Healthcare funding models

Arthur Hodgson

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

Almost all European systems are financed through a mix of public and private contributions. The majority of universal healthcare systems are funded primarily by tax revenue — for example, Portugal Spain, Denmark and Sweden. Some nations, such as Germany, France and Japan, employ a multi-payer system in which healthcare is funded by private and public contributions. However, much of the non-government funding is by contributions by employers and employees to regulated non-profit sickness funds. These contributions are compulsory and defined according to law.

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

Universal healthcare systems are redistributive. Progressivity of healthcare financing has implications for overall income inequality.

Even after we have settled on a named system within the industry, we may find ourselves talking at cross-purposes because we ascribe different meanings to the same word. As soon as we move away from each sick person paying for their own care, we are moving into some form of insurance.

In Bermuda’s case, as with any form of insurance, the optimum number of persons belonging to the group would be the entire population. The main idea is that payments come from a single pot. Healthcare should be equitable and not simply for the rich. Therefore, payments into the pot must be somehow related to income. This can be accomplished through payment from a system of proportional taxation as opposed to a single pricing for the service, as would be the case with a private insurance company. Of course, this does not prevent individuals purchasing additional healthcare or insurance that covers additional healthcare beyond what is offered in a public system. This is what happens at present in education where persons not satisfied with public education can send their children to private schools or hire private tutors.

The term “single-payer” describes the entity that makes payment, indicating that there is a single government fund from which payment is made. The contractual relationship between doctor or deliverer of the service is with the government. Some jurisdictions have a mixed public-private administration.

Measuring the service that is being provided may be complex and will be dependent upon the minimum level of care that Bermudians are prepared to accept.

The Bermuda Trade Union Congress has published as good a commentary as any on Bermuda’s healthcare:

“On May 1, 2018, International Workers’ Day, the Bermuda Trade Union Congress will join with global fraternal unions and the rest of the world to remember the struggles and celebrate the contributions that workers have made in the fight for universal rights, privileges and the rule of law.

“The BTUC’s theme for 2018 is ‘Affordable and Accessible Healthcare in Bermuda for All’. Recognising that the cost of Bermuda’s healthcare is alarming to all workers and their families, the BTUC selected that year’s theme as a means to implore all stakeholders to commit to finding solutions to Bermuda’s healthcare crisis.

“To that end, the BTUC is calling on all affiliate union members and citizens of Bermuda to join the BTUC at a rally and march on May 1 starting from Victoria Park at 12pm.”

The Bermuda Health Strategy Report 2014–2019 states:

“Compared to other high-income countries Bermuda’s health system is not providing value for money as measured by health outcomes for the level of expenditure.”

It is undisputable that Bermuda’s health system is overly strained and failing its residents. This is evident because all residents do not have access to basic health insurance coverage and healthcare contributions are not affordable. In addition, the long-term healthcare needs of our seniors are not being met. At the core of this issue, healthcare provider fees are largely unregulated and overused, seemingly placing profit over people.

According to Bermuda’s 2017 National Health Accounts Report, our per-capita health expenditure stands at $11,362, outranking all other countries in the Organisation for Economic Co-operation and Development.

As Bermuda’s working population declines through retirement and job losses, and total health-system costs continue to rise, greater financial healthcare contributions are required from the existing and retired workforce. This is having negative impact on both workers and pensioners, as their purchasing power is being eroded by healthcare inflation.

Many senior citizens are finding it extremely challenging to cope, as a large portion of their pensions is earmarked to pay for prescription drugs, diagnostic tests and other associated healthcare costs. This financial burden depletes their limited disposable income, leaving them with dwindling resources for other basic necessities.

Investigations continue to reveal that many Bermudians are electing to go without healthcare insurance coverage because it is simply unaffordable.

Further exacerbating this precarious problem, there are increasing numbers of employers who are offering workers vendor contracts to avoid having to pay benefits, especially the mandatory health insurance premiums.

The BTUC is advocating for a sustainable and improved healthcare system, and requests that all stakeholders make a concerted effort to ensure there is universal healthcare coverage in Bermuda. They call on all stakeholders to work together to ensure that:

• All residents have access to basic health insurance coverage

• Healthcare coverage contributions are affordable

• All residents have access to healthcare services

We need a healthcare system that is people-centric rather than profit-driven. Universal health coverage should be the aim and affordable healthcare should be viewed as a human right and not a commodity.

Further, it is recognised that individuals must commit to healthier lives. The Government must commit to mapping out a clear strategy with regulations that meet Bermuda’s healthcare needs. Healthcare providers must become more efficient and cost-effective. Failure to act will put more lives at risk and will keep many residents locked out of accessible and affordable healthcare.

Arthur Hodgson is a former Cabinet minister, Rhodes scholar and graduate of Oxford University in England, where he studied philosophy, politics and economics

Related News