Health care systems: models, pros and cons, and smart health card contribution

Last updated 23 March 2023- Average reading time: over 10 minutes.

In this web dossier, we will share the results of a white paper created with several of our customers and detail the feedback we collected on the impact of smart cards used in their environments.

Socialized Medicine and healthcare systems [2017 - study]:​​​​

• Overview of insurance systems and models around the world
• Origins of healthcare and health insurance systems​
• Pros and cons of universal healthcare
• The three main shared challenges facing organizations when providing health care
• ​​​Benefits of smart cards in healthcare

Universal Health Coverage is a target defined in the UN Sustainable Development Goals. It​ is achieved when everybody receives the health care they need without suffering financial hardship.

​Types of healthcare systems 

The healthcare sector is an essential part of our society due to its resources, roles taken by the state or regional authorities, and many stakeholders that it links, either directly or indirectly.

Indeed, government programs for healthcare, retirement benefits, family allocations, and health insurance are national traditions' legacies.

They have been developed according to four different models.

What is universal health care? Discover this video from the World Health Organization.

Benefits of universal health care (the World Health Organization)

Let's discover the four basic models​ and some mixed schemes.

#1 The Bismarck model

Otto von Bismarck created this universal healthcare model in Germany and enacted social legislation between 1881 and 1889. 

Therefore, health insurance and healthcare access are linked to employment in this system.

The model is financed through social contributions rather than taxes.

It relies on health insurance funded through social contributions (by employers and employees), managed by companies and employees' representatives.

The state must decide on the scope of intervention of health insurance funds and take the appropriate measures if a financial imbalance arises.

The German example was used as a blueprint in Austria.

It was also the case in Belgium, France, with the decrees of 1945, Luxemburg, and the Netherlands.

In all countries that have adopted the Bismarck model, protection has been extended to include population categories that were not protected initially (students, independent workers, etc.) 

In France, the CMU, now PUMa (Protection Universelle Maladie - universal coverage), was voted in 1999, implemented in 2000, and modified in 2016. De facto, France, is one of the many countries with universal health care. 

#2 The Beveridge model​​​

Implemented in 1942 in the United Kingdom following Lord Beveridge's report, this social protection system is based on the principle of universal access to health care, non-dependent on employment. 

This access to healthcare is not considered contingent on employment but rather an intrinsic part of citizenship. Public authorities fund this system through taxes rather than through social contributions.

A centralized system exists in the United Kingdom and Ireland (NHS​ for National Health System).

Denmark, Finland, Norway, Spain, Sweden, and New Zealand have adopted this model.

The National Health Service (Servizio sanitario Nazionale or SSN, created in 1978) provides universal coverage in Italy. It automatically covers all citizens and residents.

More on how to get an Italian health insurance card (tessera sanitaria) is on this page in English.

In contrast, a decentralized system has been adopted by Mediterranean countries (Greece, Spain, and Portugal).

#3 The Semashko ​model

This model, developed during the 1920s in the Soviet Union, spread to tUSSR'sR's satellite states after 1945. It is named after Nicolai Semashko, USSRR's health minister from 1918 to 1930.

This socialized medicine is, of course, the product of a specific political ideology.

Healthcare services belonged to the state, and the state paid healthcare professionals. Services were usually free, but patients had to pay out-of-pocket fees for medication, for example. 

The system provided universal access to health care. It was broadly a benefit in the kind system. Central authorities defined coverage levels and the amounts set aside for healthcare spending (share of GDP).

Healthcare and health insurance systems are radically changing in Central and Eastern European countries.

For example, public healthcare in Russia is free through a "Bismark-type" compulsory state health insurance system (Obligatory Medical Insurance). Your employer usually pays 2 to 3% of your salary in social charges. A part is paid to the Russian healthcare fund.

The public system is funded by the federal and regional budgets (and through contributions to the mandatory insurance fund).

According to The World Bank, public spending on health has been around 5% of the country's GDP for many years (4.6% in 2020). It's much below the EU average of 10% and well under the Soviet levels of the 1960s (6.6%) or the 1970s (6.1%). It even reached an all-time low at 2.4% in 2004.

Obligatory Medical Insurance plan services are limited, mainly covering emergency medical attention.

One must pay separately for each provided medical service or procedure for more comprehensive care. Many voluntary medical insurances in the country offer far more extensive coverage.

