to reside in Switzerland is required, within three months
of arrival, to take out an insurance policy.
The mandatory basic insurance covers a broad range of treatments: most family doctors and specialist
services, hospital care, physiotherapy, some preventive therapies. Dental care is largely excluded.
Cost sharing
100% of citizens in Switzerland are covered.
Cost sharing: Swiss patients are expected to contribute to the cost of treatments.
1. Annual deductible which ranges from a minimum of 230 $ to a maximum of 1900$. The deductible
is selected by the insured: a higher deductible usually permits lower premiums (=trade-off)
2. Uninsured persons pay 10% co-payment above deductibles for all services (including GP
consultations), but it is capped at 550$ per year
Out of pocket payment account for 28% of total health expenditure. Most OOP payments were spent on
dentistry and long-term care (not in standard care).
Many residents also purchase complementary and supplementary VHI for coverage of services not
covered under the basic package, for free choice of hospital doctor, or for improved accommodation when
hospitalized (e.g. an individual room instead of a shared room).

Provision
Hospitals: about 70% of acute inpatient care is provided by public or publicly subsidized private hospitals.
Public hospitals are owned and often run by cantons, municipalities or foundations. Private hospitals are
either for-profit, or not-for-profit. Most hospitals doctors are salaried.
Some hospitals are contracted by public, others not. You cannot choose any hospital, just within your
canton, unless you have permission. A way out is having a supplementary insurance – then you can go
wherever you want.
Secondary care: ambulatory services are largely provided by physicians operating as independent practices.
Solo practice is the norm. GPs and specialist doctors working in ambulatory-care settings are usually paid
on a fee-for-service basis.
Waiting lists is still a thing, but not as much as in other countries, due to private hospitals. Almost all public
systems have a problem with the waiting list.

Freedom of choice
Swiss citizens are free to choose their health care physician and have free access (without referral) to
general practitioners or specialists working in ambulatory care services.
There is no formal gatekeeping. Patients’ choice is restricted through cantonal hospital lists, which stops
patients from choosing hospitals in other cantons and most private for-profit hospitals.
HMOs: patients are increasingly taking up to the option to join HMOs or physician networks: almost 2/3 of
Swiss residents hold a HMO insurance policy, where they receive premium reductions in exchange for
agreeing to a managed care arrangement. In these circumstances, individuals’ choices of services are
directed by their primary care providers.

Lecture 7: the politics of healthcare

Do countries always move from SHI to NHS?
A standard development path
1. The first stage corresponds to the diffusion, as a supplement to the market, of forms of voluntary
insurance.
2. The second stage coincided with the establishment of the principle of social health insurance. The
first country to adopt such a system was Germany in 1883.
 3. The third stage corresponds to the establishment of a NHS/universalist scheme. The first country to
adopt such a model was New Zealand in 1938.
The standard path followed by different national systems is thus marked by two crucial passages: the first,
from VHI to mandatory insurance; and the second from SHI to a NHS/universalist coverage.
Voluntary insurance -> social health insurance -> universalist coverage
Law establishing SHI and NHS
NHS mostly directly after the second world war. The law establishing mandatory residence insurance was
later, from 1994 till 2007.
There are different track followed. Some countries take universalist scheme without ever having social
health insurance.
The German occupying people made social health insurance a thing in countries.

The question
Why do some countries have a national health service, others a system of social health insurance, and the
United States have neither of the two, at least to date?
Is this a simple evolutionary path, all countries go from 1 to 3? Or is there a decision to be made by
countries.
The question may also be formulated in the following manner: if- as we have previously seen- it is true that
health systems may evolve according to a standard, sequence, why have some countries stopped at the
first stage (VHI), others at the second stage (SHI), and others have gone further and reached the third stage
(NHS)?
The cultural explanation
Explain differences of countries in cultural – you can group countries according to this. Their health system
says a lot of political culture.
Some scholars have identified the cause of the differences between health systems in the
prevalent political culture of each nation.
Culture Health system
Communitarian Social health insurance
Egalitarian National health system
Individualistic Voluntary insurance
Those countries characterized by a communitarian culture (Germany, Netherlands, or Japan)
find the SHI model congenial; those with an egalitarian culture (UK and Sweden) display
tendency towards the NHS ; whilst those countries with an individualistic culture, display greater affinity
with the voluntary insurance model.
How big is the role and responsibility of the state? Health system embodies values and political agenda

The ideological orientation of governments

Does it exist a link between the healthcare models (VHI, SHI, NHS) adopted in different national contexts
and the ideological orientation of the governments which have instituted them.
Is the government in charge more left or right winged?
Not democratic chosen people mostly favoured the working class by implementing
• Conservatives/right: freedom
• Progressives/left: social equality and equity, thus more involved state
Political parties can change their position on the right/left line.

