Single-Payer Health Care Systems - International … · Single-Payer Health Care Systems: ... volved in the funding and delivery of health care to employees and their de- ... The

� Single-Payer Systems

Single-PayerHealth Care Systems:The Roles and Responsibilities

of the Public and Private Sectorsby Jeffrey D. Munn and Lynne Wozniak

Health care systems all over the world are experiencing some change as theylook for a new balance between supply and demand. This article providescontext for the U.S. health care financing debate by examining the health caresystems of five other countries: Canada, the United Kingdom, Australia, Chinaand India. The authors show that, with few exceptions, countries around theworld have seen an increase in both government and private health carespending between 1998 and 2002. The authors also demonstrate that em-ployers throughout most of the world are becoming more, rather than less, in-volved in the funding and delivery of health care to employees and their de-pendents—even among nations with so-called single-payer health systems.

During the last two decades, all healthcare systems, regardless of whetherpublic, private, single-payer or multi-payer systems, have faced rising de-mands and limited resources.A myriadof factors has contributed to this envi-ronment, such as advances in the med-ical technology used to diagnose andtreat illnesses and injuries, an increasein risk factors as individuals continue

to engage in poor health habits, and a rise in globalhealth concerns like the outbreak of severe acute res-piratory syndrome (SARS) and fears over avian flu.The largest driver of increases in cost, however, is theaging population. Older individuals tend to consumethree to five times more health services per capitathan younger individuals.

In response, all systems, by design or default, haverationed care. In private or market-driven systems,the provision of care is based on ability to pay. In

public, notably single-payer systems, care has been ra-tioned through waiting lists, schedules for nonessen-tial care and prescription drug formularies that havebecome more restrictive. No system is perfect. Allhealth care systems are striving to achieve a sustain-able equilibrium among accessibility, cost and qualityof care.

In this article, the authors examine the similaritiesand differences in three single-payer systems in ad-vanced economies—Canada, the United Kingdomand Australia—and two emerging market economies—China and India. Like health care systems all overthe world, these systems are experiencing somechange as they look for a new balance between sup-ply and demand. These changes involve a reexami-nation of the role the public and private sectors playin the responsibility for care (government, employ-ers and employees) and in coverage (public vs. pri-vate insurance). Generally, we find that the term“single-payer health system” is a misnomer. Even in

BENEFITS QUARTERLY, Third Quarter 2007 7

8 BENEFITS QUARTERLY, Third Quarter 2007

the most well-known government health care sys-tems, private insurance, especially that provided byemployers, plays a significant and, in many cases,growing role.

GLOBAL HEALTH CARE EXPENDITURES

With few exceptions, government expenditureson health care relative to general inflation in-creased steadily during the period 1998-2002 for a sample of countries in the Americas, Asia and Europe (Figure 1).

Growth in public spending is only marginally cor-related with the type of health care system. Govern-ment spending tends to decline precipitously in peri-ods of economic crisis. In Argentina, per capitagovernment expenditures on health fell from US$364in 2001 to US$120 in 2002, the year the governmentwas forced to end the peso’s peg to the U.S. dollar andallow the currency to float freely. In Singapore andthe Philippines, government-imposed austerity pro-

grams designed to pull the respective economies outof the recession created by the regional financial cri-sis of the late 1990s meant fewer public funds wereavailable for health care.

Public spending for health care rose at a muchhigher rate in two emerging economies—Indonesiaand China. Indonesia recovered rapidly from the re-gional financial crisis due to its oil revenues; overallpublic expenditures increased on welfare and educa-tion as the government tried to quell popular protestdue to political instability. Government spending inChina on health care has been facilitated by the coun-try’s rapid economic growth.

Similarly, total private expenditures (employer andindividual) rose during 1998-2002 (Figure 2). Again,spending increased in countries with public and pri-vate systems alike. In China and India, the rate ofgrowth in private expenditures was the highest, due tothe increase in disposable income among the burgeon-ing middle class and the war for talent that employersare waging, particularly as global sourcing intensifies.

