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Health Care Reforms across the World

Most international comparative research focuses on the United States and other large industrialized nations in Europe and North America, and only exceptionally1 on smaller ones. Yet, outside China and India, the vast majority of the world’s population lives in smaller and medium-sized nations. In fact, as this contribution shows, small- and medium-sized countries provide interesting “laboratories” of policy innovation. Those laboratories can be enlightening for anyone interested in issues of cost control, universal access to health care services, consumer choice, fair distribution of the financial burden of medical treatment, and related issues in health policy. Time and again, studies show that in those dimensions, the United States has not done well compared to other nations: we spend much more and have more advanced medical technologies and new drugs than anyone else, but we do not get enough value for money. Access to health care is highly fragmented and unevenly distributed, with more than twenty-five million, or about 10 percent of the population, uninsured and another ten million or so underinsured.2 In fact, maternal and child mortality is much higher in the United States than in nations with comparable income levels, and the average life expectancy of Americans has even dropped in the last few years. This assessment of the health reforms in other countries aims to broaden our horizon to include experiences abroad.

This research project represents a “most different system comparison,” applying common analytical frameworks to very different cases.3 At first sight, the countries selected do not have much in common: located on different continents, they vary in size, population, ethnic composition, historical background, and economic circumstances. But they also have common features: they are industrialized or semi-industrialized democracies with open economies. They all searched for ways to improve the quality and access to health care for their populations, facing similar challenges of growing demand for medical services under budgetary and fiscal pressure. In addition, some of the nations studied grappled with legacies of colonialism, military dictatorships, and communism.

Why did the countries of this study, facing similar internal and external pressures for change, and discussing similar policy options, choose such different pathways to restructure their health care? What did they do? What was the position of the major stakeholders? And what happened after implementation of the reforms?

It is possible to describe any given health care system in terms of the country-specific mix of financing, contracting, and modes of providing medical services.4 There are four dominant financing sources: general taxation, public or private health insurance, direct patient payments, and voluntary contributions including foreign aid. (Most if not all countries combine at least two of those sources: for example, America has social insurance for Medicare, tax subsidies for Medicaid and the Veterans Health Administration, premiums for employment-based private insurance, as well as charitable care and out-of-pocket payment for noninsured services.) Second, there are three ways of contracting health care: integrated services, long-term contracts, and reimbursement. The integrated model combines the financing and ownership in one hand. The best-known example is the British National Health Service (NHS) of 1948, largely paid for out of general taxation. Long-term contracts between health care providers and third-party payers (e.g., government agencies or administrative agencies of social health insurance) are typical for social health insurance, paid out of contributions.5 Under the reimbursement model, common in private insurance, patients pay their provider and then seek reimbursement from their insurer. Third, the provision of health services can be public, private (both for-profit and nonprofit), or—more commonly—a mix of the two.

As the above approach to describing health care financing, contracting, and ownership is essentially static, we need additional vocabulary for analyzing policy change. This study focuses on a triad of ideas (or values), interests, and institutions as the major factors affecting policy change.6

Ideas (or values) matter. Douglas and Wildavsky identified three dominant values or cultural orientations of societies.7The first, hierarchical collectivism, refers to the collectivist traditions in northwestern Europe, with social policy based on solidarity and equality. Second, competitive individualism assumes that the allocation of goods and services is based on individual demand and competing providers, with a limited role for the state (often seen as characteristic of the United States and the United Kingdom). Third, sectarian orientation features segmentation into groups with strong ideological preferences such as religious sects (the United States also has a fairly strong sectarian tradition). It is also possible to distinguish (semi-)corporatist (e.g., Germany and Holland), (semi-)pluralist (e.g., the United States and the United Kingdom), and exclusionary policy modes (for example, Chile’s military dictatorship).8 In the latter, powerful governments exclude certain groups from decision-making.

It would be an error, however, to take such orientations as general representations of countries or predictions of policy outcomes. In some countries, more than one orientation plays a role, and models became hybridized over time. Nonetheless, dominant values make certain policy outcomes more likely than others.9

Institutions matter. Some political systems change more rapidly than others. The Westminster tradition of “winner takes all” in New Zealand (until 1996), for example, allows for relatively rapid change. Holland’s multiparty coalitions, by contrast, require extensive and time-consuming bargaining (often resulting in marginal change instead of major overhaul).

Interests matter, too. The health policy arena differs from other public policy-making not only with its complex, controversial, and emotional issues that attract much media attention, but also with its well-organized and often powerful stakeholders. In several countries, medical associations, labor unions, or associations of health insurers were successful in delaying, thwarting, or blocking change.

Chile: Early Adopter of Social Insurance

by Guillermo Paraje

Chile was one of the first countries in Latin America with health insurance for public-sector workers (started in 1898) and urban manual workers (the Caja del Seguro Obrero, or SO) of 1924.10 SO covered sick leave, medical costs, maternity and child benefits, and benefits in case of invalidity, old age, and death. SO ran its own health care facilities and reimbursed charity care to the poor provided by dispensaries and hospitals of the colonial institution Beneficencia Pública. The schemes for blue- and white-collar workers merged into the National Health Service for Employees (the Servicio Médico Nacional de Empleados, or sermena) in 1942.11 There was a separate scheme for the armed forces.