The ideological orientation of governments

There seem to be a correspondence between healthcare models and ideological learning.
A large majority of laws instituting a system of SHI have been taken on by conservative or non-democratic
governments; whilst those instituting a NHS/universalist scheme have been – in the majority of cases – the
work of social democratic governments.
Logically speaking, this affinity seems plausible; the SHI model envisages a reduced public
intervention; it seems therefore to be more congenial to right-wing parties (whether conservative or
liberal).
Conversely, the NHS model envisages a much more extensive intervention on the part of the
state, and proposes equality of treatment for all citizens , even at the cost of the individual’s freedom
to choose. It should not be surprising that a system with these characteristics is more invoked by leftist
parties.
Health politics
Government in charge and interest group. Difference in solidarity and redistribution of wealth.
Interest group: a group of people that seeks to influence public policy on the basis of a particular common
interest or concern.
Sometimes it is a struggle between the state and some interest groups, like doctors (e.g. nurse strike in UK)
Health policies can be observed in the light of a particular analytical perspective, namely health politics.
This perspective assumes that the choices made by different countries in the field of healthcare largely
result from clashes involving governments and competing interest groups.
The process of formulating health policies can be conceived as an arena in which actors – such as
governments, health professionals, trade unions, employers, political parties and insurance companies –
compete. The past outcomes of these clashes were influenced not only by the strength of the actors, but
also by the rules of the game and the institutional constraints, which distinguish each national system.
Ideas – Interest - Institutions

Government versus doctors

Doctors are a very powerful interest group and are very capable of influencing the government. Example in
America: interest group capable of lobbying and moving citizens to be opposite/block plans; presidents
cannot do their plans. Some American presidents have tried to implement a better health system, but EMA
has always opposed.
Other interest groups are insurances, patient association (in some countries), pharma industry – basically
all companies that have a stake in the healthcare market.
Amongst interest groups, the one which traditionally been the most combative and influential has been the
one formed by doctors. The dispute between medical professionals and the State may be summarized in
the following terms.
The state aims at limiting the autonomy of physicians and restraining their earnings; to this end,
governments ought to prefer a NHS, or a highly integrated public system in which healthcare professionals
are salaried employees.
On the other side, doctors fight for their own professional autonomy and to gain a favourable method
remuneration. Physicians prefer to maintain the status of independent professionals, perceiving any
attempt to nationalize the healthcare system as a treat; of the three models, the NHS model is appreciated
the least by doctors.

The importance of institutional role

In those countries where political power is concentrated in the hand of the executive branch, it
is more likely that the will of the government will prevail over that of interest groups (the
government has a better chance of implementing an NHS).
• The UK has concentrated power: there are two parties, but just one is government. The bill needs
to be accepted by just one parliament (single chamber).
In those countries where power is dispersed amongst multiple actors, the executive is weaker
and interest groups find it easier to block its initiatives; in the field of healthcare, this means
that doctors have a greater chance of blocking the approval of a system in which they
disapprove of (and thus no NHS)
• Most of governments are coalition governments. Each party have a veto power – everybody has to
agree. Moreover, a lot of groups have to approve the bill. If just any group gives a red light, the bill
will not be enacted. In Switzerland also a referendum with the citizens. It is much more difficult to
pass reforms. Interest groups can influence all the different groups.
As far as the degree of concentration of political power is concerned, we make use of the two noted
theories in the field of comparative politics. The first is the distinction between majoritarian vs consensual
models proposed by Lijphart, while the second is the veto players theory developed by Tsebelis.
• Lijphart’s index of concentration of power
• Tsebelis’ veto players
Change rules of game to implement healthcare system

Conclusions
The ideological orientation of governments. SHI schemes have been more commonly adopted by
conservative governments, while the majority of laws instituting a NHS have been passed by democratic
executives
The importance of political institutions. Completing all the stages of the standard developmental sequence
(from VHI to NHS) has been easier and quicker in those political systems which have fewer veto players.

