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Critics of the U.S. health care system fre-quently point to other countries as models forreform. They point out that many countriesspend far less on health care than the UnitedStates yet seem to enjoy better health outcomes.The United States should follow the lead ofthose countries, the critics say, and adopt a gov-ernment-run, national health care system.

However, a closer look shows that nearly allhealth care systems worldwide are wrestling withproblems of rising costs and lack of access to care.There is no single international model for nation-al health care, of course. Countries vary dramati-cally in the degree of central control, regulation,and cost sharing they impose, and in the role ofprivate insurance. Still, overall trends from nation-al health care systems around the world suggestthe following:

• Health insurance does not mean universalaccess to health care. In practice, many coun-tries promise universal coverage but rationcare or have long waiting lists for treatment.

• Rising health care costs are not a uniquelyAmerican phenomenon. Although othercountries spend considerably less than theUnited States on health care, both as a per-

centage of GDP and per capita, costs are ris-ing almost everywhere, leading to budgetdeficits, tax increases, and benefit reductions.

• In countries weighted heavily toward gov-ernment control, people are most likely toface waiting lists, rationing, restrictions onphysician choice, and other obstacles to care.

• Countries with more effective nationalhealth care systems are successful to thedegree that they incorporate market mech-anisms such as competition, cost sharing,market prices, and consumer choice, andeschew centralized government control.

Although no country with a national healthcare system is contemplating abandoning uni-versal coverage, the broad and growing trend isto move away from centralized government con-trol and to introduce more market-oriented fea-tures.

The answer then to America’s health careproblems lies not in heading down the road tonational health care but in learning from theexperiences of other countries, which demon-strate the failure of centralized command andcontrol and the benefits of increasing consumerincentives and choice.

The Grass Is Not Always GreenerA Look at National Health Care Systems Around the World

by Michael Tanner

_____________________________________________________________________________________________________

Michael Tanner is director of health and welfare studies at the Cato Institute and coauthor of HealthyCompetition: What’s Holding Back Health Care and How to Free It (second edition, 2007).

Executive Summary

No. 613 March 18, 2008

Introduction

In his movie SiCKO, Michael Mooreexplores problems with the U.S. health caresystem and advocates the adoption of a gov-ernment-run, single-payer system.1 Moorecompares the U.S. system unfavorably withthose of Canada, Great Britain, and France.Economist and New York Times columnist PaulKrugman also thinks the health care systemsof France, Britain, and Canada are better thanthat of the United States.2 Physicians for aNational Health Program points out that theUnited States is the “only industrialized coun-try without national health care.”3

These and other critics of the U.S. healthcare system note that countries with such sys-tems spend far less per capita on health carethan the United States does and, by some mea-sures, seem to have better health outcomes.These critics contend that by adopting a simi-lar system the United States could solve many

of the problems that currently afflict its healthcare system. As Krugman says, “The obviousway to make the U.S. health care system moreefficient is to make it more like the systems ofother advanced countries.”4

There is no doubt that the United Statesspends far more on health care than anyother country, whether measured as a per-centage of gross domestic product (GDP) orby expenditure per capita. As Figure 1 shows,the United States now spends close to 16 per-cent of GDP on health care, nearly 6.1 per-cent more than the average for other indus-trialized countries.5 Overall health care costsare rising faster than GDP growth and nowtotal more than $1.8 trillion, more thanAmericans spend on housing, food, nationaldefense, or automobiles.6

Health care spending is not necessarily bad.To a large degree, America spends money onhealth care because it is a wealthy nation andchooses to do so. Economists consider healthcare a “normal good,” meaning that spending

2

To a large degree,America spends

money on healthcare because it is a

wealthy nationand chooses to

do so.

0 2 4 6 8 10 12 14 16

Japan

United Kingdom

Spain

Italy

Netherlands

Greece

Norway

Portugal

Canada

Germany

France

Switzerland

United States

Figure 1

Total Expenditure on Health Care as a Percentage of GDP

Source: Organisation for Economic Co-operation and Development, “OECD Health Data 2007: Statistics and

Indicators for 30 Countries,” (Paris: OECD, July 2007); 2004 data.

is positively correlated with income. Asincomes rise, people want more of that good.Because we are a wealthy nation, we can anddo demand more health care.7

But because of the way health care costsare distributed, they have become an increas-ing burden on consumers and businessesalike. On average, health insurance now costs$4,479 for an individual and $12,106 for afamily per year. Health insurance premiumsrose by a little more than 6 percent in 2007,faster on average than wages.8

Moreover, government health care pro-grams, particularly Medicare and Medicaid, arepiling up enormous burdens of debt for futuregenerations. Medicare’s unfunded liabilitiesnow top $50 trillion. Unchecked, Medicaidspending will increase fourfold as a percentageof federal outlays over the next century.10

At the same time, too many Americansremain uninsured. Although the number ofuninsured Americans is often exaggerated bycritics of the system, approximately 47 millionAmericans are without health insurance at anygiven time.11 Many are already eligible for gov-ernment programs; many are young andhealthy; many are uninsured for only a shorttime.12 Yet there is no denying that a lack ofinsurance can pose a hardship for manyAmericans.13

Finally, although the U.S. health care systemcan provide the world’s highest quality of care,that quality is often uneven. The Institute ofMedicine estimates that some 44,000–90,000annual deaths are due to medical errors,14 whilea study in The New England Journal of Medicinesuggests that only a little more than half ofAmerican hospital patients receive the clinicalstandard of care.15 Similarly, a RAND Corpora-tion study found serious gaps in the quality ofcare received by American children.16

Many critics of U.S. health care suggest thatthe answers to these problems lie in a single-payer, national health care system.17 Undersuch a system, health care would be financedthrough taxes rather than consumer paymentsor private insurance. Direct charges to patientswould be prohibited or severely restricted.Private insurance, if allowed at all, would be

limited to a few supplemental services not cov-ered by the government plan. The governmentwould control costs by setting an overallnational health care budget and reimburse-ment levels.

However, a closer look at countries withnational health care systems shows that thosecountries have serious problems of their own,including rising costs, rationing of care, lack ofaccess to modern medical technology, andpoor health outcomes. Countries whosenational health systems avoid the worst ofthese problems are successful precisely becausethey incorporate market mechanisms andreject centralized government control. In otherwords, socialized medicine works—as long as itisn’t socialized medicine.

Measuring the Quality ofHealth Care across

CountriesNumerous studies have attempted to

compare the quality of health care systems.In most of these surveys, the United Statesfares poorly, finishing well behind otherindustrialized countries. This has led criticsof the U.S. health care system to suggest thatAmericans pay more for health care butreceive less.

There are several reasons to be skeptical ofthese rankings. First, many choose areas ofcomparison based on the results they wish toachieve, or according to the values of the com-parer. For example, SiCKO cites a 2000 WorldHealth Organization study that ranks the U.S.health care system 37th in the world, “slightlybetter than Slovenia.”18 (See Table 1.)

This study bases its conclusions on suchhighly subjective measures as “fairness” andcriteria that are not strictly related to a coun-try’s health care system, such as “tobacco con-trol.” For example, the WHO report penalizesthe United States for not having a sufficientlyprogressive tax system, not providing all citi-zens with health insurance, and having a gen-eral paucity of social welfare programs. Indeed,much of the poor performance of the United

3

A closer look atcountries withnational healthcare systemsshows that thosecountries haveserious problemsof their own.

States is due to its ranking of 54th in the cate-gory of fairness. The United States is actuallypenalized for adopting Health SavingsAccounts and because, according to the WHO,patients pay too much out of pocket.19 Suchjudgments clearly reflect a particular politicalpoint of view, rather than a neutral measure ofhealth care quality. Notably, the WHO reportranks the United States number one in theworld in responsiveness to patients’ needs inchoice of provider, dignity, autonomy, timelycare, and confidentiality.20

Difficulties even arise when using moreneutral categories of comparison. Nearly allcross-country rankings use life expectancy asone measure. In reality though, life expectan-cy is a poor measure of a health care system.Life expectancies are affected by exogenousfactors such as violent crime, poverty, obesity,tobacco and drug use, and other issues unre-lated to health care. As the Organisation forEconomic Co-operation and Developmentexplains, “It is difficult to estimate the rela-tive contribution of the numerous nonmed-

ical and medical factors that might affectvariations in life expectancy across countriesand over time.”21 Consider the nearly three-year disparity in life expectancy betweenUtah (78.7 years) and Nevada (75.9 years),despite the fact that the two states haveessentially the same health care systems.22 Infact, a study by Robert Ohsfeldt and JohnSchneider for the American EnterpriseInstitute found that those exogenous factorsare so distorting that if you correct for homi-cides and accidents, the United States rises tothe top of the list for life expectancy.23

Similarly, infant mortality, a common mea-sure in cross-country comparisons, is highlyproblematic. In the United States, very lowbirth-weight infants have a much greaterchance of being brought to term with the latestmedical technologies. Some of those low birth-weight babies die soon after birth, whichboosts our infant mortality rate, but in manyother Western countries, those high-risk, lowbirth-weight infants are not included wheninfant mortality is calculated.24 In addition,

4

When you compare the

outcomes for specific diseases,the United States

clearly out-performs the rest

of the world.

Table 1WHO Health Care Rankings

Country Rank Country Rank

France 1 Switzerland 20Italy 2 Belgium 21San Marino 3 Colombia 22Andorra 4 Sweden 23Malta 5 Cyprus 24Singapore 6 Germany 25Spain 7 Saudi Arabia 26Oman 8 United Arab Emirates 27Austria 9 Israel 28Japan 10 Morocco 29Norway 11 Canada 30Portugal 12 Finland 31Monaco 13 Australia 32Greece 14 Chile 33Iceland 15 Denmark 34Luxemburg 16 Dominica 35Netherlands 17 Costa Rica 36United Kingdom 18 United States 37Ireland 19 Slovenia 38

Source: World Health Organization, “The World Health Report 2000” (Geneva: WHO, 2000).

many countries use abortion to eliminateproblem pregnancies. For example, MichaelMoore cites low infant mortality rates in Cuba,yet that country has one of the world’s highestabortion rates, meaning that many babies withhealth problems that could lead to early deathsare never brought to term.25

When you compare the outcomes for spe-cific diseases, the United States clearly outper-forms the rest of the world. Whether the dis-ease is cancer, pneumonia, heart disease, orAIDS, the chances of a patient surviving are farhigher in the United States than in other coun-tries. For example, according to a study pub-lished in the British medical journal The Lancet,the United States is at the top of the chartswhen it comes to surviving cancer. Amongmen, roughly 62.9 percent of those diagnosedwith cancer survive for at least five years. Thenews is even better for women: the five year-sur-vival rate is 66.3 percent, or two-thirds. Thecountries with the next best results are Icelandfor men (61.8 percent) and Sweden for women(60.3 percent). Most countries with nationalhealth care fare far worse. For example, in Italy,59.7 percent of men and 49.8 percent ofwomen survive five years. In Spain, just 59 per-cent of men and 49.5 percent of women do.And in Great Britain, a dismal 44.8 percent ofmen and only a slightly better 52.7 percent ofwomen live for five years after diagnosis.26

Notably, when former Italian prime minis-ter Silvio Berlusconi needed heart surgery lastyear, he didn’t go to a French, Canadian,Cuban, or even Italian hospital—he went to theCleveland Clinic in Ohio.27 Likewise, CanadianMP Belinda Stronach had surgery for her breastcancer at a California hospital.28 Berlusconi andStronach were following in the footsteps oftens of thousands of patients from around theworld who come to the United States for treat-ment every year.29 One U.S. hospital alone, theMayo Clinic, treats roughly 7,200 foreignersevery year. Johns Hopkins University MedicalCenter treats more than 6,000, and theCleveland Clinic more than 5,000. One out ofevery three Canadian physicians sends apatient to the Unites States for treatment eachyear,30 and those patients along with the

Canadian government spend more than $1 bil-lion annually on health care in this country.31

Moreover, the United States drives muchof the innovation and research on health careworldwide. Eighteen of the last 25 winners ofthe Nobel Prize in Medicine are either U.S.citizens or individuals working here.32 U.S.companies have developed half of all newmajor medicines introduced worldwide overthe past 20 years.33 In fact, Americans playeda key role in 80 percent of the most impor-tant medical advances of the past 30 years.34

As shown in Figure 2, advanced medical tech-nology is far more available in the UnitedStates than in nearly any other country.35

The same is true for prescription drugs.For example, 44 percent of Americans whocould benefit from statins, lipid-loweringmedication that reduces cholesterol and pro-tects against heart disease, take the drug.That number seems low until compared withthe 26 percent of Germans, 23 percent ofBritons, and 17 percent of Italians who couldboth benefit from the drug and receive it.36

Similarly, 60 percent of Americans takinganti-psychotic medication for the treatmentof schizophrenia or other mental illnesses aretaking the most recent generation of drugs,which have fewer side effects. But just 20 per-cent of Spanish patients and 10 percent ofGermans receive the most recent drugs.37

Of course, it is a matter of hot debatewhether other countries have too little medicaltechnology or the Unites States has too much.38

Some countries, such as Japan, have similaraccess to technology. Regardless, there is no dis-pute that more health care technology is invent-ed and produced in the United States than any-where else.39 Even when the original research isdone in other countries, the work necessary toconvert the idea into viable commercial prod-ucts is most often done in the United States.40

By the same token, not only do thousands offoreign-born doctors come to the United Statesto practice medicine, but foreign pharmaceuti-cal companies fleeing taxes, regulation, andprice controls are increasingly relocating to theUnited States.41 In many ways, the rest of theworld piggybacks on the U.S. system.

5

The United Statesdrives much ofthe innovationand research onhealth careworldwide.

Obviously there are problems with the U.S.system. Too many Americans lack healthinsurance and/or are unable to afford the bestcare. More must be done to lower health carecosts and increase access to care. Both patientsand providers need better and more usefulinformation. The system is riddled with waste,and quality of care is uneven. Governmenthealth care programs like Medicare andMedicaid threaten future generations with anenormous burden of debt and taxes.

Health care reform should be guided by theHippocratic Oath: First, do no harm. Therefore,before going down the road to national healthcare, we should look more closely at foreignhealth care systems and examine both theiradvantages and their problems.

Many of the countries with health systemsranked in the top 20 by the World HealthOrganization, such as San Marino, Malta, andAndorra, are too small to permit proper evalu-ation, or their circumstances clearly limit the

applicability to the U.S. health care system.Accordingly, this study will look at 12 coun-tries that appear to hold lessons for U.S. healthcare reforms: 10 ranked in the top 20 by theWHO and 2 others frequently cited as poten-tial models for U.S. health care reform.

Types of National HealthCare Systems

National health care, or universal health care,is a broad concept and has been implemented inmany different ways. There is no single modelthat the rest of the world follows. Each country’ssystem is the product of its unique conditions,history, politics, and national character, andmany are undergoing significant reform.

Single-Payer Systems Under a single-payer health care system, the

government pays for the health care of all citi-

6

Health carereform should be

guided by theHippocratic Oath:First, do no harm.

0 5 10 15 20 25 30 35 40 45

Netherlands

United Kingdom

France

Canada

Spain

Germany

Switzerland

Portugal

Greece

Italy

Japan

United States

MRI Units CT Scanners

Source: Organisation for Co-operation and Development, “OECD Health Data, 2007 Statistics and Indicates for 30Countries” (Paris: OECD, July 2007).Note: U.S. Data from 2003.

Figure 2Number of MRI Units and CT Scanners per Million People

zens. It collects taxes, administers the supply ofhealth care, and pays providers directly. Ineffect, this replaces private insurance with asingle government entity. Typically, the gov-ernment establishes a global budget, decidinghow much of the nation’s resources should beallocated to health care, and sets prices or reim-bursement rates for providers. In some cases,providers may be salaried government employ-ees. In others, they may remain independentand be reimbursed according to the servicesand procedures they provide. In the strictestsingle-payer systems, private insurance andother ways to “opt out” of the system are pro-hibited. This is the type of system advocated byMichael Moore, Paul Krugman, DennisKucinich, and Physicians for a National HealthProgram, among others.

Employment-Based SystemsCountries with employment-based systems

require that employers provide workers withhealth insurance, often through quasi-private“sickness funds.” These insurance funds mayoperate within or across industry sectors, withbenefits and premiums set by the government.Often premiums are simply a form of payrolltax paid directly to the fund. Providers remainindependent and reimbursement rates arenegotiated with the funds, sometimes individ-ually, sometimes on a national level. Germanyhas long been the model for an employment-based system.

Managed CompetitionManaged competition leaves the provision

of health care in private hands but within anartificial marketplace run under strict govern-ment control and regulation.42 In most cases,the government mandates that individualspurchase insurance, though this is often pairedwith a requirement for employers to provideinsurance to their workers. Individuals have achoice of insurers within the regulated market-place and a choice of providers. Although thegovernment sets a standard benefits package,insurers may compete on price, cost sharing,and additional benefits. Switzerland is theclearest example of a managed-competition

approach to universal coverage, although theNetherlands has also recently adopted a simi-lar system. The 1993 Clinton health plan, the2006 Massachusetts health care reform, andmost of the proposals advocated by the currentDemocratic presidential candidates are varia-tions of managed competition.43

Within these broad categories are signifi-cant differences. Some countries, such asFrance and Japan, impose significant cost shar-ing on consumers in an effort to discourageoverutilization and to control costs. Othercountries strictly limit the amount that con-sumers must pay out of pocket. Some countriespermit free choice of providers, while otherslimit it. In some countries there is widespreadpurchase of alternative or supplemental privateinsurance, whereas in others, private insuranceis prohibited or used very little. Resource alloca-tion and prioritization vary greatly. Japanspends heavily on technology but limits reim-bursement for surgery, while France has excep-tionally high levels of prescription drug use.

Outcomes also vary significantly. Canada,Great Britain, Norway, and Spain all heavilyration health care or have long waiting lists forcare, while France and Switzerland have gener-ally avoided waiting lists. At the same time,France, Italy, and Germany are struggling withrising health care costs and budget strain, com-pared with Canada and Great Britain whichhave done better at containing growth inexpenditures. And some countries such asGreece have fallen far short of claims of univer-sal coverage.

With all of that in mind, consider the fol-lowing prominent national health care systems.

France

Some of the most thoughtful proponentsof national health care look to France as amodel of how such a program could work.Jonathan Cohn of the New Republic has writtenthat “the best showcase for what universalhealth care can achieve may be France.”44 EzraKlein of the American Prospect calls France “theclosest thing to a model structure out there.”45

7

Some countries,such as Franceand Japan,impose significant costsharing on consumers in aneffort to discourageoverutilizationand to controlcosts.

The French system ranks at or near the top ofmost cross-country comparisons and is rankednumber one by the WHO.46

Although the French system is facing loom-ing budgetary pressures, it does provide at leastsome level of universal coverage and managesto avoid many of the problems that afflictother national health care systems. However, itdoes so in large part by adopting market-ori-ented approaches, including consumer costsharing. Other aspects of the system appear toreflect French customs and political attitudesin such a way that would make it difficult toimport the system to the United States.

France provides a basic level of universalhealth insurance through a series of mandato-ry, largely occupation-based, health insurancefunds. These funds are ostensibly private enti-ties but are heavily regulated and supervised bythe French government. Premiums (fundedprimarily through payroll taxes), benefits, andprovider reimbursement rates are all set by thegovernment. In these ways the funds are simi-lar to public utilities in the United States.

The largest fund, the General NationalHealth Insurance Scheme, covers most nona-gricultural workers and their dependents,about 83 percent of French residents. Separateinsurance plans cover agricultural workers, theself-employed, and certain special occupationslike miners, transportation workers, artists,clergy, and notaries public. Another fund cov-ers the unemployed. These larger insuranceschemes are broken down into smaller poolsbased on geographic region. Overall, about 99percent of French citizens are covered bynational health insurance.

