Two-tier health care
Encyclopedia
Two-tier health care is a term used to describe a situation that arises when there is a basic health care system
financed by government providing medically necessary but perhaps quite basic health care services, and a secondary tier of care for those with access to more funds who can purchase additional health care not covered by the publicly financed system or which permits better quality or faster access.
Most countries have both public and privately funded health care, but the degree to which this creates a quality differential depends on the way the two systems are managed, funded, and regulated. Some publicly funded universal health care systems deliver excellent service and the private system tends to be small and not highly differentiated. In other, typically poorer countries, the public health system is underfunded and over stretched, offering opportunities for private companies to deliver better quality, more time, albeit more expensive health care coverage.
The public financing system known as Medicare but consists of several different systems managed by each province or territory. The Federal government distributes funds to the provinces for health care providing the provinces design their systems to meet certain criteria which they all do. Most people receiving care in Canada do not pay for their care. The medical provider gets paid a fixed fee for the care provided. The medical provider is not allowed by law to charge top-up fees to patients to supplement their income from Medicare. Medical care providers can set their own fees that are higher than the Medicare reimbursement fee but in this case the patient must pay ALL the cost of care and not just the excess.
About 70% of Canada's health care funding is via the public system. A full 30% comes from private funding, divided approximately 50/50 between out-of-pocket funding and private insurance which may be complementary (meeting costs not covered by the public system such as the cost of prescription medicines, dental treatments and co-pays) or it may be supplementary (adding more choice of provider or providing faster access to care) There are however financial disincentives which make use of private medicine for services that ARE covered by Medicare less economic.
Six of Canada's ten provinces used to ban private insurance for publicly insured services to inhibit queue jumping in order to preserve fairness in the health care system. In a complex legal decision in 2005 the Supreme Court ruled that, in some circumstances, such bans could be illegal if the waiting period was unduly long.
Some private hospitals operating at the time when the national health care plan was instituted (for example, the Shouldice Hernia Centre
in Thornhill, Ontario
) continue to operate, although they may not bill additional charges for medical procedures. (The Shouldice Hospital does, however, make mandatory additional room charges not covered by public health insurance. This effectively places it in the "upper tier" of a two-tier system. Welfare recipients, for example, cannot be referred there.) Clinics are usually private operations, but may not bill additional charges. Private health care may also be supplied in uncovered fields and to foreigners.
is characterized by a system of private and public physicians who largely draw their income from the national health service. There are public as well as private hospitals.
Patients pay a small copay for certain aspects of care, but many people choose to cover these costs by taking out supplemental health insurance for which a small premium is payable each year.
Thus, France also has a mixed delivery system with complete patient freedom of supplier choice. There is a two-tier funding arrangement with compulsory funding of core medical services from taxation with optional private insurance for the cost of copays.
in which people are insured at the same basic rate regardless of health status. The law in Ireland allows people to take out private insurance.
There are public as well as private hospitals. Private patients are often treated in public hospitals, competing for beds with those on the public health insurance plans.
is essentially single tier with all persons accessing a common system of private and public providers with complete freedom of choice between providers. Insurers are all private companies. This insurance is heavily subsidized from tax revenues and heavily regulated, with a common, regulated standard insurance policy coverage set nationwide for all providers and a more flexible top up insurance which is less regulated and set by each company as it chooses.
Insurers set a standard price for each adult for the year for a given region of the country and have to insure all people who apply for insurance at that price regardless of the age or health status of the applicant. An equalization fund, which is essentially a national sickness fund funded from a form of income tax on employers and employees is used to pay for the health care of all Dutch children and to compensate insurers if they have more high risk profile clients than the other insurers. Thus Dutch insurers welcome the sick and the elderly because they are fully compensated for the higher risk profile of these clients. People living in more expensive areas of the country have to pay higher premiums but the elderly and the sick pay the same premiums as everyone else in that region. Social insurance covers the insurance costs of those with limited incomes such as the unemployed and the permanently disabled.
Singapore uses a universal insurance fund that all citizens are required to participate in as a baseline. Seniors and certain groups are subsidized in their membership in the universal basic insurance fund.http://www.moh.gov.sg/mohcorp/hcsystem.aspx?id=102
Optional additional supplementary insurance funds are available for purchase for elective coverage, such as for plastic surgery, or for extra amenities while in hospital.
mandates participation in a national healthcare system for all residents. Public hospitals are subsidized, but there are also private hospitals that private additional services, such as elective services.
Also, in addition to a national universal insurance fund, optional complementary and supplementary private insurance funds are available for purchase.
(or NHS) provides universal coverage to all citizens in the United Kingdom.
