Welfare culture refers to the behavioral consequences of providing poverty relief (i.e., welfare) to low-income individuals. Welfare is considered a type of social protection, which may come in the form of remittances, such as 'welfare checks', or subsidized services, such as free/reduced healthcare, affordable housing, and more. Pierson (2006) has acknowledged that, like poverty,
welfare creates behavioral ramifications, and that studies differ
regarding whether welfare empowers individuals or breeds dependence on
government aid. Pierson also acknowledges that the evidence of the
behavioral effects of welfare varies across countries (such as Norway, France, Denmark, and Germany), because different countries implement different systems of welfare.
United States
In the United States, the debate over the impact of welfare traces back as far as the New Deal, but it later became a more mainstream political controversy with the birth of modern welfare under President Lyndon B. Johnson's Great Society. The term "welfare culture," however, was not coined until 1986, by Lawrence Mead.
Welfare in the United States
Decline in welfare benefits since 1962. (in 2006 dollars)
Welfare may refer to any government-based aid used to promote the
well-being of its citizens. In recent decades, however, welfare has been
restricted to refer to the Temporary Assistance to Needy Families program (TANF), which provides monthly stipends for indigent families that meet a specific array of criteria.
The term "welfare culture" uses the more broad interpretation of welfare, all government social programs. However, scholars like David Ellwood and Lawrence Summers
(1985) believe that the debate over welfare culture could be more
accurate if each specific welfare program were examined individually. Specific programs include Medicare, Medicaid, unemployment benefits, and disability benefits.
Evolution of the debate in the United States
Kent R. Weaver argues that most scholars cite the Social Security Act of 1935 as the origin of the American welfare state. That reform enacted a wide expanse of services for the poor and financially stressed, including unemployment benefits, Aid to Families with Dependent Children (later replaced in by the Temporary Assistance to Needy Families program under the Clinton administration), retirement income stipends, subsidized housing, and many others.
Scholars such as June Axinn and Mark J. Stern (2007) estimate
that the Social Security Act of 1935 and the newly institutionalized
programs accompanying the New Deal increased the capacity to find
employment, avoid starvation, and secure some form of affordable
housing.
Furthermore, economist Robert Cohen (1973) estimated that the New Deal
sparked a reduction in unemployment from 20% to 15% by the end of the
1940s.
Stanley Feldman and John Zaller (1992) cite a number of
economists and political historians who opposed government-based aid,
because such critics credit the economic stimulus during World War II as
the true solution to the unemployment and poverty of the Great Depression.
During the war, American industries began to produce military weapons,
food, and other material needs for the troops. The new economic
incentive, in addition to a net export and an influx in gold, reduced
interest rates, increased investments, and sparked job growth.
Christine Romber (1992) and various other economic historians began to
criticize the New Deal as the cause for unnecessary and unjustified
reliance on government programs.
However, Jerold Rusk (2008), a political scientist, recognizes a
consensus among economic, history, and political scholars, which
acknowledges that the effects of the New Deal are difficult to separate
from the effects of World War II, which prevents any legitimate conclusion from being drawn on the debate.
In the early 1960s, President Johnson began his War on Poverty by introducing many new elements to welfare, including Medicare, Medicaid, increases in subsidized public housing, and more. David Frum
(2002) believed such increases in government programs were
counterproductive and found positive correlations between government aid
and those who could not stay above the poverty line without such aid.
Frum concluded that welfare bred dependence on the government.
The Moynihan Report advocates for increased welfare for poor
black families but that welfare does not empower the destitute to find
solutions to their financial troubles. Moynihan stated, "The breakdown
of the negro family has led to a startling increase in welfare
dependency." Welfare, although helpful, was a reactive measure failing
to address the true roots of poverty. Moynihan concluded that more
proactive means to empower black families include the promotion of
vocational training and a value in education.
Johnson's precedent for increasing welfare benefits hit its pinnacle in the late 1970s under President Jimmy Carter when Temporary Assistance to Needy Family (TANF) recipients were receiving $238 a month, adjusted for inflation.
According to the Census Bureau, a strong correlation with poverty
reduction is noted, suggesting a link between welfare and empowerment.
Poverty dropped from 23% of the population to 12% during the Johnson
years. Poverty did not see an increase again until 1982 with 15% of
Americans facing poverty, two years after welfare programs experienced
serious cuts under President Ronald Reagan.
However, the findings are not without their criticisms. According to the US Census Bureau, poverty had already begun to decrease before Johnson passed the Equal Opportunity Act. Additionally, unemployment reached some of its lowest rates in history under President Dwight Eisenhower near the end of the 1950s. Before Eisenhower left office, unemployment was estimated to be less than 5%.
In 1986, Lawrence Mead
introduced a series of studies on welfare culture. Mead compared
changes in income levels and welfare benefits across urban dwellers from
the 1960s through the 1980s. Mead's studies suggest that over half of
all welfare recipients will not need to stay on welfare for more than 10
years, but only 12% will be off welfare in less than 3 years. Mead
concludes that welfare has demonstrated some proven effects for helping
impoverished families meet their basic needs and find employment, thus
acting as a tool for empowerment. However, Mead acknowledges that the
welfare system can do better. Mead believes welfare culture could breed
empowerment more effectively if mandatory participation in education/job
training programs were required for welfare recipients.
Evidence of behavioral effects
Anthropologist Oscar Lewis studied the behavioral effects of poverty on indigent Mexicans. He introduced the concept of the "culture of poverty"
and 70 personality traits that he saw in the mentality of the
impoverished, including helplessness, disdain for the government, lack
of confidence, hopelessness, and a sense of futility that accompanies
the search for employment.
Social Security Expenditure and Inflation from 2013 - 2019 in the U.S
Social Security Contributions in OECD countries.
Social insurance is a concept where the government intervenes in the insurance
market to ensure that a group of individuals are insured or protected
against the risk of any emergencies that lead to financial problems.