The three major political parties took widely diverging positions regarding future policy directions. The Left preferred the centrally planned, state-run model of the British National Health Service (opposed by white-collar workers who did not like to be “equalized” with laborers, and by the medical association Colegio Médico in favor of liberal medicine). The center-left Partido Radical favored the European model of social insurance administered by the SO with extensive public health programs, and the conservative Right favored voluntary private insurance with prevention programs for the working population (modeled after the 1938 Preventive Medicine Law, Ley de Medicina Preventiva, with compulsory clinical exams for syphilis, tuberculosis, and heart disease).

In the early 1950s, the new Social Christian Party (later renamed Christian Democratic Party, or PDC) joined the coalition government. This opened a window of opportunity for proponents of a national health service. In 1952, the universal Sistema Nacional de Salud (SNS), based on the notion of citizens’ rights to health care, began to be implemented. The SNS was the first of its type in Latin America. Implementation was slow, however, and the SNS faced several problems: lack of resources, fragmentation of the system, and unequal access as certain groups were left out (e.g., the unemployed, rural residents, and white-collar workers).

The first PDC government under President Eduardo Frei from 1964 to 1970 represented the new entrepreneurial spirit of the modern middle class. It decided to address the fragmentation and access problems of the SNS. After lengthy debate, Congress passed a law in 1968 creating separate schemes for blue-collar workers and for public and private employees. The latter had access to free-choice schemes administered by sermena and reimbursed by SNS. President Frei, Senator Salvador Allende, and others realized it worsened the fragmentation and class bias of the SNS but considered the law as a transitory agreement. When Allende became president in November 1970, he announced the creation of the Single Health System (Sistema Único de Salud), provoking strong opposition from the medical association.

The Growth of Private Insurance

Almost two years later, in September 1973, the military coup led by Augusto Pinochet led to Allende’s death. Heavily influenced by the Chicago School of economics, the new regime engaged in a radical neoliberal experiment. It sought to privatize social security funds and introduce consumer choice in health care.12 Following an explicit “starve-the-beast” policy, it drastically reduced social spending and public health services. The regime opened a private health care market in 1982, with heavy subsidies for the private health insurances (Institutos de Salud Previsional, or isapres). It allowed those insured under the public scheme, the Fondo Nacional de Salud (fonasa), to opt out and seek private coverage. Fonasa’s contribution rate went up from 2 to 7 percent. As in other countries, the option to exit the public system, expressive of the neoliberal consumer’s “right to choose,” led to a spiral of cream-skimming of the market: the young, males, and healthy went private, but the sick, females in reproductive age, and elderly had to remain in (or return to) the public scheme, as they faced serious access barriers in the private market.13 Isapres initially grew rapidly, covering about 30 percent of the population by 1995, but lost ground again after the return to democracy (see below), once the public subsidies to those enrolled in isapres were phased out in 2004, and the economy (and the growth in private incomes) slowed from its impressive growth in the period from 1986 to 1997.

The Pinochet regime also replaced the SNS with the newly created National System of Health Services (Sistema Nacional de Servicios de Salud, or SNSS), a decentralized entity with twenty-six regional autonomous boards, financed out of fonasa. The responsibility for primary care centers was decentralized to the municipalities. Access to health care became even more fragmented and stratified, not only by income but also by geographical location. Within fonasa, two types of assistance categories were defined: The Institutional Assistance agency (Modalidad de Atención Institucional, or MAI) covered public services, with four different groups of beneficiaries.14 The first two were indigents and persons earning less than $400 (over 70 percent of beneficiaries, those two groups were exempt from copayments); the other two groups paid copayments depending on income level. The Free Choice scheme (Modalidad Libre Elección, or MLE) reimbursed health care provided by enrolled professionals or private establishments. For this care, fonasa gave providers a voucher according to a set fee schedule.15 MLE charged three levels of copayments linked to the category of health care. Most physicians worked in services with the highest copayments.16 Uninsured paid for their health care out of pocket. Primary care, preventive services, eldercare, child and maternal care, and other public health services were open to everybody.

After the return to democracy in 1990, the new government announced massive new investments to improve the quality of public health services and reduce waiting times. While embracing principles of equity, solidarity, and universal access, it did not abolish the dual insurance system but imposed tighter regulation on private insurers (e.g., minimum coverage, a uniform premium structure with community-rated premiums within each of the numerous plans offered by each isapre, and inclusion of dependents). Spouses were not permitted to split their coverage between the public and private insurance.

The isapres continued to function as traditional for-profit insurers, offering coverage for health care and sick leave. Some owned health facilities or had preferred-provider arrangements.17 Isapres mostly attracted young, affluent, male, and urban insured. Risk selection occurred due to the creation of numerous health plans (by 2014, there were more than fifty thousand plans18) and risk selection as the isapres were not compelled to accept all applicants. This led to separate risk pools where women paid more than men, and people over sixty faced premiums of up to eight times as much as young adults.19 While the government imposed caps on premiums in order to mitigate the financial burden for lower-income families, it set no legal restrictions on copayments and coverage, which resulted in increasing financial burdens on families. About one quarter of the population had signed up with an isapre in 1997, but that share dropped to 19 percent in 2016.20 By then, premiums of private insurance had gone up (mostly due to lack of competition and inadequate schemes of payment to providers), and increased public health spending had led to improvements of the public system. Fonasa covered almost 80 percent of the population, while 3 percent had access to other schemes (e.g., police and armed forces).