Private health care has continued parallel to the NHS, paid for largely by private insurance: it is used by about 8% of the population, generally as an add-on to NHS services and mostly obtained through employer funded insurance schemes. This is a taxable benefit to the employee (i.e. the value is imputed by the tax authorities as income to the beneficiary). Because NHS services are so comprehensive, there are many areas where the private sector usually does not compete and private insurers almost always refuse to fund. Childbirth and perinatal services are good examples. Conversely, there are some areas where the NHS does not offer free treatment (cosmetic surgery for vanity purposes for example) and thus the private sector offers a pay-for-service alternative.
Historically, avoiding waiting lists was the main reason that patients opted out of NHS treatment and into private care. Queues of many months were, at one time, common. Consultants (senior physicians such as surgeons), who had been allowed to run both NHS and private services during their NHS contracts, used to be in charge of waiting lists and had a financial incentive to keep the public waiting list long to ensure a stream of private income to the private business.
Nowadays, strict rules apply to waiting lists. That, and the allocation of better funding in hospitals, has reduced waiting times significantly. Most hospital patients are in fact not admitted from a wait list at all and those that do on average wait less than 9 weeks. Nobody should wait more than 18 weeks. This 18 weeks is not dead time because it includes the time taken to book a first appointment, to conduct all the tests, for the doctor and patient to agree on the desired treatment, and to book and execute an operation or commence the treatment regime. A patient not seen in the 18 week period without just cause has the legal right to go private at the NHS's expense.
As a result of these improvements, long waiting times are now mostly a thing of the past and the private health care sector now sells its surplus capacity to the NHS. Dentistry is an area where many practitioners prefer to work privately (because they can set their own fees). NHS dental coverage can then be patchy and some people may find that private dentistry is the only practical option open to them in their locality.
There has always been a degree of private medicine conducted within NHS hospitals, with private work being done in those hospitals and the patient being accommodated in segregated accommodation. Until recently few NHS patients were ever treated in private sector hospitals. In the English NHS, however, there has been greater willingness to outsource some work to the private sector and therefore these days NHS patients do sometimes gain access to private health care facilities at public expense. The equivalent NHS operations in Wales, Scotland and Northern Ireland do not generally fund treatment outside of their own facilities.
Patients in the UK have complete freedom of choice as to which hospital to use, which may be NHS or private. Whether the NHS funds treatment in a private hospital is a decision for the local commissioning health authority based on formal service contracts.
, Medicaid
, and the State Children's Health Insurance Program
pay for health care obtained at private facilities, but only for the elderly, disabled, and poor families with children.
The debate over health care reform in the United States
has included a proposal for a "public option" or "Medicare for All" - a government-run insurance program, available to all U.S. citizens, that would compete with private insurance plans. The stated goal of such a program would be to reduce costs through vigorous competition, while preserving choice of insurance coverage for patients. Opposition to this option has centered around concerns that the government program would have an unfair advantage, and that it could thus result in the elimination of private health insurance through attrition.
Health care system
A health care system is the organization of people, institutions, and resources to deliver health care services to meet the health needs of target populations....
financed by government providing medically necessary but perhaps quite basic health care services, and a secondary tier of care for those with access to more funds who can purchase additional health care not covered by the publicly financed system or which permits better quality or faster access.
Most countries have both public and privately funded health care, but the degree to which this creates a quality differential depends on the way the two systems are managed, funded, and regulated. Some publicly funded universal health care systems deliver excellent service and the private system tends to be small and not highly differentiated. In other, typically poorer countries, the public health system is underfunded and over stretched, offering opportunities for private companies to deliver better quality, more time, albeit more expensive health care coverage.
Canada
In Canada, there are private and public health care providers with complete patient freedom of choice between which doctors and facilities to use.The public financing system known as Medicare but consists of several different systems managed by each province or territory. The Federal government distributes funds to the provinces for health care providing the provinces design their systems to meet certain criteria which they all do. Most people receiving care in Canada do not pay for their care. The medical provider gets paid a fixed fee for the care provided. The medical provider is not allowed by law to charge top-up fees to patients to supplement their income from Medicare. Medical care providers can set their own fees that are higher than the Medicare reimbursement fee but in this case the patient must pay ALL the cost of care and not just the excess.
About 70% of Canada's health care funding is via the public system. A full 30% comes from private funding, divided approximately 50/50 between out-of-pocket funding and private insurance which may be complementary (meeting costs not covered by the public system such as the cost of prescription medicines, dental treatments and co-pays) or it may be supplementary (adding more choice of provider or providing faster access to care) There are however financial disincentives which make use of private medicine for services that ARE covered by Medicare less economic.
Six of Canada's ten provinces used to ban private insurance for publicly insured services to inhibit queue jumping in order to preserve fairness in the health care system. In a complex legal decision in 2005 the Supreme Court ruled that, in some circumstances, such bans could be illegal if the waiting period was unduly long.