The French health care system is the world’sthird most expensive, costing roughly 11 per-cent of GDP, behind only the United States (17percent) and Switzerland (11.5 percent). Payrolltaxes provide the largest source of funding.Employers must pay 12.8 percent of wages forevery employee, while employees contribute anadditional 0.75 percent of wages, for a total pay-roll tax of 13.55 percent. In addition, there is a5.25 general social contribution tax on income(reduced to 3.95 percent on pension income andunemployment benefits). Thus, most French

workers are effectively paying 18.8 percent oftheir income for health insurance. Finally, dedi-cated taxes are assessed on tobacco, alcohol, andpharmaceutical company revenues.47

In theory, the system should be supportedby these dedicated revenues. In reality, theyhave not been sufficient to keep the program’sfinances balanced. The National HealthAuthority sets a global budget for nationalhealth care spending, but actual spending hasconsistently exceeded those targets.48

In 2006, the health care system ran a €€ 10.3billion deficit. This actually shows improve-ment over 2005, when the system ran an €€ 11.6billion deficit.49 The health care system is thelargest single factor driving France’s overallbudget deficit, which has grown to €€ 49.6 bil-lion, or 2.5 percent of GDP, threateningFrance’s ability to meet the Maastricht criteriafor participation in the Eurozone.50 This maybe just the tip of the iceberg. Some governmentprojections suggest the deficit in the healthcare system alone could top €€ 29 billion by2010 and €€ 66 billion by 2020.51

In general, the funds provide coverage forinpatient and outpatient care, physician andspecialist services, diagnostic testing, prescrip-tion drugs, and home care services. In mostcases, the services covered are explicitly specifiedin regulation. However, some “implicit” benefitguarantees occasionally result in conflicts overwhat benefits are and are not fully covered.52

Most services require substantial copay-ments, ranging from 10 to 40 percent of thecost. As a result, French consumers pay forroughly 13 percent of health care out of pocket,roughly the same percentage as U.S. con-sumers.53 Moreover, because many health careservices are not covered, and because many ofthe best providers refuse to accept the fee sched-ules imposed by the insurance funds, morethan 92 percent of French residents purchasecomplementary private insurance.54 In fact, pri-vate insurance now makes up roughly 12.7 per-cent of all health care spending in France, a per-centage exceeded only by the Netherlands (15.2percent) and the United States (35 percent)among industrialized countries.55

The combination of out-of-pocket and

8

The health caresystem is the

largest single fac-tor driving

France’s overallbudget deficit.

insurance payments means that nongovern-ment sources account for roughly 20 percentof all health care spending, less than half theamount spent in the United States but stillmore than most countries with nationalhealth care systems.56

The private insurance market in France is inmany ways less regulated than the U.S. market.For example, while 20 U.S. states require someform of community rating or put limits onhealth insurance premiums, private healthinsurance in France is largely experience rated.No regulations specify what benefits must beincluded in coverage or mandate “guaranteedissue”; and pre-existing conditions may beexcluded. The only significant restrictionrequires “guaranteed renewability” after twoyears of coverage.57 More than 118 carriers cur-rently offer some form of private health insur-ance coverage.58

In general, French patients pay up front fortreatment and are then reimbursed by theirgovernment health insurance fund and/or pri-vate insurance. The amount of reimburse-ment, minus the copayment, is based on a feeschedule negotiated between health careproviders and the national health insurancefunds. These fee schedules operate similarly tothe diagnostic-related groups (DRGs) underthe U.S. system.

Although reimbursement levels are set bythe government, the amount physicians chargeis not. The French system permits providers tocharge more than the reimbursement sched-ule, and approximately one-third of Frenchphysicians do so.59 In some areas, such as Paris,the percentage of physicians who bill abovereimbursement schedules runs as high as 80percent.60 In general, however, competitionprevents most physicians from billing too faroutside negotiated rates; and physiciansemployed by hospitals, as opposed to those inprivate practice, do not have the same ability tocharge more than the negotiated rate.

The government also sets reimbursementrates for both public and private hospitals,which are generally not allowed to bill beyondthe negotiated fee schedules. While fees arerestricted, private hospitals (called cliniques),

which account for 37 percent of all short-stayhospital beds and half of all surgical beds, con-trol their own budgets, whereas public hospi-tals operate under global annual budgetsimposed by the Ministry of Health.

Health care technology that the NationalHealth Authority has categorized as “insuffi-cient medical service rendered” cannot be pur-chased by public hospitals, and its use at cliniquesis not reimbursable through national insuranceschemes.61 Yet in denying reimbursement forsuch technology, the French governmentadmits that when a product with an insufficientmedical service rendered is de-listed from reim-bursement, this does not imply that it is not effi-cient for a given pathology, but simply that thegovernment prefers to commit its resources toother reimbursements which it deems moreuseful from a collective point of view.”62

In general, the quality of French health careis high, but there are problem areas. Until veryrecently, the French have generally had quickaccess to their primary care physician ofchoice. Now, a growing problem, nomadismemedical, wherein patients go from one doctorto another until they find one whose diagno-sis they prefer, is driving up costs to the sys-tem.63 The government has responded byincreasing copayments and attempting tolimit physician reimbursements.

Much of the burden for cost containmentin the French system appears to have fallen onphysicians. The average French doctor earnsjust €€ 40,000 per year ($55,000), compared to$146,000 for primary care physicians and$271,000 for specialists in the United States.This is not necessarily bad (there is no “right”income for physicians) and is partially offset bytwo benefits: 1) tuition at French medicalschools is paid by the government, meaningFrench doctors do not graduate with the debtburden carried by U.S. physicians, and 2) theFrench legal system is tort-averse, significantlyreducing the cost of malpractice insurance.64

The French government also attempts to limitthe total number of practicing physicians,imposing stringent limits on the number ofstudents admitted to the second year of med-ical school.65

9

The private insurance marketin France is inmany ways less regulated thanthe U.S. market.

However, French physicians have showngrowing resistance to efforts at limitingphysician reimbursement with several recentstrikes and protests.66 In the face of growingbudgetary problems, future conflict may wellbe brewing.

More significantly, the government hasrecently begun imposing restrictions on accessto physicians. A 2004 study by the HighCouncil on the Future of Health Insuranceraised questions about “the legitimacy of thecomplete freedom enjoyed by health profes-sionals in setting up their private practice.”67

And in 2005, the government adopted a systemof “coordinated care pathways.” Under the newsystem, which operates very much like man-aged care in the United States, patients areencouraged to choose a “preferred doctor” andto follow the “pathway” suggested by that doc-tor. The effect is both to lock patients into achoice of primary care physician and to establisha “gatekeeper” who limits access to specialists,tests, and some advanced treatment options.68

So far, the new system has been more of agentle push than a mandate. If the new systemis not used, copayments may be slightly higheror reimbursements slightly lower, much likegoing “out of network” in the United States.But if costs continue to rise, the new systemmay be extended and made more rigorous.

Of more immediate concern, global bud-gets and fee restrictions for hospitals have ledto a recurring lack of capital investment, result-ing in a shortage of medical technology andlack of access to the most advanced care. Forexample, the United States has eight times asmany MRI units per million people and fourtimes as many CT scanners as France.69 Thispartially reflects the more technology-reliantway of practicing medicine in the UnitedStates, but it has also meant delays in treat-ment for some French patients. Also, strongdisparities are evident in the geographic distri-bution of health care resources, making accessto care easier in some regions than others.70

Thus, while the French system has generallyavoided the waiting lists associated with othernational health care systems, limited queuesdo exist for some specialized treatments and

technologies. In some cases, hospitals in dan-ger of exceeding their budgets have pushedpatients to other facilities to save money.71

Finally, the government has tried to curtailthe use of prescription drugs. The French havelong had an extremely high level of drug con-sumption. French general practitioners (GPs)prescribe on average €€ 260,000 worth of drugs ayear.72 However, the National Health Authorityhas begun de-listing drugs from its reimburse-ment formulary.73 Many French patients haveresponded by switching to similar, reim-bursable drugs, but some patients may not begetting the medicine they need. For example,one study found that nearly 90 percent ofFrench asthma patients are not receiving drugsthat might improve their condition.74

Government regulation and bureaucracyhave also been blamed for rigidity in theFrench system, preventing it from reactingquickly to changing circumstances. For exam-ple, mismanagement and the inability of thesystem to cope with emergencies were blamedin part for the deaths of 15,000 elderly individ-uals in the summer of 2003 during theEuropean heat wave; and a shortage of hospi-tal beds occurred in 2004 when a nationwideflu and bronchitis epidemic broke out.75

Although the changes made so far do notamount to rationing, 62 percent of Frenchcitizens report that they “have felt the effects”of the new restrictions.76 Slightly less thanhalf consider the waiting time between diag-nosis and treatment to be acceptable.77

Valentin Petkantchin, a scholar with theInstitut Economique Molinari, warns thatFrance is in danger “of joining the group ofcountries [such as] the UK and Canada, wherethe existence of rationing of health care andwaiting lists raises serious questions of accessto treatments by those who need them.”78 Andsome French health professionals have sug-gested that waiting times for care have begunto lengthen.79

The impact of all these cost containmentmeasures is alleviated to some degree by theability of French patients to privately contractfor care outside the public system. If a drug isremoved from the national formulary, patients

10

Global budgets and fee restrictions for

hospitals have ledto a recurringlack of capital

investment,resulting in a

shortage of medical

technology andlack of access to

the mostadvanced care.

may still purchase it if they are willing to payfor it themselves. The same is true for technol-ogy. Likewise, patients may ignore the “coordi-nated care pathway” and accept higher prices,paying more for immediate access.

In addition, the added resources frompayments by private insurance haveincreased the supply of health care technolo-gy and services. By increasing the overallamount of capital available for investmentabove and beyond the restrictions imposedby the government system, private insurancepayments increase the number of hospitalbeds and the amount of technology availablewithin the system. The capital infusedthrough private insurance may also increasethe number and training of physicians.80

In essence, the French system avoids wide-spread rationing because, unlike true single-payer systems, it employs market forces. Eventhe OECD says that the “proportion of thepopulation with private health insurance”and the degree of cost sharing are key deter-minants of how severe waiting lists will be:

Waiting lists for elective surgery general-ly tend to be found in countries whichcombine public health insurance (withzero or low patient cost sharing) andconstraints on surgical capacity. Publichealth insurance removes from patientsthe financial barriers to access leading tohigh potential demand. Constraints oncapacity . . . prevent supply from match-ing this demand. Under such circum-stances, non-price rationing, in the formof waiting lists, takes over from pricerationing as a means of equilibratingsupply and demand.81

And Ezra Klein praises the French because

[France’s ability to hold down healthcare costs] is abetted by the French sys-tem’s innovative response to one of thetrickier problems bedeviling health-poli-cy experts: an economic concept called“moral hazard.” Moral hazard describespeople’s tendency to overuse goods or

services that offer more marginal benefitwithout a proportionate marginal cost.Translated into English, you eat more ata buffet because the refills are free, andyou use more health care because insur-ers generally make you pay up front inpremiums, rather than at the point ofcare. The obvious solution is to shiftmore of the cost away from premiumsand into co-pays or deductibles, thusincreasing the sensitivity of consumersto the real cost of each unit of care theypurchase.82

However, the benefits of private insuranceare not equally distributed. The wealthy aremore likely to be able to pay privately to escapethe government system, creating in essence atwo-tier system. That has resulted in a dispari-ty in health outcomes based on income.84

While this is certainly the case in the UnitedStates and elsewhere—and there is nothingwrong with the wealthy being able to pay moreto receive better care—it demonstrates that theprofessed goal of entirely equal access is largelyunattainable even under this government-runhealth system.

A 2004 poll showed that the French had thehighest level of satisfaction with their healthcare system among all European countries.This is partly because their hybrid system hasavoided many of the biggest problems of othernational health care systems. Yet it also stemsfrom French social character. For example, by athree-to-one margin, the French believe thequality of care they receive is less importantthan everyone having equal access to thatcare.85 This means the French experience maynot be easily transferable to the United States,which has a far less egalitarian ethic.

While satisfied with their care today, theFrench do express concern about the future.In particular, they acknowledge the need forgreater cost control. This leads to the stan-dard contradiction inherent in governmentservices: most people are opposed to payingmore (either through higher taxes or out ofpocket), yet they worry that cost-controlmeasures will lead to a deterioration of care

11

The new Frenchgovernment has made a crackdown onhealth carespending one of its top priorities.

in the future. There is no consensus on whatFrench health care reform would look like.Still, some 65 percent of French adultsbelieve that reform is “urgent,” and another20 percent believe reform is “desirable.”86

Moreover there is growing dissatisfactionwith the French welfare state—of which thehealth care system is a significant part—andthe level of taxes necessary to support it. Therecent election of French president NicolasSarkozy is widely regarded as a reflection ofthis new attitude.87 Indeed, the new Frenchgovernment has made a crackdown on healthcare spending one of its top priorities..88

To sum up: the French health care systemclearly works better than most national healthcare systems. Despite some problems, Francehas generally avoided the rationing inherent inother systems. However, the program is threat-ened by increasing costs and may be forced toresort to rationing in the future.

The French system works in part because ithas incorporated many of the characteristicsthat Michael Moore and other supporters ofnational health care dislike most about theU.S. system. France imposes substantial costsharing on patients in order to discourageover-utilization, relies heavily on a relativelyunregulated private insurance market to fillgaps in coverage, and allows consumers to payextra for better or additional care, creating atwo-tier system.

This is clearly not the commonly por-trayed style of national health care.

Italy

Italy’s national health care system is ratedsecond in the world by the WHO.89 Yet a clos-er examination shows the system to be deeplytroubled, plagued with crippling bureaucra-cy, mismanagement and general disorganiza-tion, spiraling costs, and long waiting lists.

Generally, the Italian system is similar tothe British National Health Service but enjoysmore decentralization. The central govern-ment sets goals on how money should bespent, monitors the overall health status of the

nation, and negotiates the labor contracts ofmedical staff. The Italian Constitution waschanged in 2001 such that the national gov-ernment now sets the “essential levels of care”regions must meet, but regional governmentsstill control their own autonomous budgetsand distribute resources to the local level.

In theory, under the “fiscal federalist” provi-sions of this reform, discretionary centraltransfers should have dropped sharply, localtax bases and tax sharing should haveincreased, and “equalizing” transfers shouldhave been standardized and linked to objec-tives for controlling costs and increasing quali-ty. However, poorer regions and powerful spe-cial interests have strongly resisted thesechanges. Reform therefore remains incom-plete, and financial transfers from the centralgovernment are still based on historical spend-ing patterns.90

Thus, while the national Ministry of Healthcontinues to outline funding needs based onweighted capitation and past spending, recentreforms have shifted more and more powerand responsibility to regional governmentswho set their own budgets. The regions estab-lish one or more Local Health Authorities,which are responsible for the provision of careeither through government-run hospitals andclinics or by contracting with private provid-ers.91 It should be noted that governance inItaly is often as much art as science, andregions frequently fail to implement rules,guidelines, reimbursement schedules, andbudgets set by the central government.92

Financing comes from both payroll taxesand general revenues. Payroll taxes have aregressive structure, starting at 10.6 percent ofthe first €€ 20,660 of gross income and decreas-ing to 4.6 percent of income between €€ 20,661and €€ 77,480. The remainder of funding comesfrom both federal and regional general taxa-tion, including income and value-addedtaxes.93 The central government redistributesresources to compensate to some degree forinequalities among regions. Even so, mostregional health authorities run significantdeficits. Overall, regional deficits top 1.8 per-cent of GDP.94

12

Although Italyspends a

relatively low percentage of

GDP on healthcare, expenditures

have been risingrapidly in recent

years and haveconsistently

exceeded government

forecasts.

Inpatient care and primary care are free atthe point of treatment. However, copaymentsare required for diagnostic procedures, special-ists, and prescription drugs.95 The size of suchcopayments has crept steadily upward over thepast decade and now runs as high as 30 percentfor some services.96 Several attempts have beenmade to impose copayments for a broad rangeof services, including primary care, but havecollapsed in the face of public protests.97 Inaddition, nearly 40 percent of the population(the elderly, pregnant women, and children)are exempt from copayments.98

Italians have limited choice of physician.They must register with a general practitionerwithin their LHA. They may choose any GP inthe LHA but may not go outside it. Except foremergency care, a referral from a GP is requiredfor diagnostic services, hospitalization, andtreatment by a specialist. Despite these limits,Italians enjoy more choice of physician than dothe British or Spanish.

Most physicians are reimbursed on a capi-tated basis (i.e., according to the number ofpatients served over a given time period ratherthan the services actually provided), althoughsome hospital physicians receive a monthlysalary. Hospitals are generally reimbursedaccording to DRGs, with rates set by the cen-tral government—though regions sometimesdisregard those rates and set their own.

Private health insurance is available in Italybut is not widespread. Where offered, it is usu-ally provided by employers. About 10 percentof Italians have private health insurance, belowthe percentage in most OECD countries.According to the insurance industry, this ispartly because it is not possible to opt out ofthe National Health System and becausehealth insurance premiums are not taxdeductible.99 Private health insurance allowsfree choice of doctors, including specialists,and treatment in private hospitals. Even with-out private insurance, however, many Italiansuse private health resources (and presumablypay out of pocket). Estimates suggest that asmuch as 35 percent of the population uses atleast some private health services.100

Although Italy spends a relatively low per-

centage of GDP on health care, expenditureshave been rising rapidly in recent years andhave consistently exceeded government fore-casts.101 Between 1995 and 2003, total healthcare spending rose by 68 percent.102 The Italiangovernment has taken various steps to try tocontrol costs, such as reducing reimbursementrates, increasing copayments, reducing capitalexpenditures, contracting with private provid-ers, and limiting prescription drugs. All ofthese measures have met with protests, includ-ing physician strikes, and many have beenrepealed after only a short time.103

The Italian government does not provideofficial information on waiting lists, butnumerous studies have shown them to bewidespread and growing, particularly for diag-nostic tests. For example, the average wait fora mammogram is 70 days; for endoscopy, 74days; for a sonogram, 23 days.104 Undoubtedly,this is due in part to a shortage of modernmedical technology. The United States hastwice as many MRI units per million peopleand 25 percent more CT scanners.105 Ironic-ally, the best-equipped hospitals in northernItaly have even longer waiting lists since theydraw patients from the poorer southernregions as well.106

If delays become excessive, patients mayseek permission from the regional govern-ment to obtain treatment from private doc-tors or hospitals at NHS expense. A recentcourt decision allows patients whose lifewould be endangered by delays under theNHS to seek treatment in private hospitalseven without prior permission from theregional government.

Italy has imposed a relatively strict drugformulary as well as price controls, and hasthereby succeeded in reducing pharmaceuti-cal spending, long considered a problem forthe Italian health care system. In 2006,Italian drug prices fell (or were pushed) 5 per-cent, even as drug prices rose in the UnitedStates and much of the rest of the world.However, the savings came at a cost: theintroduction of many of the newest andmost innovative drugs was blocked.107

Conditions in public hospitals are consid-

13

Conditions inItaly’s public hospitals are considered substandard, particularly inthe south. Theylack not justmodern technology, butbasic goods andservices; and overcrowding iswidespread.

ered substandard, particularly in the south.They lack not just modern technology, butbasic goods and services; and overcrowding iswidespread. Conditions are frequently unsani-tary. For example, one of the largest public hos-pitals in Rome was recently found to havegarbage piled in the hallways, unguardedradioactive materials, abandoned medicalrecords, and staff smoking next to patients.108

Private hospitals are considered much betterand some regions have contracted with privatehospitals to treat NHS patients.

Dissatisfaction with the Italian health caresystem is extremely high, by some measures thehighest in Europe.109 In polls, Italians say thattheir health care system is much worse thanthat of other countries and give it poor marksfor meeting their needs. Roughly 60 percent ofItalians believe that health care reform is“urgent,” and another 24 percent believe it is“desirable.” In general, Italians believe thatsuch reform should incorporate market-basedsolutions. More than two-thirds (69 percent)believe that giving patients more control overhealth care spending will improve the system’squality. And 55 percent believe that it shouldbe easier for patients to spend their own moneyon health care.110

However, given the general dysfunction ofthe Italian political system, and the entrenchedopposition of special interest groups, substan-tial reform is not likely anytime soon.

Spain

Spain’s national health care system oper-ates on a highly decentralized basis, giving pri-mary responsibility to the country’s 17 regions.The Spanish Constitution guarantees all citi-zens the “right” to health care, including equalaccess to preventive, curative, and rehabilitativeservices; but responsibility for implementingthe country’s universal system is beingdevolved to regional governments. The degreeand speed of devolution is uneven, however,with some regions only recently achievingmaximum autonomy.111

Coverage under the Spanish system is near-

ly universal, estimated at 98.7 percent of thepopulation. The system provides primaryhealth care, including general health and pedi-atric care, outpatient and inpatient surgery,emergency and acute care, long-term diseasemanagement, and prescription drugs (al-though some drugs may require a copayment).Many mental health services, particularly out-patient services, are excluded, as is cosmeticsurgery.112

The federal government provides eachregion with a block grant. The money is notearmarked: the region decides how to use it.The block grant itself is based primarily on aregion’s population with some considerationgiven to other factors such as the population’sdemographics. Regions may use their ownfunds to supplement federal monies.

