How does universal health coverage work?
Health System Features
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It took 10 years of political tension to establish Australia’s universal public health insurance program, known as Medicare.
A universal health care bill was initially introduced in Parliament in 1973 but failed three times to pass through the Senate. Because of these failed attempts, a new parliamentary election was called, a procedure known as double dissolution, to resolve the deadlock. The new Parliament passed the health care legislation in 1974, establishing free public hospital care and subsidized private care. However, following a change in government in 1975, access to free health care services was limited to retired persons who met stringent means tests.
After another change of government in 1984, the current Medicare system was established. Medicare provides free public hospital care and substantial coverage for physician services and pharmaceuticals for Australian citizens, residents with permanent visas, and New Zealand citizens following their enrollment in the program and confirmation of identity. Restricted access is provided to citizens of certain other countries through formal agreements. Other visitors to Australia, as well as undocumented immigrants, do not have access to Medicare and are treated as private-pay patients, including those needing emergency services.
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The constitution of Brazil defines health as a universal right and a state responsibility. The Brazilian health system, known as SUS (
Sistema Único de Saúde), was conceived during the 1980s as part of the social movement aimed at Brazil’s re-democratization. SUS was officially created in 1988 by the new Brazilian constitution.
Three principles underpin SUS:
- The universal right to comprehensive health care at all levels of complexity (primary, secondary, and tertiary).
- Decentralization with responsibilities given to the three levels of government: federal, state, and municipal.
- Social participation in formulating and monitoring the implementation of health policies through federal, state, and municipal health councils.
Since 1990, the incremental expansion of SUS has enabled substantial progress toward achieving universal health coverage.
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Canadian Medicare — Canada’s universal, publicly funded health care system — was established through federal legislation originally passed in 1957 and in 1966. The Canada Health Act of 1984 replaces and consolidates the two previous acts and sets national standards for medically necessary hospital, diagnostic, and physician services. To be eligible to receive full federal cash contributions for health care, each provincial and territorial (P/T) health insurance plan needs to comply with the five pillars of the Canada Health Act, which stipulate that it be:
- Publicly administered
- Comprehensive in coverage conditions
- Universal
- Portable across provinces
- Accessible (for example, without user fees).
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China largely achieved universal insurance coverage in 2011 through three public insurance programs:
- Urban Employee Basic Medical Insurance, mandatory for urban residents with formal jobs, was launched in 1998.
- The voluntary Newly Cooperative Medical Scheme was offered to rural residents in 2003.
- The voluntary Urban Resident Basic Medical Insurance was launched in 2007 to cover urban residents without formal jobs, including children, the elderly, and the self-employed.
In 2016, China’s central government, the State Council, announced that it would merge the Newly Cooperative Medical Scheme and Urban Resident Basic Medical Insurance to expand the risk pool and reduce administrative costs. This consolidation is still underway. The combined public insurance program is now called Urban-Rural Resident Basic Medical Insurance.
Because China has a huge population, insurance coverage was increased gradually. In 2011, approximately 95 percent of the Chinese population was covered under one of the three medical insurances. Insurance coverage is not required in China.
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All registered Danish residents are automatically enrolled in publicly financed health care, which is largely free at the point of use. Registered immigrants and asylum-seekers are also covered, while undocumented immigrants have access to acute-care services through a voluntary, privately funded initiative supported by the Danish Medical Association, the Danish Red Cross, and the Danish Refugee Council.
Danes can choose from two public insurance options. Practically all Danes (98%) choose Group 1 coverage, under which general practitioners (GPs) act as gatekeepers and patients need a referral to see specialists, except for a few specialties. The remaining 2 percent of Danes choose Group 2 coverage, which allows access to specialists without a referral, although copayments apply. Under both insurance options, access to hospitals requires a referral.
Universal access to health care underlies Denmark’s Health Law, which sets out the government’s obligation to promote population health and prevent and treat illness, suffering, and functional limitations; to ensure high-quality care and easy and equal access; and to promote service integration, choice, transparency, access to information, and short waiting times.
