I am not a healthcare policy wonk, or a wonk of anything, to tell the truth. But having observed the heated arguments, the indecipherable terms and acronyms, and the general sense of helplessness in breaking the political logjam, I asked a naїve question: How do others deal with the issue?

I looked at the British system, which I know quite well. I also looked at the Japanese system, which I knew from my visits to the country and contacts with Japanese doctors, professors, drug companies, and just plain folks. Finally, I looked at the Taiwanese system, which I think is an unsung hero that deserves more recognition.


The British system

The Brits are very much like us economically, politically, and culturally. They have a much more cynical attitude toward government than we do, if you can imagine that.

So here are, in general outline, the salient facts about their system.

  • The “macroeconomic” aspect: the percentage of gross domestic product (GDP) spent on healthcare: 8.3
  • Average family premium: None; funded by taxation.
  • Co-payments: None for most services; some co-pays for dental care, eyeglasses, and 5% of prescriptions. Young people and the elderly are exempt from all drug co-pays.
  • The British system is “socialized medicine” because the government both provides and pays for healthcare. Britons pay taxes for healthcare, and the government-run National Health Service (NHS) distributes those funds to healthcare providers. Hospital doctors are paid salaries. General practitioners (GPs), who run private practices, are paid based on the number of patients they see. A small number of specialists work outside the NHS and see private-pay patients.
  • How does it work? Because the system is funded through taxes, administrative costs are low; there are no bills to collect or claims to review. Patients have a “medical home” in their GP, who also serves as a gatekeeper to the rest of the system; patients must see their GP before going to a specialist. GPs, who are paid extra for keeping their patients healthy, are instrumental in preventive care, an area in which Britain is a world leader.
  • What are the concerns? The stereotype of socialized medicine—long waits and limited choice—still has some truth. In response, the British government has instituted reforms to help make care more competitive and give patients more choice. Hospitals now compete for NHS funds distributed by local Primary Care Trusts, and starting in April 2008 patients are able to choose where they want to be treated for many procedures.
  • Finally, the brits love to gripe about everything: traffic, the schools, the weather, and, yes, the NHS. But try to suggest that healthcare should be privatized and you will be met with hostility, as I witnessed personally, and as the Conservatives found out to their dismay in the following election.


The Japanese system

  • Percentage of GDP spent on healthcare: 8
  • Average family premium: $280 per month, with employers paying more than half.
  • Co-payments: 30% of the cost of a procedure, but the total amount paid in a month is capped according to income.
  • Japan uses a “social insurance” system in which all citizens are required to have health insurance, either through their work or purchased from a nonprofit, community-based plan. Are you listening Barack? Those who can’t afford the premiums receive public assistance. Most health insurance is private; doctors and almost all hospitals are in the private sector. Take that, free-market zealots.
  • Japan boasts some of the best health statistics in the world, no doubt due in part to the Japanese diet and lifestyle, but also due to superbly trained physicians and surgeons and almost fanatical emphasis on preventive medicine. To wit: Japan has the highest rates of stomach cancer in the world. But almost every Japanese undergoes an annual gastroscopic examination. Consequently, most stomach cancers are detected at stages 0 and 1 (in other words, very early). This results in a low and decreasing mortality rate. On the other hand, in the U.S. gastric cancer is detected mostly in stage 4, sometimes in stage 3—either way too late for curative surgery. Mortality rate—close to 100%.
  • Unlike the U.K., there are no gatekeepers; the Japanese can go to any specialist when and as often as they like. Every two years, the Ministry of Health negotiates with physicians to set the price for every procedure. I have been privy to some aspects of these negotiations. The government gets into the minutest detail of the charges for procedures and drugs. Because Japanese culture abhors confrontation and fosters consensus, these negotiations are long and arduous. bBut at the end of the day, everybody signs on. This helps keep the cost down.
  • What are the concerns? In fact, Japan has been so successful at keeping costs down that Japan now spends too little on healthcare; half of the hospitals in Japan are operating in the red. Having no gatekeepers means there’s no check on how often the Japanese use healthcare, and patients may lack a medical home. These are, of course, policy concerns. But I had the occasion to ask several colleagues and some regular people I met, what their concerns were. Almost universally the answer was: none. Not a scientific poll, but telling, nonetheless.


The Taiwanese system

  • Percentage GDP spent on healthcare: 6.3! This should be music to the ears of liberals and conservatives, Democrats, and Republicans alike.
  • Average family premium: $650 per year for a family for four.
  • Co-payments: 20% of the cost of drugs, up to $6.50; up to $7 for outpatient care; $1.80 for dental and traditional Chinese medicine. There are exemptions for major diseases, childbirth, preventive services, and for the poor, veterans, and children.
  • Taiwan adopted a “National Health Insurance” model in 1995 after studying other countries’ systems. Like Japan and Germany, all citizens must have insurance, but there is only one, government-run insurer. Working people pay premiums split with their employers; others pay flat rates with government help; and some groups, like the poor and veterans, are fully subsidized. The resulting system is similar to Canada’s—and the U.S. Medicare program.
  • Taiwan’s new health system extended insurance to the 40% of the population that lacked it (sounds familiar?) while actually decreasing the growth of healthcare spending. The Taiwanese can see any doctor without a referral. Every citizen has a smart card, which is used to store his or her medical history and bill the national insurer. The system also helps public health officials monitor standards and effect policy changes nationwide. Thanks to this use of technology and the country’s single insurer, Taiwan’s healthcare system has the lowest administrative costs in the world.
  • What are the concerns? Like Japan, Taiwan’s system is not taking in enough money to cover the medical care it provides. The problem is compounded by politics, because it is up to Taiwan’s parliament to approve an increase in insurance premiums, which it has only done once since the program was enacted.


Some naїve questions

  • Why don’t we hear more about the Japanese and Taiwanese systems in the media, in the political debates, in Congress, in healthcare forums debating ad nauseam how to fix the system?
  • Are we so hopelessly captive to commercial and political forces that have a stake in the status quo, that nothing can be done to change it?
  • Why can’t we do it? Are the Taiwanese so different from us? Are they smarter? Are we so dumb?

So please, all you policy mavens, please enlighten this naїve layman; why do we need to reinvent the wheel? It has already been invented in Japan and Taiwan. And it works!

Dov Michaeli, MD, PhD
Dov Michaeli, MD, PhD loves to write about the brain and human behavior as well as translate complicated basic science concepts into entertainment for the rest of us. He was a professor at the University of California San Francisco before leaving to enter the world of biotech. He served as the Chief Medical Officer of biotech companies, including Aphton Corporation. He also founded and served as the CEO of Madah Medica, an early stage biotech company developing products to improve post-surgical pain control. He is now retired and enjoys working out, following the stock market, travelling the world, and, of course, writing for TDWI.