This is done through a process where individuals' claims are partly
dependent on their contributions, which can be considered as insurance
premium to create a common fund out of which the individuals are then
paid benefits in the future.
it is funded by taxes or premiums paid by (or on behalf of) participants (but additional sources of funding may be provided as well); and
the program serves a defined population, and participation is either
compulsory or so heavily subsidized that most eligible individuals
choose to participate.
Social insurance has also been defined as a program whose risks are
transferred to and pooled by an often government organisation legally
required to provide certain benefits.
The World Bank's 2019 World Development Report on The Changing Nature of Work
considers the appropriateness of traditional social insurance models
that are based on steady wage employment in light of persistently large informal sectors in developing countries and the decline in standard employer-employee relationships in advanced countries.
Social insurance is a public insurance that provides protection
against economic risks. Participation in social insurance is compulsory.
Social insurance is considered to be a type of social security.
Social insurance differs from public support in that individuals'
claims are partly dependent on their contributions, which can be
considered as insurance premium. If what individuals receive is
proportional to their contributions, social insurance can be considered a
government "production activity" rather than redistribution. Given that
what some receive is far higher than what they attribute (on an
actuarial basis), there is a large element of redistribution involved in
government social insurance programs. The largest of these programs is
Old age. Survivors' and Disability Insurance Program (OASDI). It
provides income not only for pensioners. But also to their survivors
(especially widows and widowers) and people with disabilities. Other
major social insurance schemes are workers' compensation, which provides
compensation for workers injured at work, unemployment insurance
providing temporary benefits after job loss, and Medicare. The Medicare
Program, which provides medical services in old age (like Medicaid), has
grown rapidly since its first introduction in 1965 and is now the
second largest program. Social security and Medicare are sometimes
called middle class programs because the middle class are the main
beneficiaries and benefits are not provided on a need basis, but when
people satisfy a certain requirement, for example age. As soon as they
satisfy the criteria, they can receive benefits.
Justifications
Social
insurance is based on the premise that there is not always equitable
distribution of resources or benefits in an competitive economy and
there must be provisions to ensure that participants in the market do
not end up with an "all-or-nothing-game".
It is a means to allow participants of a dynamic economy to take risks
and engage in economic activity with the assurance that in the instance
of an emergency, they will be protected through this accumulated fund.
Social insurance provides "social justice" and "social stability".
The following reasons specifically identify the features of a market economy that give rise to the need for social insurance:
Asymmetric information
This is a form of failure in a competitive market where there is not a parity in the provision of information between buyers
and sellers or in this situation insurers and the insured. If the risk
involved in a transaction is not made equally clear to both parties then
the trades are differently valued by the two parties.
The difference in knowledge between insurers and insured about the risk level ultimately leads to the problem of adverse selection. An example of this problem would be the situation where insurers set a particular price for health insurance
that is too high for individuals with low risk of getting sick and thus
only those with a high risk of getting sick purchase this insurance.
Ultimately the insurance company is losing money since they cannot
discriminate between buyers and thus they further increase prices. This
increase continues to eliminate individuals whose risk level is not
enough to pay the prices of this insurance and insurance companies enter
the death spiral.
Redistribution
In
order to achieve a better and more equitable distribution of insurance
costs, the government intervenes through the means of taxation of low
risk individuals in order to subsidise the premiums that have to be paid
by high risk individuals. Therefore there is a redistribution from low risk individuals to high risk individuals.
Because of this, income taxes are often used in the efficient
implementation of social insurance programs. In the case of the
Affordable Care Act, for example, an individual mandate was included
which required Americans to purchase health insurance or be subject to a
financial penalty. This allowed higher cost individuals, from the
perspective of insurance companies, such as people with pre-existing
conditions to be covered and not excluded at a reasonable rate. Although causing political controversy, was an example of redistribution within a social insurance program.
Externalities
If
individuals do not have social insurance and are thereby unable to
afford the basic right of healthcare, then not only are they subjecting
themselves to illnesses but also creating the likelihood that others
around them will be infected as well. This would be an example of a
negative externality.
In the case of the now struck down individual mandate, everyone
purchasing health insurance creates a positive externality for those
that are high cost to insurance companies as they can now afford health
care and cannot be discriminated upon because of various emerging or
pre-existing conditions.
Durability
The
existence of social insurance stems from the acceptance of the ideology
that workers should be insured against the risk of losses of economic
status due to their participation in the labour market. This inherent idea of fairness has propagated the desirability and subsequent durability of this program.
Social insurance provides protection against certain risks in
the economy that private insurance fails to deal with. Private insurance
often becomes extremely unaffordable due to the issues of adverse
selection and moral hazard, and to counteract such steep prices, the
need for a publicly mandated social insurance increases.
Social insurance is considered fair and socially responsible because
it taps into the human desire of wanting to help individuals who face
risks that are not their fault and neither are they in their control.
The premiums
required for the existence of social insurance policies come from
workers who will ultimately be covered by the benefits and this sense of
accountability makes the program seem fair and its beneficiaries,
deserving.
Social insurance helps account for the lack of predictability that
individuals in the market have regarding their retirement, health and
stability and thereby insures them against long term risks that they now
no longer need to think about but are, for the most part, inevitable.
Consequences
Moral hazard
An
issue of social insurance is that often, individuals who are insured
against certain risks become complacent and more likely to take adverse
actions because they are secure in the knowledge that they will be
insured against the adverse outcomes of these actions. This process is
known as moral hazard
and is a drawback of providing insurance to everyone because then the
government and insurance providers cannot monitor the insured and must
bear their costs of immoral actions.
