New Account

The Magazine

Current Issue

Chance to reflect - Does the passing of America's health reform bill provide an opportunity to reflect on European efforts to strengthen healthcare?

  • Previous Issues


Our team of editors discuss what they think about the current Next Generation Healthcare issues

Jodie Humphries
Web Editor

Is healthcare realising the benefits of IT?

Over the years have governments finally realised that IT can play an influential part in healthcare?
23 Mar 2010

The best system in the world?

No Comments

Healthcare reform is a highly emotive issue on both sides of the Atlantic. NGH takes a look at how health systems in Europe and the US measure up.

“The NHS is one of the largest employers in the world, along with the Chinese People's Liberation Army, the Indian railways and Wal-Mart”

As the battle to reform the US healthcare system continues, those of us in Europe look on with interest, and sometimes, frankly, puzzlement. Why do the Americans seem to prefer to risk bankruptcy in the face of a particularly debilitating illness rather than ensure that all citizens have health insurance? Why, in the face of overwhelming evidence to the contrary, do many of them proclaim their health system to be the best in the world?

According to figures compiled by the Organisation for Economic Co-operation and Development and the World Health Organization, prior to the reforms being passed, the US spent US$7290 per capita on healthcare (16 percent of GDP). Infant mortality in the country stood at 6.7 per 1000 live births in 2009, and life expectancy at birth was 78.1 years.

Compare these numbers to two European countries with more universal access to care, France and the UK. In 2009, France's healthcare spending was US$3601 per capita (11 percent of GDP) and the UK's was US$2992 (8.4 percent of GDP). Infant mortality was 3.8 per 1000 live births in France and in the UK 4.8. French citizens could expect to live on average 81 years, and UK citizens 79.1.

Even a cursory glance at these numbers shows that something doesn't add up. The US spent more than twice as much on healthcare as France and the UK, and yet its life expectancy is lower and - perhaps even more shocking for a country widely considered to be the most advanced and most powerful on earth - its infant mortality rate is decidedly higher.

With these facts in mind, NGH decided to have a closer look at how health systems on both sides of the Atlantic developed into the ones we know and love - or not - today.

The birth of public health

Otto von Bismarck is credited with establishing the world's first universal healthcare system, when he introduced a health insurance bill in Germany in 1883. However, most current systems providing universal coverage were established after the end of World War II, following the signing of the Universal Declaration of Human Rights in 1948. The related International Covenant on Economic, Social and Cultural Rights, adopted by the UN General Assembly in 1966, contains an article that recognises the right of everyone to "the enjoyment of the highest attainable standard of physical and mental health". The US has not yet ratified the sections of the covenant dealing with social and economic rights, including healthcare.

One example of a universal system, the UK's National Health Service (NHS), was founded on July 5, 1948 by then Minister of Health Aneurin Bevan. Bevan's aim was to provide good healthcare for all, financed entirely through taxation. For the first time, hospitals, doctors, nurses, pharmacists and others directly involved in healthcare were brought together under one umbrella organization.

Bevan wanted the new system to be democratically accountable to the people through Parliament, giving the Health Secretary a lot of power over the funding and how the money was used. The Health Secretary is in charge of the Department of Health, which is ultimately responsible for running the NHS. The department sets priorities, allocates money and oversees the management of the service. Below this, the system is divided up into Strategic Health Authorities, and below that again it is split into Primary Care Trusts and NHS Trusts.

Across the channel from the UK, the case of the French health system is particularly interesting. Although the French system has existed in some form for 100 years, before World War II, people bought health insurance from fraternal associations, much as the Americans once did. In the 1930s, the government brought in a mandatory system similar to the American Medicare to cover wage earners. The country's experiences during German occupation led to the post-war adoption of the Securite Sociale, a program of healthcare and pension benefits that remains the basis of French healthcare to this day.

Like its American counterpart, the system was initially funded through payroll deductions: a 16 percent deduction from wages, with 10 percent paid by the employer and six percent by the employee. However, in contrast to the US, the French government provided 80 percent of payment, while private insurance companies covered the rest. The Securite Sociale now provides healthcare coverage to 99 percent of the country's population.

Early advances

Healthcare in Germany also has a long history, beginning with von Bismarck's landmark bill in 1883. As early as 1885, statutory health insurance, known as GKV, provided access to quality healthcare for 26 percent of those earning low wages, or 10 percent of the population. This was gradually extended by raising the income level below which people were required to contribute. In 1918, coverage was extended to the unemployed; to seamen in 1927; and in 1930 to all dependents.

In 1941, the German government extended coverage to retirees, and passed legislation allowing those whose incomes had risen above the ceiling to continue with voluntary contributions. In later years, agricultural workers, students and the disabled also gained coverage. When Germany split in two after World War II, East Germany set up a centralised state-run system, with doctors becoming state employees, while West Germany re-established the prewar system.

Health services in Scandinavian countries are also financed through a combination of government funds and private insurance programmes. In Denmark, most treatment is given by individual physicians, while in Norway, Iceland, Sweden, Finland and Iceland, it takes place at public health centres.