Except for Moscow and St Petersburg, hospitals are reportedly worsening, with a lack of modern equipment, medicine, hospital beds and a shortage of specialists.

Access to healthcare institutions is complicated in rural areas, where their number decreased by 75 % between 2005 and 2013 (due to the "optimization" of health reform). Some 17,500 cities and villages have no medical infrastructure at all. 

Despite these significant healthcare gaps, only 5% of Russians use private healthcare.

Russia's system ranks 58 out of 89 in the 2021 list of countries with the best healthcare systems, with a meagre score for infrastructure quality.

#4 The out-of-pocket model

The fundamental principle of the American healthcare system is that health is a matter of individual responsibility and private insurance. 

What's the story here?

There is no compulsory national system and a preponderance of private organizations (two-thirds of Americans under 65 are covered by employment-related insurance).

Public healthcare is only provided for the elderly (Medicare) and disadvantaged (Medicaid), not unlike the Beveridge model. 

These two programs started in 1965 under the administration of Democrat L.B. Johnson.

• Medicare is a federally funded and managed healthcare system for citizens over 65
• Medicaid is a jointly funded system between the federal and state governments for low-income families and resources.​

Both Medicare and Medicaid are under the federal agency's responsibility (the Centers for Medicare and Medicaid Services  -CMS). CMS directly manages Medicare and oversees Medicaid.

The states manage their individual Medicaid programs for their citizens.

The case for universal healthcare in the USA

The idea of universal healthcare - a system that delivers good-quality medical care to all citizens and residents, regardless of their ability to pay- dates back to 1912.

Theodor Roosevelt, who had served nearly eight years as a Republican president - decided to run again on a progressive ticket. He promoted a platform that called for creating a centralized national health service. He ultimately lost the 1912 elections.

But the program planted a seed.

Accessible and affordable medical care might one day be seen as a right, more than a privilege.

Harry Truman proposed a national healthcare system twice: in 1945 and 1949. After a bruising fight with the American Medical Association and the Republican Party, he ended up with no results.

More on this: The Accidental President.

Lyndon Johnson's Great Society campaign included the idea of helping those populations the market economy had left behind (instead of a radical change and challenging head-on private insurance).

Medicaid and Medicare were initiated in 1965.

According to the New Yorker, this blended system functioned well enough in the '70s and '80s, covering 80% of Americans through their jobs or one of these programs (Nov.2, 2020).

The 1993 Clinton Health Care Plan included universal coverage and a basic benefits package. The government was to give every American "a health-care security card that will guarantee a comprehensive package of benefits" (23 September 1993).

But the bill was never enacted into law.

Needless to say that nearly a fifth of the population lived just one illness or accident away from personal bankruptcy.

In 2010, more than 48 million Americans were uninsured (source CDC reports), and millions more were underinsured (an estimated 16 million adults in 2003).

To top it off, premiums for family coverage had increased by 97% from 2000 to 2009.

The American Medical Student Association (AMSA), in a 2015 study, pointed out that, contrary to prevailing stereotypes, 80% of the uninsured are hardworking Americans. But they can't obtain insurance through their work for three main reasons:

• Their employer does not offer it,
• The employee's premium share is too high,
• They are not eligible for health insurance (newly employed or part-time).

The 2006 Massachusetts Health Care Reform, also known as « RomneyCare » because Mitt Romney was the Governor, inspired the 2010 Patient Protection and Affordable Care Act (ACA), also called «ObamaCare.» 

At the time, the "RomneyCare" reform had been a real success, driving the uninsured rate down to 4%. As of 2019, the rate is even lower at 2.9%.

According to Gallup, the ACA increased the number of insured citizens and residents but did not achieve universal health coverage.

The ACA originally mandated that all residents buy a health insurance policy or face a fine or penalty. Trump's Tax Cuts and Jobs Act (TCJA) repealed the penalty. 

The percentage of uninsured US adults reached 10.6 in Q3 2016 and rose again in 2017 and 2018 to 13.7 by Q4 2018.

It rose again in 2019 to an estimated 14,5% and started to decline in 2020 and 2021.

In 2021, only 8.3%, or 27.2 million people, were uninsured at any point during the year, indicating a reduction in the percentage and total number of uninsured individuals from the previous year (8.6% or 28.3 million).