Some private hospitals operating at the time when the national health care plan was instituted (for example, the Shouldice Hernia Centre
Shouldice Hernia Centre
Shouldice Hernia Centre is a hospital in Thornhill, Ontario, Canada, that is known for its specialization in external abdominal hernia operations. Shouldice uses a natural tissue, tension free, technique developed during World War II by Dr. Edward Earle Shouldice. Their ten full-time surgeons...
in Thornhill, Ontario
Thornhill, Ontario
Thornhill is a community in the Greater Toronto Area of Southern Ontario, Canada, located on the northern border of the city of Toronto. Once a municipal village, Thornhill is now a community and postal designation geographically split into two municipalities along Yonge Street, the city of...
) continue to operate, although they may not bill additional charges for medical procedures. (The Shouldice Hospital does, however, make mandatory additional room charges not covered by public health insurance. This effectively places it in the "upper tier" of a two-tier system. Welfare recipients, for example, cannot be referred there.) Clinics are usually private operations, but may not bill additional charges. Private health care may also be supplied in uncovered fields and to foreigners.
Denmark
Although primarily government subsidized at the county and national level, healthcare in Denmark is supported by complementary insurance plans which cover elective services not covered by the public system and to help cover co-pays.France
Health care in FranceHealth care in France
The French health care system is one of universal health care largely financed by government national health insurance. In its 2000 assessment of world health care systems, the World Health Organization found that France provided the "best overall health care" in the world...
is characterized by a system of private and public physicians who largely draw their income from the national health service. There are public as well as private hospitals.
Patients pay a small copay for certain aspects of care, but many people choose to cover these costs by taking out supplemental health insurance for which a small premium is payable each year.
Thus, France also has a mixed delivery system with complete patient freedom of supplier choice. There is a two-tier funding arrangement with compulsory funding of core medical services from taxation with optional private insurance for the cost of copays.
Germany
Health care in Germany has multiple sickness funds which are either publicly owned or not-for-profit mutuals. Membership of a sickness fund is compulsory for everyone except certain people earning an income above a certain level who are to opt out of the insurance system altogether. Doctors are usually self employed and hospitals may be publicly owned, privately owned or not-for-profit.Ireland
Healthcare in the Republic of Ireland is financed by a large publicly owned insurer operating community ratingCommunity rating
Community rating is a concept usually associated with health insurance, which requires health insurance providers to offer health insurance policies within a given territory at the same price to all persons without medical underwriting, regardless of their health status.Pure community rating...
in which people are insured at the same basic rate regardless of health status. The law in Ireland allows people to take out private insurance.
There are public as well as private hospitals. Private patients are often treated in public hospitals, competing for beds with those on the public health insurance plans.
Netherlands
Health care in the NetherlandsHealth care in the Netherlands
Healthcare in the Netherlands is financed by a dual system that came into effect in January 2006. Long-term treatments, especially those that involve semi-permanent hospitalization, and also disability costs such as wheelchairs, are covered by a state-controlled mandatory insurance...
is essentially single tier with all persons accessing a common system of private and public providers with complete freedom of choice between providers. Insurers are all private companies. This insurance is heavily subsidized from tax revenues and heavily regulated, with a common, regulated standard insurance policy coverage set nationwide for all providers and a more flexible top up insurance which is less regulated and set by each company as it chooses.
Insurers set a standard price for each adult for the year for a given region of the country and have to insure all people who apply for insurance at that price regardless of the age or health status of the applicant. An equalization fund, which is essentially a national sickness fund funded from a form of income tax on employers and employees is used to pay for the health care of all Dutch children and to compensate insurers if they have more high risk profile clients than the other insurers. Thus Dutch insurers welcome the sick and the elderly because they are fully compensated for the higher risk profile of these clients. People living in more expensive areas of the country have to pay higher premiums but the elderly and the sick pay the same premiums as everyone else in that region. Social insurance covers the insurance costs of those with limited incomes such as the unemployed and the permanently disabled.
Singapore
Healthcare in Singapore uses a true two-tier system, for both the provider network and the insurance funds. A government-sponsored and subsidized system of hospitals accepts all patients, with a guaranteed list of services. A parallel system of private hospitals provides services not available in public hospitals, or available with extra amenities (such as private rooms and other boutique services.Singapore uses a universal insurance fund that all citizens are required to participate in as a baseline. Seniors and certain groups are subsidized in their membership in the universal basic insurance fund.http://www.moh.gov.sg/mohcorp/hcsystem.aspx?id=102
Optional additional supplementary insurance funds are available for purchase for elective coverage, such as for plastic surgery, or for extra amenities while in hospital.