FIGURE 1

ANNUAL GROWTH OF GOVERNMENT EXPENDITURE ON HEALTH CARE RELATIVE TO GENERAL INFLATION (1998-2002)

Source: World Health Organization.


During the Argentine economic crisis, as real wagesfell to their lowest level in 50 years, individuals simplyhad less money to spend on health care. In Chile, wagesstagnated and unemployment rose as the economy suf-fered from the contagion effect of the Argentine crisis.Low levels of individual savings precluded individualsin the Philippines from maintaining their usual level ofexpenditures on health care. In Singapore, on the otherhand, private savings and increased company expendi-tures for health care sustained spending.

Throughout most of the world, employers are be-coming more, rather than less, involved in the fundingand delivery of health care to employees and theirdependents (Figure 3). Companies—typically multi-nationals—offer supplementary health insurance orshare in its cost, oftentimes to distinguish themselvesas “employers of choice,” even in public single-payersystems. In single-payer systems in advancedeconomies, these supplemental plans may be directedtoward executives or complement care provided bythe public system. In single-payer systems in emerg-

ing economies where the public health care systemmaintains its universality by providing only very ba-sic care, health care benefits play an important role inattracting and retaining employees.

SINGLE-PAYER SYSTEMS—CANADA, THE UNITED KINGDOM AND AUSTRALIA

Single-payer health care systems—regardless ofwhether they are located in the Americas,Asia or Eu-rope, advanced or emerging markets, or countriesgoverned by conservative or social democratic par-ties—share a common goal: to provide universal,comprehensive care without impediments to reason-able access. While the goal is common, the actual op-eration of single-payer systems and their interactionwith the private sector tend to differ, reflecting thestructure of the government, the robustness of theeconomy and the country’s demographic profile,among other factors.

FIGURE 2

ANNUAL GROWTH OF TOTAL PRIVATE EXPENDITURE ON HEALTH CARE RELATIVE TO GENERAL INFLATION (1998-2002)



Public Health Care Systems

Administration and Delivery

Health care in Canada falls under provincial andterritorial rather than federal control. Each provinceand territory is responsible for the administration ofa health care plan that meets the criteria establishedin the Canada Health Act, federal legislation that setsthe framework to which the subnational governmentsmust adhere. In the United Kingdom, the nationalgovernment, through the National Health Service(NHS), is responsible for health care; however,administration of care is managed by local “strategichealth authorities” and “trusts” that plan and pur-chase health care services. In Australia, the nationalhealth insurance system is a national-level system,administered at the commonwealth (federal), stateand local levels by Medicare Australia. The state andterritorial governments’ responsibilities include hos-pital services; home and community care; child, ado-lescent and family health services; and rehabilitationprograms.

The majority of health care facilities are publiclyowned in the United Kingdom, and health care per-

sonnel work for the government. NHS offers individ-uals a limited choice of medical facilities in whichthey may be treated. In Canada, patients have theright to choose their own doctors; approximately 95%are in private practice. However, hospital facilities areoverwhelmingly public—Over 96% of hospital bedsare found in provincial and federal hospitals. Aus-tralian health care professionals are generally in pri-vate practice. Approximately 58% of all hospitals inAustralia are publicly owned; the remaining 42% arerun by the private sector. Doctors in Canada and Aus-tralia are reimbursed by the government according toa schedule of fees (usually around 85% of the sched-uled fee); similarly, private hospitals providing ser-vices to patients covered by the health care systemare subject to a fee schedule.

Financing

The public health care system is financed primarilythrough general tax revenues in all three countries. InCanada, employer contributions (in Manitoba, New-foundland and Labrador, Ontario, and Quebec), andemployee premiums (in Alberta, British Columbia,Northwest Territories and Nunavut, and Ontario)

FIGURE 3

ANNUAL GROWTH OF COMPANY EXPENDITURE ON HEALTH CARE RELATIVE TO GENERAL INFLATION (1998-2002)



supplement federal grants to the provinces and terri-tories. In the United Kingdom, more than 80% ofNHS funding comes from general taxation; the re-maining 20% is financed by national insurance contri-butions and patient copayments. Funding for theMedicare Australia system is supplemented by amedicare levy of 1.5% of an employee’s taxable in-come. A general threshold is applicable to out-of-pocket costs (the difference between medicare bene-fits and the doctor/hospital fees). Private insurancemay cover the gap for inpatient services, and undercurrent government proposals, it may be possible forprivate insurance to cover any charges above the feeschedule paid by insureds for services provided out-side a hospital.

