International Healthcare Systems: Western Democracies

8 min readJun 30, 2020

Part XI: Yes, Now is the Perfect Time to Talk Healthcare in America

Note: This post is one part of my series, Yes, Now is the Perfect Time to Talk Healthcare in America, which provides an in-depth look at the current healthcare system so that it can be reformed. Click the link or scroll to the bottom to check out the other posts in the series.

In many ways, the United States’ employer-based model uniquely defines its healthcare system. Essentially, all other developed nations have universal health insurance; whereas, the U.S. does not. Importantly however, “universal” does not always equate to government-run and government-funded. As will be detailed, each country has a fairly unique way of providing coverage to everyone, and in many instances, using private health insurance to achieve that goal. From a global perspective, healthcare spans a spectrum of models, practices, and outcomes. As the United States moves to a more universal coverage approach, it might first be helpful to explore other Western countries’ systems.

Canada

Canada, our neighbor to the North, has a national, single-payer healthcare system. Also called Medicare, Canada’s healthcare system is tax-funded and promotes an equitable system. Medicare covers most forms of basic and some specialized treatment. Many hospitals and physicians operate privately but bill the government for their services.

However, Medicare’s scope isn’t exhaustive. Many Canadians have to buy complementary private insurance to cover specialized treatment including dental care. To add another exemption, Medicare does not cover prescription drugs, so all such medicine must be paid out-of-pocket. Children and the elderly do have programs to pay for prescription drugs but the remaining public does not. While still expensive, the government widely regulates drug prices to keep costs down.

Canada has longer life expectancy, lower infant mortality rate, and spends less per capita than the United States but trails many other Western nations in each of these categories. Canada has a notorious reputation for long wait times. Unlike the United States, Canada has a shortage of specialists and general demand for physicians exceeds supply. According to the Fraser Institute, a Canadian think tank, the average wait time from referral by a general practitioner to consultation to specialist to treatment is about 20 weeks. Meanwhile, the United States’ wait time to see specialists is about 5 weeks.

The United Kingdom, France, and Germany

Each of these countries have higher average life spans, lower infant mortality, and minimal, if any, out-of-pocket expenses. They’re also much more affordable to the average citizen and widely devoid of financial ruin situations. To varying degrees, private insurance does play a role as well. In Britain, it has an extremely narrow scope, whereas in France and Germany it has a limited yet more prominent role. As a trade off however, these European countries pay more in taxes to fund and stabilize the system. They are also heavily dependent on American, Indian, and Chinese drug imports which helps keep their costs lower.

Across the pond, the United Kingdom’s National Health Service (NHS) provides government-run, public health insurance. Like Canada, most citizens have complementary private insurance and physicians contract with the government. Through tax revenue, the NHS provides most healthcare services and treatments. Wait times can similarly plague the United Kingdom’s system. All citizens must see a general practitioner first who acts as a sort of gatekeeper, and sometimes bottleneck, to see specialized physicians which can compound the problem. For these reasons, many wealthy individuals often go around the system through private insurance.

However, public insurance has a farther reach than Canada as private insurance plays a more minimal role. Even so, the United Kingdom spends less than half per capita on healthcare spending than the United States and is a leader among many of the G7 nations.

Across the channel, France has a universal system of its own. The French healthcare system is called Social Security; it does not however bear any relation in mission to America’s social security program. Unlike Canada and the U.K., the French government finances but does not run its healthcare system. The government will reimburse about 70-80% of all expenditures and patients pay the remaining portion out-of-pocket. In many instances, French companies will offer mutuelle coverage or voluntary private health insurance as a benefit to employment. With this coverage, French citizens can get broader coverage and even 100% reimbursement between the government and their employer.

Uniquely, France gives every citizen a sort of health credit card called a carte vitale. French citizens use this card to charge all health expenses, keep track of billing and reimbursement, and store electronic medical records. Since the card’s universal across the country, it keeps track of all historical patient information from copayments to CT Scans.

Lastly, Germany has universal, public health eligibility but an ability to permanently opt out of public insurance. If a citizen earns above a certain income level, they have the option to choose between private or public insurance. The public arm, Statutory Health Insurance (SHI) is actually privately operated itself but strictly regulated by the government. It’s also widely publicly-financed through tax revenue. Like America, these SHI programs create a competitive landscape. Many SHI programs exist and citizens choose the program they want. All children, elderly, and severely sick have more protections under SHI as well.