Chile had a long tradition of free choice of provider, and insurers were hesitant to impose too many restrictions on their insured or face the wrath of the medical association by excluding providers. A large number of local hospitals, clinics, and municipal primary-care centers were under public ownership and control. Fonasa concluded long-term contracts with hospitals for the payment of inpatient care. About 15 percent of hospital income came from private insurers, the remainder from public sources. Hospitals received prospective budgets (60 percent based on historical costs), plus payments for specific activities. The public system faced shortages of finance and qualified personnel. Health professionals dissatisfied with low pay and poor working conditions went on strike frequently.21

The government announced a shift toward capitation payment of primary-care and case-based (diagnosis related group, or DRG-based) payment for hospital care in the late 1990s. This turned out to be more complex and time-consuming than expected. Case-based payment constituted only about 10 percent of hospital budgets by the mid-2000s. Facing much opposition to the market-oriented changes, the government reaffirmed its strong commitment to the public health system as a viable alternative to the private sector.

The 2000 Health Reform Commission, with representatives of the associations of physicians, health workers, and private health providers, identified four health sector objectives: improving health, addressing new health care demands due to aging and changing needs, reducing health inequalities across socioeconomic groups, and improving the quality and access of services.22 This led to several legislative proposals aimed at improving administration and management, regulating the isapres, improving access to health care (the Plan AUGE, later relabeled Garantías Explícitas en Salud, or GES) and strengthening patient rights (though this last one did not pass Parliament).

The Plan AUGE started in 2005. It defined a range of health care services, prioritized based on epidemiological data and medical guidelines. It emphasized prevention, early detection of symptoms, and primary care, and it set maximum wait times and limits for amounts families had to spend on their health care.23 AUGE covered eighty conditions by 2016.24 It was compulsory for both fonasa– and isapres-insured to safeguard equal access. While the plan was considered an important step toward universal access to health care, it also raised some important issues like waiting lists in certain AUGE conditions, but mostly in non-AUGE ones; a relatively low use of AUGE among isapres beneficiaries; and a shortage of specialists in the public sector.25

The Chilean experience illustrates that exclusionary regimes can implement major change in relative short periods of time, increasing the premiums of private insurance.26 The dictatorial regime restricted access to policy-making, banished former actors and public opinion from discussions, and crushed protests. Change in political regime thus created “windows of opportunity” for change, but the Chilean experience also showed that dominant values and long-standing institutions imposed limits on what government can do. Even while the military regime encouraged private health insurance and cut down public spending, it did not do away with all public health services or public insurance schemes. Likewise, there was strong support for public health care as a right after the restoration of democracy in 1990, but that did not lead to the abolishment or even substantial reform of private health insurance.

Universal Coverage in Israel

by David Chinitz

Israel’s health system offers the entire population comprehensive coverage administered by four competing health plans. Under the National Health Insurance (NHI), entitlements to health services are defined and detailed in legislation.27 The NHI only covers treatments included (with detailed medical indications) in the legally defined “standard basket” of services. The list is hundreds of pages long, detailing the drugs, tests, and treatments, as well as conditions under which a patient can sue if denied access (the U.S. Affordable Care Act, by contrast, lists only ten major categories of “essential health benefits,” de facto leaving detailed decisions regarding coverage to states and the market). Israel spent less than 8 percent of its GDP, and about $2,600 per person, on health care in 2016, below the average of OECD member states (in that year, the United States spent 17.8 percent of GDP and $10,345 per capita).28

Origins of the Current System

Israel’s health system began in the pre-state era with the creation of the General Sick Fund (Kupat Holim Clalit, or KHC) by the Worker’s Party in 1912.29 The KHC provided health care for workers in agricultural settlements associated with the Zionist labor movement. Members of the Labor Federation (or Histadrut) gained access to the KHC in 1920. Similarly, other political parties set up funds for their adherent populations of settlements and collectives. The wave of immigration dominated by German Jews in 1919 to 1923 (the “Third Aliyah”) included many physicians averse to joining the bureaucratic KHC. This led to the creation of the Maccabi Sick Fund that preserved more physician autonomy. By the mid-1970s, there were four sick funds in Israel, with KHC covering more than 80 percent of the population. The Histadrut and KHC served as the financial and economic backbone of the Labor Party.30

When Prime Minister David Ben-Gurion sought to nationalize the health system of the newly created state of Israel, all sick funds resisted.31 As the Ministry of Health provided hospital care and other health services, it became a direct competitor of KHC. Attempts to reform the fragmented system failed until 1994. The Maccabi generally attracted younger and wealthier insured, while the KHC (which accepted all Histadrut members) was saddled with an increasingly older, sicker, and poorer population.32

In the financial crises of the late 1980s, long queues for elective surgery and perceptions of unequal access to health care created pressure for reform.33 The Judicial State Commission of Inquiry into the national health system (the Netanyahu Commission) recommended enactment of the NHI, breaking the link between KHC and the Histadrut. The election of then Labor Party member Haim Ramon (a supporter of NHI) as Histadrut’s chairman opened the path to pass the NHI.34

The NHI expanded coverage to include the entire population and allowed the insured the free choice of a sick fund. All funds had to provide a standard basket of services. Earmarked taxes of about 5 percent replaced membership dues to the funds. Each sick fund, under the modernized moniker “health plan,” received a risk-adjusted amount for each insured plus a fiscal subsidy from the government.