Moral hazard has important implications for optimal social insurance programs, particularly in the case of unemployment benefits: the presence of moral hazard entails that, paradoxical as it may seem, individuals should optimally be only partially
insured against unemployment. This is because, in order to incentivize
an unemployed worker's job search effort, it is necessary that the
benefits paid to the worker during unemployment, meted out as a fraction
of the worker's previous salary, are greatest when the individual is
actively seeking employment.
Intergenerational acceptance and desirability
Those
that critique the program of social insurance bring up the argument
that programs such as social security only increase the burden on the
employed youth of the country because of the number of retired
individuals that are the beneficiaries.
However, this has been mitigated by research that shows that
although the number of retirees that benefit from the working youth is
significant, the number of children that American families are raising,
have considerably fallen. Thus, the number of members in a family that
need to be supported have reduced. The question of whether this is fair
still remains on the youth who must decide whether this offset in
payments is enough of a counteracting effect.
In 2019, receipts from Social Insurance taxes, the second-largest
revenue source, increased by $72 billion (or 6 percent), and increased
as a share of the economy from 5.8 percent in 2018 to 5.9 percent in
2019, climbing just above the 50-year average of 5.9 percent.
"The increase in payroll tax receipts reflects higher wages and salaries and the reallocations made between payroll and individual income taxes"
Labor supply effects
Unemployment insurance and workers' compensation
are essential aspects of Social Insurance that indeed provide
unparalleled assistance to citizens facing uncertainty regarding their
jobs. Although these programs have obvious benefits, they also affect
the labor supply because they incentivise workers to spend time out of
work and thus the time that these citizens are unemployed is longer.
Unemployment insurance, an example of social insurance, is inherently
faced with determining whether individuals face financial hardship in
the form of little or no income by choice or by circumstantial
necessity. An unemployed worker is able to rejoin the work force through
active, effortful job search. In the case of full unemployment
insurance, and job search effort is difficult to be monitored and
evaluated, the unemployed individual may have no incentive to keep
searching as they receive unemployment benefits. This reveals the
inherent social insurance tradeoff of the incentives of the insurance
and the risk involved.
Similarities to private insurance
Typical similarities between social insurance programs and private insurance programs include:
Specific definitions of eligibility rules and the amount of coverage provided;
Specific premium, contribution or tax rates required to meet the expected costs of the system.
Differences from private insurance
Typical differences between private insurance programs and social insurance programs include:
Private insurance programs are generally designed with greater
emphasis on equity between individual purchasers of coverage, and social
insurance programs generally place a greater emphasis on the social
adequacy of benefits for all participants.
Participation in private insurance programs is often voluntary; if
the purchase of insurance is mandatory, individuals usually have a
choice of insurers. Participation in social insurance programs is
generally mandatory; if participation is voluntary, the cost is heavily
subsidised enough to ensure essentially universal participation.
The right to benefits in a private insurance program is contractual, based on an insurance contract.
The insurer generally does not have a unilateral right to change or
terminate coverage before the end of the contract period (except in such
cases as nonpayment of premiums). Social insurance programs are not
generally based on a contract but on a statute,
and the right to benefits is thus statutory rather than contractual.
The provisions of the program can be changed if the statute is modified.
Individually purchased private insurance generally must be fully
funded. Full funding is a desirable goal for private pension plans as
well, but is often not achieved. Social insurance programs are often not
fully funded, and some argue that full funding is not economically
desirable.
Most international systems of social insurance are funded on an ongoing
basis without reference to future liabilities. That is seen as a matter
of solidarity between generations and between the sick and the healthy as a part of the social contract.
The current generation of healthy working people pay something now to
meet the health care and living costs of those who are currently
temporarily incapacitated through sickness or who have ceased work
through old age or disability. The main exception is in the United States, where the two largest programs, Medicare and Social Security
programs, the administrators have historically collected more in social
premiums than they have paid out as social benefits. The difference is
retained in a trust fund.
In both programs, US government actuaries periodically attempt to
predict up to 70 years in advance the longevity of the fund and must
estimate the future rates of contributions and pensions, the types of
health care needs of the beneficiaries, and what that might cost. No
other country in the world does so. Despite the US programs being in
considerable surplus, the political argument is often that these
programs are "going bankrupt" or that politicians have spent the money
on other things.
Welfare is a large program of social insurance that creates many
externalities. With welfare, the beneficiary's contributions to the
program are taken into account. A welfare program pays recipients based
on need, not contributions. In the US, there are welfare-to-work
programs that give unemployed people an incentive to work if they are
starting to seek a job. The people who use these programs are government
expenditures and are closely monitored to make sure that they are
searching for a job. They will receive several benefits once they find a
job including wage subsidies and tax breaks. Welfare-to-work programs
like these try to give people the incentive to work because, without
them, people have a strong incentive to stay unemployed.
National health insurance (NHI), sometimes called statutory health insurance (SHI), is a system of health insurance that insures a national population against the costs of health care.
It may be administered by the public sector, the private sector, or a
combination of both. Funding mechanisms vary with the particular program
and country. National or statutory health insurance does not equate to
government-run or government-financed health care, but is usually
established by national legislation. In some countries, such as
Australia's Medicare system, the UK's National Health Service and South Korea’s National Health Insurance Service, contributions to the system are made via general taxation
and therefore are not optional even though use of the health system it
finances is. In practice, most people paying for NHI will join it. Where
an NHI involves a choice of multiple insurance funds, the rates of
contributions may vary and the person has to choose which insurance fund
to belong to.
History
Germany has the world's oldest national social health insurance system, with origins dating back to Otto von Bismarck's Sickness Insurance Law of 1883. In Britain, the National Insurance Act 1911
included national social health insurance for primary care (not
specialist or hospital care), initially for about one third of the
population — employed working class wage earners, but not their
dependents. This system of health insurance continued in force until the creation of the National Health Service in 1948 which created a universal service, funded out of general taxation rather than on an insurance basis, and providing health services to all legal residents.