Eligibility

The public health care system is open to residentsand their dependents. In the United Kingdom, resi-dents meeting legal requirements are eligible for careafter six months in the country. All employees payingnational insurance contributions and income taxesare immediately eligible. In Canada, all provincial andterritorial plans provide coverage for residents inneed of emergency care and treatment while tem-porarily absent from their home jurisdiction. Homejurisdiction coverage is continued for two months af-ter the month of arrival in the new jurisdiction plus insome cases, time spent in transit. In addition to resi-dents, all three countries have reciprocal health careagreements with certain countries that entitle short-term visitors to medical benefits.

Coverage

The three health care systems provide comprehen-sive coverage including general medical, inpatient hos-pital and outpatient services. Dental and vision careand medical supplies and appliances are typically sub-ject to guidelines. Prescription drugs are covered bythe public health care systems in the United Kingdomand subsidized by Medicare Australia. In Canada, pre-scription drugs for residents under age 65 are gener-ally excluded from provincial and territorial coverage(except in Saskatchewan, Manitoba and British Co-lumbia). Several provinces provide limited/cata-strophic drug coverage for residents under age 65.Quebec also guarantees drug coverage for all resi-dents, although it is largely provided by private plans.

PUBLIC SECTOR AND PRIVATE SECTORRESPONSIBILITIES FOR HEALTH CARE

During the past two decades, Canada, the UnitedKingdom and Australia have been following differ-

ent approaches to sustaining their single-payer sys-tems by sharing the responsibility for care with em-ployers and individuals. In Canada, a robust privateinsurance market exists along with the public healthcare system, and employers step in to provide sup-plemental coverage. In the United Kingdom, themarket for private insurance is steadily growing;however, under the current system of tax incentives,employees are not clamoring for employer-providedcoverage. The Australian government has put indi-viduals front and center by giving them incentives forthe purchase of private health care insurance.

Canada

The private sector has long played an importantrole in the provision and delivery of health care inCanada. Since the institution of a public system dur-ing the 1960s, employer-provided health insurancehas served to supplement government-provided ben-efits. During recent years, escalating health care costs,increasing wait times for care and a growing talentshortage created by an aging population have encour-aged employers to play a more active role. Mostprovincial governments encourage employers to fillthe gaps in their health care systems with favorabletax treatment for employer contributions to supple-mental medical, dental and vision care. Employercontributions are deductible; the employer contribu-tion is not considered a taxable benefit to the em-ployee; and no tax is assessed on the benefit payout.

� THE AUTHORS

Jeffrey D. Munn is a principal in Hewitt’s Wash-ington, D.C., consulting office. He leads Hewitt’shealth management design and developmentteam and is responsible for thought leadershipand product development related to health andhealth care. Munn has been at Hewitt since 1995.Lynne Wozniak is team leader for Hewitt’s inter-national research services. She is responsible fortracking and reporting on technical and legisla-tive issues related to global employment, includ-ing health care. Wozniak has been with Hewittsince 1998.


In Quebec, however, the cost of medical and dentalcoverage is added to taxable income for purposes ofQuebec income tax.

On average, 42% of employees have employer-provided medical/dental, life and disability insurancebenefits.1 Of employers with over 25 employees, 99-100% offer health care benefits. If employees haveonly one nonwage benefit, medical insurance is themost common benefit. (See Table I.)

The most common private medical plan coinsur-ance percentages provided by employers are 100%and 80% for both major medical and prescriptiondrug coverage. Many employers offer medical anddental plans or medical alone for their retired em-ployees, and most of these plans do not require con-tributions from the retirees.