Health Insurance and Health Care in Israel 2018

Each health plan contracts with physicians, hospitals, and other providers. The insured may switch plans every year (though some plans impose limitations on choice of provider). While the share of switchers is low (between 1 and 2 percent per year), the health plans work hard to keep customers and attract new ones.35 This competition is only over quality of service, however, as all insured pay the same (income-related) contributions. Health plans also offer supplemental coverage, e.g., a wider choice of providers and access to private practice. More than 80 percent of the population holds supplemental plans. Those are relatively cheap, as they cover large groups (the smallest one has over seven hundred thousand members). In addition, 40 percent of the population has taken out private health insurance, much more expensive and not guaranteed.36

The NHI budget is adjusted each year to allow for the inclusion of new technologies in the coverage. The overall budget growth is limited to about 1.5 percent. Within that limit, a special expert committee determines the choice of new technologies to be included.

Private financing plays a greater role in long-term care and dental care than in acute medical care. It contributes about 40 percent to total health spending, higher than the OECD average—but several other nations provide public financing for long-term and dental care. There is some controversy over the privatization, but little and only inconclusive data on its impact on access or health. Most patients are very satisfied with their plan, and trust is generally high. At the same time, they express significant doubt when asked whether they expect the system will be there in case they need expensive care. This response appears related to the marketing efforts of private insurers, the constant drumbeat of the social lobby, and high-profile media coverage of patients denied services (often of questionable effectiveness) not covered in the standard basket.

How Does Israel’s Health System Function?

Despite annual budget adjustments, the Ministry of Health and the social lobby regularly claim that NHI’s budget is falling behind population growth and medical cost inflation. Most experts support budget adjustments based on population growth, aging, and medical inflation, but others are in favor of including new technologies. Those perspectives are reflective of diverging interests: the first has no focused political lobby, whereas every medical technology has a drug company and disease support group pressuring on its behalf.37

The public (as well as the courts) generally trusts and accepts the decisions made by the above expert committee, despite the fact that many technologies are not funded. On the other hand, there have been successful appeals to the courts to increase the automatic adjustment of the health budget. But court rulings face budget decisions by the Ministry of Finance. The current Ministry of Finance, like all finance ministries, jealously guards the national budget. Health plans and hospitals commonly run budget deficits, but the Ministry of Finance regards those as incentives for improving health care efficiency. In reality, the deficits have increased Ministry control, demoralizing health providers and undercutting long-term planning and day-to-day management.38

Israel’s health system is generally associated with the good health status of the population, although there are important differences in health status between different ethnic and minority groups.39 It also scores fairly high in quality improvement. The Ministry of Health operates sophisticated quality indicator programs for both community and hospital care. Most physicians and other providers work on salary in hospitals or in large health systems that exert a certain amount of control over the practice of medicine, which facilitates the implementation of quality programs.40

Israel’s general culture supported the rapid diffusion of digital technology, as illustrated in the complete computerization of medical records after 2000. Information systems also support medical decision-making, coordination of care, and overall quality improvement. While not perfect, the country’s relatively successful health-information and quality-improvement programs were largely based on initiatives of health plans and hospitals, as opposed to the top-down approach of other nations.

The system is not without problems, however, including continuous deficit financing and weak policy management.41 Its progress in quality improvement through systematic indicator programs is under threat by strained public finance. After a physician strike in 2011 and the recommendations of Health Minister Yael German (2013 to 2015), the Ministry of Finance agreed to add one billion NIS to the budget. Meanwhile, supplemental and private insurance premiums constitute more than four billion NIS, suggesting pent-up willingness to pay outside the public system.42

Israel’s public health system is operating efficiently but under budgetary and fiscal pressures threatening its accomplishments. Insufficient funding fuels the public perception, not always justified, of accelerating privatization of the NHI. Health plans and the hospitals run permanent deficits that demoralize care providers and administrators and undermine accountability.43 While there is still high trust in the system, there are signs that some erosion of public legitimacy could present serious challenges in the future.

The Netherlands: From Wholesale Change to Marginal Adjustments; or, A Farewell to Health Reforms?

by Kieke G. H. Okma

Germany’s Bismarckian social insurance served as a model for the Dutch Sick Fund Law (Ziekenfondswet, or ZFW) of 1964. The ZFW covered about 65 percent of the population for the costs of hospital care, dentists, general physicians, prescription drugs, and some other services. The ZFW and the long-term care insurance AWBZ of 1968 became the two major health care financing sources for more than four decades; about a third of all money came out of private payment.

Another specific feature of Dutch health care was its long tradition of dominant nongovernment (but nonprofit) health care. That traced back to medieval guilds offering financial support to their members in case of illness or death, and local communities, churches, and monasteries setting up hospitals as shelters for the homeless, elderly, and sick.44 That tradition is still visible today, even while denominational backgrounds have faded due to recent waves of mergers. Third, Holland had its “neocorporatist” tradition, with shared responsibilities of governments and organized interest groups for social policy-making.45 The state only stepped in when families and denominational organizations to which most Dutch families belonged (including churches, schools, and welfare organizations) failed to meet the basic needs of their members.

The social insurances expanded steadily in the decades after World War II. Economic stagflation after the oil crises of the 1970s, changing ideological views of the role of the state, and revised demographic projections (revealing rapid population aging) caused pressure for change.46 After decades of neocorporatist policy-making, there was a shift—at least rhetorically—to models of individualized and decentralized decision-making.

