INSURANCE

Universal health care is health care coverage which is extended to all eligible residents of a governmental region. Universal health care covers medical, dental, and mental health care. These programs vary in their structure and funding mechanisms. Typically, most costs are met via a single-payer health care system or compulsory health insurance. Universal health care is provided in all wealthy, industrialized countries, except for the United States. It is also provided in many developing countries and is the trend worldwide.

In the 1880s, most citizens in Germany became covered under the mandatory health care system championed by Otto von Bismarck. The National Health Service (NHS), established in the United Kingdom in 1948, is considered the world's first universal health care system provided by government.

Universal health care is a broad concept that has been implemented in several ways. The common denominator for all such programs is some form of government action aimed at extending access to health care as widely as possible. Most countries implement universal health care through legislation, regulation and taxation. Legislation and regulation direct what care must be provided, to whom, and on what basis. Usually some costs are borne by the patient at the time of consumption but the bulk of costs come from a combination of compulsory insurance and tax revenues. Some programs are paid for entirely out of tax revenues. In some cases, government involvement also includes directly managing the health care system, but many countries use mixed public-private systems to deliver universal health care.

UNITED STATES

The United States is the only wealthy, industrialized nation that does not have a universal health care system. The government directly covers 27.8% of the population through health care programs for the elderly, disabled, military service families and veterans, children, and some of the poor, through Medicare, Medicaid, SCHIP, and TRICARE. Federal law ensures public access to emergency services regardless of ability to pay. However, this unfunded mandate has contributed to a health care safety net that some analyses say is increasingly strained. Certain types of medical spending and particularly health insurance benefit from significant tax subsidies; in particular, employer-sponsored health insurance is a non-taxable benefit. In all, government spending accounted for 45.1% of total health spending in the U.S. in 2005.

Current estimates put U.S. health care spending at approximately 15% of GDP, the highest in the world. An estimated 84.7% of citizens have some form of health insurance coverage, either through their employer, purchased individually, or through government sources. The number of uninsured, at 45.7 million in 2007, decreased slightly from 2006, because government programs covered nearly 3 million more people. It is projected that the current economic downturn and rising unemployment rate likely will cause the number of uninsured to grow by at least 2 million in 2008. One study estimates that about 25% of the country's uninsured, or roughly another 11 million people, are eligible for government health care programs, but they are not enrolled. However, assuring adequate financing to cover those who are eligible remains a challenge.

In 2003, approximately 61 million adults, or 35 percent of individuals ages 19 to 64, had either no insurance, sporadic coverage, or insurance coverage that exposed them to high health care costs. Employers that do provide insurance, on average, spend between 4.6 and 8.7% of their payroll in health insurance premiums. The cost of health care premiums is rising much faster than the general rate of inflation or employee wages. Since 2001, premiums for family coverage have increased 78%, while inflation has risen 17% and wages have risen 19%, according to a 2007 study by the Kaiser Family Foundation.

In lieu of a national program, supporters of universal health care have sought implementation of such programs at the state and municipal level. The Commonwealth of Massachusetts is implementing a near-universal health care system by mandating that residents purchase health insurance by July 1, 2007. The City of San Francisco is also undertaking a universal health care system for uninsured residents. California, Connecticut, Maine, Vermont and Hawaii are also considering or seeking to implement universal or near-universal systems. Recently, a California State Senate committee voted on a bi-partisan basis against a plan to help establish a $14 billion fund to subsidize medical insurance for 5 million uninsured Californians.

There have been numerous proposals to stimulate the current system into extending coverage more universally, rather than through a more comprehensive restructuring. For example, since most Americans with private coverage receive it through employer-sponsored plans, many have suggested employer "pay or play" requirements as a way to increase coverage levels. However, one study suggests that current pay or play proposals are limited in their ability to increase coverage among the "working poor". The study's criticisms of these proposals included the observations that they generally exclude small firms, do not distinguish between individuals who have access to other forms of coverage and those who do not, and increase the overall compensation costs to employers. One study that examined several such market-based reform packages concluded that if market-oriented reforms are not implemented on a systematic basis with appropriate safeguards, they have the potential to cause more problems than they solve.