It stayed at 8.3% for the first six months of 2022, according to a December 2022 CDC report.

According to the American analytics and advisory company, Gallup, the ACA still earned a split decision from Americans in 2019.

However, the ACA proved resilient over time.

Now, Democrats have a chance to amplify Obamacare provisions, and even with a narrow majority, they are well-positioned to get a few projects rolling.

Between 2020 and 2021, there was an overall increase in public coverage. Specifically, 35.7% of people held public coverage for some or all of the year in 2021, according to a September 2022 report from the census.gov website.

#5 European mixed-model plans

Mixed-model plans aimed at ensuring healthcare for all.

The Bismarck and Beveridge models have had a lasting influence on most European countries. 

So what has been done?

During the second half of the 20th century, all European countries progressively extended universal health care to cover nearly all citizens.​

Since implementing the CMU (universal healthcare coverage), the French system, for example, has ensured everyone has access to healthcare. Employment no longer determines access to healthcare, as is theoretically the case. 

But funding methods have not been called into question.

In all countries influenced by the English model, funding mainly comes from taxes.

Social protection is funded through contributions in countries influenced by the Bismarck model, such as France or the Netherlands. 

These differences in funding are linked to how the system is organized:  

• ​Financing through taxes corresponds to a state-run organization, 
• In contrast, funding through social contributions usually involves trade unions and employers' organizations. 
   

So, how is healthcare funded in Europe?

Each country has its system.

It is an example of the principle of subsidiarity and, therefore, under the jurisdiction of national governments.

Europe-wide cooperation exists, particularly concerning patients' cross-border mobility (with measures like the EHIC and the European Health Insurance Card.

It gives the holder the right to access healthcare temporarily in another EU country, the UK, Norway, Iceland, Liechtenstein, or Switzerland.).

In other words:

Healthcare is a national topic only.

Cooperation also facilitates the exchange of knowledge and best practices.   

More than €1,500 billion is spent on healthcare in the European Union (including the UK).

Faced with the sharp rise in healthcare costs, all European countries have tried to rein in spending while improving the efficiency of universal healthcare systems. 

Note that the United States' spending per capita is twice as much as Germany's or France's. The situation was unchanged in 2021. US healthcare spending reached 17,4% of GDP in 2021.

 Universal healthcare pros and cons

PROs

#1. Increase longevity

Life expectancy covers many aspects (from genetics to hygiene, lifestyle, and crime rate) but can be correlated with health and easy access to health care.

Overall, universal coverage creates a healthier population and workforce (in comparable countries). That's what we see here.

Note that Western European and Canadian males' lifespan is 3 to 5 years longer than their US counterparts. This difference is very significant.

For 2021, life expectancy rebounded in most comparable countries but continued to decline in the US (76.1 years in 2021).

In these countries, all are offered access to care and high-quality healthcare services.

We must give a word of warning here: we all know correlation is not causation.

More on this topic: Why is life expectancy shorter in the US?

#2. Lower health care costs for all

US healthcare spending does not compare well with other developed countries. 

As we said, it represents 17,4% of GDP for 2021 compared to less than 10% in the UK, Norway, Sweden, and Denmark, 11% in Italy, France, or Germany, and 11,5% in Canada.

Lower costs of health care and prescription drugs are obtained through negotiation and regulation, fewer administrative costs, and a simplified and unified system.

For example, administrative costs account for 8% of total national health expenditures in the US. The other countries range from 1 to 3% (CNBC - why health care costs so much in the US.)

In a private healthcare system, costs appear substantially amplified. 

Read more: 

• More Californians are skipping medical care because of cost and are sicker for it (24 February 2021- San Francisco Chronicle.)
• Why are insulin prices in the US 6 times higher than those in Canada and nine times higher than in the UK? ( 6 October 2020 - RAND Corporation.)
• Lilly Cuts Insulin Prices by 70% and Caps Patient Insulin Out-of-Pocket Costs at $35 Per Month (March 2023)
• Novo Nordisk slashes insulin prices as of 1 January 2024  (March 2023)

#3. Enhance pricing transparency

With universal healthcare systems, pricing is more transparent and subject to rules. Medical acts are coded and have the same price tag across the country. Patients can also anticipate their bills.

We see much more opacity in the United States.

In its article dated 18 December 2018, Vox illustrates with many examples how medical billing across the US can be costly, opaque, and unpredictable. 