National healthcare insurance programs differ both in how the
contributions are collected, and in how the services are provided. In
countries such as Canada, payment is made by the government directly from tax revenue and this is known as single-payer health care. The provision of services may be through either publicly or privately owned health care providers. In France,
a similar system of compulsory contributions is made, but the
collection is administered by non-profit organisations set up for the
purpose.
An alternative funding approach is where countries implement
national health insurance by legislation requiring compulsory
contributions to competing insurance funds. These funds (which may be
run by public bodies, private for-profit companies, or private
non-profit companies), must provide a minimum standard of coverage and
are not allowed to discriminate between patients by charging different
rates according to age, occupation, or previous health status (pre-existing medical conditions). To protect the interest of both patients and insurance companies, the government establishes an equalization pool
to spread risks between the various funds. The government may also
contribute to the equalization pool as a form of health care subsidy.
This is the model used in the Netherlands.
Other countries are largely funded by contributions by employers
and employees to sickness funds. With these programs, funds come from
neither the government nor direct private payments. This system operates
in countries such as Germany and Belgium. These funds are usually
non-profit institutions run solely for the benefit of their members.
These systems are characterized by a mixture of three sources of funds
in varying degrees: private, employer-employee contributions, and
national/subnational taxes.
In addition to direct medical costs, some national insurance
plans also provide compensation for loss of work due to ill-health, or
may be part of wider social insurance plans covering things such as pensions, unemployment, occupational retraining, and financial support for students.
National schemes have the advantage that the pool or pools tend
to be vast and reflective of the national population. Health care costs,
which tend to be high at extremes of age and other specific events in
life, such as during pregnancy and childbirth, can be contributed to the
pool over a lifetime (i.e., higher when earning capacity is greatest to
meet costs incurred at times when earning capacity is low or
non-existent). This differs from the private insurance schemes that
operate which to price insurance year on year according to health risks
such as age, family history, previous illnesses, and height/weight
ratios. Consequently, some people tend to have to pay more for their
health insurance when they are sick and/or are least able to afford it.
These factors are not taken into consideration in NHI schemes.
Health care in Japan
– People without insurance through employers can participate in a
national health insurance program administered by local governments.
Healthcare in the Philippines
– Social Health Insurance Program, a resource pooling, risk sharing
health care program that provides quality health care financing not only
to the employed but to the sick, elderly, and indigents, as well
Single-payer healthcare is a type of universal healthcare in which the costs of essential healthcare for all residents are covered by a single public system (hence 'single-payer').
Single-payer systems may contract for healthcare services from
private organizations (as is the case in Canada) or may own and employ
healthcare resources and personnel (as is the case in the United
Kingdom). "Single-payer" describes the mechanism by which healthcare is
paid for by a single public authority, not a private authority, nor a
mix of both.
Description
Within
single-payer healthcare systems, a single government or
government-related source pays for all covered healthcare services. Governments use this strategy to achieve several goals, including universal healthcare, decreased economic burden of health care, and improved health outcomes for the population. In 2010, the World Health Organization's member countries adopted universal healthcare as a goal; this goal was also adopted by the United Nations General Assembly in 2015 as part of the 2030 Agenda for Sustainable Development.
A single-payer health system establishes a single risk pool,
consisting of the entire population of a geographic or political region.
It also establishes a single set of rules for services offered,
reimbursement rates, drug prices, and minimum standards for required
services.
In wealthy nations, single-payer health insurance is typically
available to all citizens and legal residents. Examples include the
United Kingdom's National Health Service, Australia's Medicare and Canada's Medicare.
History of the term
The
term was coined in the 1990s to characterize the differences between
the Canadian healthcare system with those such as the United Kingdom's
NHS. In the Canadian healthcare system, the government pays private
agencies to provide healthcare for qualifying individuals. In other
systems, the government both funds and delivers care.
Typically, "single-payer healthcare" refers to health insurance
provided as a public service and offered to citizens and legal
residents; it does not usually refer to delivery of healthcare services.
The fund can be managed by the government directly or as a publicly
owned and regulated agency.
Single-payer contrasts with other funding mechanisms like 'multi-payer'
(multiple public and/or private sources), 'two-tiered' (defined either
as a public source with the option to use qualifying private coverage as
a substitute, or as a public source for catastrophic care backed by
private insurance for common medical care), and 'insurance mandate'
(citizens are required to buy private insurance which meets a national
standard and which is generally subsidized). Some systems combine
elements of these four funding mechanisms.
In contrast to the standard usage of the term, some writers
describe all publicly administered systems as "single-payer plans," and
others have described any system of healthcare which intends to cover
the entire population, such as voucher plans, as "single-payer plans,"
although these usages generally don't meet strict definitions of the
term.
Several nations worldwide have single-payer health insurance programs. These programs generally provide some form of universal healthcare,
which is implemented in a variety of ways. In some cases doctors are
employed and hospitals are run by the government, such as in the UK or
Spain.[13][14] Alternatively, the government may purchase healthcare services from outside organizations, such as the approach taken in Canada.
Healthcare in Canada is delivered through a publicly funded healthcare system, which is mostly free at the point of use and has most services provided by private entities. The system was established by the provisions of the Canada Health Act of 1984.
The government assures the quality of care through federal standards.
The government does not participate in day-to-day care or collect any
information about an individual's health, which remains confidential
between a person and their physician.
Canada's provincially based Medicare systems are cost-effective
partly because of their administrative simplicity. In each province,
every doctor handles the insurance claim against the provincial insurer.
There is no need for the person who accesses healthcare to be involved
in billing and reclaim. Private insurance represents a minimal part of
the overall system.
In general, costs are paid through funding from income taxes. A
health card is issued by the Provincial Ministry of Health to each
individual who enrolls for the program and everyone receives the same
level of care.