Not surprisingly, health care spendingvaries widely from region to region. The differ-ences in expenditures, as well as in spendingpriorities, lead to considerable variance in theavailability of health resources. For example,Catalonia has more than 4.5 hospital beds per1,000 residents, while Valencia has just 2.8.113

Spanish patients cannot choose their physi-cians, either primary care or specialists. Rather,they are assigned a primary care doctor from alist of physicians in their local community. Ifmore specialized care is needed, the primarycare physician refers patients to a network ofspecialists. Unlike U.S. managed care, it is notpossible to go “out of network” unless thepatient has private health insurance (seebelow). This has sparked an interesting phe-nomenon whereby sick Spaniards move inorder to change physicians or find networkswith shorter waiting lists.

Waiting lists vary from region to region butare a significant problem everywhere. On aver-age, Spaniards wait 65 days to see a specialist,and in some regions the wait can be muchlonger. For instance, the wait for a specialist inthe Canary Islands is 140 days. Even on themainland, in Galacia, the wait can be as long as81 days. For some specialties the problem is farworse, with a national average of 71 days for agynecologist and 81 days for a neurologist.114

Waits for specific procedures are also lengthy.

14

Spanish patientscannot choose

their physicians,either primary

care or specialists.

The mean waiting time for a prostectomy is 62days; for hip replacement surgery, 123 days.115

Some health services that U.S. citizens takefor granted are almost totally unavailable. Forexample, rehabilitation, convalescence, andcare for those with terminal illness are usuallyleft to the patient’s relatives. There are very fewpublic nursing and retirement homes, and fewhospices and convalescence homes.116

As with most other national health care sys-tems, the waiting lists and quality problemshave led to the development of a growing pri-vate insurance alternative. About 12 percent ofthe population currently has private healthinsurance. (This amounts to double coveragesince opting out of the government system isnot allowed.117) In larger cities such as Madridand Barcelona, the number of privately insuredreaches as high as 25 percent. Overall, privateinsurance payments account for 21 percent oftotal health care exenditures.118 More com-monly, Spaniards pay for care outside of thenational health care system out of pocket. Infact, nearly 24 percent of health care spendingin Spain is out of pocket, more than anyEuropean country except Greece and Switzer-land, and even more than the United States.119

Here again, a two-tier system has devel-oped, with the wealthy able to buy their wayaround the defects of the national health caresystem, and the poor consigned to substan-dard services.120

There are also shortages of modern medicaltechnologies. Spain has one-third as manyMRI units per million people as the UnitedStates, just over one-third as many CT units,and fewer lithotripters.121 Again, there is widevariation by region. For example, two regions,Ceuta and Melilla, do not have a single MRIunit.122 The regional variation is importantbecause Spaniards face bureaucratic barriers intrying to go to another region for treatment.

All hospital-based physicians and approx-imately 75 percent of all other physicians areconsidered quasi–civil servants and are paid asalary rather than receiving payment basedon services provided. Compensation is basedon years of practice or the attainment of cer-tain professional credentials, with across-the-

board annual increases unrelated to merit,performance, or patient satisfaction.123

As a result, Spain has fewer physicians andfewer nurses per capita than most Europeancountries and the United States. The lack ofprimary care physicians is particularly acute.124

Even so, Spaniards are generally happywith their system. Nearly 60 percent describetheir system as good, the second highest favor-ability rating in Europe. (France was first.)125

Accordingly, health care reform does not rankhigh on the average Spaniard’s political agen-da. One observer described health care as“conspicuous by its absence as a major issue”in recent elections.126 Only about 46 percent ofSpaniards describe the need for reform as“urgent,” while 35 percent see reform as “desir-able.” And Spaniards are less inclined towardmarket-based reforms than most otherEuropean countries. Only 42 percent ofSpaniards believe that it should be easier forpatients to spend their own money on healthcare, and only 58 percent believe that givingpatients more control over spending willimprove quality. However, Spaniards do wantmore choice of doctors and hospitals, andthey want the government to do a better job ofdealing with waiting lists.127

Japan

Japan has a universal health insurance sys-tem centered primarily around mandatory,employment-based insurance. On the surface,Japan’s national health insurance programdefies easy description, comprising some2,000 private insurers and more than 3,000government units. However, in a broadersense, the system encompasses four principalinsurance schemes.

The Employee Health Insurance Programrequires companies with 700 or moreemployees to provide workers with healthinsurance from among some 1,800 “society-managed insurance” plans. Nearly 85 percentof these plans cover a single company andcan be thought of as similar to the self-insur-ance plans operated by many large U.S com-

15

Spain has fewerphysicians andfewer nurses percapita than mostEuropean countries and theUnited States.The lack of primary carephysicians is particularlyacute.

panies. Most of the rest are industry-based.About 26 percent of the population partici-pates in these plans.128

Such plans are financed through manda-tory employer and employee contributions,effectively a payroll tax. The total contribu-tion averages around 8.5 percent of wages. Itis generally split evenly between employerand employee, although some companiesassume slightly more than half the contribu-tion. As a result, workers contribute about 45percent of payments overall.129 It should benoted that studies have found that themajority of the burden of the employer’s con-tribution to health insurance is borne by theemployees in the form of reduced wages.130

These contributions are frequently insuf-ficient to operate the insurance plans. In2003, more than half lost money.131 A num-ber of companies have responded by dissolv-ing their individual plans and entering largerindustry-based plans. However, growingcosts continue to pressure many businesses.

Workers in businesses with fewer than700 workers must enroll in the government-run, small-business national health insur-ance program. This plan covers about 30 per-cent of the population and is funded primar-ily through mandatory contributions,around 8.2 percent of wages, and supple-mented by government funds.132

The self-employed and retirees are coveredunder the Citizens Insurance Program admin-istered by municipal governments. Fundingcomes primarily from a self-employment tax,but additional revenues come from an assess-ment on the society-managed insurance pro-grams discussed above and the small businessprogram. General revenue contributions fromthe national government are used to plugshortfalls.

Finally, the elderly are covered through afund financed by contributions from the otherthree schemes, as well as contributions fromthe central government. The elderly do not paydirectly into this plan, known as the Roken, butcontribute to the plan they were enrolled inwhile employed. The Roken is simply a cost-sharing mechanism.134

A number of small programs exist to han-dle special populations such as farmers, fisher-men, and government workers. The unem-ployed remain under their former employers’plan, although they are not required to contin-ue contributing. Private supplemental insur-ance exists, but very few Japanese carry it.Private health insurance pays for less than 1percent of total Japanese health care spending.

Benefits under all four schemes areextremely generous, including hospital andphysician care, as well as dental care, maternitycare, prescription drugs, and even some trans-portation costs. There are no restrictions onhospital or physician choice and generally nopreauthorization or gatekeeper requirements.Significant copayments accompany most ser-vices, ranging from 10 percent to, more com-monly, 30 percent (capped at $677 per monthfor a middle-income family). As a result, theaverage Japanese household pays about $2,300per year out of pocket.135 Overall out-of-pocketexpenditures amount to roughly 17 percent oftotal health care spending.

The vast majority of hospitals and clinics inJapan are privately owned, but because the gov-ernment sets all fee schedules, the distinctionbetween privately and publicly owned is irrele-vant for patients. Reimbursement for bothhospitals and clinics is on a fee-for-servicebasis, with the government setting fees andprescription prices.

The fee schedule is identical for inpatientand outpatient treatment. Because hospitalsmust absorb both physician and capital costsfrom the same level of reimbursement, the ten-dency has been to shift patients to outpatientservices.136 Recently, some attempts have beenmade to introduce alternate reimbursementmechanisms for hospitals, including DRGsand Diagnosis and Procedure Combinations—classification systems that tie reimbursementsmore closely to the resources that a particularpatient consumes. But the medical establish-ment has resisted, and only about 80 hospitalsparticipate in the experiment.137

Hospital physicians are salaried employees.Nonhospital physicians work in the privatesector, and the government sets their reim-

16

The reimbursement

schedule forphysicians creates

an incentive forthem to see as

many patients as possible. The

result is assemblyline medicine.

bursement schedules. Generally, reimburse-ment is on a fee-for-service basis, althoughrecently some chronic conditions have been“price bundled” into a single fee. Reimburse-ment schedules are set within the context of anoverall global budget on health spending, butthe division of resources is the subject of exten-sive negotiation with providers.

The fee schedule reflects both the Japanesestyle of medicine and attempts to containcosts. For example, because of a strong cultur-al bias against invasive procedures, surgerytends to be reimbursed at a much lower ratethan nonsurgical procedures.138

The fee-setting system has had serious cor-ruption problems. Because the fees for each ofmore than 3,000 procedures or services are setindividually and adjusted every two years on anindividual basis, it is possible to manipulateparticular fees without attracting much atten-tion.139 In 2004, a group of dentists was indict-ed for bribing the fee-setting board.140

In addition, the reimbursement schedulefor physicians creates an incentive for them tosee as many patients as possible. The result isassembly line medicine. Two-thirds of patientsspend less than 10 minutes with their doctor;18 percent spend less than 3 minutes.141

On the other hand, the Japanese, likeAmericans, practice a very technology-inten-sive style of medicine. Capital investment intechnology has been given high priority, andthe Japanese have at least as much access totechnology such as MRI units, CT scanners,and lithotripters as patients in the UnitedStates.142 Because the government imposesuniform fee schedules on hospitals, there is noprice competition. Instead, hospitals attemptto lure patients by having the best technology.While this can benefit patients, it has also ledto queues at the best hospitals and a blackmarket with “under the table” payments forfaster access.143

Some restrictions have been added in thelast few years, capping the number of diag-nostic imaging procedures that a hospital canperform in a calendar month, as well as reduc-ing the fees for those services.144 Thesechanges have not led to visible rationing yet

but could in the future.To date, Japan has done a fairly good job

of controlling costs without resorting to therationing common in many universal caresystems. This is due in part to factors outsidethe health care system, such as generallyhealthy lifestyles, low vehicle accident rates,low crime rates, low rates of drug abuse, andother cultural factors.145 One study estimat-ed that 25 percent of the difference in healthcare spending between the United States andJapan is attributable to a lower incidence ofdisease and 15 percent to less aggressive prac-tice styles.146 But rationing has also beenavoided through the management of thehealth care system and the imposition of sig-nificant consumer cost sharing.

Nonetheless, spending is beginning toescalate, especially in government-managedprograms such as the Roken, where there hasbeen less of an attempt at cost sharing andcost containment. As one observer explained:

We Japanese have a tendency to go to thehospital even when we have only minorailments such as the flu, headaches, orstomach aches. If medical expenses arenot high and we do not feel well, thenwhy not go see a doctor and get somemedication. . . . The result, of course, isthat waiting rooms of clinics and hospi-tals are full of people. Everyone is wel-come and there are, in fact, regular cus-tomers. Sometimes elderly people cometo see a friend and the hospital waitingroom becomes a sort of salon.147

This problem is aggravated by the demo-graphics of a rapidly aging society. By someestimates, the elderly are responsible for 90 per-cent of the aggregate increase in Japan’s healthcare costs.148 If current trends continue, Japanwill almost triple its government spending onhealth care in the next 20 years.149 And the sit-uation will only grow less stable with time.Japan is expected to lose 35 million workers by2050, with 35 percent of its population inretirement.150 This raises questions of how asystem that relies on payroll taxes for funding

17

Rationing hasalso been avoidedthrough the management ofthe health caresystem and theimposition of significant consumer costsharing.

can continue to fund rising costs even as itspayroll base shrinks.

Norway

Norway has a universal, tax-funded, single-payer, national health system. All Norwegian cit-izens, as well as anyone living or working inNorway, are covered under the National Insur-ance Scheme. Norwegians can, however, opt outof the government system by paying out ofpocket. In addition, many Norwegians goabroad for treatment to avoid the waiting listsendemic under the government program.151

The system is financed through generaltax revenues, with no earmarked or dedicatedtax for health care.152 Thus, health carebecomes one large contributor to a tax bur-den that consumes 45 percent of GDP.Among industrialized countries, only Swedenhas a higher tax burden.154

Benefits are extensive and include inpa-tient and outpatient care, diagnostic services,specialist care, maternity services, preventivemedicine, palliative care, and prescriptiondrugs. At public hospitals, there are nocharges for stays or treatment, includingdrugs. However, small copayments may becharged for outpatient treatment and fortreatment by a general practitioner, psycholo-gist, or psychiatrist. The program also pro-vides “sick pay” and disability benefits.155 AsMichael Moore has noted, the Norwegian sys-tem will even pay for “spa treatments” insome cases.156

Although the central government retainsoverall responsibility for and authority over thesystem, some management and fundingresponsibilities have devolved to regional andmunicipal governments. In general, municipalgovernments are responsible for primaryhealth care, while four regional health authori-ties are responsible for specialist care.157 Priorto 2002, public hospitals were run by local orcounty governments. In the face of chronicproblems, notably long waiting lists and risingcosts, the central government took direct con-trol of all public hospitals in January 2002.158 A

small number of private hospitals do exist out-side the public system.

The government sets a global budget limit-ing overall health expenditures, and settingcapital investment expenditures for hospitals.Most general practitioners and physician spe-cialists outside hospitals receive a fixed salary,although some specialists working on a con-tract basis receive both an annual grant andfee-for-service payments. Reimbursement ratesare set by the government and balance-billingis prohibited. Most other health care personnelare salaried government employees.159

Patient choice of physician is constrained.All Norwegian citizens must choose a generalpractitioner from a government list. The GPacts as a gatekeeper for other services andproviders. Patients may switch GPs, but nomore than twice per year and only if there is nowaiting list for the requested GP.160 Specialistsmay only be seen with a referral from the GP.

The Norwegian health care system has expe-rienced serious problems with long and growingwaiting lists.161 Approximately 280,000 Nor-wegians are estimated to be waiting for care onany given day (out of a population of just 4.6million).162 The average wait for hip replace-ment surgery is more than four months; for aprostectomy, close to three months; and for ahysterectomy, more than two months.163

Approximately 23 percent of all patients referredfor hospital admission have to wait longer thanthree months for admission.164

The Norwegian government has respondedby repeatedly and unsuccessfully attempting tolegislate waiting lists out of existence. For exam-ple, under the 1990 Patients’ Rights Act,patients with a condition that would lead to“catastrophic or very serious consequences”have a right to treatment within six months, if thetreatment is available.165 In 2001, after severalgovernment reports had documented repeatedviolations of this policy, the government passeda new mandate requiring that a patient’s med-ical condition be at least “assessed” within 30days.166 Despite these paper guarantees, waitinglists have not been substantially reduced.167

Moreover, such delays may represent onlythe tip of the iceberg when it comes to

18

The Norwegianhealth care system has

experienced serious problems

with long andgrowing waiting

lists.

rationing care in Norway. In some cases, caremay be denied altogether if it is judged not tobe cost-effective. As Knut Erik Tranoy,Professor Emeritus at the Centre for MedicalEthics of the University of Oslo and an origi-nal member of the government’s Health CarePriorities Commission, explains:

It is important to see (a) that, in a publichealth service of the Nordic type, anygiven amount of resources always hasalternative uses. And (b) it is neithermedically nor morally defensible to putscarce resources to uses which will fore-seeably yield less favorable outcomesthan other uses—save fewer lives, curefewer patients.168

Tranoy differentiates between Norwegian-style systems of national health care and “ahealth care system where patients buy ser-vices in a market, and where justice meansequality of opportunity to buy what youneed. Decisions about alternative use arethen (largely) patients’ decisions.”169

While Norwegians generally report thatthey are “fairly satisfied” with the way theirhealth care system is run, there has been grow-ing discontent over such issues as the ability tochoose a health care provider, involvement indecisions regarding care or treatment, andwaiting times—which has been an ongoingissue in Norwegian politics.170 However, at thistime there doesn’t appear to be any widespreadmovement for larger reform.

Portugal

The Portuguese health care system is a clas-sic, universal, centrally run National HealthSystem, a single-payer system funded throughtaxes with comprehensive benefits providedfree or with little cost at the point of service.171

Also, a number of occupation-related healthinsurance schemes—originally intended to beintegrated into the NHS—now coexist with it.

The primary source of care is the NHS,which is funded primarily through general tax

revenues, accounting for approximately 13 per-cent of all government expenditures.172 In the-ory, the NHS operates within an annual globalbudget for health care spending. In reality, itregularly exceeds this budget by a wide margin,necessitating supplemental funding. Portugalis one of the few OECD countries where publichealth care spending has been rising as a pro-portion of total health spending, up more thanfour percentage points since 1997.173

Theoretically, benefits under the NHSinclude all necessary inpatient and outpatienthealth care services including specialists, diag-nostic tests, mother and child care, and pre-scription drugs. On paper, no health-relatedexpense is specifically excluded from coverageby the NHS, though in reality services such asdental care and rehabilitation therapy are sel-dom provided.174 Copayments are required fordiagnostic tests, hospital admissions, consul-tations with specialists, and prescriptiondrugs, where copayments can run to 40 per-cent or higher.175

Primary care physicians and hospital-based physicians are public employees, paiddirectly by the NHS. However, NHS doctorsare permitted to practice privately as well,and roughly half do so.176 Specialists areoften in private practice and are reimbursedby the NHS on a contractual basis.

About 25 percent of the population, mostlygovernment workers, military, telecommuni-cation workers, and their families, remainunder a series of industry or occupation-basedinsurance schemes, known collectively as “sub-systems,” which are a legacy of the country’spre-NHS health care system.177 These planswere originally intended to be incorporatedinto the NHS, but their powerful constituen-cies have prevented that from occurring.Participants in the subsystems pay a premiumequal to approximately 1 percent of theirsalary. Benefits are generally superior to thoseoffered through the NHS.178 Not surprisingly,premiums fall far short of what is needed tofinance benefits. The resulting shortfall isshifted to the NHS.

In addition, approximately 10 percent ofthe population has private insurance, usually

19

Waiting lists areso long and soprevalent that theEuropeanObservatory onHealth Systemssays that theyveer toward “defacto rationing.”

through their employer.179 Private insurancegenerally pays for hospital and specialty carebut not for primary care physicians. Policiesare medically underwritten and have norequirement for renewability, meaning insur-ers can raise premiums or drop customerswith extremely high claims.180

Choice of provider is heavily constrainedunder the NHS. Every citizen must choose aprimary care physician from a list of thoseavailable within a specified geographic area.This area is usually based on the person’sarea of residence but may be based on thearea of employment. The average generalpractitioner serves as many as 1,500 people,though some may have more than 2,000patients, leading to long waits and difficul-ties in getting appointments. People maychange GPs only by applying in writing tothe NHS and explaining their reasons.181

Access to specialists or hospital care, exceptin emergencies, requires referral from thepatient’s GP. Since this is often difficult tosecure in a timely manner, patients often seekcare through hospital emergency rooms. Bysome estimates, at least 25 percent of emer-gency room patients do not need immediatetreatment.182

Despite guarantees of “universal coverage,”access to care remains a serious problem.Waiting lists are so long and so prevalent thatthe European Observatory on Health Systemssays that they veer toward “de factorationing.”183 Currently, more than 150,000Portuguese are on waiting lists for surgery, outof a population of just 10.6 million.184 How-ever, that may understate the problem in poor-er and rural areas, which have fewer healthresources and less access to care.185 Modernhealth technology is far less available than inthe United States. The United States hasalmost seven times more MRI units per millionpeople, and 20 percent more CT scanners.186

To avoid waiting lists, Portuguese patientsfrequently pay out of pocket to see physiciansin private practice. In some cases, Portuguesepatients have crossed the border to receivetreatment in Spain.187

While there appears to be a consensus in

Portugal that the system needs some kind ofreform, weak governments and strong struc-tural interest groups have combined to pre-vent the development of any consensus overthe direction reform should take.188 For themoment, Portugal drifts.

Greece

Although ostensibly an employer-based sys-tem, the Greek system operates more like a sin-gle-payer system in that it is highly centralizedand regulated. Virtually every aspect of healthcare financing and provision is strictly con-trolled by the Ministry of Social Health andCohesion.189 Some attempts have been madeto decentralize decisionmaking, with 17 regionalorganizations having some responsibility forimplementing policy and managing the deliv-ery of health care, but most power remainswith the central government.