According to Vox searches, patients pay extravagant prices for all kinds of care, which are also hard to prevent.

As Vox puts it, "Even with a PhD in surprise billing," you can't avoid steep medical bills".

In the US, injuries or serious diseases can quickly generate hundreds of thousands of dollars in bills, dry out your savings and retirement account, or even cost you your home.

The result?

That's pretty hard to grasp when you live in Canada, the UK, Italy, or Germany.

Medical price roulette: from CBS This Morning

Read more:

• I read 1,182 emergency room bills this year. Here's what I learned.
• The problem is the prices. 

#4. Improve healthcare equality

In countries where socialized medicine is implemented, health and health care are less related to social or financial status or education.

In the US, healthcare inequality is patent and is very much correlated with income inequality, as reported by The Balance in its article dated 02 November 2020.

There's more.

The socialized healthcare systems are built on the principle of solidarity.

No one is left behind. Everyone can access medical services and has health insurance.

And obviously, it's worth mentioning no one goes bankrupt from medical charges.

Read more: COVID-19, health equity and the battle of pre-existing conditions (24 February 2021)

CONs

#1. Require healthy people to pay for those in need

The rich pay for the poor.

Healthier people pay for those in need of health care, and treatment is undoubtedly a question of governance.

• In which society do we want to live?
• What is a welfare state and what are its limits?

Social protection laws or the absence of these (health and health insurance) mainly define people's healthcare coverage rights.

#2. Need careful public management

Healthcare costs can crush central or regional government budgets if expenses overrun the funding source (social contribution or income taxes).

This can be caused by long-term trends like an ageing population, unemployment, a steady increase in chronic diseases, or unexpected events like a pandemic.

For example, COVID-19 tests and injections are free for all insured and beneficiaries in France.

COVID-19 treatments at the hospital are free as well.

#3. Make medical careers less rewarding

Medicine can become a less financially attractive career to embrace. It's all the more sensitive in the US, where studies are very costly. Medical doctors often have to pay their student loans many years after they have left university. 

However, this is not the case in Europe, where university studies are almost free.

General physicians in the US made an average of $218K in 2016 (Harvard report). That's twice the average of generalists in comparable countries, where pay ranged from $86K in Sweden to $154K in Germany.

The same study notes that the US's quality of care is not significantly different from other countries and excels in many areas. 

#4. Make access to medical resources more difficult

In France and the UK, getting an appointment with a dentist can take weeks. It can take months with an ophthalmologist or a dermatologist.

Consequently, emergency rooms are often used for the wrong purpose and are overcrowded.

More reading about the topic: The Best Health Care System in the World: Which One Would You Pick?

The healthcare system management and its challenges

Let's see the three significant challenges when considering healthcare system management.

1. Providing long-term healthcare

The first challenge is maintaining or improving citizens' health by providing healthcare that meets the general public's legitimate expectations (medical or otherwise).

Issues surrounding the system's funding, continuity, and proper management are fundamental.

There are several priorities for managing the resources available, such as:

• optimizing the system by rendering procedures paperless,
• freeing patients up from the many administrative processes linked to healthcare management.​​

Take, for example, the unintentional effects or complications resulting from medical errors (treatment or advice), known as iatrogenesis.

This is an issue of some magnitude.

In the United States, the total number of deaths from iatrogenesis in 2001 reached 738,936.

The deaths caused by cardiac disease were 699,697, and 553,251 deaths were caused by cancer (American Iatrogenic Association 2002).

In France, in 2004, the number of deaths resulting from iatrogenesis was higher than 10,000, and 3.19% of hospital stays were due to medical and medication errors.

A financial assessment of this issue is difficult to carry out.

No realistic study relating to the amounts involved was to be found. However the causes of the phenomenon are known. 

Iatrogenesis can be linked to many factors, such as:

• doctors lacking information or training,
• patients requiring information or education,
• prescription errors (inappropriate medication: dose, protocol, treatment),
• over-prescription or incomplete prescription,
• a lack of data on the patient (allergies, symptoms not all taken into account, multiple pathologies),
• an under-estimation of drug interactions,
• and self-medication.

Between 30% and 50%+ % of iatrogenesis could be avoided (French Ministry of Health, July 2010).