There is no need for a variety of plans because virtually all
essential basic care is covered, including maternity and infertility
problems. Depending on the province, dental and vision care may not be
covered but are often insured by employers through private companies. In
some provinces, private supplemental plans are available for those who
desire private rooms if they are hospitalized.
Cosmetic surgery and some forms of elective surgery are not
considered essential care and are generally not covered. These can be
paid out-of-pocket or through private insurers. Health coverage is not
affected by loss or change of jobs, and there are no lifetime limits or
exclusions for pre-existing conditions.
Pharmaceutical medications are covered by public funds or through employment-based private insurance. Drug prices are negotiated with suppliers by the federal government to control costs. Family physicians
(often known as general practitioners or GPs in Canada) are chosen by
individuals. If a patient wishes to see a specialist or is counseled to
see a specialist, a referral can be made by a GP.
Canadians do wait for some treatments and diagnostic services.
Survey data shows that the median wait time to see a special physician
is a little over four weeks with 89.5% waiting less than three months.
The median wait time for diagnostic services such as MRI and CAT scans is two weeks, with 86.4% waiting less than three months. The median wait time for surgery is four weeks, with 82.2% waiting less than three months.
While physician income initially boomed after the implementation
of a single-payer program, a reduction in physician salaries followed,
which many feared would be a long-term result of government-run
healthcare. However, by the beginning of the 21st century, medical
professionals were again among Canada's top earners.
In 2002, Taiwan
had nearly 1.6 physicians and 5.9 hospital beds per 1,000 population,
low by worldwide standards, and there were a total of 36 hospitals and
2,601 clinics in the island. Health expenditures constituted 5.8 percent of the GDP in 2001, 64.9% of which coming from public funds.
Despite the initial shock on Taiwan's economy from increased
costs of expanded healthcare coverage, the single-payer system has
provided protection from greater financial risks and has made healthcare
more financially accessible for the population, resulting in a steady
70% public satisfaction rating.
The current healthcare system
in Taiwan, known as National Health Insurance (NHI), was instituted in
1995. NHI is a single-payer compulsory social insurance plan which
centralizes the disbursement of health care funds. The system promises
equal access to health care for all citizens, and the population
coverage had reached 99% by the end of 2004.
In the face of increasing loss and the need for cost containment,
NHI changed the payment system from fee-for-service to a global budget,
a kind of prospective payment system, in 2002.
South Korea used to have a multipayer social health insurance
universal healthcare system, similar to systems used in countries like
Japan and Germany, with healthcare societies providing coverage for the
whole populace. Prior to 1977, the country had voluntary private health
insurance, but reforms initiated in 1977 resulted in universal coverage
by 1989.
A major healthcare financing reform in 2000 merged all medical
societies into the National Health Insurance Service. This new service
became a single-payer healthcare system in 2004.
The Nordic countries
are sometimes considered to have single-payer health care services, as
opposed to single-payer national health care insurance like Canada. This
is a form of the 'Beveridge Model' of health care systems that features public health providers in addition to public health insurance.
The term "Scandinavian model" or "Nordic model" of health care
systems has a few common features: largely public providers, limited
private health coverage, and regionally-run, devolved systems with
limited involvement from the central government.
Due to this third characteristic, they can also be argued to be
single-payer only on a regional level, or to be multi-payer systems, as
opposed to the nationally run health coverage found in Singapore and
South Korea.
Healthcare in the United Kingdom is a devolved matter, meaning that England, Scotland, Wales, and Northern Ireland all have their own system of private and publicly funded healthcare, generally referred to as the National Health Service
(NHS). With largely public or government-owned providers, this also
fits into the 'Beveridge Model' of health care systems, sometimes
considered to be single-payer, with relatively little private
involvement compared to other universal systems. Each country's having
different policies and priorities has resulted in a variety of
differences existing between the systems. That said, each country provides public healthcare to all UK permanent residents that is free at the point of use, being paid for from general taxation.
In addition, each also has a private sector which is considerably
smaller than its public equivalent, with provision of private
healthcare acquired by means of private health insurance, funded as part
of an employer funded healthcare scheme or paid directly by the
customer, though provision can be restricted for those with conditions
such as HIV/AIDS.
In England, funding from general taxation is channeled through NHS
England, which is responsible for commissioning mainly specialist
services and primary care, and Clinical Commissioning Groups (CCGs),
which manage 60% of the budget and are responsible for commissioning
health services for their local populations.
These commissioning bodies do not provide services themselves
directly, but procure these from NHS Trusts and Foundation Trusts, as
well as private, voluntary, and social enterprise sector providers.
Healthcare in Singapore or the Singapore healthcare system has been
considered by some analysts as unique, and is dubbed as the 'Singapore
model' or the 'Singapore healthcare model'. Largely consisting of a
government-run publicly fundeduniversal healthcare system, it is then delivered through schemes such as Medisave, Medishield Life and Medifund,
while also including a significant private healthcare sector. In
addition, financing of healthcare costs is done through a mixture of
direct government subsidies (up to 80%), compulsory comprehensive
savings, a national healthcare insurance, and cost sharing.
According to global consulting firm Towers Watson (now Willis Towers Watson),
Singapore has "one of the most successful healthcare systems in the
world, in terms of both efficiency in financing and the results achieved
in community health outcomes". This has been attributed to a combination of a strong reliance on medical savings accounts, cost sharing, and government regulation.
The government regularly adjusts policies to actively regulate "the
supply and prices of healthcare services in the country" in an attempt
to keep costs in check. However, for the most part, the government does
not directly regulate the costs of private medical care unless
necessary. These costs are largely subject to market forces, and vary
enormously within the private sector, depending on the medical specialty and service provided.
Towers Watson states that the specific features of the Singapore
healthcare system are unique, and have been described as a "very
difficult system to replicate in many other countries." Furthermore,
Many Singaporeans also have supplemental private health insurance (often
provided by employers) for services that may not be covered by the
government's programmes, such as cosmetic dentistry and some prescription drugs.