The 1987 “Dekker” expert committee47 proposed to amalgamate public and private insurance and AWBZ into one basic (social) insurance, with a stronger role for insurers, a reduced range of benefits, partial replacement of income-related contributions by (community-rated) flat-rate premiums, and a reduced role of government by deregulating planning and fee-setting legislation.

The proposal caused much uproar but finally passed Parliament in the early 1990s. After the first implementation steps, however, stakeholder opposition resurfaced and Parliament shelved the reforms—but did not reverse measures already taken. The next two decades saw a regular turnover in coalition governments (usually changes from center-left to center-right coalitions and vice versa), with shifts in policy emphasis from wholesale reform to gradual adjustment, but rarely major changes in policy direction.

Several coalition governments later, the 2006 ZVW replaced the ZFW and private insurances. While substantially similar to the earlier Dekker proposals, it left out long-term care from the basic coverage and pushed the idea of market competition even further. The market-oriented policies (e.g., individual choice, competition) did not replace existing governance instruments (e.g., macro budgets), however. Governments regularly concluded “covenants” (less than legal instruments, but somewhat stronger than informal agreements) with the insurers and provider groups in an effort to reach consensus about cost control and other issues.48 These agreements, often concluded behind closed doors, resulted in opaque and narrower policy networks than under the former neocorporatist policy-making. Critics raised concerns about the unclear allocation of responsibilities.

Changing Positions of Insurers and Health Care Providers

The former sick funds had to contract all providers in their region, but higher costs translated almost automatically into higher contribution rates and tax subsidies. The shift to capitated budgets, starting in 1991, gradually increased their financial risk.49 Facing the new challenges, insurers initially appeared more concerned with consolidating their market positions than with the quality and efficiency of health care.50 They improved their administration and expanded or sometimes contracted coverage. They ran high marketing and advertising bills, and some set premiums below cost, but they increased premiums again in 2007 to recoup losses.51 Others contracted with for-profit clinics to manage waitlists and offered sport-club membership and regular checkups in the supplemental coverage. The number of supplemental plans increased substantially but most were “clones,” identical plans under different labels and sometimes priced differently. A few insurers experimented with preferred provider arrangements, but these never became popular. Almost 70 percent of Dutch insured were members of collective contracts in 2017.52

There clearly is an element of risk selection in such collective contracting and targeted marketing as employment-based collective groups (or members of sport clubs) generally represent lower risks. To counteract this trend, the government limited the discount for members of collective contracts.53

The abolishment of regional monopolies of sick funds in 1991 opened the field for new entrants. A few international insurers tried their hand in the late 1990s but soon left the country again. The deregulation actually fueled further market concentration. The number of independent sick funds dropped from fifty-four to thirty between 1980 and 2000.54 Anticipating the ZFW, all sick funds had merged with private insurers by 2005. The four major insurance groups (Achmea, VGZ, CZ, and Menzis) have covered 90 percent of the insured since 2008.55

Some organizational change occurred in health care as a result. Hospitals contracted out maintenance and hotel functions and replaced skilled staff with less expensive labor.56 While remaining nonprofits by law, some created for-profit subsidiaries for extended services like home care, meals on wheels, or clinics providing rapid access for employees. Public polls and debates in Dutch Parliament revealed strong opposition to preferential treatment of certain groups, however.57 Medical specialists and other investors set up independent clinics for elective surgery (zelfstandige behandelcentra, or ZBCs). After trying to restrain this development, the Health Ministry changed its position. It set new rules for ZBCs, expecting they would help solve long wait lists. Most ZBCs are smaller clinics, with total revenues of less than 3 percent of all hospital expenditure.58 Not all fared well (they also faced competition from hospital-owned clinics), and their number declined from 350 to 245 between 2011 and 2017.59 Hospitals also developed informal regional networks; took over nursing homes, retirement facilities, and ambulatory care; and merged with others.

Traditionally, few people in Holland were uninsured. Most citizens without access to social insurance had private coverage, even while not legally obliged to do so. After the passage of the ZVW in 2001, the numbers of uninsured and delinquent payers rose rapidly. That prompted extensive administrative measures by the Health Ministry (fines, garnishing wages, and enforced insurance registration), resulting in a drop of uninsured from 150,000 to 30,000 between 2006 and 2016.60 There were about 200,000 delinquent payers in 2007, and more than 320,000 in 2015, with over-representation of young immigrants, single-parent families, and welfare recipients.61 They might lose coverage, as insurers could bar the insured with unpaid premiums for more than three months. Though still a modest share, about 2 percent of total population, it nonetheless became a significant political issue. Again, extensive—and expensive—administrative measures by the government and action by insurers led to a decline in that number, but also to a sharp rise of debt settlement by local welfare offices.

