By Antigoni Papaioannou, Uppsala University
In 2000, the World Health Organization (WHO) carried out an assessment of the healthcare system among 191 countries. According to WHO, France, Italy, and Japan alongside with other countries were listed among the top 10 countries with excellent health care structures.(1) Certainly, somebody will wonder how the WHO came to this result and what data was the judgement based upon.
The answer is as follows: WHO chose five indicators to measure the health care systems of each country, and sorted them in descending order afterwards.(1) Briefly, the overall level of population, the health inequalities within the population, the overall health of health system response, the distribution of responsiveness within the population, and finally, the distribution of the financial burden within the population were the main indices.(1) Naturally, other determinants were also taken into consideration, based on the different components of the chosen performance indicator.
It has been 17 years since this assessment was conducted, and plenty of elements are likely to change within that period, particularly regarding financing aspects. Is it perhaps time for a new assessment of the world health care structures? It would be of great interest to discern any differences in the new ranking and try to comprehend or even find the root of the problem. It may even be a helpful tool for improving the healthcare system of some countries and recognizing the likeliness of failure of a healthcare system early on.
Therefore, this will be a brief analysis on the health systems of five countries, with focus on the financial aspect, from 2000 until present. The chosen countries are: France, Italy, Japan, United States and China. France is listed as first in the WHO ranking health report 2000, followed by Italy and Japan. Whereas United State is listed below the top 30 countries, China is only among the top 100.(1) What has been changed in 17 years in those countries? How do the health systems financing strategies vary in each country?
France has the fifth largest economy in the world with Gross Domestic Product (GDP) to be estimated at 2,433,562 trillion US dollars in 2016, and an annual GDP growth around 1,0-2,2%.(3,7) The overall health status in France is satisfactory with ~ 91% of the total population aged over 15 years old stating to have a fair or good/very good health status in 2010 and 2014, respectively.(5) The average life expectancy at birth was at 82,4 years in 2015 and according to OECD databank(6), the life expectancy at birth is increasing steadily by one year every five years.
However, this country has a comparatively high rate of premature male deaths, due to deadly accidents and unhealthy habits.(7) The insurance and financial system for healthcare in France is quite simple and easy to comprehend. The French healthcare system has a centralized character, in which the government has the most important role. The main social insurance is based on the Bismarckian model.(7) The Statutory Health Insurance (SHI; assurance maladie) covers the resident population and has different schemes, depending on the employment status.(7) It financed 75,4% of personal health expenditure and 74,3% of the total expenditure in healthcare.(7) Additionally, 90% of French population obtain an additional insurance; the Voluntary Health Insurance (VHI: assurance complémentaire) which offers better coverage for healthcare services and other co-payments, which in turn covers 12,9% of total expenditure.(7,13,14)
How can the French Government provide universal health coverage to its population? The answer is rather simple; through a well-organized but complex financing system. The healthcare expenditure was at 11,5% of total GDP in 2014 (slight increase from 2010; 11,2% of total GDP) with a contribution of 9% in the public sector, 2,5% in the private and a portion of 6,3% for out-of-pocket expenditures.(2,4,7,12,14) In a nutshell, the SHI pertains to progressive financial means while the VHI and OOP is regressive financing.(7) SHI is mainly funded by the “General Social Contribution” tax (contibition sociale généralisée; CSG) which is emanated from the total income of each resident.
