European Healthcare Systems and Social Insurance

Introduction

A healthcare system constitutes the model through which a country or region mobilizes, accumulates, and allocates resources to cater for the health needs of the population(1). Regarding the role that the health care financing system plays, the literature indicates that if it is dysfunctional, there is a likelihood that health workers will not be employed, drugs will not be purchased, and prevention activities will not be implemented(2).

Such occurrences may severely compromise the healthcare state of the population that is served by such a system. A dysfunctional healthcare system could prove disastrous in the long run as the failure to address the healthcare needs of the population has a cumulative effect. Other than just providing prerequisite resources, choosing an appropriate also determines the manner in which individual members of the target population are able to spend their finances and hence determine their welfare(2).

The existing literature indicates that healthcare system models adopted should not only focus on ensuring that the resources are availed to cater for the costs of healthcare but should also ensure that the individuals in the target population are in a position to access healthcare with minimal or no risk of experiencing financial hardships(3). Thus, a healthcare system plays two integral roles, which include raising funds to cater to healthcare operations and ensuring that the funds are availed to costs centers in an efficient manner(1).

Notably, too, a healthcare system should enable the population concerned to move towards the achievement of universal health care coverage, improve the efficiency of the healthcare system and protect the population against the existing healthcare threats. Thus, choosing an appropriate health care system approach is critical to the success of the healthcare system as it has a bearing on the collection, pooling of funds, and the purchase as well as the provision of services to the patients. Based on this specific need, this paper seeks to compare and contrast social health insurance and tax-based systems through the review of various systems across the globe.

Social Health Insurance

Social health insurance is classified as one of the principal healthcare delivery models, with most low-and-middle-income countries adopting it as a measure to facilitate the achievement of the goal of universal health coverage(4). The concept of social health insurance focuses on the pooling of the risks among all the healthcare stakeholders. For example, it risk pooling involves the target population, on the one hand, individual contributions, households, governments, and in some situation enterprises being included among the contributors towards healthcare financing(5).

In most cases where the social health insurance is utilized, the working people, including the self-employed, and the employers are required to make contributions towards covering the healthcare services that are accessible to the insured persons and their dependents(6). The government is then required to pay some subsidies towards improving the financial sustainability of the healthcare system that is financed through social health insurance(4).

Notably, though, there could be variations in the manner in which social health insurance is implemented. For example, there are situations where the contributions are held in a single fund, whereas, in others, different funds are required to compete for membership under the healthcare system(7). In some situations, the funds are run by the government, its parastatal organizations, or non-government entities with contributions being designed in a manner that ensures that the rich make higher contributions then poor people(3).

Based on the social health insurance model of financing health care, the pooling of risks tends to ensure that the sick do not have to pay more to acquire health services compared to the healthy members of the population(8). Thus, the financial risk is shared access to the health lifecycles of all the individuals.

Regarding the achievement of universal coverage and the promotion of equitable access to care, the social health insurance systems have considerably failed in the pursuit of this objective. For example, among the developed countries, it took Germany about 127 years to achieve the scale-up that is required to increase access to healthcare among its population. The slow progress towards the universal health coverage under social health insurance is largely associated with the inability to force people to join the scheme thus, making it a voluntary program that is further affected by the common issues such as adverse selection and fragmentation of the risks pools.

With most of the social health insurance approaches targeting the individuals in formal employment at the onset, it is become increasingly challenging to include the individuals in the informal sector since they are hesitant to make contributions.

The social health system marginally contributes to the improvement of the health status of individuals, families, and communities. For example, an evaluation of the various countries where the model has been adopted, there has been a significant reduction in the number of low birth weight children, lower population-related deaths, and improved mortality statistics. These positive results are largely associated with increased healthcare spending as a percentage of the gross domestic product that is associated with social health insurance. The relative efficiency associated with social health insurance stems from the increased privatization of healthcare.

Tax-Based System

The tax-based healthcare system generally refers to a model where government revenues are predominantly used to cater to healthcare expenses. Under the tax-based system, individuals contribute towards healthcare through a variety of channels, including income tax, property tax, purchases, and capital gains hence increasing the pool of funds that are available to cater to the healthcare expenses(9). Historically, this practice can be traced in 1911 when the British government passed the National Insurance Act, which required employees to make payroll contributions towards the financing of healthcare services(10).