Universal coverage developed gradually, starting in the latter part of the 1800s with nongovernmental insurance, known as sickness funds, covering primary care and user charges for hospital care. In 1973, the current universal public coverage system was founded through legislative reform.
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Health coverage in England has been universal since the creation of the National Health Service (NHS) in 1948. The NHS was set up under the National Health Service Act of 1946, based on the recommendations of a report to Parliament by Sir William Beveridge in 1942. The Beveridge Report outlined free health care as one aspect of wider welfare reform designed to eliminate unemployment, poverty, and illness, and to improve education. Under the 1946 Act, the Minister of Health had a duty to provide a comprehensive, free health service, replacing voluntary insurance and out-of-pocket payments.
Currently, all those “ordinarily resident” in England are automatically entitled to NHS care, still largely free at the point of use, as are nonresidents with a European Health Insurance Card. For other people, such as non-European visitors or undocumented immigrants, only treatment in an emergency department and for certain infectious diseases is free. Rights for those eligible for NHS care are summarized in the NHS Constitution; they include the right to access care without discrimination and within certain time limits for certain categories, such as emergency and planned hospital care.
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Universal coverage was achieved over seven decades by extending statutory health insurance (SHI) to all employees (in 1945), retirees (in 1945), the self-employed (in 1966), and the unemployed (in 2000). In 2000, the
Couverture maladie universelle (Universal Health Coverage), or CMU, was created for residents not eligible for SHI, although the program required yearly renewals and entitlement changes whenever a beneficiary’s professional or family situation changed. After the implementation of CMU, fewer than 1 percent of residents were left without baseline coverage.
In January 2016, SHI eligibility was universally granted under the
Protection universelle maladie (Universal Health Protection law), or PUMa, to fill in the few remaining coverage gaps. The law also replaced and simplified the existing system by providing systematic coverage to all French residents. It merged coverage for persons previously covered by the Universal Health Coverage and immigrants covered by the state-sponsored health insurance.
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Chancellor Otto von Bismarck's Health Insurance Act of 1883 established the first social health insurance system in the world. At the beginning, health insurance coverage was restricted to blue-collar workers. In 1885, 10 percent of the population was insured and entitled to cash benefits in case of illness (50% of wages for a maximum of 13 weeks), death, or childbirth. While initially limited, coverage gradually expanded. The final step toward universal health coverage occurred in 2007, when health insurance, either statutory or private, was mandated for all citizens and permanent residents. Today’s system provides coverage for the entire population, along with a generous benefit package.
Health insurance is provided by two subsystems: statutory health insurance (SHI), consisting of competing, not-for-profit, nongovernmental health insurance plans known as sickness funds; and private health insurance.
Long-term care services are covered separately under Germany’s mandatory, statutory long-term care insurance (LTCI).
Unlike those in many other countries, sickness funds and private health insurers, as well as long-term care insurers, use the same providers. In other words, hospitals and physicians treat all patients regardless of whether they have SHI or private insurance.
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The constitution of India obliges the government to ensure the “right to health” for all. Each state is required to provide free universal access to health care services. However, health care in India has been chronically underfunded.
Historically, there have been several government-funded health insurance schemes intended to improve coverage for specific population groups, with variations across states. One important scheme aimed at reducing financial catastrophe and vulnerability for lower-income populations is the National Health Insurance Program (Rashtriya Swasthya Bima Yojana, or RSBY), launched in 2008. As of 2016, some 41 million families were enrolled in RSBY. However, evidence indicates that the scheme has not significantly reduced out-of-pocket spending. It is now being subsumed under the PM-JAY.
With ineffective public insurance schemes and the low uptake of commercial insurance, only around 37 percent of the population were covered by any form of health coverage in 2017–2018. Further systemic barriers to access include long wait times in hospitals, the perceived low quality of public health services, and substantial workforce and infrastructure shortfalls.
In March 2018, the central government approved the implementation of PM-JAY. This flagship public health initiative has been internationally recognized as a significant step toward achieving universal coverage in India. The initiative offers hospital coverage for the 40 percent of the country’s population that is poor or low-income. The other important initiative is to bolster preventive and promotive health care services by revamping existing primary health facilities into Health and Wellness Centres.