Greek employers must enroll their work-ers in one of 35 “social insurance funds,”funded in part through a payroll tax and inpart through general tax revenues. UnlikeGermany, where employers have a choiceamong competing sickness funds, Greeksocial insurance funds are specific to indus-try sectors. The range of benefits offered byeach fund, the contribution rates, and thetypes of providers that the insured can accessare all determined by the Ministry of SocialHealth and Cohesion.190

Certain funds known as “noble funds,” pri-marily used by government workers, the bank-ing sector, and public utility workers, offermore extensive benefits and require smallerworker contributions. The powerful unionsrepresenting workers from these sectors haveconsistently blocked attempts to merge thesefunds with other social insurance funds or toallow buy-ins from other industry sectors.191

Social insurance funds reimburse doctors intwo ways. Some providers are employed directlyby the funds at fund-operated clinics and areeffectively salaried employees. Others practiceprivately but contract with funds to providecare. Contract physicians are reimbursed on a

20

Despite overlapping

health plans, the Greek system

falls short of universal coverage.

fee-for-service basis, but reimbursement ratesare extremely low. Balance-billing is prohibited.

In theory, funds provide first-dollar cover-age, with no deductibles and low copaymentsfor only a few services. However, as discussedbelow, most physicians demand “informal”payments in exchange for treatment.

In addition to the social insurance funds,the National Health Service employs physiciansand operates hospitals. The NHS operates par-allel to the social insurance funds, acting essen-tially as a back-up mechanism, although it maybe the principal provider of health services insome rural areas. It also provides health care forthe uninsured and the elderly.

In addition to NHS hospitals, other publichospitals contract with the social insurancefunds. In both cases, the Ministry of SocialHealth and Cohesion determines not only thehospital’s budget, but the number of person-nel, the specialties of the personnel, salary lev-els, number of beds, and the purchase of tech-nology. Budgets are rigidly monitored and hos-pital administrators have little leeway.192

Hospitals are reimbursed on a per diem pay-ment system, a type of a fixed charge.193

NHS hospitals in particular are consideredsubstandard. Most suffer from severe staffingshortages caused by low pay and poor living con-ditions in rural areas. It has been estimated thatless than half of authorized medical positions areactually filled.194 Low salaries have also led to per-sonnel shortages in public hospitals associatedwith social insurance funds.195

A series of reforms implemented in 2005imposed a referral requirement for hospitaladmissions. Patients seeking free treatment ina public NHS hospital must have a referralfrom a general practitioner, who acts as a gate-keeper. Private practice physicians may notmake referrals to public or NHS hospitals.196

Unfortunately, general practitioners are inseverely short supply. Greece needs an estimat-ed 5,000 general practitioners to meet demand.In actuality it has only around 600.197

Despite overlapping health plans, the Greeksystem falls short of universal coverage. About83 percent of the population is covered for pri-mary care (on par with the United States), and

about 97 percent for hospital care.198 In theory,the uninsured can always receive treatment bywalking into an NHS clinic or hospital. Onlyabout 8 percent of Greeks have private supple-mental health insurance, although this per-centage has risen substantially in the past fewyears and further growth is predicted.199

Accurate information on waiting lists isdifficult to come by. According to the WHO,“although ‘patient registries’ at the hospitallevel do exist, there is no systematic data pro-cessing available at any level of care,” to pro-vide adequate analysis.200 However, mostobservers agree that waiting lists are a severeproblem at almost every level of care, and par-ticularly bad at both NHS and public hospi-tals. An examination of waiting lists at Athenshospitals by the Ta Nea newspaper found thewait for surgery was as long as six months; foran outpatient appointment with either thehypertension or neurology departments, 150days. Even simple blood tests required amonth-long wait.201

The Greek system has developed a level ofendemic corruption as patients have soughtways around the system’s rationing, bureaucra-cy, and inefficiencies. For example, Greeks rou-tinely provide physicians with “informal” pay-ments for seeing a patient from a sickness fundthat has not contracted with the doctor, formoving a patient up in the queue, or for pro-viding treatment outside government guide-lines. In addition, physicians actively attemptto persuade patients to move from a doctor’ssickness fund contract to the doctor’s privatepractice. Patients who switch pay out of pock-et but receive faster and better care. Even NHSphysicians see private patients on the side.(This practice was illegal until 2002 but wenton despite the prohibition).202 Physicians alsoreceive payments for referrals to private hospi-tals or diagnostic centers. Such informal out-of-pocket payments made up 42 percent oftotal health expenditures in 2002, fully 4.5 per-cent of GDP.203 Essentially, the Greek healthcare system is funded through payroll taxes,general tax revenue, and bribery.

In addition, the health care bureaucracy hasbecome highly politicized. Every staff appoint-

21

Essentially, theGreek health caresystem is fundedthrough payrolltaxes, general taxrevenue, andbribery.

ment in the public health sector must beapproved at the ministry level. All hospitaladministrators and other health officials areappointed on the basis of political affiliationwith the governing party, often with little regardfor relevant training or other qualifications.204

Not surprisingly, Greece has far less mod-ern health care technology than the UnitedStates. The United States has more than twiceas many MRI units per million people and 20percent more CT scanners.205 Much of thestate-of-the-art equipment that does exist isclustered in the country’s small number of pri-vate clinics and hospitals. Indeed, the vastmajority of high technology biomedical testsare performed by the private sector.206

One study summed up the problems withthe Greek health care system this way:

The Greek health system does not yetoffer universal coverage and has frag-mented funding and delivery. Funding isregressive, with a reliance on informalpayments, and there are inequities inaccess, supply and quality of services.Inefficiencies arise from an over relianceon relatively expensive inputs, as evi-denced by the oversupply of specialistsand undersupply of nurses. Resourceallocation mechanisms are historical andpolitical with no relation to performanceor output; therefore providers have littleincentive to improve productivity.207

That would appear to be a fairly accuratesummary.

Netherlands

Aside from Switzerland, the Netherlandshas perhaps the most market-oriented nation-al health care system in Europe. That was thecase even before 2006, when a series of reformsintroduced even more market mechanisms.

The old pre-2006 Dutch system resembledGermany’s. Dutch workers with incomesbelow €€ 32,600 were required to enroll in one of30 government-controlled “sickness funds.”

Those with higher incomes had the option ofenrolling in the funds if they wished, or optingout of the government system and purchasingprivate insurance. Sickness funds werefinanced through a payroll tax and a flat-rate,per-capita premium.208

The funds provided a uniform package ofbenefits including physician and hospitalcare, specialist care, diagnostic tests, prescrip-tion drugs, and dental care for children.209

While consumers could switch funds annual-ly, there was little competition between fundsand few consumers actually switched.

The new Dutch system operates on the the-ory of managed competition like Switzerland(see below). Both the social health insuranceprogram and the alternative private healthinsurance option were replaced by a require-ment that all Dutch citizens purchase a basichealth insurance plan from one of 41 privateinsurance companies. Although a fine may beimposed for failure to comply, there is nocomprehensive system for identifying citizenswho do not meet the mandate. An estimated1.5 to 2 percent of the population is currentlyuninsured.210

The required plan, which covers mini-mum benefits set by the government,includes general practitioner and specialistcare, hospital stays, some dental care, prena-tal care, some medicines, and travel expenses.In one interesting innovation, most of therequired benefits are specified in terms of“functions of care” rather than by providercategory. Thus, “rehabilitation care” isrequired, but no particular type of rehabilita-tion provider is mandated.211 This may meanthat the benefits package will be less suscep-tible to manipulation by provider interestgroups, but it is much too early to tell.

The Health Ministry sets premiums, whichaverage around €€ 100 per month for an indi-vidual. Insurance companies can offer varyingdeductibles, ranging from €€ 150 to €€ 1,000 peryear, allowing for a small level of price compe-tition. Policies can also offer rebates of up to€€ 225 if a policyholder uses no health servicesin a given year beyond seeing a primary carephysician.212 About 90 percent of the popula-

22

Aside fromSwitzerland, theNetherlands has

perhaps the mostmarket-orientednational health

care system inEurope.

tion also buys supplemental insurance cover-ing services over and above the required stan-dard benefits package.213

Employers generally pay half of insurancepremiums, with individual workers picking upthe other half.214 Individual premiums are taxdeductible.215 Subsidies, or care allowances, thathelp low- and middle-income income workerspurchase the basic insurance plan are extensiveand reach well into the middle class. Currently, 5million Dutch citizens qualify for some level ofsubsidy on a sliding scale based on income.216

Those subsidies are financed through a tax onsalaried workers. Because of the high levels ofsubsidy, the Dutch government remains a largesource of health spending, one area of signifi-cant difference with the Swiss system.217

Insurers negotiate quality, quantity, andprice of services with providers. Notably,many insurers require providers to docu-ment the quality of the care they provide, fre-quently relying on evidence-based guidelinesand performance metrics.218

Some insurers provide care directly, usingtheir own staffs and their own facilities, suchas primary care centers and pharmacies.Other insurers contract with a network ofproviders similar to U.S. preferred providerorganizations (PPOs). Patients can go out ofnetwork but will receive only partial reim-bursement. Most insurers require a referralfrom a primary care provider before a patientcan see a specialist.219 Pharmaceutical pricesare capped nationwide at the average price ofmedicines in a therapeutic class. Individualsmay choose more expensive drugs but mustpay the difference out of pocket.220

The new system has been in place for onlytwo years, which is not enough time to per-mit a thorough evaluation. However, prelim-inary indications suggest that it is animprovement over the pre-2006 system.221

Dutch consumers appear to have em-braced the reforms. Consumer organizationsare participating in negotiations with pro-viders, insurers, and lawmakers. The system isbecoming more transparent, with far greaterinformation available regarding both priceand quality. Consumers seem willing to make

decisions and change insurers on the basis ofprice and quality.

Price competition under the new system hasincreased significantly and at least 20 percent ofDutch consumers have switched insurers.222

When the system was initiated, the Dutch gov-ernment predicted premiums would cost€€ 1,106 on average. However, competition hasforced the average premium down to €€ 1,028,097.6 percent below the prediction.223 Overall,the new system is estimated to have increasedthe purchasing power of Dutch households byas much as 1.5 percent.224 However, not every-one has been a winner. The community ratingrequirement has resulted in steep increases inpremiums for younger workers who were moreheavily subsidized under the old system.225

Under the old system, waiting lists werewidespread—for example, more than threemonths for a hip replacement and two monthsfor a prostectomy or hysterectomy.226 Onestudy estimated that at least 100 heart patientsdied each year while on waiting lists.227 Earlyevidence suggests that some improvement hascome as a result of the 2006 reforms.228

Hospitals are beginning to compete byexpanding services such as neurosurgery andradiation therapy.229 Although some expertshave expressed concern that smaller hospitalsoffering these services may not have sufficientutilization rates to ensure quality and efficacy,the expanded availability of services will likelyincrease access to care and reduce queues.230

The new system may even be having a pos-itive impact on health care costs. Since thenew system took effect, health care costs havebeen growing at an annual rate of just 3 per-cent, compared to more than 4.5 percent inthe year before the reforms.231

The jury is still out, and the Dutch systemstill falls well short of a true free market, butthe Netherlands appears to have taken a bigstep in the right direction.

Great Britain

Almost no one disputes that Britain’sNational Health Service faces severe prob-

23

As many as750,000 Britonsare currentlyawaiting admission toNHS hospitals.

lems, and few serious national health careadvocates look to it as a model. Yet it appearsin Moore’s movie SiCKO as an example ofhow a national health care system shouldwork, so it is worth examining.

The NHS is a highly centralized version ofa single-payer system. The government paysdirectly for health care and finances the sys-tem through general tax revenues. Except forsmall copayments for prescription drugs,dental care, and optician services, there areno direct charges to patients. Unlike manyother single-payer systems such as those inCanada and Norway, most physicians andnurses are government employees.

For years, British health policy has focusedon controlling spending and in general hasbeen quite successful, with the system spend-ing just 7.5 percent of GDP on health care.232

Yet the system continues to face serious finan-cial strains. In fiscal year 2006, the NHS faceda deficit of £700 million, according to govern-ment figures, and as much as £1 billion,according to outside observers.233 This comesdespite a £43 billion increase in the NHSannual budget over the past five years.234 Bysome estimates, NHS spending will have tonearly triple by 2025 just to maintain the cur-rent level of services.235

And that level of services leaves much to bedesired. Waiting lists are a major problem. Asmany as 750,000 Britons are currently awaitingadmission to NHS hospitals. These waits arenot insubstantial and can impose significantrisks on patients. For example, by some esti-mates, cancer patients can wait as long as eightmonths for treatment.236 Delays in receivingtreatment are often so long that nearly 20 per-cent of colon cancer patients considered treat-able when first diagnosed are incurable by thetime treatment is finally offered.237

In some cases, to prevent hospitals fromusing their resources too quickly, mandatoryminimum waiting times have been imposed.The fear is that patients will flock to the mostefficient hospitals or those with smaller back-logs. Thus a top-flight hospital like SuffolkEast PCT was ordered to impose a minimumwaiting time of at least 122 days before

patients could be treated or the hospital wouldlose a portion of its funding.238 As the DailyTelegraph explained:

In a real competitive market, increaseddemand can allow prices to rise, thusincreasing profits, which allow the mar-ket to grow. Efficient producers can thenreduce their unit costs and their prices,and so give a better deal to the con-sumer. The prevailing logic is that themore customers who are served—orproducts that are sold—in a given periodof time, the better the business does.

But PCTs have budgets that arepredetermined by Whitehall spend-ing limits, and there is no way forthem to conjure extra revenue out ofthe air or to grow their market. As aresult, the hospitals that are mostsuccessful in providing prompt treat-ment are running through the finiteresources of their PCTs at an unac-ceptably rapid rate.239

The problem affects not only hospitals.There are also lengthy waits to see physicians,particularly specialists. In 2004, as a cost-cut-ting measure, the government negotiated lowsalaries for general practitioners in exchangefor allowing them to cut back the hours theypractice. Few are now available nights orweekends.240 Problems with specialists areeven more acute. For example, roughly 40percent of cancer patients never get to see anoncology specialist.241

The government’s official target for diag-nostic testing is a wait of no more than 18weeks by 2008. In reality, it doesn’t comeclose.242 The latest estimates suggest that formost specialties, only 30 to 50 percent ofpatients are treated within 18 weeks. For trau-ma and orthopedics patients, the figure is only20 percent. Overall, more than half of Britishpatients wait more than 18 weeks for care.243

Explicit rationing also exists for sometypes of care, notably kidney dialysis, openheart surgery, and some other expensive pro-cedures and technologies.244 Patients judged

24

Explicit rationingalso exists forsome types ofcare, notably

kidney dialysis,open heart

surgery, and someother expensiveprocedures and

technologies.

too ill or aged for the procedures to be cost-effective may be denied treatment altogether.

Recently, the British government intro-duced some tiny steps toward market-basedreforms. Under the experimental LondonPatient Choice Project, patients who have beenwaiting longer than six months for treatmentare offered a choice of up to four alternateproviders. This experiment has been extendednationwide for coronary heart patients whohave been waiting longer than six months.245

Some proposed solutions are far more radi-cal. David Cameron, leader of the ConservativeParty, has proposed that the NHS be allowedto refuse treatment to individuals who don’tpractice healthy lifestyles, for example, whosmoke or are overweight. Then again, he hasalso proposed that the government pay forgym memberships and subsidize the purchaseof fresh fruit and vegetables.246

A small but growing private health care sys-tem has emerged in the UK. About 10 percentof Britons have private health insurance. Somereceive it through their employer, while otherspurchase it individually. In general, the insur-ance replicates care provided through the NHSand is purchased to gain access to a widerchoice of providers or to avoid waiting lists.247

Private health insurance is lightly regulatedand risk-rating is allowed. The British govern-ment treats health insurance more or less thesame as other types of insurance.248

The British public is well aware of the needfor reform. Nearly two-thirds of Britons (63percent) say that the need for reform is“urgent,” while another 24 percent believe it is“desirable.” Fully 60 percent of Britons believethat making it easier for patients to spend theirown money on health care would improvequality.249 Yet Britons are also extremely proudof their health care system and wary of anyreforms that would “Americanize” it.

Switzerland

Of all the countries with universal healthcare, Switzerland has one of the most mar-ket-oriented systems. Indeed, the Swiss gov-

ernment actually pays for a smaller amountof total health care expenditures than theU.S. government, 24.9 percent versus 44.7percent.250 (See Figure 3.)

The Swiss system is based on the idea ofmanaged competition, the same concept thatunderlay the 1993 Clinton health care plan andMitt Romney’s reforms in Massachusetts.251

Managed competition leaves the provision ofhealth care and health insurance in privatehands but creates a highly regulated artificialmarketplace as a framework within which thehealth care industry operates.252

Swiss law requires all citizens to purchase abasic package of health insurance, an individualmandate. Coverage is close to universal, estimatedat 99.5 percent.253 This level of compliance is duein part to the Swiss national character and maynot be replicable in the United States where therecord of complying with mandates is muchmore mixed (even if such a mandate were desir-able).254 For example, nearly 100 percent of Swissdrivers comply with their country’s mandate forautomobile insurance, compared with only 83percent of U.S. drivers.255

The term “basic benefits package” issomewhat misleading since the required ben-efits are quite extensive, including inpatientand outpatient care, care for the elderly andthe physically and mentally handicapped,long-term nursing home care, diagnostictests, prescription drugs, and even comple-mentary and alternative therapies.256

Insurance is generally purchased on an indi-vidual basis. Few employers contribute to thepurchase or provide insurance.257 The policiesare provided by private insurers. Currently,some 93 insurers operate in Switzerland,although not every insurer operates in everycanton, or region.258 Originally, insurers wererequired to be nonprofit entities, but thatrestriction was eliminated in 2002.

Insurers cannot reject an applicant on thebasis of health status, and all policies are com-munity rated within a geographic area, mean-ing that the healthier pay higher premiums tosubsidize the less healthy. One exception tocommunity rating is for nonsmokers, who canreceive premiums as much as 20 percent lower

25

Waiting lists are a major problem underthe Canadian system.

than smokers. A formula adjusts premiumsbased on sex and age.259 The geographic varia-tion can be significant, with premiums differ-ing as much as 50 percent between cantons.260

Unable to compete on the basis of manag-ing and pricing risk, and required to offernearly identical basic benefits packages,insurers compete primarily on price. Sincethey cannot reduce costs by risk manage-ment or benefit design, they generally man-age prices by varying the level of deductiblesand copayments. Individuals can purchaseexpensive policies with very low deductiblesand copayments, or far less expensive policieswith high deductibles or extensive copay-ments. Thus, premiums vary according totheir cost-sharing attributes and plan type,running from $1,428 per year for a plan witha deductible of approximately $2,000 to$2,388 for a plan with a $250 deductible.261

Because employers do not pay for workers’health insurance, the Swiss are exposed to thefull cost of their insurance purchases. As a result,many Swiss have opted for high-deductible

insurance. Thus, with high deductibles andextensive copayments, the Swiss pay out ofpocket for 31.5 percent of health care, twice asmuch as in the United States.262 (See Figure 4.)

Recently, there has also been a growingmarket in managed care plans that, like thosein the United States, offer lower premiums inexchange for limitations on access to special-ists and other services. Premiums for suchplans run around $1,900 per year.263

The Swiss government offers subsidies tolow-income citizens to help them purchase apolicy. Subsidies are based on both incomeand assets, and the maximum available sub-sidy covers the cost of an average premium inthe individual’s canton. These subsidies aredesigned to prevent any individual from hav-ing to pay more than 10 percent of incomeon insurance. They do not, however, pay theentire cost of insurance because the Swiss donot want to create an incentive for subsidizedindividuals to choose the most expensiveplan with the lowest deductibles and copay-ments.264 Roughly one-third of Swiss citizens

26

Insurance is generally

purchased on anindividual basis.

Few employerscontribute to the purchase

or provide insurance.

0 10 20 30 40 50 60 70 80 90 100

Switzerland

Greece

United States

Canada

Spain

Portugal

Italy

Germany

France

Japan

Norway

United Kingdom

Figure 3Percentage of Total Health Spending Paid by Government

Source: OECD, “OECD Health Data 2007: Statistics and Indicators for 30 Countries.” Organisation for EconomicCo-operation and Development, July 2007; 2004 data.Note: Switzerland excludes mandatory insurance premiums.

receive some form of subsidy, and approxi-mately 19 percent of all health insurance pre-miums are paid with government funds.265

Swiss insurers operate as cartels to negotiateprovider reimbursements on a cantonal basis.Providers must accept the negotiated payment,and balance-billing is prohibited. If insurers andproviders are unable to reach agreement on a feeschedule, canton governments are empowered tostep in and impose an agreement. There are norestrictions on where physicians may set up prac-tice, so to some degree providers can vote withtheir feet, moving to cantons that offer higherreimbursements, a practice that has led to physi-cian shortages in some areas.267

The system includes both public and pri-vate hospitals.268 Private hospitals negotiatereimbursement with insurance cartels andphysicians in the same manner. Public hospi-tals are operated by cantons, which negotiatereimbursement rates with insurers and pro-vide subsidies to the hospitals. In some can-

tons, individuals with only the basic insur-ance plan must use public hospitals; supple-mentary insurance (see below) is required foradmission to private hospitals.