In general, provincial governments prohibit pri-vate plans from covering the services offered underthe provincial plan. Supplemental plans cannot beused to purchase enhanced care for government-pro-vided services. In June 2005, the Supreme Court ofCanada ruled that individuals in Quebec have theright to obtain private health insurance for servicesalready available under the public health care system(Chaoulli v. Quebec), thereby reopening the debate

about the role of private insurers and payment in thecurrent system.

In December 2006, the government of Quebecpassed legislation (An Act to Amend the Act Re-specting Health Services and Social Services andOther Legislative Provisions) reaching, at least, par-tial resolution to the discussion. Now, Quebecers areallowed to purchase private health insurance forthree surgical procedures with long waiting lists—knee replacement surgery, hip replacement surgeryand cataract surgery.

The court ruling and the new Quebec legislationhave led the other provinces to examine whether anexpanded private sector would create greater effi-ciencies or inefficiencies in the provision of healthcare in their jurisdictions. The concept of a two-tierhealth care system is not popular with most Canadi-ans, who fear that the funding and quality of the pub-lic system would deteriorate if a parallel, rather thancomplementary system, was created.While the debatecontinues, employers continue to plug at least somegaps as employees demand better care.

United Kingdom

Overall, the quality of services provided by NHSremains high, but there may be long waits, especiallyfor nonessential (elective) care. A private health caresystem has grown up to supplement NHS. Privatemedical insurance covers approximately 10% of thepopulation; an estimated one-fifth of private care pa-tients do not have insurance but pay directly upon ad-mission.

Company-paid premiums for health insuranceplans are deemed to be taxable income to the em-ployee. Consequently, lower-paid employees have tra-ditionally not wanted coverage since the premiumswere taxable and NHS was viewed as “free.” Employ-ers provide preretirement medical benefits mostly toexecutives and upper-level salaried employees. Typi-cally, employers cover the entire cost of insurance forexecutives and family members; cost-sharing plansare common for nonexecutives.

In 2000, the government released a new NHS plan,a ten-year effort to improve the system by upgradingfacilities, increasing the number of health care per-sonnel, decreasing wait times, and fostering coopera-tion between purchasers and providers. “Competi-tion” is being introduced into the system by givingpatients a choice, albeit limited, of health care facili-ties.This latest round of reforms continues to focus onNHS itself; it displaces an explicit review of the roleof private insurers in the provision of health care andthe role of employers and individuals in assuming re-sponsibility for health care.

TABLE I

PREVALENCE AND CHARACTERISTICSOF EMPLOYER-PROVIDED MEDICAL PLANS IN CANADA1

Plan Percent of Characteristics Employers

Choice in Medical Plans

No choice 58%

Flexible benefit plan/choice of options 42

Two options 5

Three options 15

Four options 17

Five or more options 5

No coverage 0

Prescription Drug Cost Containment

Coinsurance less than 100% 42%

No cost-containment features 40

Other 18

1. For active employees only.

Source: Statistics Canada.


Australia

To reduce individuals’ dependence on the publichealth care system, the Australian government hascreated a series of incentives and surcharges to pro-mote the purchase of private health insurance by individuals.

• Lifetime Health Cover—Individuals who pur-chase hospital coverage early in life and maintainthis coverage pay lower premiums throughouttheir lives when compared to individuals who pur-chase coverage later in life. To lock in the lowestpremium, hospital coverage must be purchasedshortly after the individual turns age 31. Individu-als who take out coverage after age 31 pay a 2%loading on top of their premium for every year af-ter age 31; the maximum loading is 70%.

• Federal Government Rebate on Private HealthInsurance—The government offers a 30%, 35%,or 40% rebate on premiums for private healthinsurance depending on the age of the oldestperson covered by the policy and the number of days this person was in a given age category.The rebate is 30% if the oldest person coveredby the policy is under age 65, 35% if the oldestperson is age 65 to age 69, and 40% if the oldestperson is age 70 or older. Anyone who is insuredunder medicare and who is enrolled with a licensed health benefit organization is eligible forthe rebate.

• Medicare Levy Surcharge—High-income indi-viduals who are eligible for medicare but havenot purchased an appropriate level of health insurance with a registered health fund are sub-ject to an additional 1% surcharge on taxableincome.