Switzerland
Healthcare in SwitzerlandHealthcare in Switzerland
Healthcare in Switzerland is universal and is regulated by the Federal Health Insurance Act of 1994 . Health insurance is compulsory for all persons residing in Switzerland...
mandates participation in a national healthcare system for all residents. Public hospitals are subsidized, but there are also private hospitals that private additional services, such as elective services.
Also, in addition to a national universal insurance fund, optional complementary and supplementary private insurance funds are available for purchase.
United Kingdom
The National Health ServiceNational Health Service (England)
The National Health Service or NHS is the publicly funded healthcare system in England. It is both the largest and oldest single-payer healthcare system in the world. It is able to function in the way that it does because it is primarily funded through the general taxation system, similar to how...
(or NHS) provides universal coverage to all citizens in the United Kingdom.
Private health care has continued parallel to the NHS, paid for largely by private insurance: it is used by about 8% of the population, generally as an add-on to NHS services and mostly obtained through employer funded insurance schemes. This is a taxable benefit to the employee (i.e. the value is imputed by the tax authorities as income to the beneficiary). Because NHS services are so comprehensive, there are many areas where the private sector usually does not compete and private insurers almost always refuse to fund. Childbirth and perinatal services are good examples. Conversely, there are some areas where the NHS does not offer free treatment (cosmetic surgery for vanity purposes for example) and thus the private sector offers a pay-for-service alternative.
Historically, avoiding waiting lists was the main reason that patients opted out of NHS treatment and into private care. Queues of many months were, at one time, common. Consultants (senior physicians such as surgeons), who had been allowed to run both NHS and private services during their NHS contracts, used to be in charge of waiting lists and had a financial incentive to keep the public waiting list long to ensure a stream of private income to the private business.
Nowadays, strict rules apply to waiting lists. That, and the allocation of better funding in hospitals, has reduced waiting times significantly. Most hospital patients are in fact not admitted from a wait list at all and those that do on average wait less than 9 weeks. Nobody should wait more than 18 weeks. This 18 weeks is not dead time because it includes the time taken to book a first appointment, to conduct all the tests, for the doctor and patient to agree on the desired treatment, and to book and execute an operation or commence the treatment regime. A patient not seen in the 18 week period without just cause has the legal right to go private at the NHS's expense.
As a result of these improvements, long waiting times are now mostly a thing of the past and the private health care sector now sells its surplus capacity to the NHS. Dentistry is an area where many practitioners prefer to work privately (because they can set their own fees). NHS dental coverage can then be patchy and some people may find that private dentistry is the only practical option open to them in their locality.
There has always been a degree of private medicine conducted within NHS hospitals, with private work being done in those hospitals and the patient being accommodated in segregated accommodation. Until recently few NHS patients were ever treated in private sector hospitals. In the English NHS, however, there has been greater willingness to outsource some work to the private sector and therefore these days NHS patients do sometimes gain access to private health care facilities at public expense. The equivalent NHS operations in Wales, Scotland and Northern Ireland do not generally fund treatment outside of their own facilities.
Patients in the UK have complete freedom of choice as to which hospital to use, which may be NHS or private. Whether the NHS funds treatment in a private hospital is a decision for the local commissioning health authority based on formal service contracts.
United States
The United States has a two-tier public-private health system but the majority of the population cannot gain access to the public provision tiers. Health care provided directly by the government is limited to military and veteran families and certain Native American tribes. Certain cities and towns also provide free care directly, but only to those who cannot afford to pay. MedicareMedicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
, Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
, and the State Children's Health Insurance Program
State Children's Health Insurance Program
The State Children's Health Insurance Program – later known more simply as the Children's Health Insurance Program – is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to families with children...
pay for health care obtained at private facilities, but only for the elderly, disabled, and poor families with children.
The debate over health care reform in the United States
Health care reform in the United States
Health care reform in the United States has a long history, of which the most recent results were two federal statutes enacted in 2010: the Patient Protection and Affordable Care Act , signed March 23, 2010, and the Health Care and Education Reconciliation Act of 2010 , which amended the PPACA and...
has included a proposal for a "public option" or "Medicare for All" - a government-run insurance program, available to all U.S. citizens, that would compete with private insurance plans. The stated goal of such a program would be to reduce costs through vigorous competition, while preserving choice of insurance coverage for patients. Opposition to this option has centered around concerns that the government program would have an unfair advantage, and that it could thus result in the elimination of private health insurance through attrition.
See also
- Canadian and American health care systems comparedCanadian and American health care systems comparedComparison of the health care systems in Canada and the United States are often made by government, public health and public policy analysts. The two countries had similar health care systems before Canada reformed its system in the 1960s and 1970s. The United States spends much more money on...
- Health care compared - tabular comparisons of the US, Canada, and other countries not shown above.
- Universal health careUniversal health careUniversal health care is a term referring to organized health care systems built around the principle of universal coverage for all members of society, combining mechanisms for health financing and service provision.-History:...