Others have proposed premium subsidies to help individuals purchase their own health insurance as a way to increase coverage rates. Research confirms that consumers in the individual health insurance market are sensitive to price. Estimates of the demand elasticity in this market vary, but generally fall in the range of -0.3 to -0.1. It appears that price sensitivity varies among population subgroups, and is generally higher for those at younger ages and lower incomes. However, research also suggests that subsidies alone are unlikely to provide sufficient incentive to encourage more people to get coverage.

President elect Barack Obama has promised to cut waste from the health care system and to introduce a universal health care plan into law by the end of his first term.

CANADA

In 1984, the Canada Health Act was passed, which prohibited extra billing by doctors on patients while at the same time billing the public insurance system. In 1999, the prime minister and most premiers reaffirmed in the Social Union Framework Agreement that they are committed to health care that has "comprehensiveness, universality, portability, public administration and accessibility."

The Canadian system is for the most part publicly funded, yet most of the services are provided by private enterprises or private corporations, although most hospitals are public. Most doctors do not receive an annual salary, but receive a fee per visit or service. About 30% of Canadians' health care is paid for by the private sector or individuals. This mostly goes towards services not covered or only partially covered by Medicare such as prescription drugs, dentistry and vision care. Many Canadians have private health insurance, often through their employers, that cover these expenses.

The Canada Health Act of 1984 "does not directly bar private delivery or private insurance for publicly insured services," but provides financial disincentives for doing so. "Although there are laws prohibiting or curtailing private health care in some provinces, they can be changed," according to a report in the New England Journal of Medicine. The legality of the ban was considered in a decision of the Supreme Court of Canada which ruled in Chaoulli v. Quebec that "the prohibition on obtaining private health insurance, while it might be constitutional in circumstances where health care services are reasonable as to both quality and timeliness, is not constitutional where the public system fails to deliver reasonable services." The appellant contended that waiting times in Quebec violated a right to life and security in the Quebec Charter of Human Rights and Freedoms. The Court agreed, but acknowledged the importance and validity of the Canada Health Act, and at least four of the seven judges explicitly recognized the right of governments to enact laws and policies which favor the public over the private system and preserve the integrity of the public system. But not if the public system fails to deliver reasonable service as to quality or timeliness, as the court found in this case.

FUNDING MODELS

Universal health care in most countries has been achieved by a mixed model of funding. General taxation revenue is the primary source of funding, but in many countries it is supplemented by specific levies (which may be charged to the individual and/or an employer) or with the option of private payments (either direct or via optional insurance) for services beyond that covered by the public system.

Almost all European systems are financed through a mix of public and private contributions. The majority of universal health care systems are funded primarily by tax revenue (e.g. Portugal). Some nations, such as Germany, France and Japan employ a multi-payer system in which health care is funded by private and public contributions.

A distinction is also made between municipal and national healthcare funding. For example, one model is that the bulk of the healthcare is funded by the municipality, speciality healthcare is provided and possibly funded by a larger entity, such as a municipal co-operation board or the state, and the medications are paid by a state agency.

Universal health care systems are modestly redistributive. Progressivity of health care financing has limited implications for overall income inequality.

COMPULSORY INSURANCE

This is usually enforced via legislation. Sometimes there may be a choice of several funds providing a basic service (e.g. as in Germany) or sometimes just a single fund (as in Canada).

In some European countries where there is private insurance and universal health care, such as Germany, Belgium and Holland, the problem of adverse selection (see Private Insurance below) is overcome using a risk compensation pool to equalize, as far as possible, the risks between funds. Thus a fund with a predominantly healthy, younger population has to pay into a compensation pool and a fund with an older and predominantly less healthy population would receive funds from the pool. In this way, sickness funds compete on price and there is no advantage to eliminate people with higher risks because they are compensated for by means of risk-adjusted capitation payments. Funds are not allowed to pick and choose their policyholders or deny coverage, but then mainly compete on price and service. In some countries the basic coverage level is set by the government and cannot be modified.

Ireland at one time had a "community rating" system through VHI, effectively a single payer or common risk pool. The government later opened VHI to competition but without a compensation pool. This resulted in foreign insurance companies entering the Irish market and offering cheap health insurance to relatively healthy segments of the market which then made super profits at VHI's expense. The government later re-introduced community rating through a pooling arrangement and at least one main major insurance company BUPA then withdrew from the Irish market.