Other revenues for the SHI funding include specific taxes, such as taxes on tobacco, alcohol, or taxes on pharmaceutical companies. Furthermore, the National Solidarity Fund for Autonomy (Caisse Nationale de Solidarité pour l’ Autonomie; CNSA) provides funding for the long-term care for the elderly and disabled, whereas funds for acute hospital care and home hospitalization is provided by a diagnosis- related group (groupe homogéne de maladies; DRG); all of the aforementioned funds are part of the SHI.(7)
To continue with the next country, Italy is the eighth largest economy in the world according to World Bank(3) with 1,85 trillion US dollars in 2016 and an annual GDP growth 0,8- 1,7%.(4) The Italian population has a good health status in general, with 90,55% of the total population aged over 15 years old stating fair or good/very good health in 2010. (5) Although in 2014, only 88% of the population declined the same quality status of health.(5) The average life expectancy at birth of the total population was estimated at 82,6 years in 2015, with a rather variable value over the years.(5) It is important to mention that Italy has low infant and neonatal mortality and has managed to decrease mortality rate by 53% between 1980-2010.(8)
It is worth taking a brief look at Italy’s healthcare system and finance: The National Health Service (Servizio Sanitario Nazionale, SSN) is the fundamental healthcare system that provides universal coverage to all the resident population, and it is divided into three different levels: national, regional and local.(8) At national level, the Government, as in the Ministry of Health is responsible for the healthcare planning, policies and financing, whereas in regional level, each region has the authority in execution of planning and delivery of health.(8) Basically, this implicates that different regions have the possibility to take different choices in the planning of health as well as in the financing. Nonetheless, the VHI has begun to gain more and more individuals, with 5,5% of the population choosing VHI coverage in 2010.(8)
The main financial contributors of SSN are funds through the national and regional taxes with completion by co- payments for outpatient care and pharmaceuticals. (8,13) Few examples of the representing taxes and funds are earmarked corporate tax (IRAP), regional surcharge on the national income tax (IRPEF) and the national value-added tax (VAT).(8) The total healthcare expenditure is at 9,2% of the GDP, which is an 1,2% increase from the percentage of GDP in 2000.(2,8,12,14) In 2014, public spending for health accounted for 7% of the total GDP, while the private was 2,3% of total GDP, and 21,2% of total GDP originated from out-of-pocket payments.(2,3,14)
Now to another continent and the third most economically powerful country in the world with a GDP at 4,9 trillion dollars for the year 2016, according to the World Bank: Japan.(3) In 2010, approximately 73% of the total population aged over 15 years old reported that they have a fair or good/very good health status.(5) Japan holds the world’s longest life expectancy with an average life expectancy at birth at almost 84 years.(5,9) An interesting fact regarding the health status of this country is the extremely low neonatal mortality rate at only 0,9 per 1000 live births in 2014.(5)
The Japanese healthcare system is based on the Statutory Health Insurance System (SHIS), which offers universal coverage to all the residents as they are obligated by law to obtain an insurance coverage.(9) The public health system is separated into two levels: prefecture and municipal. The SHIS consists of three main insurance schemes, the Society-managed Health Insurance (SMHI), the Government-managed Health Insurance (GMHI) and the NHI. Employees of large firms are insured by the SMHI, while workers of small or medium corporations are insured by the GMHI.(9) The NHI refers to the self- employed. Although the Japanese healthcare system provides universal coverage and plenty of benefits, there is still a small demand for additional private health insurance. This is offered by the VHI which covers some of the out-of-pocket payments in specific healthcare related procedures.(9)
In 2014, the total health expenditure was estimated at 10,2% of GDP, 8,6% of total GDP is spent on public corporations, 1,7% on private spending and 13,9% of total expenditure in health responds to the out-of-pocket health expenditure. (2,9)The national spending is financed by taxation, insurance premiums and patent cost sharing.(9)
The third example, United States, is a country with the largest economy in the world, its GDP is estimated at 18,56 trillion US dollars with a stable annual growth rate at 2,5-2,6% the past 10 years.(2,3,4) The percentage of the population aged over 15 years has gradually increased between 2000 and 2016, while roughly 97% of general population report to have a satisfied health status.(5) The United States is one of the high-income countries with comparatively lower life expectancy at birth, being 78,6 years in 2010 and with high mortality. The main reason of that relatively high mortality rate might be a result of disparities and difficulties in access to healthcare.(10) Overall, the United States healthcare system is multidimensional and complicated, consequently, more than one paragraph is needed in order to fully comprehend its function and financing.
In the United States, private sector stakeholders are more involved in healthcare structuring than the government. There are two major federal government insurances: Medicare and Medicaid. The latter provides coverage for an amount of poor and almost poor individuals. Medicare covers the seniors and disabled.(10) In other words, public and private purchases play both an important role in the healthcare system; with the public actors to include federal, state and local level.(10) Regarding the private insurances, the majority of Americans citizens obtain such an insurance through employment, with only a small percentage (10%) purchasing private coverage.(10)
The health expenditure in United States count for ~17,1% of GDP in 2014, an increase of 1,3% since 2000.(2,14) The health care expenditures paid by public resources constitute 8,3% of total GDP while those paid by private are estimated to add up to 8,9% of total GDP. Spending paid by individuals (aka out-of-pocket payments) constitute 11% of total health expenditure.(10,14) Health care financing is achieved through taxes, premiums and OOP expenses, but also donations from employers, employees, individuals and charities. For instance, there are payroll taxes which fund the Hospital Insurance Part of Medicare, a mandatory tax paid equally and by employees and employers.(10)
The last country, China, is second on the list of the most economically powerful countries, with GDP of 11,2 trillion US dollars.(3) Although China has a growing economy, the healthcare system is not considered one of the best, on the contrary, it is attributed to one of the worst.(1,11) In 2010, the average life expectancy at birth as about 75 years.