Private insurance is fairly top heavy where only about 11% of the population opts for Private Health Insurance (PHI). The Germans who opt for PHI are typically young people, those self-employed, and those who are generally wealthier. Since many Germans get complementary PHI for specific treatments not covered under SHI, those who can afford to opt out altogether can benefit from all-encompassing services at a lower cost. Additionally for PHI systems, “risk is assessed only upon entry, and contracts are based on lifetime underwriting”. This can be specifically attractive to healthy, young professionals making a strong starting salary.

Like France, Germany offers another hybrid model but, in some respects, operates more efficiently. The insurers are more heavily regulated but operationally autonomous which allows for specific, localized care. Germany struggles with wait times and access to specialists. Its per capita spending is a bit higher as well but still far below America’s mark. Additionally, it’s a more choice-oriented system that seems somewhat reminiscent as well. With competing SHI programs, PHI programs, and strict German government regulation, it struggles with similar issues that America’s system faces like heavy bureaucracy, high administrative fees, and rapid consolidation among insurance providers.

As presented, the U.K., France, and Germany sequentially escalate in population where the largest of the three, Germany, has about 83 million citizens. In comparison, the United States has about 4.5x more people. These European nations commit to universal healthcare but operate quite differently from each other.

Collectively, they also have one glaring question that fiercely rears its head in political discourse: can the system be properly funded? Unlike the United States however, these countries have widespread, underlying support for their healthcare systems and a willingness to pay into a more collective approach. Political arguments aren’t based on government’s intervention in the system but rather ensure that it can be properly financed and maintained.

Scandinavia

Many point to the Nordic bloc as the beacon for healthcare around the globe. The region, which consists of Denmark, Finland, Norway, and Sweden, have high life expectancy, low healthcare costs, and balanced health equity. However, the reason for such parity stretches beyond their healthcare systems. These nations blend capitalism and socialism; however, their social service apparatus extends significantly farther than America’s programs. In addition to healthcare, higher education and pensions are included for citizens. Still, the idea that these programs are “free” is pretty misleading. Scandinavian citizens pay much more in taxes.

According to the Organization for Economic Coordination and Development (OECD), the disparity is fairly stark. In the above chart, the OECD measures tax wedge which is the difference between an employer’s cost per employee and an employee’s net disposable income. Essentially, it measures the percentage of wages siphoned as tax revenue controlling for differences in currency value and inflation. According to the OECD, Scandinavian citizens pay about 5-10% more per person. Additionally, they collect their tax revenue differently than the U.S.

The United States uses a progressive tax system where higher income brackets pay more to the government. Similarly, businesses pay a corporate tax tied to their size and scale. In America, taxes at the individual and corporate level have come under scrutiny because many at the top consistently game the system through complex deductions and loopholes.

Perhaps counter-intuitively, even with these issues, America still pays more in top personal income and corporate taxes per capita. According to The Tax Foundation, an independent non-profit, the Nordic nations collect more net tax revenue through three mechanisms.

First, Scandinavia has a much higher value-added tax (VAT) based on consumption. In other words, they have a sales tax on goods and services that is about 4x higher than America’s average amount. Second, they collect more through personal income; however, the wealthy pay proportionally less and the middle class proportionally more than the United States’ tax code. Scandinavia has a relatively flat tax system where everyone pays more taxes, but it doesn’t scale like in the U.S. Third, citizens pay about double in social security contributions via a payroll tax. Through individual and employer contributions, more money comes out of the paycheck and never reaches individuals’ hands.

Like many of the aforementioned Western allies, the Scandinavian countries have government-run, universal healthcare. Private insurance does not exist. The costs are low and outcomes are noticeably better. However, the average citizen pays substantially more in taxes and it’s more concentrated in the middle-class than focused on the wealthy. Collectively, these countries have a population 16x smaller than the U.S.

This system works for the Nordic nations, but it seems impractical in the United States. While we may strive for better healthcare and outcomes, such as Scandinavia achieves, it’s hard to fathom that a sizable tax hike, the way the Nordics collect it, would be palatable and supported by a majority of the American public.

Thanks for reading! If you enjoyed this post please clap, share, and feel free to add me on LinkedIn to share any feedback. For links to all of the other blog posts included in this series, see below.

1. Yes, Now is the Perfect Time to Talk Healthcare in America

2. The History of Pre-1970s Healthcare

3. The History of Modern Healthcare

4. What is Medicare?

5. The Debate Around the Affordable Care Act

6. Three Areas Where the American Healthcare System Actually Works

7. Three Areas Where the American Healthcare System Fails

8. The Driving Forces Behind America’s Healthcare Cost Problem

9. Voter Attitudes Surrounding Healthcare

10. How the United States Can Fix Healthcare, According to the Presidential Candidates

11. International Healthcare Systems: Western Democracies

12. International Healthcare Systems: Eastern Democracies