Health Insurance Around the World

So recently I watched a Frontline documentary about Health care around the world and while I recommend watching it, I’ll provide a quick summary of the following nations: Britain, Japan, Germany, Taiwan, and Switzerland.

Here’s the netflix documentary if you want it!

The British system is government run, everyone goes through the NHS (National Healthcare System). From my understanding is that NHS runs the entire system. There is separate private insurance in which you can go to private facilities, but if you have NHS you go to NHS hospitals.

You go through a general practitioner to get to a specialist, the wait times can be long, much longer than the United States but comparable. The entire system is funded through taxes but healthcare for the most part is free. They recently have been adding market innovation (such as letting you choose the hospital, etc) to keep prices and wait times down, but that has caused a few hospitals to shut down.

The Japanese system is private insurance companies and private hospitals, but the governments sets ALL prices. I’m serious, ALL prices, the cost of bandaging a cut less than 6 inches is 450 yen. That’s how precise they set prices. You either get your insurance through your company or you go to a community run system in your area. The prices are set in stone though and adjusted every 2 years. The severe limitation of the system though is that doctors are not paid very well, and that many hospitals and clinics actually run in deficits, so the sustainability of this system is not 100% known.

The German system is simliar to ours except your premium payment is determined based on your income, higher the income the higher the premium. You can also opt out of the government run system and run with private insurance if you choose to. Insurance companies are not allowed to make any profit, and I’m not entirely sure what their incentive is, the video mentioned something about how the people running the system get paid more for more customers so I guess the insurance pay is commission based? The hospitals and doctors are mostly privately run. The prices in the system are kept down by reducing doctor’s salaries, doctors make about 50% less in Germany than they do here. Drug prices are also negotiated and set by the government.

Instead of choosing private insurance, the entire system is run through the government’s insurance program though hospitals and clinics can be privately run. This keeps the administrative costs down and  provides the most benefit for the entire system as the insurance provider is the government who will pay the prices negotiated with the providers. The major issue is the same as Japan, the government has to borrow significantly to pay the providers because the desire to keep premiums for citizens down. A bit Orwellian though if you’re using your insurance too much you’ll get a “visit” from a government official.

The Swiss choose a system similar to Germany in the sense that you are required to get insurance but you can choose where to get it from. The insurance companies are not allowed profit from basic care but can make profits from incidentals (private room, etc.). The swiss drug companies are also doing well but they get a good chunk of their profits from the US unregulated system where they can set more market based prices. Since the insurance companies can’t make too much from the basic care, they try to provide premium services and better prices and also keep their own administrative costs down.

So a few common elements to almost all these systems include:

Insurance is required, you must either get it through the government, private employer, or community based organization. Many low income people are subsidized and their insurance paid for.

Insurance companies are not allowed to discriminate based on pre-existing conditions.

Doctors and hospitals have a lot of set prices fixed, from my understanding this is where the WTF it cost me that much comes from in the US. I’m not entirely sure the system in the US but I assume prices are being set by providers so the profit is significantly higher. An example of price fixing is Japan sets the price of an MRI at $97 (at the time of the movie), that MRI costs $1600 in the US. Of course the machines in the US might be better than the ones in Japan so the cost per MRI might be higher, but still seems ridiculous that the prices are so varied. I know Medicare does this and I assume each insurance agent also does it, but it might just be that companies in the US just charge differently.

Another important distinction between other countries and the US is that the US has 82% of R&D in biotechnology globally. The costs we pay with drugs and treatment allow the rest of the world to be subsidized without significant hit with R&D (at least that’s one theory behind higher US prices).

Side note: Canada
Canada’s system I think is similar to Taiwan’s system, government insurance with private hospitals. Though I think Canada’s insurance is provincial instead of national.

If the documentary got something wrong or I misunderstood something please comment and I’ll make a correction.