In recent years, some American politicians as well as media in the country such as Vox and The New York Times
has suggested that the system in place in Singapore could be used as a
possible solution to revamp the healthcare system in the United States,
and that Singapore's "miracle" health care system could be the answer
due to its fusion of both liberal and conservative ideas.
Regions with hybrid single-payer/private insurance systems
Healthcare in Australia is provided by both private and government institutions. Medicare is the publicly funded universal health care venture in Australia. It was instituted in 1984 and coexists with a private health system. Medicare is funded partly by a 2% income tax
levy (with exceptions for low-income earners), but mostly out of
general revenue. An additional levy of 1% is imposed on high-income
earners without private health insurance.
As well as Medicare, there is a separate Pharmaceutical Benefits Scheme that considerably subsidises a range of prescription medications. The Minister for Health administers national health policy, elements of which (such as the operation of hospitals) are overseen by individual states.
India has a universal multi-payer health care
model that is paid for by a combination of public and private health
insurances along with the element of almost entirely tax-funded public
hospitals.
The public hospital system is essentially free for all Indian residents
except for small, often symbolic co-payments in some services. At the federal level, a national health insurance program was launched in 2018 by the Government of India, called Ayushman Bharat. This aimed to cover the bottom 50% (500 million people) of the country's population working in the unorganized sector (enterprises having less than 10 employees) and offers them free treatment even at private hospitals.
For people working in the organized sector (enterprises with more than
10 employees) and earning a monthly salary of up to Rs 21000 are covered
by the social insurance scheme of Employees' State Insurance which entirely funds their healthcare (along with pension and unemployment benefits), both in public and private hospitals.
People earning more than that amount are provided health insurance
coverage by their employers through the many public or private insurance
companies. As of 2020, 300 million Indians are covered by insurance
bought from one of the public or private insurance companies by their
employers as group or individual plans.
Unemployed people without coverage are covered by the various state
insurance schemes if they do not have the means to pay for it.
In 2019, the total net government spending on healthcare was $36 billion or 1.23% of its GDP. Since the country's independence, the public hospital system has been entirely funded through general taxation.
Healthcare in Israel is universal and participation in a medical insurance plan is compulsory. All Israeli
residents are entitled to basic health care as a fundamental right. The
Israeli healthcare system is based on the National Health Insurance Law
of 1995, which mandates all citizens resident in the country to join
one of four official health insurance organizations, known as Kupat
Holim (קופת חולים - "Sick Funds") which are run as not-for-profit
organizations and are prohibited by law from denying any Israeli
resident membership. Israelis can increase their medical coverage and
improve their options by purchasing private health insurance. In a survey of 48 countries in 2013, Israel's health system was ranked fourth in the world in terms of efficiency, and in 2014 it ranked seventh out of 51. In 2020, Israel's health system was ranked third most efficient in the world. In 2015, Israel was ranked sixth-healthiest country in the world by Bloomberg rankings and ranked eighth in terms of life expectancy.
Building upon less structured foundations, in 1963 the existence of a
single-payer healthcare system in Spain was established by the Spanish
government. The system was sustained by contributions from workers, and covered them and their dependants.
The universality of the system was established later in 1986. At
the same time, management of public healthcare was delegated to the
different autonomous communities in the country.
While previously this was not the case, in 1997 it was established that
public authorities can delegate management of publicly funded
healthcare to private companies.
Additionally, in parallel to the single-payer healthcare system
there are private insurers, which provide coverage for some private
doctors and hospitals. Employers will sometimes offer private health
insurance as a benefit, with 14.8% of the Spanish population being
covered under private health insurance in 2013.
In 2000, the Spanish healthcare system was rated by the World Health Organization as the 7th best in the world.
A number of proposals have been made for a universal single-payer healthcare system in the United States, among them the United States National Health Care Act (popularly known as H.R. 676 or "Medicare for All") originally introduced in the House in February 2003 and repeatedly since.
On July 18, 2018, it was announced that over 60 U.S. HouseDemocrats would be forming a Medicare for All Caucus. On March 17, 2021, exactly a year after COVID-19 had appeared in every U.S. state, House Democrats introduced the Medicare for All Act of 2021 with 112 supporters.
Advocates argue that preventive healthcare
expenditures can save several hundreds of billions of dollars per year
because publicly funded universal healthcare would benefit employers and
consumers, that employers would benefit from a bigger pool of potential
customers and that employers would likely pay less, would be spared
administrative costs, and inequities between employers would be reduced.
Prohibitively high cost is the primary reason Americans give for
problems accessing health care. At over 27 million, the number of people without health insurance coverage in the United States is one of the primary concerns raised by advocates of health care reform.
Lack of health insurance is associated with increased mortality – about
sixty thousand preventable deaths per year, depending on the study. A study done at Harvard Medical School with Cambridge Health Alliance
showed that nearly 45,000 annual deaths are associated with a lack of
patient health insurance. The study also found that uninsured, working
Americans have a risk of death about 40% higher compared to privately
insured working Americans.
Backers of single-payer or Medicare for All note that minorities and the poor, as well as rural residents
in general, are less able to afford private health insurance, and that
those who can must pay high deductibles and co-payments that threaten
families with financial ruin.
Any national system would be paid for in part through taxes
replacing insurance premiums, but advocates also believe savings would
be realized through preventive care and the elimination of insurance
company overhead and hospital billing costs.
A 2008 analysis of a single-payer bill by Physicians for a National Health Program estimated the immediate savings at $350 billion per year. The Commonwealth Fund
believes that, if the United States adopted a universal health care
system, the mortality rate would improve and the country would save
approximately $570 billion a year.
National policies and proposals
Government is increasingly involved in U.S. health care
spending, paying about 45% of the $2.2 trillion the nation spent on
individuals' medical care in 2004. However, studies have shown that the
publicly administered share of health spending in the U.S. may be closer
to 60% as of 2002.
