Publicly funded health care
Publicly funded medicine is a level of medical service that is paid wholly or in majority part by public funds (taxes or quasi-taxes). Publicly funded medicine is often referred to as "socialized medicine" by its opponents, whereas supporters of this approach tend to use the terms "universal healthcare", "single payer healthcare", or National Health Services. It is seen as a key part of a welfare state (see Welfare State for an interpretation in UK terms).
Publicly funded medicine may be administered and provided by the government, but in some systems that is not an obligation: there exist systems where medicine is publicly funded, yet most health providers are private entities. The organization providing public health insurance is not necessarily a public administration, and its budget may be isolated from the main state budget. Likewise, some systems do not necessarily provide universal healthcare, nor restrict coverage to public health facilities.
Proponents of publicly funded medicine cite several advantages: universal access to high quality care, equality in matters of life and death, the reduction of contractual paperwork, and the creation of uniform standards of care. One important difference is the reduction in the percentage of societal resources devoted to medical care (in other words public systems cost less than private systems).
Varieties of public systems
The majority of industrial societies have publicly funded health systems that cover the great majority of the population. For some examples, see the British, medicare (Canada) and Medicare (Australia). The role of the government in healthcare provision is however a source of continued debate where opinions diverge sharply.
Even among countries that have publicly funded medicine, different countries have different approaches to the funding and provision of medical services. Some areas of difference are whether the system will be funded from general government revenues (e.g. Italy, Canada) or through a government social security system (France, Japan, Germany) on a separate budget and funded with special separate taxes. Another difference is how much of the cost of care will be paid for by government or social security system, in Canada all hospital care is paid for by the government while in Japan patients must pay 10 to 30% of the cost of a hospital stay. What will be covered by the public system is also important; for instance, the Belgian government pays the bulk of the fees for dental and eye care, while the Australian government covers neither.
Public systems around the world
- In Australia the current system, known as Medicare, was instituted in 1984. It coexists with a private health system. Currently, the tax levy system of funding Medicare has lead to a severe revenue shortfall, with increased costs to patients. This has triggered reforms by the Howard government to the scheme. Many critics claim that these reforms are in fact a move away from the principle of universal health care.
- Canada has a federally-sponsored publicly funded medicare system, but each province may opt out, though none currently do. Basic services are wholly public, with no fee for service allowed. Other areas of health care such as dentistry and optometry are almost wholly private.
- In Finland the publicly funded medical system is funded by taxation and every citizen has a state-funded health insurance. The system is comprehensive and compulsory, like in Sweden, and a small patient fee is also taken.
- In France, most doctors remain in private practice; there are both private and public hospitals. Social Security is a public organization (actually, several of them) distinct from the state government, and with separate budgets. It generally refunds patients 70% of most health care costs, and 100% in case of costly or long-term ailments. Supplemental coverage may be bought from private insurers, most of them nonprofit, mutual insurers. Until recently, social security coverage was restricted to those who contributed to social security (generally, workers or retirees), excluding some poor segments of the population; the government of Lionel Jospin put into place the "universal health coverage".
- In Israel, the publicly funded medical system is universal and compulsory. Payment for the services are shared by labor unions, the military, and the treasury.
- In Sweden, the publicly funded medicine system is comprehensive and compulsory. Physician and hospital services take a small patient fee, but the services are funded through the taxation scheme of the County Councils of Sweden.
- In 1948, the United Kingdom passed the National Health Service Act that provided free physician and hospital services to all citizens. Most doctors and nurses are on government payroll and receive salaries, a fixed fee for each patient assigned, and enhanced payments for specialized treatments or skills. The National Health Service has been amended from time to time, but is largely intact. Around 86% of prescriptions are provided free. Prescriptions are provided free to people who satisfy certain criteria such as low income or permanent disabilities. People that pay for prescriptions do not pay the full cost. For example, in 2004 most people will pay a flat fee of £6.40 (€9.64, US$11.76) for a single drug prescription regardless of the cost (average cost to the health service was £11.10--about €16.70, US$20.40--in 2002). Funding comes from a hypothecated health insurance tax and from general taxation. Private health services are also available.
- The United States has been virtually alone among developed nations in not maintaining a publicly-funded health-care system since South Africa adopted one after toppling its apartheid regime, but a few states have taken serious steps toward achieving this goal, most notably Minnesota. Other states, while not attempting to insure all of their residents strictly speaking, cover large numbers of people by reimbursing hospitals and other health-care providers using what is generally characterized as a charity care scheme; New Jersey is perhaps the best example of a state that employs the latter strategy.
Parallel public/private systems
Almost every country that has a publicly funded health care system also has a parallel private system, generally catering to the wealthy.
From the inception of the NHS model (1948), public hospitals in the United Kingdom have included "amenity beds" which would typically be siderooms fitted more comfortably, and private wards in some hospitals where for a fee more amenity is provided. These are predominantly used for surgical treatment, and operations are generally carried out in the same operating theatres as the NHS work and by the same personnel. These amenity beds do not exist in other socialized healthcare systems, like the Spanish one, among others. From time to time the NHS pays for private hospitals (arranged hospitals) to take on surgical cases for which the NHS facility does not have sufficient capacity. This work is usually, but not always, done by the same doctors in private hospitals.
Even in the United States healthcare for the elderly, also known as Medicare, is financed from taxation, but often provided by privately owned hospitals or physicians in private practice. Another example is France where Social Security is a public entity which refunds patients for care in both private and public facilities; the majority of French doctors are in private practice. In some systems, patients can also take private health insurance, but choose to receive care at public hospitals, if allowed by the private insurer.