TAXATION

Some countries (notably the United Kingom, Italy and Spain) have eliminated insurance entirely and choose to fund health care directly from taxation. Other countries with insurance-based systems effectively meet the cost of insuring those unable to insure themselves via social security arrangements funded from taxation, either by directly paying their medical bills or by paying for insurance premiums for those affected.

SINGLE-PAYER

This term is used in the U.S. debate to describe a funding mechanism meeting the costs of medical care from a single fund. Although the fund holder is sometimes assumed to be the government allocating funding from taxation, its proponents do not rule out the possibility of some other mechanism. It is therefore as yet undetermined whether a future U.S. single-payer universal health care system would be funded from taxation, from compulsory insurance or a mixture of both.

PRIVATE INSURANCE

In countries with universal coverage, private insurance is most often used as a supplement, covering what the core safety net service does not provide, Examples include elective cosmetic surgery and special comforts like private rooms. In some countries, people can use private insurance to obtain treatment more quickly than would otherwise be possible.

Where voluntary insurance (often private) is predominant, such as in the U.S., medical (health) insurance is subject to the well-known economic problem of adverse selection which may also be referred to as a market failure. Adverse selection in insurance markets occurs because those providing insurance have limited information with which to estimate the health risks on which they may need to pay future claims. In simple terms, those with poor health are more likely to apply for insurance and more likely to need treatments requiring high insurance company payouts. Those with good health may find the cost of insurance too high for the perceived benefit, and some will remove themselves from the risk pool. This adverse selection concentrates the risk pool, thereby further raising costs. In practical terms, the potential for adverse selection means that private insurers have an economic incentive to use medical underwriting to 'weed out' high cost applicants in order to avoid adverse selection. Among the potential solutions posited by economists are single payer systems as well as other methods of ensuring that health insurance is universal, such as by requiring all citizens to purchase insurance and limiting the ability of insurance companies to deny insurance to individuals or vary price between individuals.

Health care systems throughout the world face sustainability challenges that may require far-reaching changes in national policy. Over the last decade, health spending has been accelerating as a percent of Gross Domestic Product (GDP) among Organisation for Economic Co-operation and Development (OECD) countries. Many industrialized countries have aging populations, with resulting increases in health care utilization, while others face rapid population growth. One recent study, by global consulting firm PriceWaterhouseCoopers, projected that global health care spending would triple in real dollars by 2020, consuming 21% of GDP in the U.S. and 16% of GDP in other OECD countries.

UNITED STATES

Whether a government mandated system of universal health care should be implemented in the U.S. remains a hotly debated political topic. Those in favor of universal health care, such as the non-partisan Institute of Medicine of the National Academies, which has called for the U.S. to implement universal health care by 2010, argue that the current rate of uninsurance creates direct and hidden costs shared by all, and that extending coverage to all would lower costs and improve quality. Americans have a lower average life expectancy than those in other industrialized nations with universal health care, such as Australia, the United Kingdom, Canada, and Sweden. Infant mortality rates also remain higher in the U.S., despite declines in recent decades, and are higher than the average of the European Union.

Critics of this argument note that there is very little correlation between life expectancy and infant mortality with the quality of health care, due to such factors as alternate causality and variations in the way countries collect their statistical data. In fact, the U.S. led the world in life expectancy twenty years ago with virtually the same health system. Rather, many analysts attribute the lower life expectancy to a great surge in obesity rates. Opponents of universal health care programs argue that people should be free to opt out of health insurance and that government programs would require higher taxes, increase utilization, and reduce health care quality. They also claim that the absence of a market mechanism may slow innovation in treatment and research, and lead to rationing of care through waiting lists.

Both sides of the political spectrum have also looked to more philosophical arguments, debating whether people have a fundamental right to have health care provided to them by their government.

Survey research shows that Americans see expanding coverage as a top national priority, and a majority express support for universal health care. There is, however, much more limited support for tax increases to support health care reform. Most Americans report satisfaction with their own personal health care. Some argue that support for a single-payer system is less than the level of dissatisfaction with the current system and desire for increased coverage might suggest.

DEBATE IN THE UNITED STATES

The following is a listing of universal health care pros and cons as argued by supporters and opponents.