Employers, on the other hand, have few incen-tives to provide employees with private coverage.Under the Fringe Benefits Tax Assessment Act 1986,employment-related noncash fringe benefits aresubject to tax, unless specifically exempt. The fringebenefits tax (FBT) is a federal tax separate from income tax. It is levied on an employer when em-ployees or associates of employees receive fringebenefits either from the employer or from a thirdparty. Benefits subject to an FBT—including privatehealth care insurance—are tax free for employeesand FBT payments are deductible from corporate income tax. However, a decline in employer-pro-vided health insurance has been caused by FBT rates(46.5% per year through March 31, 2007), the addi-tional administrative costs attached to calculatingFBT and employees’ preference for choosing theirown health fund.

According to data from the Australian Institute ofHealth and Welfare (AIHW), private health insur-ance covered 31.8% of total nongovernment expen-ditures on health services in 2004/2005. Insurance isprovided through “health benefit organizations” (orhealth insurance funds) that are licensed in accor-dance with the terms of the National Health Act of1953. According to the Private Health Insurance Ad-ministration Council (PHIAC), there are 37 healthbenefit organizations nationwide, 28 of which areopen to the general public and nine reserved for spe-cific groups (for example, teachers’ federations).

As of December 2006, 43.4% of the populationpurchased private health insurance for hospital cov-erage and 42.8% purchased ancillary coverage (e.g.,physical therapy, dental, and vision), according toPHIAC. Premiums are determined on the basis of“community rating”—Single, family, couple and single-parent coverage is available.

SINGLE-PAYER SYSTEMS—CHINA AND INDIA

While China and India attract economic investmentin all industries—from low-cost manufacturing to thebusiness process outsourcing of professional servicesand research and development—talent issues are be-coming more and more complex. In order to attract,retain and manage their workforce, employers are tak-ing a hard look at their benefits packages, particularlythose elements related to health care. Despite in-creased government attention, the public health caresystems have not been able to meet demands for care.

. . . Talent issues are becoming more and more complex.

In order to attract, retain and manage theirworkforce, employers are taking a hard look

at their benefits packages, particularly those elements related to health care. �


ChinaThe search for a health system model in China has

been complicated by the move from a planned to amarket economy. This move disrupted the traditionalstructure and financing of health care and encour-aged other societal changes, specifically rapid urban-ization that put additional stress on the system. Thedisruption in the traditional model and the transitionto a new health care system can be seen in the distri-bution of health care expenditures. From 1983 to2003, government and social insurance expendituresfell, respectively, from 37.43% and 31.12% in 1983 to16.96% and 27.16% in 2003. Out-of-pocket expendi-tures have become the primary source of health carefinancing, as expenditures increased from 31.45% to55.87% over the same period.

Public Health Care System

In 1998, the State Council issued guidelines for a new national medical plan with the stated goal of di shuiping, guang fugai (low benefit levels, wide cov-erage). The guidelines established a social insuranceapproach in urban areas—pooled risk at the munici-pal level. (Community-based financing is beingreestablished in rural areas.) The urban systems con-sist of individual medical savings accounts with a so-cial risk pooling account for inpatient and cata-strophic expenditures.

Municipal health insurance is financed throughemployer and employee contributions. Retirees areexempt from contributions. Under the guidelines, em-ployers contribute 6% of pay, distributed between thepooled account and individual accounts; employees

contribute 2% of pay, all of which is deposited in theirindividual account. The percentage of the employercontribution that is allocated to individual medical ac-counts varies by the individual’s age.

The minimum contribution is based on 60% andthe maximum contribution is based on 300% of thecity average wage for the previous year. Contributionrates are adjusted to each city’s prevailing economicconditions, and in many locations, the employer con-tribution has been increased.

Individual medical accounts cover an employee’soutpatient and emergency care and pharmaceuticaldrugs. In some cities, the employee also is responsiblefor a deductible before payment begins from the social pool. In Shanghai, the deductible is equal to10% of the city average wage for the previous year.