Recently some providers have begun oper-ating outside the negotiated fee schedules. Aseparate supplemental insurance market isstarting to develop to cover the cost of theseproviders, which are presumed to offer higherquality or more advanced services. Supple-mentary insurance also allows access to pri-vate hospitals in those cantons that do notpermit access under the basic insurance plan.Even within public hospitals, supplementaryinsurance can be used to pay for services suchas private rooms that are not covered underthe basic plan. By some estimates as many as40 percent of Swiss citizens have purchasedsupplemental insurance.269

The Swiss do not impose a global budgeton their health care system and have thereforeavoided the waiting lists common in other sys-

27

Because employers do not pay for workers’ healthinsurance, theSwiss are exposedto the full cost oftheir insurance purchases. As a result, many Swiss haveopted for high-deductible insurance.

0 5 10 15 20 25 30 35 40 45

Netherlands

France

Germany

United States

Canada

Norway

Japan

Italy

Portugal

Spain

Switzerland

Greece

Figure 4Percentage of Total Health Spending Out of Pocket

Source: OECD, “OECD Health Data 2007: Statistics and Indicators for 30 Countries.”Data for France from Simone Sandier, Valerie Paris, and Dominique Polton, Health Care Systems in Transition: France(Copenhagen: European Observatory on Health Systems and Policies, 2004).Data for Greece from the World Health Organization.

tems. In addition, the Swiss have a high degreeof access to modern medical technology, but ithas come at a cost. The Swiss spend 11.5 per-cent of GDP on health care, second only to theUnited States.270

Since Swiss health care consumers areexposed to the cost consequences of theirhealth care decisions, this trade-off betweenaccess and cost can be presumed to reflect thedesires of Swiss patients. They have chosenhigh quality care even though it costs themmore. Given that economists consider healthcare to be a “normal good”—that is, consump-tion rises along with income—and Switzerlandis a wealthy nation, such a decision seemsentirely reasonable.271

At the same time, it is notable that Swisshealth care spending remains below that of theUnited States for nearly comparable care.Strong evidence suggests that the exposure ofSwiss consumers to the cost consequences oftheir health care decisions has made them moreconscious consumers and helped limit overallhealth care costs. As Regina Herzlinger andRamin Parsa-Parsi of Harvard have concluded,“Cost control may be attributed to the Swissconsumer’s significant role in health care pay-ments and the resulting cost transparency.”272

The transparency of the system also makes itresponsive to consumer preferences. The WHOsurvey ranked Switzerland second only to theUnited States in terms of responsiveness topatients’ needs for choice of provider, dignity,autonomy, timely care, and confidentiality.273

The Swiss generally seem pleased with theirsystem. Earlier this year, Swiss voters over-whelmingly rejected a proposal to replace thecurrent system with a single-payer plan; morethan 71 percent of Swiss voters turned downthe proposal in a nationwide referendum.274

Nonetheless, the Swiss system has its ownproblems, most of them predictable outgrowthsof the individual mandate and the regulationinherent in managed competition. In most mar-kets, consumers impose a certain discipline onprices because they can refuse to buy a productif it costs too much. The individual mandateremoves this power since consumers must pur-chase the product (in this case, insurance) even if

they believe the cost outweighs the value.Moreover, the establishment of a government-defined benefits package is an open-ended invi-tation to special interests representing varioushealth care providers and disease constituencies,who can certainly be expected to lobby for theinclusion of additional services or coverage.275

Public choice dynamics are such thatproviders (who would make money from theincreased demand for their services) and diseaseconstituencies (whose members naturally havean urgent desire for coverage of their illness orcondition) will always have a strong incentive tolobby legislators for inclusion under any mini-mum benefits package. The public at large willlikely be unaware of the debate or see resistingthe small premium increase caused by any par-ticular additional benefit as unworthy of a sim-ilar effort—a simple case of concentrated bene-fits and diffused costs.276

That is exactly what has happened inSwitzerland, leading to a growing expansionof the basic benefits package. In particular, apowerful hospital and physician lobbyingcoalition known as the “Blue Front” was ableto demand a significant expansion in coveredbenefits in exchange for a relaxation of “anywilling provider” laws so as to permit man-aged-care contracts.277

The expansion of benefits has driven upthe cost of insurance, a cost only partially off-set by larger deductibles. Although the pro-portion of health expenditures paid out ofpocket remains high, it has decreased byroughly 10 percent in the past decade.278

Moreover, the growth in covered benefitshas helped drive up costs for the system as awhole, as the Swiss become more insulatedfrom the costs of their health care purchas-ing decisions. If that trend continues, it couldundermine the cost transparency that is atthe heart of the Swiss system.” As UweReinhardt has noted, “Over time, the growthin compulsory benefits has absorbed anincreasing fraction of the consumers’ pay-ment, thus compromising the consumer-dri-ven aspects of the Swiss system.”279

Evidence shows that the community ratingrequirements are creating distortions within

28

Strong evidencesuggests that the

exposure of Swiss consumers

to the cost consequences oftheir health care

decisions hasmade them more

conscious consumers.

the Swiss market, leading to the over provisionof care to the healthy and the under provisionof care to the sick.280 In addition, the prohibi-tion on risk management discourages thedevelopment of new and innovative products.Peter Zweifel of the University of Zurich, amember of the Swiss Competitive Committeewhich oversees insurance regulation, believesthat a return to some degree of risk-rating isessential to the long-term success of the Swisssystem.281 As Zweifel puts it, “Let competitionwork its magic. Let those who are bad risks getthe message that they need to become betterrisks, if possible. If not possible, [they would]still get a subsidy which [keeps their costs]down to little more than 8–10 percent of tax-able income.”282

Third, the cartel structure for negotiatingreimbursement schedules can create a num-ber of distortions. Effectively monopsonypurchasers, the cartels have enormous lever-age when it comes to negotiations. Not sur-prisingly, physicians have tended to set uppractice in cantons with the highest levels ofreimbursement, leading to shortages in otherareas. Reimbursement rates have reportedlycreated wasteful incentives—for example, hos-pitals shifting patients from outpatient toinpatient care.283 And the combination ofincreased demand and low reimbursementhas led to the first signs of queues for themost complex surgeries.284

In addition, the negotiations freeze inplace a pricing structure that inhibits thedevelopment of innovative approaches thatdo not tie payments to specific benefits. Thisincludes both managed care approaches andhealth services integration.285

Finally, Switzerland has some of Europe’sstrongest regulation of nonphysician healthcare professionals.286 As a result, patients areoften forced to use more expensive providerswhere a less expensive professional would do.

All of the above combine to undermine theconsumer-driven nature of Switzerland’shealth system. Despite these problems, theSwiss system provides a useful lesson for theUnited States about the value of consumer-directed health care. In particular, we can see

that when the cost of insurance becomes moretransparent, consumers shift their purchasingpreferences toward true insurance (spreadingcatastrophic risk), rather than purchasing pre-payment for routine, low-cost services. Thatgives consumers an overall incentive to makecost-versus-value decisions when purchasinghealth care, resulting in reduced costs whilemaintaining individual choice and qualitycare.

Germany

Germany ranked 25th in the WHO rat-ings.287 Despite that low ranking, however, thecountry is worth examining because it is fre-quently cited as a model by advocates ofnational health care.

National health insurance in Germany ispart of a social insurance system that datesback to Bismarck. All German citizens withincomes under €€ 46,300 (roughly $60,000) arerequired to enroll in one of approximately 250statutory “sickness funds.” Those with higherincomes may enroll in the funds if they wish, ormay opt out of the government system andpurchase private insurance.288 About three-quarters of workers with incomes above thestatutory limit choose to remain in the sick-ness funds, which currently cover approxi-mately 90 percent of the population. Overall,insurance coverage is nearly universal.However, the number of uninsured has beenrising, roughly tripling in the last 10 years to300,000 people.289 About 9 percent of the pop-ulation purchases supplemental insurance tocover items that are not included in the stan-dard benefits package.290

Sickness funds are financed through a pay-roll tax split equally between the employer andemployee. The size of the tax varies dependingon which fund the worker has chosen, butaverages around 15 percent of wages.291 Sick-ness funds are supposed to be solvent and self-supporting, but in reality the system ran a €€ 7billion deficit in 2006.292 The German govern-ment has proposed a 1 percent increase in thepayroll tax, split evenly between employer and

29

The Swiss systemprovides a usefullesson for theUnited Statesabout the valueof consumer-directed healthcare.

employee, starting next year.293 In addition,general tax revenues finance capital costs foracute care hospitals and many rehabilitativeservices, especially for retirees.

Benefits are extensive, covering physi-cians, hospital and chronic care, diagnostictests, preventive care, prescription drugs, andpart of dental care. In addition to the medicalbenefits, sickness funds provide sick pay tothose who cannot work due to illness, rang-ing from 70 to 90 percent of the patient’s lastgross salary, for up to 78 weeks.294

The central government and state govern-ments split the regulation of the health caresystem. The central government establishesthe national global budget for health carespending, defines any new medical proceduresto be included in benefit packages, and setsreimbursement rates for physicians. Some ofthis is accomplished through legislation, whilethe rest is handled through negotiationsbetween the National Association of SicknessFunds and the National Association ofPhysicians. At the state level, state associationsof sickness funds and physicians negotiateoverall health budgets, reimbursement con-tracts for physicians, procedures for monitor-ing physicians, and reference standards forprescription drugs.295 The bargaining powerin these negotiations clearly lies with the sick-ness funds backed by the government, allow-ing them to effectively impose fee schedulesand other restrictions on providers. The pur-chasing power of a German physician’s wagesis now about 20 percent that of a U.S. physi-cian.296 This has led to physician strikes asrecently as 2005.297

Although Germany spends less on healthcare than the United States, both as a percent-age of GDP and per capita, expenditures havebeen rising at an alarming rate in recent years.Friedrich Breyer, an economist from KonstanzUniversity, estimates that health care spendingcould reach 30 percent of GDP by 2020 unlesssignificant changes are made.298

The German government has responded bybeginning to cut back on benefits. In 2004,sickness funds stopped covering eyeglasses,lifestyle medications, and all over-the-counter

drugs. Copayments were imposed for the firsttime, such that Germans now pay €€ 10 perquarter to see a general practitioner, €€ 10 perday of hospital stay, €€ 10 per prescription, andfor certain specialty services.299 The highestcopayments are 10 percent for prescriptiondrugs. Overall, Germans pay out of pocket forabout 13 percent of total health care spending,only slightly less than Americans.300 Prelim-inary evidence suggests that the introductionof cost sharing has slightly reduced utilizationand spending.301

In 2006, Chancellor Angela Merkel pro-posed a sweeping set of health care reformsthat included creating a centralized healthfund, shifting financing in part from payrolltaxes to general revenues, trimming benefits,imposing greater cost sharing, and making thesystem more transparent. She was forced toabandon the package in the face of public andpolitical opposition.302

The degree of health care rationing inGermany is the subject of considerable debate.Unlike many OECD countries, the Germangovernment does not compile data on waitinglists.303 One frequently cited study suggeststhat Germans are no more likely than Ameri-cans to wait more than four weeks to see a spe-cialist.304 The WHO says, “Waiting lists andexplicit rationing decisions are virtuallyunknown.”305

However, at least one study concludes thatrationing is occurring for the elderly and thosewith terminal illness, and concludes that “thequestion remains as to whether lives atadvanced ages could be saved if age rationingwere discontinued and maximum medicaltreatment were to be applied to everyone, irre-spective of their age.”306 In addition, a survey ofGerman hospitals reported that “waiting timeswere prolonged” due to both a lack of capacityand hospital target budgets that make thetreatment of sickness fund patients with seri-ous conditions financially unattractive.307

Also, Germans have less access to modernmedical technology than Americans. TheUnited States has four times as many MRIunits per million people and twice as manyCT scanners.308 The situation would undoubt-

30

AlthoughGermany spends

less on healthcare than the

United States,expenditures have

been rising at analarming rate in

recent years.

edly be worse without the existence of thesmall private insurance sector. Althoughsmall as a proportion of total health spend-ing, private insurance puts competitive pres-sure on sickness funds, pushing them toexpand their quality and services. At onetime, CT scanners were even rarer in the pub-lic system, available only under exceptionalcircumstances and after long waits, yet rela-tively common in the private sector.Competition forced the public sector to addmore CT scanners.309

Some analysts blame price restrictionsand reimbursement rates for increasingbureaucratic interference in how Germanphysicians practice medicine. Physicians try-ing to work within the maze of reimburse-ment caps and budget restrictions have nofinancial incentive to provide more than theminimally necessary care. That has led toquestions of quality assurance, and the gov-ernment has responded with ever greatermicromanagement of practice standards.The result has been a huge increase in redtape for physicians and a general loss of inno-vation.310

Germans seem aware of the need toreform their health care system. In a 2004poll, 76 percent of Germans thought healthcare reform was “urgent,” while an addition-al 14 percent thought it was “desirable.”However, Germans are split nearly down themiddle about what that reform should be.Roughly 47 percent would like to see anincrease in private health care spending,whereas 49 percent would not. Similarly, 45percent of Germans believe that more patientchoice would improve health care quality,whereas 50 percent do not. The reluctance tofully embrace market reforms undoubtedlystems from a long-standing German belief insocial solidarity. By a margin of 81 to 18 per-cent, Germans believe that equal access to thesame quality of care for everyone is moreimportant than their own access to the bestpossible care.311

Costs and demographics will eventuallyforce changes in the German system.However, given the failure of Chancellor

Merkel’s reforms, change is unlikely in thenear future.

A Few Thoughts on Canada

Canada is another country that did notmake the top 20 health care systems in theWHO rankings (it finished 30th), and few seri-ous advocates of universal health care look toit as a model. As Jonathan Cohn puts it,“Nobody in the United States seriously pro-poses recreating the British and Canadian sys-tem here—in part because, as critics charge . . .they really do have waiting lines.”312 However,since the press still frequently cites it as anexample, it is worth briefly examining.

Although Canada is frequently referred toas having a “national health system,” the sys-tem is actually decentralized with consider-able responsibility devolved to Canada’s 10provinces and 2 territories. It is financedjointly by the provinces and the federal gov-ernment, similar to the U.S. Medicaid pro-gram. In order to qualify for federal funds,each provincial program must meet five crite-ria: 1) universality—available to all provincialresidents on uniform terms and conditions;2) comprehensiveness—covering all medicallynecessary hospital and physician services; 3)portability—allowing residents to remain cov-ered when moving from province to province;4) accessibility—having no financial barriersto access such as deductibles or copayments;and 5) public administration—administeredby a nonprofit authority accountable to theprovincial government.

Federal financing comes from general taxrevenue. The federal government provides ablock grant to each province which amountsto around 16 percent of health care spend-ing. However, most funding comes fromprovincial taxes, primarily personal and cor-porate income taxes. Some provinces also usefunds from other financial sources like salestaxes and lottery proceeds. And some (BritishColumbia, Alberta, and Ontario) charge pre-miums, although health services cannot bedenied because of inability to pay. The health

31

Some analystsblame pricerestrictions andreimbursementrates for increasingbureaucraticinterference inhow Germanphysicians practice medicine.

care system is an enormous part of theCanadian welfare state. On the provinciallevel, the health care system amounts tobetween one-third and one-half of all socialwelfare spending.313

Provinces must provide certain benefits,including primary care doctors, specialists,hospitals, and dental surgery. Other benefits,such as routine dental care, physiotherapy,and prescription drugs, are optional. Someprovinces offer substantial coverage for theseservices, some cover them only partially, andsome do not cover them at all. Except foremergencies, treatment by specialists or hos-pital admission requires a referral from a pri-mary care physician.

Provider reimbursement is set by eachprovince, and some provinces restrict overallphysician income. In general, however, reim-bursement is on a fee-for-service basis. Hospi-tals are paid a specific pre-set amount to coverall noncapital costs. Capital expenditures mustbe approved on a case-by-case basis.

An increasing number of Canadians alsocarry private insurance, most often providedthrough their employer. Originally thisinsurance was designed to cover those fewservices not covered by the national healthcare system. At one time, all provinces pro-hibited private insurance from covering anyservice or procedure provided under the gov-ernment program. But in 2005, the CanadianSupreme Court struck down Quebec’s prohi-bition on private insurance contracting.314

Litigation to permit private contracting isnow pending in several other provinces.

In addition to the public hospitals cov-ered by the government, many private clinicsnow operate, offering specialized services.Although private clinics are legally barredfrom providing services covered by theCanada Health Act, many do offer such ser-vices in a black market. The biggest advan-tage of private clinics is that they typicallyoffer services with reduced wait times com-pared to the public health care system.Obtaining an MRI scan in a hospital couldrequire a wait of months, whereas it could beobtained much faster in a private clinic.

Waiting lists are a major problem under theCanadian system. No accurate governmentdata exists, but provincial reports do show atleast moderate waiting lists. The best informa-tion may come from a survey of Canadianphysicians by the Fraser Institute, which sug-gests that as many as 800,000 Canadians arewaiting for treatment at any given time.According to this survey, treatment time frominitial referral by a GP through consultationwith a specialist, to final treatment, across allspecialties and all procedures (emergency,nonurgent, and elective), averaged 17.7 weeksin 2005.315 And that doesn’t include waiting tosee the GP in the first place.

Defenders of national health care haveattempted to discount these waiting lists, sug-gesting that the waits are shorter than com-monly portrayed or that most of those on thewaiting list are seeking elective surgery. A lookat specialties with especially long waits showsthat the longest waits are for procedures suchas hip or knee replacement and cataractsurgery, which could arguably be consideredelective. However, fields that could have signif-icant impact on a patient’s health, such as neu-rosurgery, also have significant waitingtimes.316 In such cases, the delays could be lifethreatening. A study in the Canadian MedicalAssociation Journal found that at least 50patients in Ontario alone have died while onthe waiting list for cardiac catheterization.317

Data from the Joint Canada–United StatesSurvey of Health (a project of Statistics Canadaand the National Center for Health Statistics)revealed that “thirty-three percent ofCanadians who say they have an unmet med-ical need reported being in pain that limitstheir daily activities.”318 In a 2005 decisionstriking down part of Quebec’s universal carelaw, Canadian Supreme Court Chief JusticeBeverly McLachlin wrote that it was undisput-ed that many Canadians waiting for treatmentsuffer chronic pain and that “patients die whileon the waiting list.”319

Clearly there is limited access to modernmedical technology in Canada. The UnitedStates has five times as many MRI units permillion people and three times as many CT

32

U.S. patients areactually more

likely thanCanadians to

receive preventivecare for chronic

or serious healthconditions.

scanners.320 Indeed, there are more CT scan-ners in the city of Seattle than in the entireprovince of British Columbia.321

Physicians are also in short supply.Canada has roughly 2.1 practicing physiciansper 1,000 people, far less than the OECDaverage. Worse, the number of physicians per1,000 people has not grown at all since 1990.And while the number of nurses per 1,000people remains near the OECD average, thatnumber has been declining since 1990.322

In addition, although national health caresystems are frequently touted as doing a betterjob of providing preventive care, U.S. patientsare actually more likely than Canadians toreceive preventive care for chronic or serioushealth conditions. In particular, Americans aremore likely to get screened for common can-cers, including cancers of the breast, cervix,prostate, and colon.323

Canada has been relatively effective at con-trolling spending. The country spends about 9percent of GDP on health care, a percentagethat has risen only slightly over the last decade.Relative to average OECD expenditures,Canadian health expenditures have declinedby 4 percent since 1997.324 That cost control,however, has clearly come at the expense ofaccess to care.

Canadians’ dissatisfaction with the prob-lems in their system has been growing forsome time. One survey showed that some 59percent of Canadians believe that their sys-tem requires “fundamental changes,” andanother 18 percent believe the system needsto be scrapped and totally rebuilt.325 Still,Canadians are reluctant to embrace marketreforms that are associated with the U.S.health care system—a system that Canadiansdisdainfully reject. As one observer put it:

Anxiety about Americanization and theconstantly reinforced strain of nationalpride in Canadian health care coexist[s]with considerable uneasiness about theactual state of that care. It is as if, whenCanadians look south across the borderthey swell with pride, but when theylook within they shrink back, seeing

many problems and feeling uncertaintyabout the future.