Lecture 9: doctor payment method

How doctors are paid is not merely a technical issue. It is widely believed that the method by which
physicians are paid may affect their clinical and professional behaviour.
In general, physicians are paid one or more of the following three methods:
1. Fee-for-service (FFS)
The fee-for-service method requires each doctor to be paid in proportion to the type and
quantity of services actually provided. Physicians are rewarded for every service or test they
provide. Since each service is a paid a certain rate, the most productive doctors – or those who provide
the services with the most profitable rates – will be the ones who earn the most.
At least on paper, the FFS should stimulate productivity the most. However, it provides an incentive to
increase the total volume of services provided, to also provide services that are not strictly necessary.
You don’t need in advance how many treatments you are going to get, so the end-payment is unknown.
2. Capitation
Physicians are paid a set amount for each enrolled person assigned to them , per period of time,
whether or not the person seeks care. The capitation fee can be uniform, or it can be weighed, taking
into account some variables, such as the age or health conditions of the patient.
Like FFS, it invites doctors to seek user satisfaction, but it does not offer economic incentives for the
provision of unnecessary services. Capitation should also ensure the stability of the doctor-patient
relationship and, therefore, the continuity of care. Capitation can induce doctors to select
patients, accepting the less demanding ones . Since doctors do not have financial incentives to provide
many services, the risk is that patients are undertreated.
3. Salary
Doctors undertake to observe a certain working schedule, for which they are rewarded with a previously
agreed amount, regardless of both the number of patients and the services actually provided.
Physicians have no incentive to provide excessive treatment. In the FFS system, every doctor has an interest
in seeking the satisfaction of his/her clients. Salary does not provide any premium for the
productivity of the individual professional. Not having a direct economic incentive in this sense, the
salaried doctor could, instead, take the patient’s judgment less into consideration.
Each of these methods has relative strengths and weaknesses. Many combinations are possible

Payment methods
Extra-billing (EB)
Extra-billing is the practice of billing a patient for the difference between what the patient’s health
insurance chooses to reimburse and what the provider chooses to charge. Physicians are thus allowed
to charge more than the scheduled fee, and patients must pay the difference
Private practice (PP)
Employed physicians are also allowed to have a private practice. Private patients are source of
additional income.
In most countries allowed. Mostly combination of salary from public hospital and then fee for
service in the ‘afterhours’.
Recently, some countries have been experimenting with innovative forms of payments for doctors. ‘pay for
performance’ mechanisms have been introduced in several countries including Australia, Czech Rep,
France, Hungary, Netherlands, UK and the US.

Lecture 9: Health care reforms over the last 30 years

Big bang reforms: very large changes in short amount of time. Mostly incremental change – small steps in a
big timespan.

80s and early 90s: SHI – problems and solutions

Cost in healthcare is always rising. A solution for the ever growing market was the optional gatekeeping.
At least on voluntarily basis, with incentives to use it.
Hospital and primary care had low integration, a stricter regulation was introduced. E.g. regional
coordination in France to coordinate independent actors.
Problems Solutions
Part of the population without health insurance Targeted programs for the
coverage uninsured
High and rising health care costs Optional gatekeeping
Lack of integration among the parts of the health Greater public regulation
system

80s and early 90s: NHS – Problems and solutions

Patient is allowed to go private or abroad if waiting times are too long, and this would be reimbursed by
the system – this gave pressure to keep waiting times short.
Internal competition (use market features), to increase quality of hospitals.
Problems Solutions
Limited freedom of choice Enhancing freedom of choice
Long waiting times Maximum waiting time guarantee
Low customer orientation Internal competition, quality rating

Five major reform trends

1. Stimultion of greater competition: especially in NHS a problem, but within SHI competition among
insurers.
2. Promotion of integration (both in terms of financing and delivering)
3. Decentralization
4. Strenghtening patients’ rights and freedom of choice
5. Extension of insurance coverage