New Roles for Consumers in Dutch Health Care

To encourage consumer mobility, government-sponsored websites and other media about health care and insurances spread rapidly. Dutch citizens seemed weary of the bombardment of information, however, and the mobility of insured remained modest.62 About 18 percent of insured changed plans in 2006, but that share dropped to around 6 percent in later years.63 Collective employment-based plans covered two-thirds of insured. Young, healthy, and higher-income groups switched plans much more frequently than elderly, disabled, or chronically ill persons, and they paid more attention to premiums than quality of services.64

The strategy of “voice” worked well in the domain of long-term care.65 Patient groups and relatives of mentally handicapped persons lobbied successfully for better services. Long waitlists for elderly and chronically ill patients in the early 1990s pressured the government to increase financing for long-term care, and again in the early 2010s, following media coverage of long waitlists and poor quality care in nursing homes. The AWBZ and its successor WLZ also offered the option of cash benefits or vouchers (persoonsgebonden budget, or PGB) instead of services. These vouchers became very popular, with more than 50,000 PGB recipients in 2003 (receiving on average about €20,000 per year) and estimates of more than 150,000 in 2017.66 In acute medical care, there was less interest in exiting. Most patient stayed with their GP for many years, following their referral to medical specialists and hospitals. Dutch patients also remained loyal to their local hospitals (particularly those with religious backgrounds) and former regional sick funds.67

Dutch Health Reforms Ten Years Later

The Dutch Health Insurance Law (Zorgverzekeringswet, or ZVW) of 2006 mandates that all adult legal residents take out basic coverage for medical care with an insurer of their own choice.68 Coverage is on an individual basis. The government determines the entitlements. Insurers have to charge community-rate premiums and accept any applicant for the basic coverage. Low-income insured are eligible for fiscal subsidies. Insured pay a flat-rate premium directly to their insurer as well as income-related ZVW contributions collected by their employer as earmarked taxation. Insurers with more “high-risk” (high-cost) patients in their portfolio receive compensation. This way, it is hoped, insurers will pay more attention to contracting efficient health care than selecting healthy—on average, less costly—insured. All insured face a mandatory deductible; they can add a voluntary deductible (or accept restrictions in provider choice) in exchange for lower premiums and take out supplemental coverage for entitlements not covered by the basic insurance. In addition, they pay contributions for the long-term insurance (Wet Langdurige Zorg, or WLZ, formerly AWBZ), and share the fiscal burden of the premiums for the unemployed, welfare recipients, and insured younger than 18 years, as well as administration and some other costs.

The new “consumer-driven” ZVW, based on “managed competition,” assumed that critical choice of individuals would prompt selective contracting between (competing) insurers and (competing) providers, thus safeguarding the best, cheapest, and most patient-friendly care.

Did the 2006 reform cause dramatic change? “Yes and no” is the short answer. Yes, because the 2006 legislation ended the century-long tradition of Dutch sick funds, plunging health care into uncharted territory with a quasi-private health insurance.

No, because the new market orientation did not drive out the strong popular support for social solidarity in Dutch society. There was consumerism at the margin, but no evidence that Dutch citizens embraced “consumer-driven” health care (except perhaps the cash benefits for long-term care). For-profit health services were tolerated on a modest scale—as long as governments safeguarded access to a wide range of health care without undue financial barriers. Efforts to engage in risk selection by insurers and providers faced strong resistance. Most insured never changed plans, and two thirds of insured had collective employer-sponsored contracts. After the first year of the introduction of the ZVW, the number of switchers dropped sharply. Young, better educated, and healthier insured changed more frequently than the elderly or disabled. In brief, the persons who needed health care most were the least likely to act as critical consumers in health insurance.

There was a flurry of organizational change in health care, but little evidence of quality improvement.69 Insurers focused more on consolidating market positions than health care quality. The four major insurance conglomerates covered almost 90 percent of the market. Health care providers, too, protected their markets by creating regional monopolies. This regional collaboration and integration severely limited consumer choice, sometimes all but defeating pro-competitive government policies.

The 2006 ZVW greatly added to administrative complexity and costs. Ten years after its passage, total health expenditure had risen from 8 to more than 12 percent of GDP.70 The Dutch case illustrates that competitive markets require extensive supervision and (new) regulation, and that insurance mandates are hard and administratively costly to enforce.

The partially implemented reforms did not replace existing governance models. Dutch health care consequently revealed intricate overlay of state control and deregulation, patient choice and paternalistic government, market competition and market concentration, individual coverage and collective contracts, and a dominant share of collective, employment-based coverage within the universal insurance that assumes individual choice as a major driving force.

The 2017 Governing Manifesto distanced itself from the market-oriented reforms. It hardly mentioned competition or consumer choice.71 It emphasized instead the need for stronger budget controls, individual responsibility (delisting of benefits and shift from institutions to home care) and regional collaboration—thus, less competition between providers (while not reversing policies already implemented). With that shift, further implementation of “consumer-driven” health care in Holland seems unlikely.

Re-forming New Zealand’s Health Reforms

by Tim Tenbensel and Toni Ashton

New Zealand’s Social Security Act of 1938 introduced universal, fully funded health care as part of broader welfare reforms. Physicians averse to becoming government employees resisted, and this resulted in a dual system with state-owned hospitals providing services free of charge and self-employed general practitioners receiving both public finance and direct patient payments.

New Zealand spent about 9.2 percent of GDP on health care in 2015: most (80 percent) from general taxation and the mandatory accident insurance (ACC), 15 percent out-of-pocket spending, and 5 percent private health insurance.72 All permanent residents are automatically covered by the public health system. It includes inpatient and outpatient care, maternity services, and many community-based services. Most services are free of charge, but copayments apply for general practice consultations and pharmaceuticals, and long-term care such as home care and residential care for elderly is means-tested.

Most general practitioners (GPs) work in group practices with three or more GPs, one or more practice nurses, and other support staff. Citizens can choose their own GP but need their referral for access to secondary care. Patients usually have little choice of specialists or hospitals in the public system, and patients for elective surgery are prioritized according to need.73 Patients can seek treatment (paid directly or via private insurance) in the parallel private system of specialist and hospital care. About one-third of the population held private health insurance. Private insurance is not subject to any special regulations, and premiums are not tax-deductible.