The system then evolved after World War II, where the government developed a universal tax-supported health system to cater to the expenses associated with the healthcare operations(11). Most colonies of the British government adopted the tax-based system for financing healthcare with minimal changes being introduced at various points, which is consistent with the World Health Organization (WHO) records(10).

Theoretically, the existing literature indicates that adopting a tax-based healthcare system accords most nations various advantages that would not be obtained from other models (12). The most fundamental argument that is used to support the use of the tax-based system is that the approach is effective in pooling the health risks among a wider population hence ensuring that the costs of healthcare are reduced and cautions the populace from catastrophic healthcare expenditure(13).

The system also avoids risk selection as is seen in the insurance-based health care system where the insurer tends to screen potential individuals for enrollment focusing to accommodating the members of the population whose health risks are below average(14). This view of the tax-based system is generally based on the theoretical assumptions of the advantages that it accords the countries that adopt it as a method of financing health care. However, the practicality of the method would be clearer after reviewing its operationalization at the country level for those nations that have adopted this system of healthcare finance.

Notably, the tax-based health care system has produced better results in the progress towards universal coverage. The users of the health care services under the tax-based health care system tend to enjoy higher access given the minimal costs requirements associated with the service provision. The system does not necessarily require that users to make any form of payments to be enrolled and hence there is increased access to healthcare. On the other hand, the tax-based system tends to have increased focus on the primary care system which in essence means that there is increased access to a wider variety of services such as preventative care, treatment of chronic illnesses and focus on personal health which when coupled with the improved coordination of the healthcare providers tends to have better health outcomes.

The tax-based system tends to have higher efficiency given the better coordination of healthcare services that use the general practitioners as the gatekeepers in the provision of services. This system tends to offer a better defense of the population in regard to the health threats that exist in the countries concerned(15). For example, the tax-based health care system integrates various public health approaches to the provision of healthcare including health education and promotion of preventative services. Thus, the model tends to increase the close working relationship between the public healthcare system and the clinical services which in essence ensures that improved health among the population.

Review of Healthcare Systems

Canadian Helathcare System

Canada adopts a tax-based healthcare system through its national health insurance program tend to enjoy various benefits that are associated with this form of healthcare finance(16). Given that the model allows for the large part of the services to be provided by the private practitioners, patients are likely to enjoy quality services at a relatively cheaper rate. For example, despite the government leaving the control of the processes involved in the provision of health care to be controlled by the services providers, it still does regulate the sector to ensure that it pays for quality services(17).

The need for governments to control the spending that is associated with the tax-based system leads to various challenges that are associated with this model for financing health care. The literature indicates that the most common approaches the government adopts when handling the issues of increased spending under the tax-based system are through the increase in the amount of tax that is levied or by reducing the number of services that are provided within the healthcare system(18).

For example in Canada, the government has resulted in the reduction of services that are offered under its healthcare system. The Canadian administration has adopted a list of what is termed as medically necessary and thus, they tend to exclude the services that are deemed as being over utilized from this list with the aim of reducing the resources required to finance healthcare.

Netherlands

Following a major reform in its provision of healthcare, the Dutch government adopted changes in 2006 the led to the introduction of the current healthcare system which introduced a social health insurance system for financing healthcare(19). The country has a single compulsory insurance scheme through which the private insurers use to compete for their clientele. The system allows the health insurers to negotiate the pricing aspects of the services directly with the healthcare providers and tend to make profits while still ensuring that the quality of care is maintained(20).

However, as is the case with the most social health insurers, the insurers under the Dutch system are obliged to accept new applicants without differentiating their premiums on the basis of the risks profiles they create about these individuals(21). The regulation of the manner in which the profiling of new applicants is carried out ensures that there is wider delivery of the healthcare services to the population as opposed to the narrowed situation where individuals that are considered to be high risk are required to pay higher premiums and in times end up being excluded from the healthcare system(17).

Thus, due to this approach towards financing health care, the Dutch healthcare system is able to cater for individual who have chronic illnesses who constitute a large number of the population and would otherwise present a burden to the government if they had been ignored(19).

The Dutch government still has an upper hand regarding the control of the quality, accessibility, and affordability of the healthcare services ensuring that the citizenry is cushioned from experiencing catastrophic healthcare expenditure(22). The increased government participation has ensured that there is extensive infrastructure to finance the research activities and continually develop the required technology to offer quality healthcare services for the populace.

Compared to the tax-based system where the government finances the health care with a view of reducing costs as a result of increased healthcare consumption as seen under the Canadian healthcare system, the social health insurance under the Dutch system largely focuses on making sure that the population is responsible for the services they acquire(23).