The social risk pool covers only those medical ex-penses specified by the Ministry of Health and localhealth authorities. Expenses include hospitalization,extended emergency care (prior to hospitalization),and treatments for serious illnesses on an outpatientbasis. Eligible expenses are paid according to a co-insurance schedule, and payments are limited to fourtimes the city average wage for the previous year.Any expenses exceeding this amount are paid by sup-plemental insurance plans or by the employee di-rectly. Social pools generally restrict their coverage tolow-expense and medically necessary treatment indesignated public hospitals.

Public Sector and Private Sector Responsibilities for Health Care

With the privatization of the health care system,employees increasingly have been looking to employ-ers to provide comprehensive health care coverage.To distinguish themselves as “employers of choice”and help employees avoid high health care costs, em-ployers have begun to develop their own health carebenefit strategy in China. Employers may deducttheir expenses related to health care provision, andhealth care coverage and benefits are not consideredto be taxable income to employees.

Nearly 90% of employers in China provide somekind of supplemental health insurance benefit to em-ployees. Almost all plans are paid completely by theemployer; the employee makes no contribution. Thetypical plan covers 80% to 90% of outpatient and100% of inpatient costs with a combined maximumannual benefit of CNY$20,000.

Supplemental benefits vary from a single benefitto comprehensive coverage. (See Table II.)

In the short-to-medium term, China’s “one-child”policy is likely to put pressure on employers to pro-vide dependent coverage for spouses and parents, as

TABLE II

EMPLOYER-PROVIDED SUPPLEMENTAL HEALTH BENEFITS IN CHINA

Benefit Prevalence

Employee Medical Checkup 91.0%

Dependent Medical—Children 58.9

Maternity Insurance 53.9

Critical Illness Insurance 41.9

Hospitalization Cash Allowance 40.3

Dependent Medical—Spouse 10.1

Dependent Medical—Parents 2.0

Source: Hewitt’s 2005 Compensation and Benefit Sur-vey with 654 multinationals responding.


each child is culturally—and financially—responsiblefor two parents and four grandparents.

IndiaPublic Health Care System

A limited social insurance system has been in placefor private sector employees since 1948.The programis administered by the states under agreement with,and reimbursement by, the Employees’ State Insur-ance Program. State governments arrange for theprovision of medical care through government hospi-tals and dispensaries, state government facilities orprivate doctors under capitation contracts. Benefitsinclude outpatient medical care, surgery, specialistservices, hospitalization, medicines, maternity care,and disability and cash compensation. This program,though attractive on paper, suffers from operationalweaknesses. There are currently about 35 millionbeneficiaries. The system has not been implementedin some states and some union territories.

Coverage applies to employees in companies withmore than ten or 20 employees (depending on thetype of establishment). Most states and districts cur-rently provide benefits for dependents as well. Sea-sonal employees, agriculture and certain other sec-tors, and employees earning more than INR$10,000are excluded. Disabled and insured employees arecovered upon payment of a nominal monthly fee. Ifemployee contributions cease, benefits continue to beavailable for 26 to 39 weeks, depending on the em-ployee’s contribution record, and may be extendedup to an additional 52 weeks for certain long-termdiseases.

State governments pay 12.5% of the cost of med-ical benefits. Employers contribute 4.75% of payrollfor covered employees; employees earning more thanIND$50 per day contribute 1.75% of earnings.

Public Sector and Private SectorResponsibilities for Health Care

Due to inadequate funding, individuals seekingcare from public providers typically experience longwaits in facilities with only basic medical equipment.Since many public facilities suffer from a poor repu-tation, many individuals use private facilities forhealth care services. According to a 2003 NationalCouncil of Applied Economic Research report, only35% of individuals seek care from public facilities formajor illnesses, regardless of income level.

Consequently, it is not surprising that the privatehealth care market is growing at a rapid pace. In ad-dition to the 65% of the population that use privatehospitals for treatment of major illnesses, over 80%

of outpatient services are provided by the private sec-tor. The main services provided are diagnostic andcurative; they also include other services such as den-tistry and pharmaceuticals.