The Ministry of Health is responsible for public health services, maternity services, and disability support services for people aged under 65. The Ministry of Heath distributes the bulk of its budget to the twenty District Health Boards (DHBs) via a weighted population-based funding formula. DHBs are responsible for the health care of their regional populations. They own the public hospitals and purchase community-based services. DHBs, the accident insurance agency (ACC), and the Ministry of Health purchase services from private providers through “service agreements.”

Successive Waves of Health Reform

New Zealand’s economic policy and public-sector management, according to many commentators, underwent the “purest” neoliberal and new public management reforms between 1984 and 1996.74 After the National Party replaced Labour as the governing party in 1990, it extended the neoliberal reform ideas to the health sector.

The central feature of the reforms—which involved a major restructuring of the health system—was a switch from an integrated model toward the separation of purchasing and provision functions.75 Four newly established Regional Health Authorities (RHAs) became responsible for purchasing personal health services and disability support for their regional populations. Public hospitals became for-profits, with the Ministers of Health and Finance as their shareholders. Renamed Crown Health Enterprises (CHEs), they had to compete with private providers for service contracts. The theory behind this “quasi-market” was that it would encourage former public institutions to improve quality and efficiency and respond to the preferences of the RHAs in order to win contracts.

However, similar to the experience with “purchaser-provider splits” of other nations (e.g., the United Kingdom and the Netherlands), competition was constrained as hospitals felt obliged to continue to serve local populations. Most contracts were in fact let to incumbent providers.76 Public hospitals often enjoyed a monopoly position, especially for acute services.

By the time of the next general election in 1999, there was little evidence of efficiency gains77—not altogether surprising, given the degree of disruption caused by the reforms. The restructuring had been costly, and many health professionals felt alienated working in the competitive environment.78 The termination of some services and media coverage of inadequate patient care in public hospitals had created widespread dissatisfaction.

In 1999, a Labour-led coalition government came to power. The Labour Party promised restoration of a noncommercial system and local community involvement in the management and planning of health services. This led to yet another round of reform, essentially reverting to an integrated model. Twenty-one locally elected DHBs were established to be responsible for ownership and management of public hospital services and some community-based services, and for purchasing most other services (including primary health care) through contracts with private providers. The principles, goals, and objectives of the New Zealand Health Strategy served as guidelines for DHB activities.79

The Primary Health Care Strategy in 2001 announced a renewed focus on the health of populations and a community-oriented, team-based approach to care.80 It included the creation of Primary Health Organisations (PHOs), networks of primary health providers with capitated payments for their enrolled populations. More than eighty PHOs were established within five years. Most GPs joined a PHO, and more than 95 percent of the population enrolled in practices that were part of a PHO. PHO members faced lower copayments due to higher tax subsidies.

The National Party returned as the major party in government in 2008. Its major review of the health system in 2009 did not recommend major changes.81 Policy change instead became incremental, emphasizing collaboration among DHBs and between DHBs and PHOs in the regional planning of services and efforts to reduce the administrative duplication. Mergers and restructuring caused a rapid fall in numbers of PHOs, too, from around eighty to thirty (many of the early ones had been very small).82 To reduce financial access barriers, the age limit for free GP care was raised from six to thirteen years between 2012 and 2015.

Next, attention turned to health care performance measurement and national health targets for activities like child immunization, elective surgery, and wait times for treatment or emergency departments. Studies showed significant improvements in those targets, although the central government did not allocate funding for them. This meant that DHBs reprioritized their funding in order to meet the targets.83

Reducing health inequalities has also been an important focus of government policy since 2000, especially inequalities between indigenous Maori population and other New Zealanders. While there have been some notable improvements—for example, immunization rates for Maori children are now equal to non-Maori84—ethnic inequalities still persist.

The Drivers of Change

The factors that mattered most in New Zealand are its particular political system, the entrenched path dependency of its tax-based financing, and the dynamics of the state-medical profession relationship.

The highly concentrated constitutional power (one house of parliament, unitary system), combined with dominance over health funding and provision of hospital care, gives New Zealand governments substantial hands-on control over policy levers. Windows of opportunity for major policy reform occur relatively frequently and tend to stay open for longer than elsewhere. Governments keen to embrace novel reform ideas face few formal obstacles or veto points, as illustrated by the comparative ease with which governments of the 1990s and 2000s implemented reforms. New and untested systems and structures were rapidly put in place, with relatively little consideration of the practicalities of implementation. That provoked considerable anxiety among service providers who had to translate broad visions into concrete practice, with little practical guidance.85 It also led to a general sense of reform fatigue and a growing realization of the limited traction and negative consequences of the reforms. Despite major differences in ideological orientation, none of the major political parties of New Zealand have attempted to change from a tax-based financing of the health system; change took place within that financing model instead.

The third major institutional factor is the dual system of private primary care and publicly funded hospitals. This largely separated the policy arenas of primary care and hospitals since the early 1940s. The Association of Salaried Medical Specialists (ASMS) operated essentially as a labor union, working within the constraints of available resources in the public hospital system. In contrast, primary care continues to function predominantly as a private industry, with limited state subsidy. However, GPs have never gained a more dominant role in overall policy-making.86 The different policy terrains meant that interest-group activity tended to be sector specific, and that the New Zealand Medical Association (NZMA) has struggled to find a policy role that is relevant to both general practitioners and hospital specialists.


