Around the World in Healthcare Systems: Europe

The COVID-19 pandemic has highlighted problems in US healthcare -- inequity, fragmentation, complexity – and brought new urgency to long-debated questions about the effectiveness and financial sustainability of this multi-player system. While the US drives ground-breaking medical research and innovation, it spends more on healthcare per capita and as a percentage of GDP than other OECD countries but still has the lowest life expectancy and highest chronic disease burden. Not surprisingly, healthcare reform was a key topic in the 2020 presidential election, particularly during in the Democratic primary. Terms like “single payer” and “public plan option” entered the public discourse as candidates debated which healthcare system model would be best for the country.

To begin with, it would be challenging to find a true single-payer system anywhere in the world, and it’s important to acknowledge that no healthcare system is perfect. There are limits on healthcare supply and every system allocates care in some manner, pulling different levers to regulate demand. In the US, a lever often pulled is the cost of care to the individual – both the cost of insurance coverage and out-of-pocket costs for services. Other systems around the world use other means to balance budgets, such as limiting access to care with gatekeepers or permitting long waiting times to access care.

As the new US Presidential administration prepares to embark on its own quest for affordable, accessible, equitable, high-quality healthcare, we thought it would be instructive to share perspectives on other countries’ healthcare models, drawing on our organization’s long experience helping employers around the world ensure their employees have the healthcare that they need and want.

In the first post in this series, we will review the healthcare systems of a few countries in Europe. Most European countries have achieved a level of universal health coverage. Typically, the government provides a basic level of care access and does not use cost to the individual as a lever to regulate demand. However, there are key differences across the continent in exactly how the state is involved in the delivery and financing of healthcare.

United Kingdom

In the United Kingdom, universal health coverage is achieved through a highly centralized system (the Beveridge Model, named after its creator)in which the government is the primary payer and care is delivered by the National Health Service (NHS). This public healthcare system is strongly regulated and primarily funded through taxation, which enables most services to be free at point of use. Many, but not all, hospitals and clinics are government-owned, and while some doctors are government employees, even private doctors collect fees from the government. Regardless, the NHS largely controls what providers can charge for services.

While proponents of universal healthcare consider this system of centralized, free healthcare coverage a gold standard, one of its major disadvantages are long wait lists to access non-urgent care. A private market, accessed by individually purchased or employer-sponsored supplemental medical insurance, addresses this specific challenge. Approximately 10.5% of the population has private, voluntary supplemental medical insurance. The fact that this robust secondary private market exists means the UK’s system is not a true single-payer system, although the Beveridge Model comes closer than most.

France

France achieves universal coverage via the more decentralized Bismarck Model, where employers and employees fund health care coverage through standard payroll deductions directed to “sickness funds.” All employers are obligated to subscribe to a sickness fund on behalf of their employees and make social security contributions to cover the cost of health insurance. In this system, the government is responsible for both financing and managing (by setting premiums related to income levels and determining the prices of goods and services) these funds for all citizens and residents.

When individuals in France access care, only a percentage of the cost is covered by the sickness fund; the balance is technically a patient co-payment that can be reimbursed by supplemental health insurance plans (known as mutuelles). Approximately 99% of employees in France have access to a company-subsidized mutuelle. If an individual is unemployed, they can access care through the public health insurance system and are eligible for subsidies to cover the costs of co-payments.

Sickness funds generally cover 70% of medical costs. In cases of serious or chronic illness (such as cancer, diabetes, and mental illness) costs are covered in full and all copayments are waived. In France, general practitioners (GP) function as gatekeepers in the healthcare system, with a goal of limiting unnecessary hospitalizations and/or specialist care (excluding gynecology, ophthalmology, psychiatry, and some other types of care). GPs are reimbursed on a fee-for-service basis, with fees being government-defined. Seeing a specialist without a proper GP referral results in reduced coverage from the sickness fund.

Generally, French citizens express satisfaction with their healthcare system. It should be noted, however, that taxation and mutuelle contributions are high and long-term trends show falling reimbursement rates for state healthcare services and increasing payroll deductions – all of which indicate the financial challenges these funds face.

Netherlands

The Netherlands also leverages a decentralized healthcare system to achieve universal coverage. Unlike Germany and France, they do not use sickness funds; they have government-regulated health plans instead. All residents are legally required to apply for basic, private health insurance. Residents over the age of 18 are subject to premiums that can differ based on type of insurance and insurer. Being uninsured will result in a fine.

Although this mandatory individual coverage is similar to the individual coverage mandate originally instituted in the US under the Affordable Care Act (but later removed), basic private insurance in the Netherlands has low cost-sharing with a low annual deductible cap. This low-cost model provides all Dutch residents a minimum health benefit and exists alongside a competitive marketplace for affordable supplemental private insurance top-ups. The overall population is extremely satisfied with the existing healthcare system and the Netherlands has consistently been ranked a top-three healthcare system in Europe by the Euro Health Consumer Index. Despite this classification, some insured parties complain about the yearly (small) premium increase and wish for more nurses and better care.

Eastern Europe

Many Eastern European countries have healthcare systems that rely on social health insurance principles; the government raises and pools funds in order to finance health services. Although this model is typically a first step to achieving universal healthcare coverage, Eastern European countries have had varied levels of success in implementing this model. In theory, the public system covers almost everything, but there is considerable reliance by individuals on the private sector (insurers, providers, etc.) and quality of care in the public sector is often suboptimal.

Universal health coverage and health equity

While all European healthcare models have their challenges, most provide universal healthcare access. Having some degree of centralized cost controls within a universal coverage framework allows countries to allocate care irrespective of an individual’s ability to buy private insurance or pay out-of-pocket for access to care. It should be noted however that this does not necessarily eliminate systemic inequities as affluent individuals are still often able to self-navigate private care options to receive better care and /or quicker diagnoses and treatment than those who solely rely on public healthcare systems. Despite these challenges, the US can still learn a great deal regarding care affordability and meeting basic standards of care from universal systems.

Up next in this series: Asia.

Amelia Edwards
by Amelia Edwards

Associate for Global Business Solutions, Mercer

Liz Greenbaum Sherer
by Liz Greenbaum Sherer

Principal for Health, Mercer

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