After the reformation of the rural economy in China, in 1979, new healthcare systems were introduced to the residents. A city-based Social Health Insurance (SHI) scheme arose from the government, in which almost half of the urban population is insured.(11) This insurance scheme left the other half of the population without insurance and in turn forces them to out-of-pocket payments.
In 2014, the total health expenditure accounted for only 5,5% of GDP, with 3,1% of total GDP emanating from the public services and 2,5% from private services. Due to the nature of the healthcare system, the out-of-pocket payments reach the 32% of the total expenditure on health.(12,14) This leads China to have one of the highest OOP- shares of total health expenditure in the world.(11)
How is insurance financed in China? Basically, the SHI program is financed by premium contributions from employers and employees. The rates of the taxation vary from 6% to 2% of one’s salary, depending on the status of employment.(11)
In conclusion, the healthcare systems, as well as financing systems of France, Italy and Japan are well-organized and well-oriented in general. Conversely, United States and China are faced with critical issues; large proportions of the population are uninsured and simultaneously, both countries experience rapid increases of healthcare cost. Both countries are standing at a crossroad and soon a decision needs to be made. In the case of the unavailing healthcare system of United States and China, “how beneficial is the health system for the public?” and “how is the citizen’s interest protected?”.
- World Health Organization (WHO). The world health report 2000- Health systems: improving performance. 2000 Available on: http://www.who.int/whr/2000/en/
- The World Bank, IBRD- IDA. DataBank: World Development Indicators. 2017 Available on: http://databank.worldbank.org/data/reports.aspx?source=2&series=NY.GDP.MKTP.CD&country=#
- The World Bank, Gross Domestic Product 2016. World Development Indicators database. 2017 Available on: https://data.worldbank.org/data-catalog/GDP-ranking-table
- The World Bank, IBRD- IDA. DataBank Available on https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?end=2016&locations=FR-IT-JP-US-CN&name_desc=true&start=2000&view=chart
- Organisation for Economic Co-operation and Development (OECD) Stat. Health Status. Data extracted September 2017. Available on: http://stats.oecd.org/Index.aspx?DataSetCode=HEALTH_STAT#
- Organisation for Economic Co-operation and Development (OECD) Stat. Mortality and Life Expectancy at birth. Data extracted September 2017. Available on: http://stats.oecd.org/Index.aspx?DataSetCode=HEALTH_STAT#
- Chevreul Karine, Berg Brigham Karen, Durand-Zaleski Isabelle, Hernandez-Quevedo. France: Health System Review. Health Systems in Transition. 2015;17(3):1-218 Available on: http://www.euro.who.int/en/about-us/partners/observatory/publications/health-system-reviews-hits/full-list-of-country-hits
- Ferré F, de Belvis AG, Valerio L, Longhi S, Lazzari A, Fattore G, Ricciardi W, Maresso A. Italy: Health System Review. Health Systems in Transition. 2014;16(4):1-168 Available on: http://www.euro.who.int/en/about-us/partners/observatory/publications/health-system-reviews-hits/full-list-of-country-hits
- Tatara K, Okamoto E. Japan: Health System Review. Health Systems in Transition. 2009;11(5):1-164 Available on: http://www.euro.who.int/en/about-us/partners/observatory/publications/health-system-reviews-hits/full-list-of-country-hits
- Rice T, Rosenau P, Unruh LY, Barnes AJ, Saltman RB, van Ginneken E. United States of America: Health System Review. Health Systems in Transition. 2013;15(3):1-431 Available on: http://www.euro.who.int/en/about-us/partners/observatory/publications/health-system-reviews-hits/full-list-of-country-hits
- Winnie Yip, William C. Hsiao. The Chinese Health System at a crossroads. Health Affairs27. 2008;2:460-468
- World Health Organization (WHO). Health System Financing Profile by country. Available on: http://apps.who.int/nha/database/Country_Profile/Index/en
- Sarah Thomson, Thomas Foubister, Elias Mossialos. Financing Health care in the European Union: challenges and policy responses. Observatory Studies Series No 17. 2009;1-224
- Organisation for Economic Co-operation and Development (OECD) Stat. Health expenditure and financing. Data extracted September 2017. Available on http://stats.oecd.org/Index.aspx?DataSetCode=SHA#