Four Healthcare Financing and Delivery Models

As individual countries design their own healthcare financing and delivery systems, they make a number of policy decisions that are based upon ethical considerations. These decisions involve choices regarding who is covered, the method of financing the medical-care delivery system, and whether the delivery system is public or private. These healthcare financing and delivery systems are categorized below into four models and specific countries are identified that exemplify each type of model. It is important to recognize, however, that no country fits any model precisely, and that healthcare systems are dynamic. The four generic models are national health service, national health insurance, social insurance, and private voluntary health insurance.

NATIONAL HEALTH SERVICE. National health service systems usually collect revenues from general taxation, mandate the use of public facilities, and have limited cost sharing. As a result, countries with national health service generally offer the greatest equality in access to care and employ the most progressive financing methods. However, some critics have expressed concern that national health services may be relatively inefficient and unresponsive to individuals's healthcare service preferences (Enthoven).

The United Kingdom's National Health Service (NHS) is the archetypal example of this model. Since its creation in 1948, the guiding principal of the NHS has been equity— equal access to healthcare services for all inhabitants. The NHS offers a comprehensive array of government-provided services, a national benefits package, and is financed by general tax revenues. During the early 1990's, the concerns about inefficiencies and customer service led to introducing some market incentives and development of a system of competition within the NHS (Enthoven). However, subsequent reforms initiated by the Labor government largely abolished the quasi-market and emphasized the idea of collaboration with a return to strong elements of command and control (Le Grand).

NATIONAL HEALTH-INSURANCE PROGRAM. National health-insurance systems usually generate revenues from general taxation, have private providers and facilities, allow the government to set payment rates for healthcare providers, and may have limited cost sharing. The major difference between national health insurance and national health service is the ownership of the facilities.

The Canadian health system is an example of a national health-insurance system. Revenues are generated from general taxation, the government sets payment rates for the providers who participate in the system, and there is no cost sharing. Healthcare professionals must choose between participating in the national health-insurance system and opting out of the system entirely to work in the privately financed sector (Flood and Archibald).

SOCIAL INSURANCE. In social insurance systems, revenues are generated from payroll taxes, the private sector provides health insurance, private facilities are common, and the government sometimes sets payment rates for providers. Although insurance is compulsory, and thus accessible to all, the scope of healthcare benefits may vary by plan.

Social insurance, the first type of health insurance to be developed, was introduced in Germany by Otto van Bismarck [1815-1898] in 1883. Germany has continued to use the social insurance system, and several European nations and other countries like Japan and Korea have modified the basic social insurance model to meet their own needs (Glaser, Powell and Anesaki, Anderson).

PRIVATE VOLUNTARY HEALTH INSURANCE. In the private voluntary health insurance system revenues are generated by a variety of sources including premiums, payroll taxes, and general taxation, private facilities are the norm, the government may or may not set provider payment rates, and coinsurance is common (Maxwell, Storeygard and Moon). This system is likely to have the greatest disparity in access to healthcare services, since access is based upon ability to pay. In addition, it is common for a proportion of the population to be uninsured. In theory, this system should be more efficient than government-run health systems, because free-market competition should result in greater efficiency (Enthoven and Kronick). However, it is believed by many that free-market principles, such as a free flow of product information and price sensitivity among consumers, do not fully apply to the healthcare sector, and consequently competition and greater efficiency do not always occur (Rice et al.). The United States and many low and middle-income countries use a system of voluntary private health insurance.

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