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Since 1995, Israel’s National Health Insurance (NHI) law has ensured universal coverage for citizens and permanent residents. As the law states, "Health insurance…shall be based on principles of justice, equality and mutual assistance." Under this commitment, every resident is entitled to health care services.
Residents are free to choose one of four competing nonprofit health plans that must cover anyone who applies. Every resident has a right to receive all services included in the benefit basket that is mandated by the government, subject to medical discretion. While residents also have the right to receive services at a reasonable quality level, within a reasonable period of time, and at a reasonable distance from their home, no formal definition of “reasonable” exists, and there is no penalty for health plans that fail to comply.
Some populations are excluded: soldiers, who receive health care directly from the army; inmates, who receive care from the Israel Prison Service; documented and undocumented foreign workers, whom employers are required to enroll in private insurance programs; and undocumented migrants, temporary residents, and tourists.
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Universal coverage is provided through Italy’s National Health Service (
Servizio sanitario nazionale, or SSN), established through legislation in 1978. The SSN automatically covers all citizens and legal foreign residents. Since 1998, undocumented immigrants have had access to urgent and essential services. Temporary visitors are responsible for the costs of any health services they receive.
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Japan’s statutory health insurance system (SHIS) covers 98.3 percent of the population, while the separate Public Social Assistance Program, for impoverished people, covers the remaining 1.7 percent. Citizens and resident noncitizens are required to enroll in an SHIS plan; undocumented immigrants and visitors are not covered.
The SHIS consists of two types of mandatory insurance:
- employment-based plans, which cover about 59 percent of the population
- residence-based insurance plans, which include Citizen Health Insurance plans for nonemployed individuals age 74 and under (27% of the population) and Health Insurance for the Elderly plans, which automatically cover all adults age 75 and older (12.7% of the population).
Each of Japan’s 47 prefectures, or regions, has its own residence-based insurance plan, and there are more than 1,400 employment-based plans.
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In the Netherlands, a national health insurance program was first rolled out in 1941, reflecting the German Bismarck model of public and private health insurers. Around 63 percent of the population was covered by public health insurance, while the more affluent could opt for private insurance or choose to remain uninsured.
At the turn of the century, concerns over inefficiencies and long waiting lists provided momentum for market-oriented reform based on the managed competition model proposed by American economist Alain C. Enthoven. The 2006 Health Insurance Act merged the traditional public and private insurance markets into one universal social health insurance program underpinned by private insurance and mandatory coverage.
All residents (and nonresidents who pay Dutch income tax) must purchase statutory health insurance from private insurers. Adults choose a policy on an individual basis (no family coverage), and children under 18 are then automatically covered. Insurers are required to accept all applicants, and enrollees have the right to change their insurer each year.
The uninsured are fined, and their insurance premiums may be levied directly from income. People who conscientiously object to insurance can opt out by making mandatory contributions into a health savings account. Active members of the armed forces (who are covered by the Ministry of Defense) are exempt.
Undocumented immigrants cannot purchase health insurance and have to pay for most treatments out-of-pocket (excluding acute care, obstetric services, and long-term care). However, some mechanisms are in place to reimburse costs that undocumented immigrants are unable to pay. Political asylum–seekers fall under a separate, limited insurance plan. Permanent residents living in the Netherlands for more than three months are obliged to purchase private insurance. Short-term visitors are required to purchase insurance for the duration of their visit if they are not covered through their home country.
Since 2011, the number of uninsured in the Netherlands has steadily declined. At the end of 2016, 23,000 people (less than 0.2% of the population) remained uninsured.
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Beginning with the 1938 Social Security Act, a consensus developed in New Zealand that government has a fundamental role in providing for the population’s health care needs. Not long after that law’s passage, the government achieved its goal of universal health coverage. No citizen can be denied treatment in public hospitals, and all citizens have insurance through government-funded, universally accessible health services. In practice, however, coverage varies by income, need, location, and type of service.
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Norway has universal health and social insurance coverage, known as the National Insurance Scheme (NIS), or
Folketrygd. It is currently regulated by the 1997 National Insurance Act and the 1999 Patient Rights Act.
