Public Financing of Health Care in Eight Western Countries

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Public Financing of Health Care in Eight Western Countries PUBLIC FINANCING OF HEALTH CARE IN EIGHT WESTERN COUNTRIES The Introduction of Universal Coverage BY ALEXANDER SHALOM PREKER Ph.D. Thesis Submitted to Fulfill Requirements for a Degree of Doctor of Philosophy at the London School of Economics and Political Science UMI Number: U048587 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U048587 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 rnsse F 686 X c2I ABSTRACT The public sector of all western developed countries has become increasingly involved in financing health care during the past century. Today, thirteen OECD countries have passed landmark legislative reforms that call for compulsory prepayment and universal entitlement to comprehensive services, while most of the others achieve similar coverage through a mixture of public and private voluntary arrangements. This study carried out a detailed analysis of why, how and to what effect governments became involved in health care financing in eight of these countries. During the early phase of this evolution, reliance on direct out-of-pocket payment and an unregulated market mechanism for the financing, production and delivery of health care led to many unsatisfactory outcomes in the allocation of scarce resources, redistribution of the financial burden of illness and stabilisation of health care activities. This forced the state to intervene through regulations, subsidies and direct provision of services. Expansion in prepayment of health care gradually occurred through private insurance, social insurance and general revenues in response to different socio-economic, political and bureaucratic forces. Although improving health may have been the ultimate goal, offering universal access to affordable health care was the way the countries examined achieved this objective. Universal comprehensive coverage was associated with a decade of stable public expenditure on health care compared with GDP, total government expenditure and government consumption expenditure. There were no disproportionate increases in health care expenditure or displacement of public funds away from social programmes that depended on cash transfer payments. Nor do the countries that offer such social protection have higher public debt or poorer economic performance compared with the rest of the OECD. Measures of health status are unfortunately still not sufficiently developed or standardised to permit a detailed analysis of this aspect of outcome through cross-national comparisons. Furthermore, the countries examined may be more vulnerable to political backlash because of the high visibility of their government involvement in health care financing. 2 TABLE OF CONTENTS List of Figures and Tables 8 Acknowledgements 10 Part I. Introduction 11 Chapter 1. Theoretical Framework Chapter 2. Methodology 53 Part II. National Profiles 98 Chapter 3. New Zealand 99 Chapter 4. United Kingdom 116 Chapter 5. Canada 140 Chapter 6. Australia 164 Chapter 7. Denmark 190 Chapter 8. Norway 212 Chapter 9. Sweden 236 Chapter 10. Finland 259 Part II. Discussion 282 Chapter 11. Analysis 283 Chapter 12. Theories 342 Appendix Figures 348 Tables 358 Glossary 372 Select Bibliography 373 Detailed Table of Contents Chapter 1. Theoretical Framework A. Historical Role of the State 12 B. Determinants of Public Policy 18 1. Level of Socio-economic Development 19 2. Political Processes 21 a) Ideology 22 b) Democratization 25 c) Political Party Formation 26 3. Bureaucratic Structures 28 4. Market Failure 31 C. Normative Functions of Modem Governments 41 D. Outcome to Health Policy 43 E. Policy Processes 48 Chapter 2. Methodology A. Hybrid Discipline 53 B. Scientific Method 54 C. Objectives 57 D. Hypotheses 58 E. Research Design 61 1. Styles 61 2. Elements 65 (1) Dimensions (Contextual) 66 (2) Countries (Spatial) 69 (3) Time Period (Temporal) 75 F. Data Collection 78 1. Descriptive 78 2. Quantitative 80 G. Analytical Techniques 83 1. Descriptive 84 (1) Positivist Analysis 85 (2) Linguistic Analysis 86 2. Quantitative 88 (1) Time series 89 (2) Cross-sectional analysis 93 Chapter 3. New Zealand A. Financial Infrastructures 99 1. Colonial Military Outposts 99 2. National Insurance Plan of 1882 100 3. Friendly Societies 102 B. Landmark Legislative Reforms 103 1. General Election of 1935 103 2 Communist and Socialist Influence 106 3. Health Insurance Committee of 1935 107 4. Investigation Committee of 1937 109 5. Committee on National Health and Superannuation of 1937 110 6. Social Security Act of 1938 112 7. Social Security Amendment Bill of 1941 114 C. Barriers to Universal Coverage 115 1. Hostages to History 115 4 Detailed Table of Contents Chapter 4. United