methods of funding healthcare in other countries

The performance of healthcare systems and their funding type
In June of this year the World Health Organisation published a report which presented a ranking of national health systems’ performance in their efforts to achieve three goals [WHO-1]

  • good health
  • responsiveness to the expectations of the population
  • fairness of financial contribution
It did so by combining together some measures of these three aspects into a single index. The results of this analysis were widely publicised in the UK because this overall ranking placed the UK in 18th position (out of 191 countries), and led to numerous newspaper features on the health systems of other countries. A detailed review of this very substantial report is outside the scope of this paper but it is of interest to look at its overall findings in the context of different countries’ methods of financing healthcare and expenditure on healthcare. Table 3 below shows the rankings of the 15 EU countries, plus those of some other major economies.

Table 3 – Major industrialized countries, ranked by World Health Organization indicators
WHO
rank
  
Country
Main type
of funding(a)
Expenditure
per capita(b)
%
Private
1
France
SI
2,077
23.6
2
Italy
Tax
1,783
32.0
7
Spain
Tax
1,218
23.2
9
Austria
SI
1,968
29.5
10
Japan
SI
1,822
21.7
11
Norway
SI
2,425
17.2
12
Portugal
Tax
1,237
33.1
14
Greece
Tax
1,167
43.2
16
Luxembourg
SI
2,215
7.7
17
Netherlands
SI/VI
2,070
29.6
18
United Kingdom
Tax
1,461
16.2
19
Ireland
Tax/VI
1,436
24.2
20
Switzerland
VI
2,794
26.6
21
Belgium
SI
2,081
10.3
23
Sweden
Tax
1,746
16.2
25
Germany
SI
2,424
25.4
30
Canada
Tax
2,312
30.4
31
Finland
Tax
1,502
23.7
32
Australia
Tax/VI
2,043
30.7
34
Denmark
Tax
2,133
18.0
37
United States
VI
4,178
55.3
(a) SI = Social insurance; Tax = General taxation; VI = Voluntary (private) insurance.
(b) US $, purchasing power parities. Source: [OECD]

The most remarkable fact about this table is the lack of correspondence between a country’s rank (as measured on the WHO indicators) and its method of financing healthcare, although those few countries where voluntary insurance plays a greater role in funding all fall in the lower half of the table. Furthermore, although countries with a predominantly social insurance funded system tend to spend more on healthcare than those with tax funded systems, there is very little correlation between their rank and the amount spent on healthcare. Indeed, if this were the sole criterion for ranking the countries, the UK does rather better than might be expected.

The table also shows the proportion of each country’s health expenditure that is financed privately. Even though in most countries a contribution to publicly funded healthcare is compulsory, either indirectly through taxation or directly through social insurance, there is usually a significant amount of private expenditure, chiefly comprising contributions by patients towards the cost of drug treatments, over-the-counter medicines, and private insurance. This averages about 25% of total health expenditure for the countries shown in the table. The largest deviations above the mean are the USA and Greece and the largest below are the Benelux countries and, to a lesser degree, the UK, Sweden and Norway. Again the type of funding system does not affect the amount spent privately, although on average it is slightly higher amongst tax based systems than social insurance systems.

3 The question wording was “In general, would you say you were very satisfied, fairly satisfied, neither satisfied nor dissatisfied, fairly dissatisfied or very dissatisfied with the way healthcare runs in (name of country)?”

© British Medical Association 2008

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