The establishment of universal coverage has a long history in Norway. Political and social movements began advocating for universal social and health care insurance around 1900. The Act of Health Insurance, covering employees as well as their families, came into force in 1909. Membership was mandatory for low-income employees; others could opt in. The coverage was twofold: health care and guaranteed basic income in case of income loss due to ill health. In 1956, the system was converted into a universal and mandatory right for all citizens.
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Singapore’s health care financing system is underpinned by the belief that all stakeholders share responsibility for attaining sustainable universal health coverage. Singapore has a multipayer health care financing framework, where a single treatment episode might be covered by multiple schemes and payers, often overlapping. The system, known as the 3Ms, comprises the following programs:
- MediShield Life, a universal basic health care insurance, is mandatory for citizens and permanent residents and provides lifelong protection against large hospital bills and select costly outpatient treatments. It was launched in 2015 to replace MediShield, an opt-out catastrophic illness insurance scheme.
- MediSave, a national medical savings scheme, helps cover out-of-pocket payments. Personal and employer salary contributions (8%–10.5%, depending on age) to MediSave accounts are mandatory for all working citizens and permanent residents. These tax-exempt, interest-bearing (currently 4% to 5%) accounts can be used to pay for family members’ health care expenses.
- MediFund is the government’s safety net for needy Singaporeans who cannot cover their out-of-pocket expenses, even with MediSave.
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The Health and Medical Services Act states that Sweden’s health system must cover all legal residents. Coverage is universal and automatic. Emergency coverage is provided to all patients from the European Union, European Economic Area countries, and nine other countries with which Sweden has bilateral agreements. Asylum-seeking and undocumented children have the right to health care services, as do children who are permanent residents. Adult asylum-seekers and undocumented adults have the right to receive care that cannot be deferred, such as maternity care.
Three basic principles apply to all health care in Sweden:
- Human dignity: All human beings have an equal entitlement to dignity and have the same rights regardless of their status in the community.
- Need and solidarity: Those in greatest need take precedence in being treated.
- Cost-effectiveness: When a choice has to be made, there should be a reasonable balance between costs and benefits, with costs measured in relation to improvement in health and quality of life.
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Historically, health insurance in Switzerland had been provided by many small private insurers. After several attempts to introduce a system of universal coverage, the federal government adopted the Health Insurance Law in 1994, based on a private insurance model. The law’s objectives were to:
- strengthen equality by introducing universal coverage and subsidies for low-income households
- expand the benefit basket and ensure high standards of health services
- contain the growing costs of the health system.
Since going into effect in 1996, health insurance coverage is close to 100 percent. Citizens are legally required to purchase insurance, and the cantons ensure compliance. Insurance policies typically apply to individuals, and separate coverage must be purchased for dependents. New residents must purchase a policy within three months of arriving in Switzerland, and coverage applies retroactively to the arrival date. Temporary nonresident visitors pay for care themselves and claim expenses from any insurance coverage they hold in their home countries. The absence of mandatory health insurance for undocumented immigrants remains an unsolved problem.
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Taiwan's NHI system was implemented in 1995. Before then, Taiwan had had more than 10 public insurance schemes, each covering a particular group, such as government employees, farmers, and low-income households. These programs covered 59 percent of the population.
In 1986, Taiwan's government proposed moving to a universal NHI program. The planning process involved studying health insurance systems abroad, borrowing parts from systems of other countries and adapting them to suit Taiwan's national conditions. On the recommendation of former government adviser Uwe Reinhardt, the late Princeton University economist, Taiwan's government established a single-payer system, which merged Taiwan's then-existing public insurance schemes. Reinhardt's recommendation was based on three principles:
- Equity in both access and benefits
- Effective and egalitarian cost control
- Administrative simplicity to help the public understand the system.
The NHI Act became law in July 1994 and implemented rapidly in 1995. NHI is a government-run social health insurance program that provides equitable medical and health care services to all in case of illness, injury, and childbirth. Enrollment in NHI is mandatory for all citizens and for foreigners legally residing in Taiwan for longer than six months. Virtually all residents are enrolled.
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