Canadians may jealously guard their sys-tem and resist “Americanizing” it, but evenadvocates of universal health care are comingto recognize that it does not provide a validmodel for U.S. health care reform.

Conclusion

The U.S. health care system clearly hasproblems. Costs are rising and are distributedin a way that makes it difficult for some peopleto afford the care they want or need. Moreover,although the number of uninsured Americansis often exaggerated, far too many Americansgo without health insurance. And while theU.S. provides the world’s highest quality healthcare, that quality is uneven, and too oftenAmericans don’t receive the standard of carethat they should. But the experiences of othercountries with national health care systemsshow that the answer to these problems lieswith more pro-market reform, not more gov-ernment control.

Of course, there is no single model fornational health care systems in other coun-tries. Indeed, the differences from country tocountry are so great that the terms “nationalhealth care” or “universal coverage” can bemisleading—as if one collective model showshow other countries deal with health careand health insurance. Each country’s systemis the product of its unique conditions, his-tory, politics, and national character. Thosesystems range from the managed competi-tion approach of the Netherlands andSwitzerland to the more rigid single-payersystems of Great Britain, Canada andNorway, with many variations in between.

Some countries have a true single-payer sys-tem, prohibiting private insurance and evenrestricting the ability of patients to spend theirown money on health care. Others are multi-payer systems, with private competing insurersand varying degrees of government subsidyand regulation. Some countries base their sys-

33

Universal health insurancedoes not meanuniversal accessto health care.

tems around employment, while others havecompletely divorced work from insurance.Some require consumers to share a significantportion of health care costs through eitherhigh deductibles or high copayments. Otherssubsidize virtually first-dollar coverage. Someallow unfettered choice of physicians. Othersallow a choice of primary care physicians butrequire referrals for specialists. Still othersrestrict even the choice of primary care doctors.

In fact, about the only system one cannotfind is the type of system described by MichaelMoore, Physicians for a National HealthProgram, and other national health care advo-cates—a system that provides unlimited carewith no premiums, deductibles, or copay-ments, from the physician of one’s choice. Forexample, in SiCKO, Moore lambastes Americaninsurers for denying coverage for rare andexperimental treatments.327 And, during theNew Hampshire primary, John Edwards rantelevision advertisements highlighting thetragic death of a teenage girl whose liver trans-plant was rejected by her father’s insurer.328

These stories play effectively on the emotionsand drive a desire for change. Yet one searchesin vain for a national health care system any-where that regularly pays for experimental anduntested procedures.

Likewise, advocates for national health caretap into the anger many patients (and doctors)feel for the gatekeepers and prior approvalrequired under American managed care. Butmany if not most foreign systems require simi-lar gatekeepers. Moreover, copayments andother forms of cost sharing are commonplace.

It is also important to realize that no coun-try’s system would translate directly to theUnited States. Americans are unlikely to acceptthe rationing or restrictions on care and tech-nology that many countries use to controlcosts. Nor are U.S. physicians likely to accept acut in income to the levels seen in countries likeFrance or Germany. The politics, economics,and national cultures of other countries oftenvary significantly from those of the UnitedStates. Their citizens are far more likely to havefaith in government actions and to be suspi-cious of free markets. And polling suggests

that citizens of many countries put social soli-darity and equality ahead of quality and choicewhen it comes to health policy.329 Americanattitudes are quite different. As pollster BillMcInturff notes, “Never, in my years of work,have I found someone who said, ‘I will reducethe quality of the health care I get, so that allAmericans can get something.’”330

Even so, some important lessons can bedrawn from the experiences of other countries:

• Universal health insurance does notmean universal access to health care. Inpractice, many countries promise uni-versal coverage but ration care or haveextremely long waiting lists for treat-ment. Nor does a national health caresystem necessarily mean universal cov-erage. Some countries with ostensiblyuniversal systems actually fall far shortof universal coverage, and most leave atleast a small remnant (1–2 percent ofthe population) uncovered. Althoughthis is certainly wider coverage than theUnited States provides, it shows the dif-ficulty of achieving either truly univer-sal coverage or universal access to care.

• Rising health care spending is not auniquely American phenomenon. Othercountries spend considerably less thanthe United States on health care, both asa percentage of GDP and per capita,often because they begin with a lowerbase of expenditures. Nonetheless, theircosts are still rising, leading to budgetdeficits, tax increases, and/or benefitcuts. In 2004, the last year for which datais available, the average annual increasefor per capita health spending in thecountries discussed in this study was5.55 percent, only slightly lower than theUnited States’ 6.21 percent.331 As the WallStreet Journal notes, “Europeans . . . facesteeper medical bills in the future in theircash-strapped governments.”332 In short,there is no free lunch.

• Those countries that have single-payersystems or systems heavily weightedtoward government control are the most

34

The broad andgrowing trend in

countries withnational health

care systems is tomove away from

centralized government control and

introduce moremarket-oriented

features.

likely to face waiting lists, rationing,restrictions on the choice of physician,and other barriers to care. Those coun-tries with national health care systemsthat work better, such as France, theNetherlands, and Switzerland, are suc-cessful to the degree that they incorpo-rate market mechanisms such as compe-tition, cost-consciousness, market prices,and consumer choice, and eschew cen-tralized government control.

• Dissatisfaction and discontent with anation’s health care system seems to beuniversal. Undoubtedly, Americans areunhappy with the current state of ourhealth care system. According to themost recent Commonwealth Fund sur-vey, an astounding 82 percent of Ameri-cans believe that our system eitherrequires fundamental change or needs tobe completely rebuilt.333 Not surprising-ly, polls suggest health care reform is thetop domestic policy issue in the upcom-ing presidential election.334 Yet, thatsame Commonwealth Fund study showslarge majorities in every country, rangingfrom 58 percent in the Nether-lands to78 percent in Germany calling for funda-mental reform or complete rebuilding oftheir health care systems.335 Earlierpolling by the Stockholm Networkfound similar levels of unhappiness.336

Not as bad as in the United States, per-haps, but certainly no ringing endorse-ment of their systems.

• Although no country with universal cov-erage is contemplating abandoning auniversal system, the broad and growingtrend in countries with national healthcare systems is to move away from cen-tralized government control and intro-duce more market-oriented features. AsRichard Saltman and Josep Figueras ofthe World Health Organization put it,“The presumption of public primacy isbeing reassessed.”337 Alan Jacobs ofHarvard points out that despite signifi-cant differences in goals, content, andstrategies, European nations are general-

ly converging toward market practices inhealth care.338 Thus, even as Americansdebate adopting a government-run sys-tem, countries with those systems aredebating how to make their systemslook more like that of the United States.

Looking at other countries and their expe-riences, then, can provide guidance toAmericans as we debate how to reform ourhealth care system. National health care is nota monolithic idea, nor is it as disastrous asU.S. critics sometimes portray. Some nationalhealth care systems do some things well.

Yet, those systems do have serious prob-lems. In most cases, national health care sys-tems have successfully expanded insurancecoverage to the vast majority, if not quite all,of the population. But they have not solvedthe universal and seemingly intractable prob-lem of rising health care costs. In many cases,attempts to control costs through govern-mental fiat have led to problems with accessto care, either delays in receiving care or out-right rationing.

In wrestling with this dilemma, manycountries are loosening government controlsand injecting market mechanisms, particu-larly cost sharing by patients, market pricingof goods and services, and increased compe-tition among insurers and providers. As PatCox, former president of the EuropeanParliament, put it in a report to the EuropeanCommission, “We should start to explore thepower of the market as a way of achievingmuch better value for money.”339

Moreover, the growth of the governmentshare of health care spending, which hadincreased steadily from the end of World WarII until the mid-1980s, has stopped, and inmany countries the private share has begunto increase, in some cases substantially. Someevidence shows a growing shift from publicto private provision of health care.340 If thetrend in the United States over the last sever-al years has been toward a more European-style system, the trend in Europe is toward asystem that looks more like America’s.

Therefore, if U.S. policymakers can take one

35

The United Statescan increase coverage andaccess to care,improve quality,and control costswithout importing theproblems ofnational health care.

lesson from national health care systemsaround the world, it is not to follow the road togovernment-run national health care, but toincrease consumer incentives and control. TheUnited States can increase coverage and accessto care, improve quality, and control costswithout importing the problems of nationalhealth care. In doing so, we should learn fromthe successes—and the failures—of systems inother countries.

NotesThe author wishes to thank Pierre Bessard of theInstitut Constant de Rebecque; Valentin Petkant-chin of the Institut Economique Molinari; AlbertoMingardi of the Instituto Bruno Leoni; and ReginaHerzlinger of Harvard University for their assis-tance. The author would also like to offer specialthanks to Jonathan Cohn of the New Republic andauthor of Sick: The Untold Story of America’s HealthCare Crisis—and the People Who Pay the Price, for hiswillingness to review and comment on this paperdespite disagreeing with my conclusions.

1. SiCKO, Dog Eat Dog Films, 2007.

2. Paul Krugman, “The Waiting Game,” New YorkTimes, July 16, 2007.

3. Physicians for a National Health Program, “Insur-ance CEOs Fattened on the Suffering of Many,”http://www.pnhp.org/news/2006/april/the_healthcare_tipp.php.

4. Paul Krugman and Robin Wells, “The HealthCare Crisis and What to Do about It,” New YorkReview of Books, March 23, 2006.

5. Organisation for Economic Co-operation andDevelopment, “OECD Health Data 2007: Statis-tics and Indicators for 30 Countries” (Paris:OECD, 2007).

6. Christine Borger et al., “Health Spending Projec-tions through 2015: Changes on the Horizon,”Health Affairs 25, no. 2 (2006): w61–w73, http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w61.

7. Uwe Reinhardt of Princeton University, for ex-ample, estimates that nearly half of the difference inspending between the United States and otherindustrial nations is due to America’s higher GDP.Uwe Reinhardt, Peter Hussey, and Gerard Anderson,“U.S. Health Care Spending in an InternationalContext,” Health Affairs 23, no. 3 (2004): 11–12.

8. Kaiser Family Foundation, “Employer HealthBenefits 2007 Annual Survey,” Kaiser FamilyFoundation, September 11, 2007.

9. 2007 Annual Report of the Board of Trustees of theFederal Hospital Insurance and Federal SupplementalMedical Insurance Trust Funds (Washington: Gov-ernment Printing Office, 2007).

10. Jagadeesh Gokhale, “Medicaid’s Soaring Costs:Time to Step on the Brakes,” Cato Institute PolicyAnalysis no. 597, July 19, 2007.

11. Carmen DeNavas-Walt et al., “Income, Povertyand Health Insurance in the United States: 2005,”Current Population Reports (Washington: U.S. CensusBureau, 2006). This number should be approachedwith a great deal of caution, however. A study for theDepartment of Health and Human Services suggeststhat the Current Population Survey “appears to over-state the uninsured substantially compared to othersurveys.” Cathy Callahan and James Mays, “WorkingPaper: Estimating the Number of Individuals in theUnited States without Health Insurance,” ActuarialResearch Service, prepared for the Department ofHealth and Human Services (Washington: U.S.Department of Health and Human Services, 2005),p. 22. Other studies put the actual number of unin-sured at 21–31 million. Congressional Budget Office,“How Many People Lack Health Insurance and forHow Long?” (Washington: Congressional BudgetOffice, 2003). Moreover, all those estimates includepeople who could obtain coverage. For example, asmany as one-third of Americans without healthinsurance are eligible for existing government pro-grams such as Medicaid or the State Children’sHealth Insurance Program but have failed to sign upfor the program. BlueCross BlueShield Association,“The Uninsured in America,” January 2005, www.coverageforall.org/pdf/BC-BS_Uninsured-America.pdf. Roughly another third live in households withannual incomes above $50,000, suggesting thatmany could reasonably afford to purchase insuranceif they chose to do so. Devon Herrick, “Crisis of theUninsured: 2007,” National Center for Policy Anal-ysis Brief Analysis no. 595, September 28, 2007.

12. “Overview of the Uninsured in the UnitedStates: An Analysis of the 2005 Current PopulationSurvey” (Washington: U.S. Department of Healthand Human Services, 2005).

13. This is not to say that universal coverageshould be the goal of health care reform, and cer-tainly not the primary goal. Universal insurancecoverage does not necessarily translate into accessto care. And, while some evidence indicates thatuninsured Americans have somewhat worsehealth outcomes than insured Americans, the evi-dence of a direct link between health insuranceand health is weak. Nor is expanding insurance

36

coverage necessarily the best or most efficient useof resources for improving health. Helen Levy andDavid Meltzer, “What Do We Really Know aboutWhether Health Insurance Affects Health,”Economic Research Initiative on the UninsuredWorking Paper no. 6, December 2001. Moreover,in many cases, expanding insurance coverage willexacerbate the problems of third-party payment.

14. Cited in Tamar Nordenberg, “Make No Mis-take: Medical Errors Can Be Serious,” FDA Con-sumer Magazine 34, no. 5 (2000).

15. Elizabeth McGlynn et al., “The Quality ofHealth Care Delivered to Adults in the UnitedStates,” New England Journal of Medicine 348 (2003):2635–45.

16. Rita Mangione-Smith et al., “The Quality ofAmbulatory Care Delivered to Children in theUnited States,” New England Journal of Medicine357 (2007): 1515–23.

17. See, for example, http://www.michaelmoore.com/sicko/health-care-proposal/ and http://www.pnhp.org.

18. World Health Organization, “The World HealthReport 2000” (Geneva: WHO 2000); SiCKO, Dog EatDog Films, 2007. For a critical look at the WHOstudy, see Glen Whitman, “WHO Do You ThinkYou’re Fooling: The World Health Organization’sProblematic Ranking of Health Care Systems,” CatoInstitute Briefing Paper, February 28, 2008; TwilaBrase, “WHO’s Hidden Agenda,” Ideas on Liberty,Foundation for Economic Education, October 2000.

19. World Health Organization.

20. Ibid.

21. OECD, “Health at a Glance: OECD Indicators,2005” (Paris: OECD Publishing, 2005), p.11.

22. Census Bureau, 2000 Census (Washington: U.S.Census Bureau).

23. Robert L. Ohsfeldt and John E. Schneider, TheBusiness of Health: The Role of Competition, Markets,and Regulation (Washington: American EnterpriseInstitute Press, 2006).

24. In Austria and Germany, fetal weight must beat least 500 grams (1 pound) to count as a livebirth; in other parts of Europe, such asSwitzerland, the fetus must be at least 30 cen-timeters (12 inches) long. In Belgium and France,births at less than 26 weeks gestation are regis-tered as lifeless. And some countries don’t reliablyregister babies who die within the first 24 hoursafter birth. For a full discussion of the issue, see

Miranda Mugford, “A Comparison of ReportedDifferences in Definitions of Vital Events andStatistics,” World Health Statistics Quarterly 36(1983), cited in Nicholas Eberstadt, The Tyranny ofNumbers: Measurements and Misrule (Washington:AEI Press, 1995), p. 50. Some, but not all, coun-tries are beginning to standardize figures, andfuture data may be more reliable.

25. Anthony DePalma, “SiCKO, Castro, and the120 Year Club,” New York Times, May 27, 2007.

26. Arduino Verdecchia et al., “Recent Cancer Survivalin Europe: A 2000–02 Period Analysis of EUROCARE-4 Data,” The Lancet Oncology 8, no. 9 (2007): 784–96,http://www.thelancet.com/journals/lanonc/article/PIIS1470204507702462/abstract; Nicole Martin, “UKCancer Survival Rate Lowest in Europe,” DailyTelegraph, August 24, 2007. Of course, some argue thatthese figures are skewed by aggressive U.S. testing anddiagnostic procedures. In the United States, doctorscatch many cancers that would go undetected in othercountries. These cancers may be small or slow growingand might not kill the person. That these cancers arediagnosed in the United States but not in other coun-tries makes our survival rate look higher. JonathanCohn, “What Jacques Chirac Could Teach Us aboutHealth Care,” New Republic, April 10, 2007. That theo-ry is worth considering; increased screening likely doesaffect the figures for slow growing cancers such asprostate cancer (the source of much controversy sinceRudy Giuliani raised the issue in his campaign). “RudyWrong on Cancer Survival Chances,” Washington Post,October 31, 2007; David Gratzer, “Rudy Is Right inData Duel about Cancer,” Investors Business Daily,November 6, 2007.

As Robert Ohsfeldt and John Schneider con-cede in their book, The Business of Health, “[Many]cancer survival rate estimates . . . do not adjust forcancer stage at diagnosis. This could result in sur-vivor time bias—those with cancers detected at anearlier stage would exhibit longer post diagnosissurvival times, even for cancers that are essentiallyuntreatable.” Robert Ohsfeldt and John Schneider,The Business of Health (Washington: AEI, 2007), pp.23–24. However, survivor time bias is not as big anissue for cancers that have faster metastasizingtimes or that strike younger patients. As Ohsfeldtand Schneider go on to note:

Survivor time bias, however, should not bea significant concern for cancers thatrespond well to treatment if detected early.For such cancers, early detection makes asubstantive contribution to survival time—the longer survival time associated withearly detection thus is not a spurious effectof early detection. An example is thyroidcancer. In the United States, virtually allfemales with thyroid cancer survive for atleast five years. The lower survival rates for

37

thyroid cancer in European countries sug-gest some underperformance in eitherearly detection or post diagnosis manage-ment in these countries. In contrast, thedifferences in survivor rates are less pro-nounced for cancers that are more difficultto treat, such as lung cancers.

The United States’ advantage holds for othercancers, too, including breast, colon, and thyroidcancer among others. Moreover, the benefits ofearly detection and treatment go well beyond sur-vival rates. Even for prostate cancer, early treat-ment can significantly affect quality of life. Andthe United States might simply have more casesof prostate cancer than other countries. (Forexample, diet could play a significant role. KyungSong, “Study Links Diet to Prostate Cancer,”Seattle Times, October 11, 2007.)

Finally, one of the most common argumentsfor socialized medicine is its capacity to increasescreening and preventive care. Indeed, John Edwardsactually wants to make testing mandatory for allAmericans. “Edwards Backs Mandatory PreventiveCare,” Associated Press, September 2, 2007.

27. “World Briefing: Berlusconi Has Heart Surgeryin US,” New York Times, December 19, 2006.

28. “Stronach Went to US for Cancer Treatments:Report,” CTV, September 14, 2007, http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070914/belinda_Stronach_070914/20070914.

29. Steve Findlay, “U.S. Hospitals Attracting Pat-ients from Abroad,” USA Today, July 22, 1997.

30. The two principal reasons for sending apatient abroad were the lack of availability of ser-vices in Canada (40 percent) and the length of thewait for certain treatments (19 percent). Robert J.Blendon et al., “Physicians’ Perspectives on Caringfor Patients in the United States, Canada, andWest Germany,” New England Journal of Medicine328, no. 14 (1993): 1011–16.

31. John Goodman, “Moore’s SiCKO Could PutLives at Risk,” The Michael Moore Chronicles, NationalCenter for Policy Analysis, 2007, http://sicko.ncpa.org/moores-sicko-could-put-lives-at-risk.

32. “Nobel Prize in Physiology or Medicine Win-ners 2007–1901,” The Nobel Prize Internet Archive,http://almaz.com/nobel/medicine/medicine.html.

33. Pharmaceutical Research and Manufacturing ofAmerica, “R&D Spending by U.S. BiopharaceuticalCom-panies Reaches a Record $55.2 Billion in2006,” February 12, 2007.

34. Economic Report of the President (Washington:

Government Printing Office, 2004), p. 192.

35. Gerard Anderson et al., “It’s the Prices Stupid:Why the United States Is So Different from OtherCountries,” Health Affairs 22, no. 3 (2003): 99.

36. Oliver Schoffski, “Diffusion of Medicines inEurope,” paper prepared for the European Feder-ation of Pharmaceutical Industries and Associ-ations,” 2002, cited in Daniel Kessler, “The Effectsof Pharmaceutical Price Controls on the Cost andQuality of Medical Care: A Review of the EmpiricalLiterature,” submitted to the U.S. InternationalTrade Commission.

