methods of funding healthcare in other countries
Discussion
A recurring theme in the rapidly growing literature on comparing health systems4 is that the same problems affect all of them, and that all countries are looking at other systems to see if anything can be learned from them. From the point of view of governments these problems manifest themselves as pressures on costs, caused by:
- ageing populations
- higher levels of chronic disease and disability
- the increased availability of new treatments and technologies
- rising public expectations
One key indicator of a society’s normative values involves the very nature of healthcare itself. Some societies view it as a predominantly social or collective good, whereby all citizens benefit when an individual receives needed curative as well as preventive service. Social solidarity is a related value, whereby the costs of care are intentionally cross-subsidised from young to old, from rich to poor and from the healthy to the sick, to ensure that all members of society receive the care that they need. Other societies, influenced by the radical market-oriented thinking of the 1980s, increasingly perceive healthcare as a commodity that can be bought and sold on the open market. This position emphasises the technical and dynamic efficiency that market incentives can instil into health services provision, and the contributions that these incentives are believed to make towards restraining future spending growth. [WHO-2 (p.5)]
This leads to a second point. It is not possible, or sensible, to simply abstract from one country’s healthcare system those elements which seem to be favourable and graft them onto another system. As Raffel says:
In the enthusiasm to solve a problem by adopting some other country’s policies one risks not examining closely enough the experiences of the other country. How well are the policies really working? How much of the policy’s success is due to unique political, economic, and cultural factors in that country? The danger is that insufficient critical examination will occur and will bring about results that are not desirable and that may make things worse. The industrialised democracies of the West tend to follow that cautionary practice routinely, though some might conclude […] that New Zealand leaped into adopting reforms inspired from abroad without adequate consideration of all key factors. Some Europeans undoubtedly feel this way about managed competition and DRGs [diagnosis related groups]. [Raffel (p.295)]
A third point, following from these two, that must be considered is: what principles should underlie the funding of a health service? Each country will have its own priorities and aims for funding, which one would expect to reflect the wider priorities and aims of the society, welfare and taxation systems. Thus in a country with a progressive tax regime, i.e. one in which proportionally more taxes are paid by wealthier people, one would expect that the healthcare funding system would have a similar objective. It is generally taken as axiomatic that funding for healthcare should be equitable, and if one accepts this, the list of principles for funding healthcare services set out by Normand is useful:
- The cost of collecting the funds should be low
- The system should be equitable
- The funding should be adequate and not be subject to fluctuations
- The system should not lead to conflict with other government objectives
- The public should be satisfied with the system
- The system should not channel funds into low priority programmes or away from high priorities. [Normand]
The way that a country’s healthcare system is funded is largely a matter of historical accident. Where comprehensive health cover for all citizens is the aim, the choice of method lies between funding from taxation or funding through compulsory social insurance. There is little to choose between these two methods, although there is some evidence that funding from taxation is slightly more efficient and equitable. Any movement from one system to another has tended to be in the direction of general tax funding and away from social insurance.
The method of funding appears to have little impact on the outcomes of the health system, or on patient satisfaction. These are influenced far more by the level of funding and the efficiency of the delivery mechanisms employed within the country concerned.
4 This paper will be concerned only with health systems in industrialised countries.