In a peer-reviewed paper published in the Annals of Internal Medicine, researchers of the RAND Corporation
reported that the quality of care received by Veterans Administration
patients scored significantly higher overall than did comparable metrics
for patients currently using United States Medicare.
The United States National Health Care Act is a perennial piece of legislation introduced many times in the United States House of Representatives by then Representative John Conyers (D-MI). The act would establish a universal single-payer health care system in the United States, the rough equivalent of Canada's Medicare, and the United Kingdom's National Health Service, among other examples. The bill was first introduced in 2003 and has been reintroduced in each Congress since. During the 2009 health care debates over the bill that became the Patient Protection and Affordable Care Act, H.R. 676 was expected to be debated and voted upon by the House in September 2009, but was never debated. In the wake of Bernie Sanders' 2016 presidential campaign,
in which a push for universal healthcare featured prominently,
single-payer proposals gained traction. Conyers reintroduced his bill in
the House of Representatives in January 2017. Four months later, the
bill was supported by 112 co-sponsors, surpassing for the first time the 25% mark of co-sponsorship. In September of the same year, Sanders himself, together with 16 co-sponsors, introduced a Medicare-for-all bill in the Senate (S. 1804). An analysis of a Mercatus Center study of the 2017 proposal by economist Jeffrey Sachs
found that "it rightfully and straightforwardly concludes that M4A
would provide more health care coverage at lower cost than the status
quo, projecting a net reduction in national health expenditures of
roughly $2 trillion over a 10-year period (2022-2031), while also
enabling increased health care coverage."
The Congressional Budget Office and related government agencies scored the cost of a single-payer health care system several times since 1991. The Government Accountability Office
published a report in 1991 noting that "[I]f the US were to shift to a
system of universal coverage and a single payer, as in Canada, the
savings in administrative costs [10 percent of health spending] would be
more than enough to offset the expense of universal coverage."
The CBO scored the cost in 1991, noting that "the population that
is currently uninsured could be covered without dramatically increasing
national spending on health" and that "all US residents might be
covered by health insurance for roughly the current level of spending or
even somewhat less, because of savings in administrative costs and
lower payment rates for services used by the privately insured."
A CBO report in 1993 stated that "[t]he net cost of achieving
universal insurance coverage under this single payer system would be
negative" in part because "consumer payments for health would fall by
$1,118 per capita, but taxes would have to increase by $1,261 per
capita" in order to pay for the plan.
A July 1993 scoring also resulted in positive outcomes, with the CBO
stating that, "[a]s the program was phased in, the administrative
savings from switching to a single-payer system would offset much of the
increased demand for health care services.
Later, the cap on the growth of the national health budget would hold the rate of growth of spending below the baseline." The CBO also scored Sen. Paul Wellstone's
American Health and Security Act of 1993 in December 1993, finding that
"by year five (and in subsequent years) the new system would cost less
than baseline."
A 2014 study published in the journal BMC Medical Services
Research by James Kahn, et al., found that the actual administrative
burden of health care in the United States was 27% of all national
health expenditures. The study examined both direct costs charged by
insurers for profit, administration and marketing but also the indirect
burden placed on health care providers like hospitals, nursing homes and
doctors for costs they incurred in working with private health insurers
including contract negotiations, financial and clinical record-keeping
(variable and idiosyncratic for each payer).
Kahn, et al. estimate that the added cost for the private insurer
health system in the US was about $471 billion in 2012 compared to a
single-payer system like Canada's. This represents just over 20% of the
total national healthcare expenditure in 2012. Kahn asserts that this
excess administrative cost will increase under the Affordable Care Act
with its reliance on the provision of health coverage through a
multi-payer system.
A February 2020 study published in The Lancet found that the proposed Medicare for All Act would save 68,000 lives and $450 billion in national healthcare expenditure annually.
State proposals
Several single-payer state referendums and bills from state legislatures have been proposed, but with the exception of Vermont, all have failed. In December 2014, Vermont canceled its plan for single-payer health care.
California
California
attempted passage of a single-payer health system by initiative in
1994, as Proposition 186, which got 27% of the vote.
Multiple legislative proposals have been proposed in the state legislature, one of the earliest by Senator Nicholas Petris. The first successful passage of legislation through the California State Legislature, SB 840 or "The California Universal Healthcare Act" (authored by Sheila Kuehl), occurred in 2006 and again in 2008. Both times, Governor Arnold Schwarzenegger vetoed the bill. State Senator Mark Leno has reintroduced the bill in the legislative session afterwards.
On February 17, 2017, SB 562, which is also known as "The Healthy California Act" was introduced to the California State Senate.
This bill is a $400 billion plan that was sponsored by the California
Nurses Association to implement single-payer healthcare in California.
Under this bill, which was co-authored by State Senators Ricardo Lara
(D-Bell Gardens) and Toni Atkins (D-San Diego), Californians would have
health coverage without having to pay any premiums, co-pays, or deductibles.
Under this proposed bill, all California residents will be covered in
the Healthy California Act SB 562 regardless of their immigration
status.
This bill will also include transient students that attend California
institutions whom, purchased their healthcare program through the
school.
Services that will be covered by this bill will need to determine as
medically necessary by the patient's chosen health care provider. These services will range from preventive services to emergency services, in addition to prescription drugs services. SB 562 passed in the State Senate on June 1, 2017 with a vote of 23–14. When the bill was sent to the State Assembly, it was put on hold by Assembly Speaker Anthony Rendon, who expressed concern over financing.