37. Ibid.

38. For example, some evidence seems to indicatethat overuse of CT scans in the United States, espe-cially in children, may actually be increasing theincidence of some cancers. David Brenner and EricHall, “Computed Tomography—An IncreasingSource of Radiation Exposure,” New England Journalof Medicine 357, no. 22 (2007): 2277–84. Yet, otherevidence suggests that increased use of CT scansmay reduce deaths from other cancers such as lungcancer. International Early Lung Cancer Investi-gators, “Survival of Patients with Stage I LungCancer Detected on CT Screening,” New EnglandJournal of Medicine 355, no. 17 (2006): 1763–71.Robin Hanson of George Mason University hasargued that much of U.S. health care spending pro-vides no benefit at all. Indeed, Hanson believes thatwe could cut health care spending by 50 percentwithout affecting health outcomes. Robin Hanson,“Cut Medicine in Half,” Cato Unbound, September10, 2007, http://www.cato-unbound.org/2007/09/10/robin-hanson/cut-medicine-in-half/. In con-trast, Mark McClellan of Harvard University andeconomist David Cutler argue that the benefits ofincreased health care technology vastly overwhelmtheir costs. David Cutler and Mark McClellan, “IsTechnological Change in Medicine Worth It?”Health Affairs 20 (2001): 11–29.

39. Ohsfeldt and Schneider, The Business of Health. Itis true, as Jonathan Cohn points out, that much,though by no means all, of the basic research onhealth care is funded by the National Institutes ofHealth. Jonathan Cohn, “Creative Destruction:The Best Case against National Health Care,” TheNew Republic, November 12, 2007. However, thevast majority of applied research is funded by theprivate sector. Overall, roughly 57 percent of allbiomedical research spending comes from privateindustry. From 1989 to 2002, four times as muchmoney was invested in private biotechnology com-panies in America as in all of Europe. Tyler Cowen,“Poor U.S. Scores in Health Care Don’t MeasureNobels or Innovation,” New York Times, October 5,2006.

38

40. Cowen, “Poor U.S. Scores in Health Care Don’tMeasure Nobels or Innovation.”

41. “The Novartis Warning,” Wall Street Journal, May8, 2002.

42. See Alain Enthoven, “The History and Principlesof Managed Competition,” Health Affairs 12, suppl. 1(1993): 24–48.

43. Michael Tanner, “No Miracle in Massachusetts:Why Governor Romney’s Health Care ReformWon’t Work,” Cato Institute Briefing Paper no. 97,June 6, 2006.

44. Jonathan Cohn, Sick: The Untold Story of America’sHealth Care Crisis—And the People Who Pay the Price(New York: HarperCollins, 2007), p. 226.

45. Ezra Klein, “Health Care Wrap Up,” www.ezraklein. com, April 25, 2005; http://www.prospect.org/csnc/blogs/ezraklein_archive?month=04&year=2005&base_name=health_care_wrapup.

46. Mattke et al., “Health Care Quality IndicatorsProject.”

47. Victor Rodwin, “The Health Care System underFrench National Health Insurance: Lessons for HealthReform in the United States,” American Journal of PublicHealth 93, no. 1 (2003): 34. Note that the total tax bur-den is higher than the health care system’s percentageof GDP because of the costs associated with the non-working population—that is, children, the elderly, andthe unemployed.

48. Philippe Manière et al., “Perspectives on theEuropean Health Care Systems: Some Lessons forAmerica,” Heritage Foundation Lecture no. 711,July 9, 2001.

49. “French Health Insurance System to Post 10.3-Billion-Euro Deficit,” EU Business, August 6, 2006.

50. “Deficit-Saddled France under Fire over Bud-get,” Reuters, July 5, 2007. Members of the Eurozoneare required to keep budget deficits below 3 percentof GDP.

51. “French Health Care Is Badly Run,” BBC News,August 8, 2006.

52. Martine Bellanger, Veneta Cherilova, and ValerieParis, “The Health Benefit Package in France,”European Journal of Health Economics 6, suppl. 1(2005): 24–29.

53. Simone Sandier et al., “France,” in Health CareSystems in Transition, eds. Sarah Thomson and EliasMossialos (Brussels: The European Observatory onHealth Care Systems, 2004).

54. Thomas Buchmueller and Agnes Couffinhal,“Private Health Insurance in France,” OECDHealth Working Paper no. 12, 2004. In this senseat least, French physicians may have more free-dom than American physicians under Medicare,which prohibits balance-billing.

55. Francesca Columbo and Nicole Tapay, “PrivateHealth Insurance in the OECD Countries: The Benef-its and Costs for Individuals and Health Systems,”OECD Health Working Paper no. 15, 2004.

56. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

57. Buchmueller and Couffinhal, “Private HealthInsurance in France.” It is important to note,however, that this deregulated insurance is supple-mental coverage. No one can be disqualified forhealth reasons from basic coverage.

58. Ibid.

59. Rodwin, “The Health Care System under FrenchNational Health Insurance.”

60. Ibid.

61. Valentin Petkantchin, “Pernicious Myths aboutPublic Health Insurance in France,” Economic Note(Brussels: Institut Economique Molinari, 2007),http://www.institutmolinari.org/pubs/note20071.pdf.

62. “La Securite Social,” Report of the French Courtof Audit, September 2006.

63. Manière et al., “Perspectives on the EuropeanHealth Care Systems.”

64. Paul Dutton, “Health Care in France and theUnited States: Learning from Each Other,”Brookings Institution, July 2002.

65. Rodwin, “The Health Care System under FrenchNational Health Insurance.

66. Alexander Dorozynski, “French Health StaffStrike over Budget Cuts,” British Medical Journal320 (February 2000): 333; Alexander Dorozynski,“French Medical System Beset by Strikes,” BritishMedical Journal 324 (February 2002): 258.

67. High Council for the Future of Health Insur-ance, “L’Avenir de l’Assurance Maladie: L’Urgenced’un Redressment par la Qualité” (Paris, Ministry ofHealth, 2004).

68. Valentin Petkantchin, “The Ineffectiveness ofHealth Cost Containment Policies in France,”Economic Note (Brussels: Institut Economique

39

Molinari, 2007); http://www.institutmolinari.org/pubs/note20073.pdf.

69. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

70. Rodwin, “The Health Care System under FrenchNational Health Insurance.

71. Petkantchin, “The Ineffectiveness of HealthCost Containment Policies in France.”

72. Norman Ho, ”A Long, Hot Summer,” HarvardInternational Review 26 (Summer 2004); “FrenchHealth Care Is Badly Run,” BBC News, January 23,2004.

73. Valentin Petkantchin, “Bureaucratic Drug De-listing: The French Example,” EU Reporter, January–February 2007.

74. Schoffski, “Diffusion of Medicines in Europe.”

75. “French Health Care Is Badly Run,” BBC News,January 23, 2004.

76. D. Benamouzig and R. Launois, “RationingHealth Care in Europe-France,” in Rationing HealthCare in Europe: An Empirical Study, eds. J. MatthaisGraf von der Schulenburg and Michael Blanke(Amsterdam: IOS Press, 2004), p. 16.

77. Helen Disney et al., Impatient for Change: Euro-pean Attitudes to Healthcare Reform (London: Stock-holm Network, 2004), pp. 69–86.

78. Institut Economique Molinari, “Health Myths inFrance—More Competition, Not Cost ContainmentIs the Solution According to the French InstitutEconomique Molinari,” news release, January 7,2007, www.institutmolinari.org/pubs/pr20071.pdf.

79. Dorozynski, “French Health Staff Strike overBudget Cuts.”

80. Columbo and Tapay, “Private Health Insurance inthe OECD Countries.”

81. Hurst and Luigi Siciliani, “Tackling ExcessiveWaiting Times for Elective Surgery: A Comparison ofPolicies in Twelve OECD Countries,” OECD HealthWorking Paper no. 6, July 2003.

82. Ezra Klein, “The Health of Nations—Here’s HowCanada, France, Britain, Germany, and our OwnVeterans Health Administration Manage to CoverEverybody at Less Cost and with Better Care thanWe Do,” American Prospect, April 24, 2007.

83. E. van Doorslaer et al., “Income-Related Inequalityin the Use of Medical Care in 21 OECD Countries,” in

Towards High Performing Health Systems: Policy Studiesfrom the OECD Health Project (Paris: OECD, 2004).

84. Rodwin, “The Health Care System under FrenchNational Health Insurance.”

85. Disney et al., Impatient for Change, pp. 69–86.

86. Ibid.

87. “Sarkozy’s Election Reflects Europe’s RightTurn,” National Public Radio, May 7, 2007.

88. “Budget 2008: Tighter Controls on HealthcareSpending as French Conservatives Crack Down onSocial Security Deficit,” Global Insight, 2007, http://www.globalinsight.com/SDA/SDADetail10740.htm.

89. Mattke et al., “Health Care Quality IndicatorsProject.”

90. Alexandra Bibbee and Benoît Bellone, “Eco-nomic Survey of Italy, 2007” (Paris: OECD, 2007).

91. Andrea Donatini et al., Health Care Systems inTransition: Italy (Copenhagen: European Observa-tory on Health Systems and Policies, 2001).

92. Franco Reviglio, “Health Care and Its Financing inItaly: Issues and Reform Options,” IMF WorkingPaper 00-166, October 2000.

93. Donatini et al., Health Care Systems in Transition:Italy.

94. Reviglio, “Health Care and Its Financing in Italy”.

95. Depending on regions and election cycles. Copay-ments for prescription drugs are frequently intro-duced only to be repealed shortly before elections.

96. Daniel Callahan and Angela Wasunna, Medi-cine and the Market: Equity v. Choice (Baltimore:Johns Hopkins University Press, 2006), p. 98.

97. Donatini et al., Health Care Systems in Transition:Italy.

98. Callahan and Wasunna, Medicine and the Market:Equity v. Choice, p. 93.

99. Vincenzo Atella and Federico Spandanaro,“Private Health Insurance in Italy: Where WeStand Now,” Euro Observer, Spring 2004.

100. Callahan and Wasunna, Medicine and theMarket: Equity v. Choice, p. 97.

101. George France, Francesco Taroni, and AndreaDonatini, “The Italian Health Care System,” Health

40

Economics 14 (September 2005): 185–202.

102. Alberto Mingardi, “A Drug Price Path toAvoid,” Washington Post, November 12, 2006.

103. See, for example, “Italy Hit by DoubleStrike,” BBC News, February 9, 2004.

104. Reviglio, “Health Care and Its Financing in Italy.”

105. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

106. Donatini et al., “Health Care Systems inTransition: Italy.”

107. Mingardi, “A Drug Price Path to Avoid.”

108. Ariel David, “Italian Police Units InspectHospitals,” Washington Post, January 8, 2007.

109. Vittorio Maio and Lamberto Manzoli, “TheItalian Health Care System: WHO Ranking versusPublic Perception,” PLoS Medicine 6 (June 2002):301–03.

110. Disney et al., Impatient for Change, pp. 111–19.

111. Guillem Lopez-Casasnovas, Joan Coasta-Font,and Ivan Planas, “Diversity and Regional Inequal-ities: Assessing the Outcomes of the SpanishSystem of Health Care Services,” UPF WorkingPaper no. 745, April 2004.

112. Antonio Duran, Juan Lara, and Michelle vanWaveren, “Spain: Health System Review,” HealthSystems in Transition 8, no. 4 (Copenhagen: Euro-pean Observatory on Health Systems and Policies,2006).

113. Ibid.

114. “Waiting to Be Seen: How the Health ServiceVaries across Spain,” Expatica, June 26, 2007.

115. Emilio Cerda, Laura de Pablos, and MariaRodriguez, “Waiting Lists for Surgery,” in PatientFlow: Reducing Delay in Healthcare Delivery (Hoboken,NJ: Springer, 2006).

116. Xavier Bosch, “Spain: The Old FrequentlyLive with Their Families,” British Medical Journal324 (June 29, 2002): 1543.

117. There is one exception. Central governmentcivil servants can opt out of the public system andhave the government pay for their private insur-ance. Roughly 91 percent of civil servants chooseprivate insurance. Noah Clarke, “GovernmentHealth Care: A Universal Failure,” Today’s News,Goldwater Institute, May 10, 2007.

118. Mario Rodriguez, Richard Scheffler, andJonathan Agnew, “An Update on Spain’s HealthCare System: Is It Time for Managed Competi-tion?” Health Policy 51 (2000): 109–31.

119. Columbo and Tapay, “Private Health Insurancein the OECD Countries.”

120. Luis Rajmil et al., “The Quality of Care andInfluence of Double Health Care Coverage inCatalonia (Spain),” Archive of Disease in Childhood 83(September 2000): 211–14.

121. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

122. Duran, Lara, and van Waveren, “Spain:Health Systems Review.”

123. Rodriguez, Scheffler, and Agnew, “An Up-date on Spain’s Health Care System.”

124. Duran, Lara, and van Waveren, “Spain:Health Systems Review.”

125. Disney et al., Impatient for Change, pp. 151–60.

126. Alastair Kilmarnock, “Spain: Commentary,”in Impatient for Change: European Attitudes to Health-care Reform, eds. Disney et al. (London: StockholmNetwork, 2004), p. 161.

127. Disney et al., Impatient for Change, pp.151–60.

128. Tetsuo Fukawa, “Public Health Insurance inJapan,” World Bank Institute Working Paper no.37201 (2002).

129. Ibid.

130. Kohei Komamura and Atsuhiro Yamada,“Who Bears the Burden of Social Insurance? Evi-dence from Japanese Health and Long-Term CareInsurance Data,” Journal of Japanese and InternationalEconomics 18 (December 2004): 565–81.

131. “Japanese Health Insurance Industry FacesWinnowing Out,” Medical Insurance News, March21, 2004.

132. Noriyuki Takayama, “Japan’s Never-EndingSocial Security Reforms,” International SocialSecurity Review 55 (2002): 11–22.

133. Ibid.

134. Adam Wagstaff, “Health Systems in East Asia:What Can Developing Countries Learn from Japanand the Asian Tigers?” Health Care Economist, April18, 2007.

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135. Shikha Dalmia, “The UAW’s Health-CareDreams,” Wall Street Journal, July 27, 2007.

136. M. Ryan Baker, “Japan and Massachusetts: AComparison of Universal Health Care Systems,”Missouri Foundation for Health, Spring 2006.

137. Naoki Ikagami and John Campbell, “Japan’sHealth Care System: Containing Costs and Attempt-ing Reform,” Health Affairs 23 (2004): 29–34.

138. Naoki Ikagami and John Campbell, “HealthCare Reform in Japan: The Virtues of MuddlingThrough,” Health Affairs 18 (Fall 1999): 56–75.

139. Ibid.

140. “The Doctor’s Dilemma,” The Economist, June10, 2004.

141. Jeong Hyoung-Sun and Jeremy Hurst, “AnAssessment of the Performance of the JapaneseHealth Care System,” OECD Labour Market andSocial Policy Occasional Paper no. 56, 2001.

142. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

143. Aki Yoshikawa and Jayanata Bhattacharya,“Japan,” in World Health Systems: Challenges andPerspectives, eds. Bruce Fried and Laura Gaydos(Chicago: Health Administration Press, 2002).

144. Ikagami and Campbell, “Health Care Reformin Japan: The Virtues of Muddling Through.”

145. Bill Ross et al., “International Approaches toFunding Health Care,” [Australia] CommonwealthDepartment of Health and Ageing OccasionalPapers, Health Financing Series no. 2, 1999.

146. W. C. Hsiao, “Afterward Costs—The MacroPerspective,” Containing Health Care Costs in Japan(Ann Arbor: The University of Michigan Press,1999), pp. 45–52. While this study uses dateddata, the general conclusions have been endorsedby more recent authors: Ikagami and Campbell,“Health Care Reform in Japan: The Virtues ofMuddling Through”; Ross et al., “InternationalApproaches to Funding Health Care.”

147. Rihito Kimura, “Bioethics and JapaneseHealth Care,” Washington-Japan Journal 3 (1994): 2.

148 Takayama, “Japan’s Never-Ending SocialSecurity Reforms.”

149. Christian Hagist and Laurence J. Kotlikoff,“Health Care Spending: What the Future WillLook Like,” National Center for Policy Analysis,Study no. 286, June 28, 2006.

150. Booyeon Lee, “Help Wanted: Is Immigrationthe Answer to the Shrinking Labor Force,” AshaiShimbun, December 23, 2003.

151. Waiting lists and rationing in Norway havebecome sufficiently bad that, in 2000, the govern-ment launched the Patient Bridge Project to facilitatethe treatment of Norwegian patients in private hos-pitals in neighboring countries. G. Bottom, S.Grepperud, and S. M. Neiland, “Trading Practices:Lessons from Scandinavia,” Health Affairs 69 (2004):317–27.

152. Jan Roth Johnsen, Health Systems in Transition:Norway 8, no. 1 (Copenhagen: European Observa-tory on Health Systems and Policies, 2006).

153. “Tax Revenues on the Rise in Many OECDCountries, OECD Report Shows,” FinFacts, October11, 2006; http://www.finfacts.com/irelandbusinessnews/publish/article_10007581.shtml.

154. Ibid.

155. Johnsen, Health Systems in Transition: Norway.

156. Michael Moore, Remarks before the Washing-ton, D.C., premiere of SiCKO, June 20, 2007.

157. Johnsen, Health Care Systems in Transition: Norway.

158. Terje Hagen and Oddvar Kaarboe, “The Nor-wegian Hospital Reform of 2002: Central Govern-ment Takes Over Ownership of Public Hospitals,”Health Organization Research Norway (HORN)Working Paper no. 1 (2004).

159. Paul van den Noord, Terje Hagen, and TorIversen, “The Norwegian Health Care System,” OECDEconomics Department Working Paper no. 198, 1998.

160. Johnsen, Health Care Systems in Transition: Norway.

161. H. Piene, P. Nyen, and H. Hauge, “Waiting Listsand Hospital Capacity—Analyses Based on Theoreti-cal Queue Models and Empirical Data,” Paper pre-sented to the Annual Meeting of the InternationalSociety for Technological Assessment of Health Care,Unimed, Norway, 1997.

162. Christine Furuholmen and Jon Magnussen,Health Care Systems in Transition: Norway (Copen-hagen: European Observatory on Health Care Sys-tems, 2000).

163. Luigi Siciliani and Jeremy Hurst, “ExplainingWaiting Times Variations for Elective Surgeryacross OECD Countries,” OECD Health WorkingPaper no. 7, October 2003.

164. M. Hoel and E. Saether, “Private Health Care

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as a Supplement to a Public Health System withWaiting Time for Treatment,” Ragnar FrischCenter for Economic Research, Oslo, 2000.

165. Quoted in Soren Holm, “Goodbye to theSimple Solutions: The Second Phase of PrioritySetting in Health Care,” British Medical Journal 317(October 1998): 1000–02.

166. Hagen and Kaarboe, “The Norwegian Hospi-tal Reform of 2002: Central Government TakesOver Ownership of Public Hospitals.”

167. Ibid.

168. Knut Erik Tranoy, “Ethical Principles in PublicHealth Care” in “Scandinavia: With a Remarkabout Relativism and the Cultural Foundations ofHealth Care Ethics,” in Bioethics for the People by thePeople, ed. Darryl R. J. Macer (Bangkok, Thailand:Eubios Ethics Institute, 1994), p. 57.

169. Ibid.

170. Hagen and Kaarboe, “The Norwegian HospitalReform of 2002: Central Government Takes OverOwnership of Public Hospitals.”

171. Catarina Diogo, “The Reform of the NHS inPortugal,” University of York, Department ofManagement, Working Paper no. 5, 2005.

172. Directorate-General of Health, “National HealthPlan, 2004–2010” (Lisbon: Ministry of Health, July2004).

173. OECD, “Health at a Glance: OECD Indica-tors, 2005” (Paris: OECD, 2005).

174. Margarida Bentes et al., Health Care Systems inTransition: Portugal (Copenhagen: European Ob-servatory on Health Systems and Policies, 2004).

175. Bentes et al., Health Care Systems in Transition:Portugal.

176. Paul Ferrinho, “Dual Practice in the HealthSector: Review of the Evidence,” Human Resourcesfor Health 2 (2004).

177. Bentes et al., Health Care Systems in Transition:Portugal.

178. Ibid.

179. Ibid.

180. Columbo and Tapay, “Private Health Insur-ance in OECD Countries.”

181. Bentes et al.

182. Ibid.

183. Ibid.

184. Catarina Diogo, “The Reform of the NHS inPortugal,” University of York, Department ofManagement, Working Paper no. 5, 2005.

185. Monica Duarte Oliveira and Gwyn Bevan,“Measuring Geographic Inequalities in the PortugueseHealth Care System: An Estimation of Hospital CareNeeds,” Health Policy 66 (March 2003): 277–93.

186. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

187. Mario de Queiroz, “Living in Portugal, GivingBirth in Spain,” InterPress Service, March 29, 2005.

188. Monica Duarte Oliviera, Jose Magone, andJoao Periera, “Nondecision Making and Inertia inPortuguese Health Policy,” Journal of Health Politics,Policy and Law 30 (January–February 2005):211–30.

189. Josep Figueras et al., Health Care Systems inTransition: Greece (Copenhagen: World HealthOrganization, 1996).

190. Figueras et al., Health Care Systems in Transition:Greece.

191. Konstantina Davaki and Elias Mossialos, “PlusCa Change: Health Sector Reforms in Greece,” Jour-nal of Health Politics, Policy, and Law 30 (February–April 2005): 143–67.

192. Figueras et al., Health Care Systems in Transition:Greece.

193. Mary Geitona, “Cost Containment Policies inthe Public Sector,” Paper presented at InternationalTraining Program on Health Economics, Athens,December 2003, http://www.nsph.gr/ecoman/word/costconainmentpolicies.doc

194. Davaki and Mossialos, “Plus Ca Change.”

195. Ibid.

196. “Greece Healthcare: Coming under GreatPressure,” The Economist, June 24, 2005.

197. Figueras et al., Health Care Systems in Transition:Greece.

198. WHO, “Highlights on Health: Greece 2004”(Copenhagen: WHO Regional Office for Europe,2005.)

199. Columbo and Tapay, “Private Health Insurance

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in OECD Countries”; WHO, “Highlights on Health:Greece 2004.”

200. Theodora Zachariadou et al., “The Demolitionof Waiting Lists Project,” PowerPoint presenta-tion, 2005; http://www.hope.be/04 exchange/pro-gramme 2006/presentations_participants/greece_2006.pdf.

201. Cited in Zachariadou et al., “The Demolitionof Waiting Lists Project.”

202. Davaki and Mossialos, “Plus Ca Change.”

203. WHO, “Highlights on Health: Greece 2004.”

204. Figueras et al., Health Care Systems in Transition:Greece.

205. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

206. Geitona, “Cost Containment Policies in thePublic Sector.”

207. Elias Mossialos, Sara Allin, and KonstantinaDavaki, “Analyzing the Greek Health System: A Taleof Fragmentation and Inertia,” Health Economics S1(2005): S151.

208. Jessica Hohman, “International HealthcareSystems: A Primer,” American Medical StudentAssociation, 2007.

209. Andre den Exter et al., Health Care Systems inTransition: Netherlands (Copenhagen: European Ob-servatory on Health Systems and Policies, 2004).

210. G. P. Westert and H. Verkleij, eds., Dutch HealthCare Performance Report 2006 (Bilthoven, TheNetherlands: Center for Prevention and HealthServices Research, National Institute for PublicHealth and the Environment, 2006.) A govern-ment-run system remains in place to cover long-term care, mental health care, and mental healthhospitalization of longer than one year. KaiserPermanente International, “Selected EuropeanCountries’ Health Systems,” Prepared for a confer-ence on European Systems of Universal HealthCare, Washington, October 31, 2007.

211. “Alain Enthoven and Wynand van den Ven,“Going Dutch—Managed-Competition HealthInsurance in the Netherlands,” New EnglandJournal of Medicine 357 (2007): 2421–23.

212. Stefan Greb, Maral Manougian, and JurgenWasem, “Health Insurance in the Netherlands,”CESifo DICE Report, January 2007.

213. Kaiser Permanente International, “Selected

European Countries’ Health Care Systems.”

214. Willem van Duin, “The Role of Private Insurersin Dutch Health Care: The Vision of Eureko,” Paperpresented at a conference on European Systems ofUniversal Health Care, Washington, October 31,2007.

215. Ibid.

216. “The New Care System in the Netherlands,”Ministry of Health, Welfare and Sport, TheNetherlands Embassy, May 2006, www.mivws.nl/images/boekje-zorgstelsel—engels_tem20-107939.pdf.

217. “Health Insurance System,” Ministry ofHealth, Welfare and Sport, The Royal NetherlandsEmbassy, 2006, www.minvws.nl/en/themes/health-insurance-system/.

218. J. Andre Knottnerus and Gabriel ten Velden,“Dutch Doctors and Patients—Effects of HealthCare Reform in the Netherlands,” New EnglandJournal of Medicine 357 (2007): 2424–26.

219. Van Duin, “The Role of Private Insurers inDutch Health Care: The Vision of Eureko.”

220. Ibid.

221. Knottnerus and ten Velden, “Dutch Doctorsand Patients—Effects of Health Care Reform inthe Netherlands.”

222. Greb, Manougian, and Wasem, “Health Insur-ance in the Netherlands.”

223. Gautam Naik, “Dutch Treatment: In Holland,Some See Model for U.S. Health-Care System,”Wall Street Journal, September 6, 2007.

224. Greb, Manougian, and Wasem, “Health Insur-ance in the Netherlands.”

225. Ibid.

226. Siciliani and Hurst, “Explaining Waiting TimesVariations for Elective Surgery across OECDCountries.”

227. J. Plomp et al., “Death on the Waiting List forCardiac Surgery in the Netherlands in 1994 and1995,” Heart 81 (1999) 593–97.

228. Paul Belien, “Two Months of Competition inDutch Healthcare,” Brussels Journal, October 23, 2006.

229. Knottnerus and ten Velden, “Dutch Doctorsand Patients—Effects of Health Care Reform inthe Netherlands.”

44

230. Ibid.

231. Gautam Naik, “Dutch Treatment: In Holland,Some See Model for U.S. Health-Care System,”Wall Street Journal, September 6, 2007.

232. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

233. Rudolf Klein, “The Troubled Transformationof Britain’s National Health Service,” New EnglandJournal of Medicine 355 (2006): 409–15.

234. Daniel Martin, “Billions Squandered as NHSFails to Deliver,” Daily Mail, September 12, 2007.

235. Ibid.

236. Anthony Browne, “Deadly Rise in Wait forCancer Care,” London Observer, March 3, 2002.

237. Anthony Browne, “Cash-Strapped NHSHospitals Chase Private Patient “Bonanza,” LondonObserver, December 16, 2001.

238. “Too Successful: The Hospitals Forced to Intro-duce Minimum Waiting Times,” Daily Telegraph,August 7, 2006.

239. Ibid.

240. Martin, “Billions Squandered as NHS Failsto Deliver.”

241. John C. Goodman, “Health Care in a Free Society:Rebutting the Myths of National Health Insurance,”Cato Policy Analysis no. 532, January 27, 2005.

242. Richard Lewis and John Appleby, “Can theEnglish NHS Meet the 18-Week Waiting List Target?”Journal of the Royal Society of Medicine 99 (206): 10–13.

243. David Rose, “Waiting List Crisis as NHSCuts Costs,” London Times, June 56, 2007.

244. Callahan and Wasunna, Medicine and theMarket: Equity v. Choice, p. 93.

245. Lewis and Appleby, “Can the English NHSMeet the 18-Week Waiting List Target?”

246. “NHS Should Not Treat Those with Un-healthy Lifestyles, Say Tories,” Evening Standard,September 4, 2007.

247. Elizabeth Docteur and Howard Oxley, “Health-Care Systems: Lessons from the Reform Experience,”OECD Working Paper no. 9, December 5, 2003.

248. Sarah Thomson and Elias Mossialos, “Reg-ulating Private Health Insurance in the Euro-

pean Union: Implications of Single MarketLegislation and Competition Policy,” EuropeanHealth Policy Group, September 2004.

249. Disney et al., Impatient for Change, pp. 29–38.

250. Civitas, “The Swiss Healthcare System,” (Lon-don: The Institute for the Study of Civil Society,2002), http://www.civitas.org.uk/pdf/Switzerland.pdf. This number differs from the official OECDpercentage because the OECD defines governmentexpenditure on health to include government-man-dated insurance premiums, even if they are spent onprivate insurance. Under this definition, all privateinsurance purchased in Massachusetts under itsnew compulsory health care plan would be catego-rized as a public expenditure on health, for example.The cited number excludes mandatory insurancepremiums because, though Swiss citizens arerequired to purchase a basic insurance plan, thatplan comes from privately owned and even “for-profit” insurance companies. Individuals have con-siderable freedom of choice among insurers.Furthermore, premiums are paid directly to theinsurers rather than collected directly by the gov-ernment. For all those reasons the Swiss system dif-fers significantly from, say, Germany, where I believeit is proper to include payments to sickness funds asa governmental rather than a private expenditure.

251. Michael Tanner, “No Miracle in Massa-chusetts: Why Governor Romney’s Health CareReform Won’t Work.” However, Regina Herzlingerof Harvard University notes the important distinc-tion that, unlike most systems of managed compe-tition, including both the Clinton and Romneyversions, the Swiss system is not employer based (e-mail to author, October 3, 2007).

252. For more on the concept of managed com-petition, see Enthoven, “The History and Princi-ples of Managed Competition.”

253. Association of Swiss Health Insurance Com-panies and CIA World Factbook (Washington: CentralIntelligence Agency).

254. Michael Tanner, “Individual Mandates forHealth Insurance: Slippery Slope to NationalHealth Care,” Cato Institute Policy Analysis no.565, April 5, 2006.

255. E-mail from Sabine Alder, CommunicationsManager, Association Suisse d’Assurances, to author,October 4, 2007; Greg Kelly, “Can Government ForcePeople to Buy Insurance?” Issues and Answers no. 123,Council for Affordable Health Insurance, March2004, citing data from the Insurance Research Coun-cil, http://www.cahi.org/cahi_contents/resources/pdf/n123GovernmentMan date.pdf.

45

256. Andreas Minder, Hans Schoenholzer, andMarianne Amiet, Health Care Systems in Transi-tion: Switzerland (Copenhagen: European Obser-vatory on Health Care Systems, 2000).

257. Jim Landers, “In Switzerland, Everyone IsInsured, and Businesses Don’t Pay,” DallasMorning News, February 7, 2006.

258. Regina Hertzlinger and Ramin Parsa-Parsi,“Consumer-Driven Health Care: Lessons fromSwitzerland.” Journal of American Medical Associa-tion 292, no. 10 (2004).

259. Ibid.

260. Ibid.

261. Landers, “In Switzerland Everyone Is Insured,and Businesses Don’t Pay.”

262. Uwe E. Reinhardt, “The Swiss Health System:Regulated Competition without Managed Care,”Journal of the American Medical Association 292, no. 10(2004): 1227–31.

263. Hertzlinger and Parsa-Parsi, “Consumer-Driven Health Care: Lessons from Switzerland.”

264. Peter Zweifel, “Competitive Mechanisms inHealth Care,” in Reinventing Health Care (London:Stockholm Network, 2000).

265. Hertzlinger and Parsa-Parsi. “Consumer-Driven Health Care: Lessons from Switzerland.”

266. Minder, Schoenholzer, and Amiet, HealthCare Systems in Transition: Switzerland.

267. Ibid.

268. Civitas, “The Swiss Healthcare System.”

269. Ibid.

270. OECD, “Health at a Glance: OECD Indicators,2005.”

271. See Reinhardt, Hussey, and Anderson, “U.S.Health Care Spending in an International Context.”

272. Herzlinger and Parsa-Parsi. “Consumer-Driven Health Care: Lessons from Switzerland.”

273. Mattke et al., “Health Care Quality IndicatorsProject.”

274. “Swiss Voters Reject Health InsuranceChanges,” Agence France Presse, March 11, 2007.

275. Tanner, “Individual Mandates for Health

Insurance: Slippery Slope to National Health Care.”

276. Ibid.

277. Civitas, “The Swiss Healthcare System.”

278. Ibid.

279. Reinhardt, “The Swiss Health System:Regulated Competition without Managed Care.”

280. Herzlinger and Parsa-Parsi. “Consumer-Driven Health Care: Lessons from Switzerland.”

281. Peter Zweifel, “Switzerland,” Journal of HealthPolitics, Policy, and Law 25 (2000): 937–44.

282. Zweifel, “Competitive Mechanisms in HealthCare.”

283. Hertzlinger and Parsa-Parsi, “Consumer-Driven Health Care: Lessons from Switzerland.”

284. Alphonse Crespo, “Swiss Health Care: AClockwork Model That Fails to Keep Its Promise,”in The Dangers of Undermining Patient Choice: Lessonsfrom Europe and Canada, eds. Merrill Matthews,Grace-Marie Turner, and Julian Morris (Dallas:Institute for Policy Innovations, and Alexandria,VA: Galen Institute, 2006), pp. 16–19.

285. Hertzlinger and Parsa-Parsi, “Consumer-Driven Health Care: Lessons from Switzerland.”

286. Minder, Schoenholzer, and Amiet, HealthCare Systems in Transition: Switzerland.

287. Mattke et al., “Health Care Quality IndicatorsProject.”

288. David Greene and Benedict Irvine, “HealthCare in France and Germany: Lessons for the UK”(London: Civitas, The Institute for the Study ofCivil Society, 2001).

289. Ulla Schmidt, “Health Policy and HealthEconomics in Germany,” Speech given at the con-ference, The American Model and Europe: Past-Present-Future, Washington, January 27, 2006.

290. Kaiser Permanente International, “SelectedEuropean Countries’ Health Care Systems.”

291. Schmidt, “Health Policy and Health Economicsin Germany.” Roughly 14.2 percent covers standardhealth insurance, with an additional 0.9 percentgoing to cover dentures and sick pay. There is also aseparate 1.7 percent tax (1.95 percent for childlesscouples) to cover long-term care insurance. KaiserPermanente International, “Selected EuropeanCountries’ Health Care Systems.”

46

292. Kyle James, “German Health Care Reform:Mission Impossible?” Deutsche Welle, March 8, 2006.

293. Ibid.

294. Reinhard Busse and Annette Riesberg, HealthCare Systems in Transition: Germany (Copenhagen:European Observatory on Health Systems andPolicies, 2004).

295. Ibid.

296. Dennis Nowak, “Doctors on Strike—The Crisisin German Health Care Delivery,” New EnglandJournal of Medicine 355, no. 15 (2006): 1520–22.

297. Ibid.

298. Cited in Annette Tuffs, “Germany at Centreof Rationing Row as Budget in Crisis,” BritishMedical Journal 327 (2003): 414.

299. Christian Gericke, Matthias Wismar, andReinhard Busse, “Cost-Sharing in the GermanHealth Care System,” Berlin University of Tech-nology, 2004, http://www.ww.tu-berlin.de/diskussionspapiere/2004/dp04-2004.pdf.

300. Kaiser Permanente International, “SelectedEuropean Countries’ Health Care Systems.”

301. Boris Augurzky, Thomas Bauer, and SandraSchaffner, “Copayments in the German HealthCare System: Does It Work?” Institute for theStudy of Labor (IZA) Discussion Paper no. 2290,September 2006.

302. “Merkel Announces a Deal, Averts a Crisis,”Der Spiegel, October 5, 2006.

303. Siciliani and Hurst, “Explaining WaitingTimes Variations for Elective Surgery across OECDCountries.”

304. K. Davis et al., “Mirror, Mirror on the Wall:An International Update on the ComparativePerformance of American Health Care,” TheCommonwealth Fund, May 2007.

305. World Health Organization, “Highlights onHealth, Germany, 2004, www.euro.who.int/eprise/main/WHO/Progs?CHHDEU/system/200050311-1.

306. Hilke Brockmann, “Why Is Less MoneySpent on Health Care for the Elderly than for theRest of the Population? Health Care Rationing inGerman Hospitals,” Social Science and Medicine 55(2002): 593–608

307. Cited in Busse and Riesberg, Health CareSystems in Transition: Germany.

308. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

309. Wilfried Prewo, “Germany: How Not to Organizea Health System,” in The Dangers of Undermining PatientChoice: Lessons from Europe and Canada, ed. MerrillMatthews, Grace-Marie Turner, and Julian Morris(Dallas: Institute for Policy Innovations, andAlexandria, VA: Galen Institute, 2006).

310. Dieter Braeuninger, “Health Policy in Germany:Health Reforms Need a Dose of Market Medicine,”Deutsche Bank Research, June 13, 2006.

311. Disney et al., Impatient for Change, pp. 89–97.

312. Jonathan Cohn, “Shtiko: It’s No Fun to Agreewith Michael Moore,” New Republic, June 22, 2007.

313. Brett J. Skinner, “Paying More, Getting Less2005: Measuring the Sustainability of ProvincialPublic Health Expenditure in Canada,” FraserInstitute, October 2005.

314. Chaoulli v. Quebec (Attorney General), 2005SCC 35, [2005] 1 S.C.R. 791.

315. Nadeem Esmail, Michael Walker, and Dom-inika Wrona, “Waiting Our Turn, 16th Edition: Hos-pital Waiting Lists in Canada,” Fraser Institute, 2006.

316. Ibid.

317. Madhu Natarajan et al., “The Risks ofWaiting for Cardiac Catheterization: A Prospec-tive Study,” Canadian Medical Association Journal,November 26, 2002.

318. Cited in June O’Neill and David O’Neill,“Health Status, Health Care and Inequality: Canadavs. the U.S.,” National Bureau of Economic ResearchWorking Paper no. 13429, September 2007.

319. Chaoulli v. Quebec.

320. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 Countries.”

321. “What President Clinton Can Learn fromCanada about Price Controls and Global Budgets,”Policy Backgrounder no. 129, National Center forPolicy Analysis, October 5, 1993.

322. OECD, “Health at a Glance: OECD Indicators,2005.”

323. O’Neill and O’Neill, “Health Status, HealthCare and Inequality: Canada vs. the U.S.”

324. OECD, “Health at a Glance: OECD Indicators,2005.”

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325. Cited in Callahan and Wasunna, Medicine andthe Market: Equity v. Choice, p. 72.

326. Ibid, p. 69.

327. SiCKO, Dog Eat Dog Films, 2007.

328. “Edwards Campaign Unveils New ‘Underdog’Television Ad in New Hampshire,” John Edwards 08,news release, January 6, 2008, http://www.johnewards.com/news/headlines/20080106-underdog-ad/;Joel Zinberg, “Edwards’ Evil Insurance Scam,” NewYork Post, January 10, 2008.

329. Callahan and Wasunna, Medicine and the Market:Equity v. Choice; Disney et al., Impatient for Change.

330. Robin Toner, “Unveiling Health Care 2.0,Again,” New York Times, September 16, 2007.

331. OECD, “OECD Health Data 2007: Statisticsand Indicators for 30 countries.”

332. Quoted in Callahan and Wasunna, Medicineand the Market: Equity v. Choice, p. 109.

333. Cathy Schoen et al., “Toward Higher-Performance Health Systems: Adults’ Health CareExperiences in Seven Countries, 2007,” HealthAffairs, October 31, 2007.

334. For example, the CBS News poll, October12–16, 2007, found 25 percent of Americanschoosing health care as the most important issuein this campaign, second only to 26 percent choos-ing the war in Iraq. Similarly, an NBC/Wall StreetJournal poll, November 1–5, found 16 percentchose health care, second to the 26 percent whochose Iraq, http://www.pollingreport.com/prioriti.htm.

335. Schoen et al., “Toward Higher-PerformanceHealth Systems.”

336. Disney et al., Impatient for Change.

337. Richard Saltman and Josep Figueras, “Analyz-ing the Evidence on European Health Care Re-forms,” Health Affairs, March–April 1998.

338. Cited in Callahan and Wasunna, Medicine andthe Market: Equity v. Choice, p. 91.

339. “Cox Report on Financing Sustainable Health-care in Europe Presented to European CommissionToday,” Medical News Today, February 13, 2007.

340. Hans Maarse, “The Privatization of HealthCare in Europe: An Eight Country Analysis,” Jour-nal of Health Politics, Policy, and Law 3He1 (2006):981–1014.

STUDIES IN THE POLICY ANALYSIS SERIES

612. Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration by Jim Harper (March 5, 2008)

611. Parting with Illusions: Developing a Realistic Approach to Relations with Russia by Nikolas Gvosdev (February 29, 2008)

610. Learning the Right Lessons from Iraq by Benjamin H. Friedman, Harvey M. Sapolsky, and Christopher Preble (February 13, 2008)

609. What to Do about Climate Change by Indur M. Goklany (February 5, 2008)

608. Cracks in the Foundation: NATO’s New Troubles by Stanley Kober (January 15, 2008)

607. The Connection between Wage Growth and Social Security’s FinancialCondition by Jagadeesh Gokhale (December 10, 2007)

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