In Sweden, the central government is responsible for hospitals and health services, through the National Board of Health and Welfare. Services under the 23 county councils are divided into the regional hospital service, the provincial hospital service and the primary health service.

Each of the six Swedish regional hospitals is associated with a university; the universities are run by the central government, while the hospitals are regional. Private healthcare does exist, but on a limited scale: approximately 15 percent of all medical consultations are given by private practitioners.

While several European countries brought in legislation to deliberately establish their universal healthcare programmes, the origin of the current health system in the US was more haphazard. Up to the early 1920s, Americans spent an average of US$5 a year on medical care (US$100 in today's money), mostly only 'cure-all' potions from dubious sources. Hospitals at this time were primarily places where the destitute went to die.

With the advent of modern medicine - particularly antibiotics - hospitals began to promote themselves as somewhere to go to be made better. Still, people only paid for care if they were desperately ill, and hospitals began to look for ways to increase their patient numbers. Baylor University Hospital in Dallas decided to offer a deal to a group of local teachers: they would pay 50 cents a month and the hospital would cover the bills for any hospital visits. When the Depression hit, the scheme's popularity soared, and it eventually became known as Blue Cross.

During World War II, factory owners used health insurance benefits to attract workers. In 1943, the IRS made employer-based healthcare tax-free, and a second law passed in 1954 bumped up the tax advantages even more, paving the way for the existing multi-payer system.

What lessons can President Obama and his healthcare reform team draw from the history of those systems providing more universal coverage? It is clear that the growth of a country's health system is largely a result of accidents of history. In a few cases, such as the UK and Germany, universal care was established through legislation; but in other instances, most notably the US, one thing literally led to another. This is somewhat ironic, given that people often become irrationally attached to their current system and put up strong resistance to change.

As the populations of Western countries continue to age and healthcare requirements increase, reformers must stress the message that the system in place in any given country is not necessarily the best one to meet its citizens' changing health needs. As the figures on the current American system show, just because it worked in 1943 doesn't mean it does now.


Health systems compared


France boasts a national social insurance system with elements of tax-based financing and voluntary health insurance. The state regulates the health system and the statutory health insurance funds. It sets the limit for health insurance spending, approves a report on health and social security trends and amends benefits and regulation.

The statutory health insurance system is divided into three schemes. The general scheme covers about 84 percent of the population, including employees in business and industry and their families; the agricultural scheme covers farmers and their families (7.2 percent of the population); the scheme for self-employed people covers five percent of the population. In 1999 the government brought in universal health insurance coverage on the basis of residence in France (99.9 percent coverage); and in 2004 an insurance fund for dependent older people was established.


The German system is based on social health insurance and also consists of three schemes. About 87 percent of the population are covered. Mandatory membership applies to about 77 percent (based on income) and is voluntary for 10 percent. Ten percent of the population are covered by private health insurance; two percent by governmental schemes and 0.2 percent are not covered by any third-party scheme.

Coverage is fully portable, with eligibility and benefits independent of any local reinterpretations by insurers, politicians, administrators, or healthcare providers. Universal coverage is honoured by all medical centres and hospitals.


Sweden has a compulsory healthcare system that is predominantly tax-based, providing coverage for every resident of the country, although there is some voluntary insurance that gives supplementary coverage. The system is regionally based and publicly operated, organised on the national, regional (23 counties) and local (290 municipalities) levels.

The Ministry of Health and Social Affairs ensures the efficient operation of the system at a national level. The National Board of Health and Welfare is the central advisory and supervisory agency for health and social services, and there are several associated national institutions, such as the National Social Insurance Board, which guarantees uniformity and quality in the processing of insurance and benefits.


The countries that make up the United Kingdom - England, Northern Ireland, Scotland and Wales - are individually responsible for their own healthcare. They fund healthcare mainly through national systems of taxation, with services being delivered through public providers. Purchasing responsibilities have been devolved to local bodies (Primary Care Trusts in England, Health Boards in Scotland, Local Health Boards in Wales and Primary Care Partnerships in Northern Ireland).

Coverage is available to all legal residents of the UK, residents of the European Economic Community and citizen of other countries with which the UK has reciprocal agreements. Private medical insurance does exist, but has quite a low uptake - about 11.5 percent of the population.


Although now on the brink of reform, for many years the US health system has been funded mainly by the private sector, through insurance available from employers or other private schemes. Currently as many as 45.7 million people (15.3 percent of population) do not have health insurance.

The federal government is involved in two main schemes, Medicaid and Medicare, each covering about 13 percent of population. Medicaid is funded jointly by the federal and state governments and covers low-income or otherwise needy groups such as the disabled or children from impoverished families. Medicare covers people 65 or older, some younger people with disabilities and those on dialysis or undergoing a kidney transplant.

Most doctors practice privately and are paid through discounted fees paid by private health plans, public programmes and direct charges to patients. Public and private hospitals provide in-patient care, with hospitals paid through a combination of charges per admission and capitation.


Disclaimer: All comments posted in a personal capacity
In order to post a comment you need to be regsitered and signed in.
Register | Sign in
No Comments Have Been Submitted
Disclaimer: All comments posted in a personal capacity