According to SB 562, a Healthy California Trust Fund would be
established to provide funding for the bill. Currently, states receive
funding from the federal government for certain healthcare services such
as Medicaid and Medicare. In addition to taxes, these funds would be pooled into the new trust fund
and provide the sources of funding needed to implement The Healthy
California Act. However, California must first obtain a waiver from the
federal government which would allow California to pool all the money
received from these federal programs into one central fund. A new bill, AB 1400, authored by Assemblymembers Ash Kalra, Alex Lee
and Miguel Santiago was introduced in 2021, and is pending for 2022.
In 2019, California Governor Gavin Newsom appointed a "Healthy
California for All" (HCFA) commission to study the feasibility of
adopting a universal health care system with unified financing, such as a
single-payer system, in California.
Colorado
The Colorado State Health Care System Initiative, Amendment 69, was a citizen-initiated constitutional amendment proposal in November 2016 to vote on a single-payer healthcare system called ColoradoCare.
The system would have been funded by a 10% payroll tax split 2:1
between employers and employees. This would have replaced the private
health insurance premiums currently paid by employees and companies.
It would have begun operating in 2019 and was estimated to require
revenue of $38 billion annually (from the Federal government and payroll
taxes) and provide coverage for all residents, with no deductibles.
The ballot measure was rejected by 79% of voters.
Hawaii
In 2009, the Hawaii state legislature passed a single-payer healthcare bill that was vetoed by Republican Governor Linda Lingle. While the veto was overridden by the legislature, the bill was not implemented.
Illinois
In
2007, the Health Care for All Illinois Act was introduced and the
Illinois House of Representatives' Health Availability Access Committee
passed the single-payer bill favorably out of committee by an 8–4 vote.
The legislation was eventually referred back to the House rules
committee and not taken up again during that session.
Massachusetts
Massachusetts
had passed a universal healthcare program in 1986, but budget
constraints and partisan control of the legislature resulted in its
repeal before the legislation could be enacted.
Question 4, a nonbinding referendum,
was on the ballot in 14 state districts in November 2010, asking
voters, "[S]hall the representative from this district be instructed to
support legislation that would establish healthcare as a human right
regardless of age, state of health or employment status, by creating a
single payer health insurance system like Medicare that is
comprehensive, cost effective, and publicly provided to all residents of
Massachusetts?" The ballot question passed in all 14 districts that
offered the question.
Minnesota
The
Minnesota Health Act, which would establish a statewide single-payer
health plan, has been presented to the Minnesota legislature regularly
since 2009. The bill was passed out of both the Senate Health Housing
and Family Security Committee and the Senate Commerce and Consumer
Protection Committee in 2009, but the House version was ultimately
tabled.
In 2010, the bill passed the Senate Judiciary Committee on a
voice vote as well as the House Health Care & Human Services Policy
and Oversight Committee. In 2011, the bill was introduced as a two-year bill in both the Senate and House, but did not progress. It has been introduced again in the 2013 session in both chambers.
Montana
In September 2011, Governor Brian Schweitzer
announced his intention to seek a waiver from the federal government
allowing Montana to set up a single-payer healthcare system.
Governor Schweitzer was unable to implement single-payer health care in
Montana, but did make moves to open government-run clinics, and in his
final budget as governor, increased coverage for lower-income Montana
residents.
New York
New
York State has been attempting passage of the New York Health Act, which
would establish a statewide single-payer health plan, since 1992. The
New York Health Act passed the Assembly four times: once in 1992 and
again in 2015, 2016, and 2017, but has not yet advanced through the
Senate after referrals to the Health Committee. On all occasions, the
legislation passed the Assembly by an almost two-to-one ratio of
support.
Oregon
The state of Oregon attempted to pass single-payer healthcare via Oregon Ballot Measure 23 in 2002, and the measure was rejected by a significant majority.
Pennsylvania
The
Family Business and Healthcare Security Act has been introduced in the
Pennsylvania legislature numerous times, but has never been able to
pass.
Vermont passed legislation in 2011 creating Green Mountain Care. When Governor Peter Shumlin signed the bill into law, Vermont became the first state to functionally have a single-payer health care system.
While the bill is considered a single-payer bill, private insurers can
continue to operate in the state indefinitely, meaning it does not fit
the strict definition of single-payer.
Representative Mark Larson, the initial sponsor of the bill, has
described Green Mountain Care's provisions "as close as we can get [to
single-payer] at the state level." Vermont abandoned the plan in 2014, citing costs and tax increases as too high to implement.
Public opinion
Advocates
for single-payer healthcare point out support in polls, although the
polling is mixed depending on how the question is asked.
Polls from Harvard University in 1988, the Los Angeles Times in 1990,
and the Wall Street Journal in 1991 all showed strong support for a
health care system comparable to the system in Canada.
A 2001 article in the public health journalHealth Affairs
studied fifty years of American public opinion of various health care
plans and concluded that, while there appears to be general support of a
"national health care plan," poll respondents "remain satisfied with
their current medical arrangements, do not trust the federal government
to do what is right, and do not favor a single-payer type of national
health plan."
Between 2001 and 2013, however, polling support declined. A 2007 Yahoo/AP
poll showed 54% of respondents considered themselves supporters of
"single-payer health care," and 49% of respondents in a 2009 poll for
Time Magazine showed support for "a national single-payer plan similar
to Medicare for all." Polls by Rasmussen Reports in 2011 and 2012 showed 49% opposed to single-payer healthcare. In April 2019, a Kaiser Family Foundation poll showed 56% of Americans favor "a national health plan, sometimes called Medicare-for-all", with support remaining steady over the previous two years.
A majority of Democratic Party voters support Medicare for all.
From 2010 to 2020, all House members who supported Medicare for All won
reelection including those in Republican-leaning districts.
A 2007 study published in the Annals of Internal Medicine
found that 59% of physicians "supported legislation to establish
national health insurance" while 9% were neutral on the topic, and 32%
opposed it.
In January 2020, The American College of Physicians endorsed the
concept of single-payer system for the US and published a series of
articles supporting this in the Annals of Internal Medicine.