UK, 1990
The 1990 reform of the Thatcher government, inspired by the principles of the ‘internal market’,
represented a radical break with the past.
A fundamental component of the internal market was the separation of suppliers and
purchasers. The split promised efficiency by introducing a system of provider competition in
which money would follow the patient.
Local health authorities would receive a budget, based upon the number of patients, with
which to purchase necessary services from a vast array of providers.
‘Fund holding’ general practitioners (GPs) represented a second category of purchasers. The provision of
services, on the other hand, was the responsibility of the hospitals, which were transformed into
autonomous ‘trusts’ that would then be obliged to compete to win contracts.
UK, 2001-2005
Most of the attention of the second Blair administration (2001-05) has been paid to the
strengthening of patients’ choice. From 2006 onwards, patients would have the right to choose
from a list of at least four providers selected by their GP for planned hospital care , including an
option to be treated in a private hospital. By 2008, English patients would be allowed to choose
from any provider meeting the Healthcare Commission’s standards and charging the NHS price.
In order to facilitate patients’ choice, of particular importance was the development of the star rating
system. The latter consists of a few key targets and a larger set of indicators – including waiting lists,
cleanliness, treatment-specific data and financial management – through which public and private
providers’ performances are assessed.

The Netherlands, 1990

The path of health reform followed in the Netherlands was largely inspired by the Dekker Report
(1987). The Simons Plan, passed in 1990, put the main points of the Dekker Report into practice and
recommended a gradual implementation.
From 1992 onwards, those Dutch citizens making compulsory contributions to the national
health insurance scheme (two thirds of the entire population) were permitted to choose , year by
year, which insurance fund to subscribe to – previously these funds had only been permitted to enroll
members from their own region. In order to guarantee the equity of the system and to prevent ‘cream
skimming’, since 1991 a system of risk compensation was brought into being.

The Netherlands, 2006

The 2006 reform was supported by the center-right coalition led by Balkenende. It is largely inspired by the
recommendations contained in the 1987 Dekker Report.
Following the 2006 reform, all Dutch residents are obliged to purchase an insurance policy
covering a standard, basic benefits package. Citizens are free to choose their insurer, which
may be changed every year.
Insurers (both for-profit and non-profit) are in competition with each other, and are obliged to accept each
person who applies for an insurance plan. Premiums must be community-rated.
Adults are required to pay an annual premium directly to their insurer. In addition to the fixed premium,
subscribers pay an income dependent contribution to a single national fund.
The contributions collected by this fund are redistributed among all insurers on a risk-adjusted basis. Low-
income families can apply for fiscal subsidy to purchase basic health insurance.

Sweden, 2005
In 1992 the Bildt government issued a three-month guarantee for ten elective treatments with long waiting
lists. In the two years immediately following the reform, waiting lists dropped substantially. However, by
the mid-1990s waiting times had lengthened again.
The latest National Treatment Guarantee, implemented since 2005, is based on the ‘0-7-90-90’ rule,
meaning instant contact (zero delay) with the health care system for advice, seeing a general
practitioner within 7 days, consulting a specialist within 90 days, and waiting no more than 90
days between diagnosis and treatment.
If the county council could not provide treatment within three months, the patient was to be
offered treatment at a hospital in some other county council or at a private facility.
France, 1996-1999
The Juppé Plan introduced important structural changes in both the financing and provision of
healthcare services.
With regard to financing, the Universal Health Coverage Act passed in 1999. Moreover, the financing source
was shifted partially from payroll contributions to a general tax based on people’s total income .
As far as the provision of services is concerned, in 1997 the carnet de santé (a booklet in which
doctors would have all relevant information concerning the diagnosis and treatment of
individual patients) was introduced with the intention of avoiding contradictory or redundant
prescriptions.
Since 1998: médecins traitants (family doctors entrusted with the role of gatekeeping for secondary care).

Germany, 2007
The 2007 reform was promoted by the first Merkel government.
Universal insurance obligation: starting in 2009, the obligation to take out insurance includes all
German residents. Non-SHI subscribers are required to have a private healthcare insurance
policy (covering a benefit basket similar to the one guaranteed by the SHI).
All mandatory contributions paid by SHI subscribers are collected by a Central Reallocation Pool, which in
turn allocates them to individual sickness funds according to a morbidity-based risk adjustment scheme.
Another important change concerns the standardization of the contribution rate for SHI subscribers. The
contribution rate is currently set at 14.6% of the worker’s salary, to be paid in equal shares by employer
and employee.
South Korea, 1999
In 1999, the Korean parliament approved a reform of the funding system that required all
sickness funds to merge into a single national insurance scheme
Previously, more than 350 health insurance societies operated in Korea, which workers belonged to, based
on profession or place of residence.
The introduction of national health insurance, therefore, led to the adoption of a single-payer model, with
uniform contribution rates and the same benefit package.