Since most employees in multinational and largedomestic companies earn more than INR$10,000,they are excluded from the employee state insurancescheme. These employers generally provide their em-ployees with private health care insurance. Corporategroup health insurance plans are often based on afloater design under which the policy may be ex-tended to a spouse, children and sometimes parents.Under this type of plan, the employee has the optionof structuring health coverage on an individual orgroup basis (for example, selecting coverage for him-self or herself up to INR$300,000 or for the individualand two other family members at INR$100,000 each).

Company-sponsored plans usually provide 100%of medical costs, up to certain maximums. Employeecontributions are rare. Dental and vision care are usu-ally covered under the outpatient medical. However,unlike China, the provision of health insurance cover-age is not tax effective for employers in India—thecost of health insurance is subject to an FBT.An FBTis levied on an employer where employees or associ-ates of employees receive benefits either from theemployer or from a third party at the corporate in-come tax rate of 33.66% (including surcharge). Thetaxable value of an employer-provided health insur-ance plan (provided by a third party) is 20% of theactual cost. Benefits are tax free for employees. FBTsare not deductible against corporate income taxes.

. . . The private health care market isgrowing at a rapid pace. In addition to the

65% of the population that use privatehospitals for treatment of major illnesses,

over 80% of outpatient services areprovided by the private sector.

The main services provided are diagnosticand curative; they also include

other services such as dentistry and pharmaceuticals.�


However, the value of medical facilities madeavailable by an employer to an employee and the em-ployee’s family free of charge is not subject to anFBT and not taxable to the employee. Some largeemployers and public sector enterprises operategroup health policies for their staff or provide on-sitehealth care services. The reimbursement of medicalexpenses to the employee is also tax free, providedthat the amount does not exceed INR$15,000 peryear.

Historically, health insurance was sold to compa-nies as a rider to more lucrative property and casualtyinsurance policies. In 2005, the Insurance Regulatoryand Development Authority (IRDA) approved theestablishment of standalone health insurance compa-nies and, as a result, the private health insurance mar-ket is evolving rapidly. In 2006, several insurancecompanies announced that they would not offerhealth insurance as a standalone product. Meanwhile,some foreign companies have demonstrated an inter-est in the market.

CONCLUSION

This article has explored government-providedhealth care in countries outside the United States, inan attempt to provide context to the debate of howbest to pay for health care in this country. Several sys-tems, including Canada, the United Kingdom andAustralia, are well established and are generally re-garded as successful. Yet these three systems takevastly different approaches. Australia, in particular,has been more willing to hold individuals account-able for their health-related behaviors, for example,by penalizing people who delay buying health insur-ance until they are older (and more likely to needhealth care services). In the Australian system, thereare few incentives for employers to offer coverage.

This system, in contrast to other systems around theworld, combines a primarily public system with littlesupplemental coverage and a strong sense of individ-ual responsibility.

The United Kingdom and Canada, on the otherhand, focus on providing urgent care when needed,without incentives for early entry into the system.Consequently, much money spent by these systems isfor urgent and critical care, and there are substantialwaiting periods for basic and elective procedures.Employers have filled the gap here as a way to attractworkers. In many cases, individuals pay directly forservices if they are not covered by government or pri-vate insurance.

In China, the move to a market-based economyhas greatly disrupted health care, and employers aremoving aggressively to provide benefits in an effort tobe “best employers.” In India, a government-run sys-tem has been implemented inconsistently and over-whelmed by the rapid growth of the rest of the econ-omy. Here, too, it is primarily employers that havefilled in any gaps.

The global health care problem is not likely to besolved any time soon. Any successful system must ul-timately balance the interests and financial resourcesof the primary stakeholders—governments, which aimto spread risk and prevent catastrophic claims; em-ployers, which must attract a present and productiveworkforce to compete in a global economy; and indi-viduals, who must maintain their health and have thefinancial resources to meet any supplemental needs.How best to balance these interests will continue to bethe source of passionate debate for some time. �

Endnote

1. Statistics Canada, Canadian Labor Market at a Glance,2003.

Documents

Single-Payer Health Care Systems - International … · Single-Payer Health Care Systems: ... volved in the funding and delivery of health care to employees and their de- ... The