Better information systems could play a part in cutting this figure. This reduction is one of the goals of the Personal Medical File.

Healthcare fraud is also a significant challenge.

Just think about it.

• ​In the United States, between $75 billion and $250 billion, according to the FBI, are lost to fraud. In 2021, $4 trillion was dedicated to healthcare spending.
• On average, around 6% to 10% of spending in the healthcare sector is lost to fraud, according to the European Healthcare Fraud and Corruption Network (EHFCN). Europe spent €1.5 trillion on healthcare in 2019. Over €150 billion were lost in that year alone.

2. Focusing the work of Healthcare professionals on patient health 

Most programs in this area aim to facilitate information exchanges, helping healthcare professionals concentrate on care and treatment rather than management.

This attempt to reorganize the relationships between patients, healthcare professionals, and administration is much helped by introducing new digital technology for exchanges between healthcare or insurance organizations and creating health cards. These factors can often lead to drastic improvements.

In France, with the universal health care SESAM Vitale program, for example:

• Patients are now reimbursed after five days rather than after 2-3 weeks (due to paperwork). 
• ​1.207 billion electronic claim forms were used in 2020; 93% of all claim forms with administrative productivity and treatment costs were divided by 6 for the claims in question.
• 12% of the French population has a Shared Electronic Medical Record ( smart EMR) in January 2021".

"Carte Vitale" is a card with an embedded microcontroller certifying health insurance entitlement.

There's more.

The introduction of electronic claim forms and the cut-statement sheets means that 3,6 billion A4 sheets of paper are saved annually.

They are no longer produced, printed, distributed, stored, or destroyed.

3. Coordinating and optimizing information-sharing

Ambition: optimize the use of medical data. Patients' Electronic Medical Records (smart EMR) ensure that healthcare professionals can access all their medical information whenever and wherever.

This record, therefore, cuts errors and hesitancy in emergencies and improves the quality of services provided. It also enhances cooperation between healthcare workers, pooling all available patient information into a centralized file.

Electronic Medical Records streamline healthcare systems.

Smart EMRs limit the number of medical interventions and ensure consistent patient care. There are also advantages to government health policy: a well-treated patient does not have to keep coming back.

Telemedicine also presents fantastic opportunities. The term refers to any situation where information is passed between healthcare professionals electronically (general practitioners or specialists, care workers, pharmacists, etc.).

This information could be messages, letters, signals, results, images, administrative data, complete files, or monitoring for diagnosis, therapy, or monitoring.

Benefits of smart mart cards in healthcare 

Using smart cards speeds up the transition to paperless electronic procedures and data exchanges, three formidable catalysts for systems modernization. 

In terms of administration, the results obtained are impressive. 

Yet this technology is often under-used in areas where it will produce excellent results.

Now:

• Strong identification and authentication (ID verification) for patients and healthcare professionals are critical features of computerized cards and should be implemented in the healthcare sector. Yet this is not the case in many countries.
• Implementing health care cards with an identification number and PIN or biometric authentication would enable creating personalized online services, a quintessentially «patient-centric» approach. Yet, these initiatives are still in the development stages.
• The ability to verify benefits, expiration dates, and multiple uses is underused. 
• Thus far, the benefits of paperless, electronic medical data exchanges have not been fully tapped. Yet cards have a crucial role in creating consistent databases, automatic data reading, and temporary or permanent confidential local storage of additional data such as blood groups, allergies, chronic diseases, and associated treatments.

Electronic services that have already been implemented in European countries for universal health care schemes and in the rest of the world—with identification systems, electronic signatures, and electronic authentication - clearly show:

The best part?

This robust technology can strike at the heart of fraud mechanisms, often with minimal infrastructure investment and without significant changes for patients and healthcare professionals.

Smart card technology is an invaluable asset to combat healthcare fraud and errors in the interest of all.​

​

Thales – a significant healthcare systems provider

Thales provided technical services and products while implementing 11 national electronic healthcare systems, including the German Gesundheitskarte (picture above) or Chifa card, an eHealthcare solution in Algeria.

Our contribution to these electronic healthcare projects provides an excellent overview of the technology involved, its applications, the quality of information systems, and the social context of its use.

Furthermore, our experts have supported national debates on improving systems to fight fraud and reduce errors.

Finally, Thales is an active collaborator in European and global standardization organizations and in mHealth.​