Kingdom A. Financial Infrastructures 116 1. Elizabethan Poor Laws 116 2. Lloyd George’s National Insurance Plan of 1911 119 3. World War I to the Great Depression 121 4. World War H 123 B. Landmark Legislative Reforms 124 1. Beveridge’s Report 124 2. Vested-Interest Groups 126 3. Brown’s Plan 127 4. White Paper 129 5. Willink’s Plan 131 6. Bevan’s Plan 132 7. National Health Service Act of 1946 134 C. Barriers to Universal Coverage 138 1. Administrative Reorganisations 138 Chapter 5. Canada A. Financial Infrastructures 140 1. The British North America Act of 1867 140 2. Provincial Government Health Programmes 141 3. Heagerty Committee Draft Bill of 1944 143 4. Dominion-Provincial Conference of 1945 145 5. National Hospital and Diagnostic Services Act of 1957 147 6. Provincial Health Insurance 150 B. Landmark Legislative Reforms 152 1. Royal Commission on Health Services 152 2. Federal-Provincial Conference of 1965 156 3. National Medicare Programme 157 4. Strike, Insurrection and War Measures 160 C. Barriers to Universal Coverage 162 1. Canada Health Act of 1984 162 Chapter 6. Australia A. Financial Infrastructures 164 1. Colonial Government Health Services 164 2. Doctors and Pre-paid Health Care 167 3. Royal Commission on National Insurance of 1923 168 4. National Health and Pensions Insurance Act of 1938 170 5. National Health Services Act of 1948 171 6. Earl Page Voluntary Insurance of 1953 174 B. Landmark Legislative Reforms 176 1. Committee of Inquiry into Health Insurance of 1968 176 2. Scotton-Deeble Compulsory Insurance Plan of 1969 177 3. Whitlam Labour Government of 1972 178 4. Medibank I 180 C. Barriers to Universal Coverage 186 1. Earl Page Revisited 186 2. Medicare of 1984 188 5 Detailed Table of Contents Chapter 7. Denmark A. Financial Infrastructures 190 1. Early Danish Sickness Funds 190 2. Law on Recognised Sickness Funds of 1892 191 3. Danish Medical Association 193 4. Minor Social Reform of 1921 195 5. Social Insurance Law of 1933 196 6. World War II 197 7. Public Sickness Insurance Law of 1960 197 B. Landmark Legislative Reforms 199 1. Danish Social Politics 199 2. County Councils and Municipalities 200 3. Parliamentary Resolution of 1964 201 4. Social Reform Commission of 1969 202 5. Sickness Funds’ Publicity Campaign 206 6. Social Reform Investigations 207 7. Sickness Insurance Law of 1971 208 C. Barriers to Universal Coverage 210 1. Groenneg&r Committee of 1986 210 Chapter 8. Norway A. Financial Infrastructures 212 1. Sickness Funds 212 2. County Medical Officer 213 3. Committee Work 214 4. The Labour Party 216 5. Compulsory Sickness Insurance Law of 1909 217 6. Norwegian Medical Association 218 B. Landmark Legislative Reforms 220 1. The Great Depression 220 2. War Occupation and Joint Reconstruction Programme 222 3. Parliamentary Decree 223 4. Social Insurance Committee Report No. I 225 5. Committee Report No. II 227 6. Compulsory Universal Sickness Insurance Law of 1956 229 C. Barriers to Universal coverage 232 1. Civil Defence Health Plan 232 2. Health For All 234 Chapter 9. Sweden A. Financial Infrastructures 236 1. Swedish Sickness Funds 236 2. Social Democratic Party 241 B. Landmark Legislative Reforms 243 1. Social Security Commission of 1938 243 2. Sickness Insurance Law of 1947 245 3. Hojer Report of 1948 246 4. Swedish Medical Association 248 5. Sickness Insurance Law of 1953 249 C. Barriers to Universal Coverage 250 1. Regional Hospital Plan of 1958 251 2. Swedish Younger Doctors’ Association 253 3. Seven Crowns Reform of 1969 254 4. Health Policy for the 1990s 257 6 Detailed Table of Contents Chapter 10. Finland A. Financial Infrastructures 259 1. Early Health Provisions 259 2. Finnish Medical Association 260 3. Public Involvement 261 4. Multi-Party Politics 261 5. First Parliamentary Proposal 263 B. Landmark Legislative Reforms 264 1. Governmental Proposal to Parliament of 1954 264 2. Sickness Insurance Committees 265 3. Social and Political Transformation 268 4. Sickness Insurance Act of 1963 271 C. Barriers to Universal Coverage 274 1. Beyond Social Insurance 274 2. Public Health Act of 1972 276 3. Finnish Health for All by the Year 2000 280 Chapter 11. Analysis A. Clarification of concepts 283 1. Financing Mechanisms 285 2. Participation 290 3. Entitlement 291 B. Hypotheses (why, how and to what effect) 294 1. Determinants of Health Policy (why) 294 a) Socio-economic Development 294 b) Political Processes 297 i) Ideology 298 ii) Democratization 302 iii) Political Party Formation & Vested Interests 305 c) Bureaucratic Structures 310 d) Market Failure 315 2. Normative Functions of Governments (how and what) 320 a) Allocation Function 320 b) Distribution Function 325 c) Stabilisation Function 330 3. Outcome to Public Financing of Health Care (to what effect) 335 Chapter 11. Theories A.
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