While the goal of public systems is to provide equal service, the egalitarianism is thus always partial. Every nation either has parallel private providers or its citizens are free to travel to a nation that does, so there is effectively a two-tier healthcare system that reduces the equality of service. Since private providers are typically better paid, those medical professionals motivated by remunerative concerns migrate to the private sector while the private hospitals also get newer and better equipment and facilities. A number of countries such as Australia attempt to solve the problem of unequal care by insisting that doctors divide their time between public and private systems.
Proponents of these parallel private systems argue that they are necessary to provide flexibility to the system and are a way to increase funding for the health care system as a whole by charging the wealthy more. Opponents believe that they are allowed to exist mainly because politicians and their friends are wealthy and would prefer better care. They also argue that all citizens should have access to high quality healthcare. The only country not to have any form of parallel private system for basic health care is Canada. However, many wealthy Canadians go to the United States for care.
Also, in some cases, doctors are so well paid in both systems that prestige is often more important to them than remuneration. This is very much the case in the United Kingdom where private medicine is seen as less prestigious than public medicine by much of the population. As a result, the best doctors tend to spend the majority of their time working for the public system, even though they may also do some work for private healthcare providers. The British in particular tend to use private healthcare to avoid waiting lists rather than because they believe that they will receive better care from it.
Role of the free market
Whether the free market can adequately deliver health care is the key question with regards to health care.
Perhaps the most commonly cited argument for the superiority of a government to a free market system is the example provided by the only free market system today in operation in a major nation. The United States has the only mostly private health delivery system in a developed country. It is below average by almost every health measure such as infant mortality, life expectancy, or cancer survival rates, while also being the most costly system in the world. In 2001 the United States spent $4,887 per person on health care. That is more than double the rate of any other G7 country, except Japan which spends $2,627 per capita annually. Surprisingly, the United States also spends a greater fraction of its national budget on health than such nations as Canada, Germany, France, or Japan.
A number of economists still come to the defence of the free market in health care. It is important to note that while the United States is the most private of any system, there is still a substantial public component. Of every dollar spent on health care in the United States 44 cents comes from some level of government. In addition, government also increases private sector costs by imposing licensing and regulatory barriers to entry into both the practice of medicine and the drug trade. Neoliberal economists argue that the American system is an only somewhat less public one and that no nation currently tries a truly free market delivery of health care. One of the largest extra costs in the United States are huge insurance costs to cover the vast payouts from malpractice lawsuits.
Most experts believe, however, that significant market failure occurs in health markets, thereby making a free market operate inefficiently. The consumers of health care are vastly less knowledgeable than the medical professionals they buy it from. The schools do little to remedy this, even basic preventive skills such as behavior and drug management of blood pressure, cholesterol and other risk factors are not taught. An individual making rational choices about his/her own health care is also unlikely, especially in a case of emergency. The extreme importance of health matters to the consumer adds to the problem of the information gap. This gives the medical profession the ability to set rates that are well above free market value. The need to ensure competence and qualifications among medical professionals also means that they are inevitably closely controlled by professional associations that can exert monopolistic control over prices. Monopolies are made even more likely by the sheer variety of specialists and the importance of geographic proximity. Patients in most markets have no more than one or two heart specialists or brain surgeons to choose from, making competition for patients between such experts very limited.
In theory when a government sets billing rates it can negotiate with the professional societies with equal heft and knowledge, reaching a total cost that is closer to the ideal than an unregulated market. Doctors' salaries do tend to be much lower in public systems. For instance, doctors' salaries in the United States are twice those in Canada.
Markets also fail to provide an efficient delivery for health care because prevention is such an essential component, but one that most people misjudge. Screening for diseases such as cancer saves both lives and money, but there is a tendency within the general population to not correctly asses their risk of disease and thus to not have regular check ups. They are only willing to pay a doctor when they are sick, even though this care may be far more expensive than regular preventative care would have been. The one exception is when extensive publicity, such as that for mammograms, is undertaken. Making regular appointments cheaper, or even free, has been shown to reduce both rates of illness and costs of health care. Conversely, placing the cost of a visit to a GP too low will lead to excessive visits wasting both a patient's and a doctor’s time. Thus while some experts believe free doctor visits produce ideal results, most other believe that forcing people to pay some fraction of the cost of an appointment would be better.
An argument against public health care is that the cost-benefit government decisions are influenced by factors tangential to providing the highest quality healthcare. Advocates of this view point to decisions by various boards based on value judgments rather than efficiency. For instance, breast cancer, which has a powerful lobby and a high visibility, gets more money than lung cancer, which is often seen as self inflicted due to smoking. In a free market system, assuming that one group of patients is no wealthier than the other, they would both be treated equally. However, in such a system, problems arise with the treatment of illnesses that are more likely to affect the poor than the wealthy (or vice versa).
All insurance also tends to increase risk taking. If getting ill results in no financial penalty, certain people may be more willing to expose themselves to potentially unhealthy lifestyles. Since in most public systems everyone pays equally, there is less incentive to stop smoking or lose weight than there would be if one’s lifestyle choices were showing up on a monthly insurance bill. Similarly, hypochondria may also be encouraged by free care. However, even in the United States, most people receive insurance through their employer, thus creating similar situations. Outbreaks of somewhat dubious diseases, like chronic fatigue syndrome are just as common, or even more common, in the United States as they are elsewhere.