What Health Care System is the Best: Tax-Based or Bismarck?

Canada is a tax-based system that is equitable. It has an effective cost containment. It is, of course, universal. We have low insurance premiums, and it is about 70% public and about 30% private in health care costs. It is similar to that found in Britain and France, but their private-public ratio expenses are much higher than that in Canada.

Germany and France’s health care systems are based upon payroll taxes rather than general taxation. They go off of a Bismarck system, which is a Social Insurance Model. Employers, along with employees, are obligated to pay into ‘mutual assistance associations’ and ‘sickness funds.’ Both employer and employee groups govern them. They are non-profit bodies; they are independent groups but are highly controlled by the state.

The sickness funds are called mutuelles in France, and Krankenkassen in Germany, which are based on income level rather than being rated on illnesses or exploitation of services like that found in private plans.

The best health care systems in the world are based on social insurance models.

In 2000, the World Health Organization (WHO) placed France’s health care model at its top. France’s system form of ‘public health system’ is actually a form of statutory health insurance based on discrete, independent, highly regulated, not-for-profit health insurance organizations known as mutuelles. Mutuelles started in the 19th century.

Mutuelles were added into the official social security post the second world war, which is the foundation of France’s health care system. These systems funds only benefited workers and their families as it is financed through payroll taxes. Universal coverage was an objective but was lobbied out because occupational groups already had valuable autonomous health insurance plans.

The largest health insurance fund, called the régime général, covers close to 84 percent of the population. The farmers’ plan covers 7.2 percent, and the self-employment system covers approximately 5 percent of the population. Finally, the rest of the people are covered by a lot of tinier mutuelles.

France’s health care system is the most expensive globally. Their government tried to control health care expenditures, which is a conflict between government and jurisdictions, making policies very difficult (Sandier et al. 2004).

An issue with employment-based insurance is it depends on the individual’s employment. To counteract this issue, in 2000, France introduced universal health care called Couverture Maladie Universelle. A parallel system of complementary health insurance for the very poor was also established called CMU-Complémentaire (or CMU-C) is a public scheme that covers the co-payments required by most health care services. It gives health care to the poorest 1.8 percent of the population, which is bankrolled through general taxation. Since 2005, France has assisted those just above the CMU-C cut-off level by establishing L’Aide Pour Une Complémentaire Santé, a similar means-tested complementary health insurance program for low-income individuals not eligible for CMU-C.

Another issue with the payroll-based system does not provide coverage to as many people as general taxation does. To fix this, they created a new nationwide income tax in 1990 for more people’s health care.

They are moving slowly towards more general taxation like in Canada and moving away from the social insurance model.

Funding for health care also comes from alcohol, tobacco, cars, and money from pharmaceutical companies’ advertisements.

France’s system is more comprehensive than in Canada, as they provide not just hospital care, primary care and diagnostics, but also dental and eye care and pharmaceuticals. It is also slightly different from Canada, as costs are shared through the people being treated.

There are several forms in which shared costs are covered.

Voluntary complementary health insurance is the most effective cost-sharing mode in France. There are some exemptions with severe chronic illness (such as AIDS, diabetes, and cancer), severely disabled persons, pregnant women, veterans, newborns, and nursing home residents. Accounts for about 8.5 percent of the total population who is exempt from co-insurance.

To cover the remaining expenditures not covered by statutory health insurance, complementary health insurance has evolved in France, which is totally optional for their citizens.

Almost 90% of France has some form of complementary health insurance. They have three options of complimentary insurance to choose from. The first is through the same mutuelles that provide statutory health insurance, and it accounts for 60 percent of voluntary health insurance. Private for-profit companies, which have the freedom to adjust for risk, account for about 20 percent of voluntary health insurance, which provides better and faster health care.

The for-profit health insurance market encourages healthy individuals to choose commercial health insurance options, as their own risks and premiums are lower, which, in turn, decreases the pool of healthy contributors in the not-for-profit.

The point of having limited statutory health insurance coverage was originally to make individuals responsible for costs and, in this way, to keep overall costs low.

In 2000, 75.5 percent of total expenditure on health care was covered by statutory health insurance, 12.4 percent were covered by complementary voluntary health insurance, and 11.1 percent came from out-of-pocket spending (Sandier et al., 2004:43).

Concerning other countries, France’s proportion of out-of-pocket health expenses is quite low (less than half of Canada). Still, when insurance premiums and deductibles are calculated, France’s household spending on Health care increases considerably.

“I am not here to build a business; I am not here to build a corporation; I am not here to build Schools; I am not here to build churches—I am no Mother Theresa.

What I will do, is—lead a legacy.”

~Dean Mathers



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