Learning from Singapore
According to Harvard Medical School Professor Thomas Aretz, international comparisons between health-care systems are key to reforming national systems.
Professor Aretz, in a comparison of health care systems around the world, which of them are best in terms of quality and efficiency?
Most health-care systems consist of a public-private mix, a mixture of mandatory and voluntary components. The dominant model in European countries is the social insurance model, in which health services are largely financed by mandatory contributions from employees and/or employers, depending on income. In the United States, on the other hand, the health-care system is primarily voluntary.
Asia has a broad palette of models, which vary widely. To compare quality among different health care systems, we have to distinguish among the various sectors of health care. Seen in these terms, the quality of public health care in the European systems and in some Asian countries is superior to public health care in the United States. However, if we’re talking about individual treatment in case of illness, the quality clearly depends on the particular institution or clinic provider. If we look at survival rates for a given diagnosis, the US system is probably superior. In addition, the economic sustainability and effectiveness of the health-care system is strongly dependent on the expectations of consumers. Just looking at per capita expenditures can easily lead us astray.
In other words, it is not necessarily true that the greater the expenditures the healthier the population?
What you have to keep in mind is that the health-care system only accounts for between 10 percent and 15 percent of a given population’s health. The economic situation, level of education, genetic factors, and environment are often far more important. Many studies have shown that economic conditions and education level in and of themselves have an enormous effect on survival and general health.
Professor Aretz, in a comparison of health care systems around the world, which of them are best in terms of quality and efficiency?
Most health-care systems consist of a public-private mix, a mixture of mandatory and voluntary components. The dominant model in European countries is the social insurance model, in which health services are largely financed by mandatory contributions from employees and/or employers, depending on income. In the United States, on the other hand, the health-care system is primarily voluntary.
Asia has a broad palette of models, which vary widely. To compare quality among different health care systems, we have to distinguish among the various sectors of health care. Seen in these terms, the quality of public health care in the European systems and in some Asian countries is superior to public health care in the United States. However, if we’re talking about individual treatment in case of illness, the quality clearly depends on the particular institution or clinic provider. If we look at survival rates for a given diagnosis, the US system is probably superior. In addition, the economic sustainability and effectiveness of the health-care system is strongly dependent on the expectations of consumers. Just looking at per capita expenditures can easily lead us astray.
In other words, it is not necessarily true that the greater the expenditures the healthier the population?
What you have to keep in mind is that the health-care system only accounts for between 10 percent and 15 percent of a given population’s health. The economic situation, level of education, genetic factors, and environment are often far more important. Many studies have shown that economic conditions and education level in and of themselves have an enormous effect on survival and general health.
Thomas Aretz, Harvard Medical School
Although the US system is the most market driven, it is by no means more economical. Health expenditures in the United States far outstrip those of the rest of the world.
That is true. According to the most recent OECD statistics, per capita expenditures for health care in the United States in 2002 were about $5300. That’s almost 140 percent of the OECD average. Health expenditures are currently more than 14 percent of the American gross national product. Switzerland and Germany are next, at about 11 percent. But they aren’t alone. Almost all industrialized countries are currently experiencing enormous cost pressure. The problem is that in most countries, health-care expenditures are growing faster than economic productivity.
Which countries could serve as a template?
Singapore has one of the best systems. In their search for the “optimal health care system” they first analyzed existing models. They came up with something completely new—a medical savings account for each citizen. This system, which is currently being tried out in the United States and other countries has the advantage that it is very transparent and understandable. In this system, everyone pays from 6 percent to 8 percent of income into an individual account, in the “Medisave” program. All physicians and hospital bills are paid from this account. In addition, this account can be passed along to one’s heirs, and beyond a certain sum and a certain age, account holders can use the funds for a wide range of other purposes, which has been shown to be a powerful stimulus for responsible use of the account. The state will provide a minimum of coverage for people with chronic and long-term illnesses.
That is true. According to the most recent OECD statistics, per capita expenditures for health care in the United States in 2002 were about $5300. That’s almost 140 percent of the OECD average. Health expenditures are currently more than 14 percent of the American gross national product. Switzerland and Germany are next, at about 11 percent. But they aren’t alone. Almost all industrialized countries are currently experiencing enormous cost pressure. The problem is that in most countries, health-care expenditures are growing faster than economic productivity.
Which countries could serve as a template?
Singapore has one of the best systems. In their search for the “optimal health care system” they first analyzed existing models. They came up with something completely new—a medical savings account for each citizen. This system, which is currently being tried out in the United States and other countries has the advantage that it is very transparent and understandable. In this system, everyone pays from 6 percent to 8 percent of income into an individual account, in the “Medisave” program. All physicians and hospital bills are paid from this account. In addition, this account can be passed along to one’s heirs, and beyond a certain sum and a certain age, account holders can use the funds for a wide range of other purposes, which has been shown to be a powerful stimulus for responsible use of the account. The state will provide a minimum of coverage for people with chronic and long-term illnesses.
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Do you see any other similarly innovative models in Europe?
The Swiss reform model, which was initially developed in the 1990s, is very interesting. Currently in Switzerland, more than 100 private independent insurance companies compete for customers in a regulated marketplace.
Consumers do have freedom of choice, but a comprehensive system ensures that all Swiss citizens have access to core basic coverage. Anyone who wants more health care is free to buy more insurance. The state’s sole responsibility is to ensure that the competing providers offer the desired and necessary level of quality in the health-care market.
The goals of Harvard Medical International (HMI) include expanding the number of people around the world who have access to high-quality medical care. What conditions are necessary to reach that goal?
Our efforts include developing and continuously improving international standards of quality in both medicine and health care systems. Institutions and organizational forms both have to change. The most important aspect, however, is the people in the medical professions. They need appropriate training and continuing education in order to manage this transformation and to communicate it globally. HMI has been dedicated to these complex tasks for quite a number years, particularly in Asia and the Middle East. Along with the Ludwig-Maximilian University of Munich, we have established a global network of leaders in the field, who have committed themselves to our specific approach to excellence.
These excerpts are taken from an in-depth interview with Professor Aretz, published in the November issue of think:act, Roland Berger Strategy Consultants' executive magazine.If you have questions or comments, please do not hesitate to contact us:
The Swiss reform model, which was initially developed in the 1990s, is very interesting. Currently in Switzerland, more than 100 private independent insurance companies compete for customers in a regulated marketplace.
Consumers do have freedom of choice, but a comprehensive system ensures that all Swiss citizens have access to core basic coverage. Anyone who wants more health care is free to buy more insurance. The state’s sole responsibility is to ensure that the competing providers offer the desired and necessary level of quality in the health-care market.
The goals of Harvard Medical International (HMI) include expanding the number of people around the world who have access to high-quality medical care. What conditions are necessary to reach that goal?
Our efforts include developing and continuously improving international standards of quality in both medicine and health care systems. Institutions and organizational forms both have to change. The most important aspect, however, is the people in the medical professions. They need appropriate training and continuing education in order to manage this transformation and to communicate it globally. HMI has been dedicated to these complex tasks for quite a number years, particularly in Asia and the Middle East. Along with the Ludwig-Maximilian University of Munich, we have established a global network of leaders in the field, who have committed themselves to our specific approach to excellence.
These excerpts are taken from an in-depth interview with Professor Aretz, published in the November issue of think:act, Roland Berger Strategy Consultants' executive magazine.If you have questions or comments, please do not hesitate to contact us:
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