Under the Dutch system, also provide for a wider range of services given that the adoption of social health insurance which seeks to spread out the risk among the wider population as opposed to just overlooking certain services(24). For example, the Dutch social health insurance ensures that the insured have access to dental services through private dentists and dental hygienists with citizens being required to register with a specific dentist.

When compared to the tax-based system under the Canadian healthcare approach, excludes provision of services such ad dental and associated care given the perception that these require an extensive amount of resources to finance and hence rather than increase the costs to ensure that they are financed, it si better to just leave them out and have the population seek them from private providers at a higher cost(25).

The fact that the Dutch social health insurance caters for a wider variety of services that are excluded from the tax-based system, this gives the patients a wider range of providers to choose from hence increasing the quality of care that they wider society can be able to access.The Dutch government is able to cooperate with the wider variety of service provider including nursing homes and other pre-hospitalization centers, hence increasing the access to the health care among the population.

The Dutch healthcare system is prone to the failure to enable the country to achieve universal health coverage. For example, it has been shown that some individuals who are young and healthy are likely to take different approaches to their health care finance(26). In most cases due to the need to contribute towards their healthcare, the young individuals who generally consider themselves to be healthy are likely to opt out of the arrangement and hence end up undermining the cross-subsidization.

The main cause of the young people’s desire to exit the healthcare system results from the Dutch’s system having a mandated insurance contribution which would make a section of the population that perceives themselves as being healthy to opt out of the arrangement(22). The system is also associated with higher health system costs and hence significantly lowers the progress towards equitable healthcare.

Sweden

Sweden’s healthcare system is largely a tax-based system with the 9.9% of the gross domestic product being allocated to the provision of healthcare services. The taxes used to finance the health care services in Sweden are levied by both the national and county governments(27). About 4% of the population having voluntary health insurance, the amount the financing fo healthcare through this provision only accounts for about 0.2% hence is regarded as very low and with a minimal bearing on the policy approaches that are adopted within the healthcare system(17).

As opposed to the other tax-based system, the users are required to pay user-fee that are mainly the safeguard measure to the over utilization of the services being provided. The patients have are required to pay about SEK 80 for a day hospitalization with the vulnerable and patients who are under 20 years of age being exempted from the payment(27). Notably, the government makes attempts to control the high-cost of healthcare through setting ceilings on the amount that the individuals are required to pay which is largely set at about SEK 1,100 with the subsidies increasing to cater for the other services obtained about this value each year.

Patients are required to pay for the drug prescriptions that are not subject to the payments under the national health system. The increased government engagement in healthcare provision, the system has ensured that the Swedish population does not incur catastrophic healthcare expenditure(28). The government involvement does not engage in the limitation of the services to be provided.

Regarding tax-based system improving the progress towards the acheivment of universal coverage, the Swedish healthcare model has had positive achivements. The alteration in the Swedish healthcare system has allowed the patients to be in a position to have access to the services that are perceived as expensive. Dental services for individuals who are 20 years and below are provided with waivers hence guaranteeing them free access to these services.

As opposed to just denying the patients access to the dental services, the government has ensured that they can still be accessible through the provision of preventative health care(29). This form of implementation of a tax-based system under the Swedish healthcare ensures that the practices of limiting services that are deemed to be expensive are still provided with the contributions from the patients being used as a safeguard measure that deters overutilization.

Notably though, during the previous decades, this form of tax-based approach to healthcare that relied on the contributions from the local government led to some complications which the Swedish government is working towards controlling.

For example, the country has been riddled with instances of the equity of access to healthcare being taken for granted(30). This was evident as multiple regions have been shown to lag behind in regard to the investments that are being made in regard to healthcare. The regions that had higher contributions in terms of taxes paid towards health care have continued to receive preference in terms of healthcare investments. The government has however had to create new policies to address this situation.

Conclusion

The existing literature has demonstrated that there are significant differences in regard to the approaches that are applied to the social health insurance and the national tax-based system. Despite the national tax-based system performing better regarding the provision of healthcare services through cushioning the users from having to make any out of pocket payments, there are some challenges that this system tends to experience.

Under the national tax-based system there increased utilization of the services leading to higher costs of providing care but on the other hand this leads to increased access to care hence leading to progress towards universal coverage. The social health insurance tend to introduce some user fees which are critical in preventing overutilization of services by the population.

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