The two major health reforms were driven primarily by the political ideology of the government of the day rather than careful analysis of policy options. In the 1990s, the change to a contract model was based upon the center-right National Party’s faith in the power of markets to achieve efficiency gains. The underlying idea was that “exit” would be the main mechanism driving performance. In contrast, the shift in the 2000s back to a more integrated system that featured community governance reflected the notion of the Labour Party that the “voice” of the community would ensure responsiveness to the needs and preferences of the people.

The period from 1991 to 2001 demonstrates New Zealand’s institutional capacity to initiate radical reform. New Zealand, as an English-speaking, higher-income country, felt the influence of neoliberal policy prescriptions more strongly and earlier than continental European countries. In the 1990s, health policy became the key site of an ideological battle between the advocates of market signals and disciplines, and the defenders of a more social-democratic framework in health care.

New Zealand’s experience illustrates how reform realities can differ from reform rhetoric. Many of the defining elements of its health system from its inception have endured. The broad administrative structures changed several times over, but the method of financing and many of the underlying organizational arrangements for service delivery remained unchanged. This indicates the remarkable resilience of the institutions against top-down reforms.87

New Zealand’s experience demonstrates some important limits of health policy reform. It shows what can happen when “irresistible forces” of political institutions promoting major policy change meet the “immovable object” of a highly path-dependent health sector. The end result is that major changes can occur frequently, but the effects of these changes tend to be far less than hoped for by the governments that initiate them.

Taiwan: Health System Reforms and Future Challenges

by Tsung-Mei Cheng

Taiwan, a midsize East Asian economy with a per capita GDP of $48,095, on par with Germany’s $48,111,88 has had, since 1995, a high-performing, government-run, single-payer health insurance system—the National Health Insurance (NHI). The NHI provides universal health coverage to Taiwan’s population of 23.5 million, with comprehensive benefits at affordable costs. Total national health spending in Taiwan was 6.5 percent of Taiwan’s GDP in 2016, of which 52.2 percent came from the NHI in 2013.89

The NHI’s comprehensive benefit package provides everyone, poor and rich alike, the same care regardless of their ability to pay. Benefits include inpatient and outpatient care, dental care, prescription drugs, traditional Chinese medicine, renal dialysis, prenatal care, home nursing, chronic mental illness care, physical rehabilitation, and preventive services such as pediatrics, adult health examinations, and cancer screening.

Enrollment in the NHI is mandatory for everybody. Over 99.9 percent of Taiwan’s residents, including foreigners living in the country for longer than six months, were insured in 2013. The revenues of the NHI consist of contributions by insured, employers, and the government with respective shares of 37 percent, 29.3 percent, and 33.8 percent in 2015. The government subsidizes 100 percent of the contributions of the poor.

The NHI’s delivery system consists of a mixture of private not-for-profit and government-owned hospitals (unlike the original British NHS with predominantly public hospitals). Independent physicians and private hospitals contract with the government to deliver services. Except for a limited number of items, such as certain intraocular lens implants and artificial knees, providers are not permitted to charge more than the fees set by the NHI.

The NHI’s system of global budgets has been effective in controlling health spending. The government sets the annual overall growth rate of NHI expenditure after extensive deliberations with multiple stakeholders. This serves as a national budget for health spending. The powerful system of information technology of the NHI, furthermore, leads to high operational efficiency at low administrative costs. The NHI’s administrative budget was a mere 1.07 percent of its total expenditures in 2014. 90

Public satisfaction with the NHI has been consistently high in recent years, in the 80 percent range. Comprehensive benefits, low premiums, low copays, easy accessibility, free choice of providers, and virtually no waiting times explain the high public support.

The Genesis of Taiwan’s Health System

Taiwan began planning for a universal health insurance scheme in the late 1980s. In 1995, a mere seven and a half years after political deliberations and planning began, the government established the NHI scheme. It was implemented almost overnight, providing health insurance coverage for 42 percent of Taiwan’s population who were then uninsured. At the end of the first year, the NHI enrolled more than 92 percent of the population.

It may be argued that Taiwan was able to establish its NHI only because of a confluence of several conditions that created a unique window of opportunity for such an ambitious national project to come to fruition in such a short period of time.91 These conditions included decades of successful economic growth that enabled the financing of such a major new program, strong public demand for universal health insurance, and an entrenched political party with a parliamentary majority that found itself challenged by a rapidly rising opposition party.

The decision of Taiwan’s government to adopt a single-payer system, when it had the opportunity to adopt other models of health systems—such as Germany’s Bismarckian multipayer social insurance system, the UK’s Beveridge model of tax-financed single-payer NHS, or the U.S. private insurance system—was based on the recommendation of Princeton University economist Uwe Reinhardt, who was an adviser to Taiwan’s government at the time. Reinhardt recommended the single-payer system with a mixed public-private delivery system to Taiwan in 1989 on the following grounds: first, a single-payer system is equitable as benefits and payment to providers are uniform regardless of ability to pay; second, it can control costs effectively; and third, it is simple to administer and easily understood by the public. Performance of Taiwan’s twenty-three-year-old NHI has shown that this indeed has been the case: equitable, good at cost control, highly popular, and administratively simple, and therefore cheap to run.

Major Reforms and Challenges

Like any health system in the world, Taiwan’s NHI has faced its challenges. Chief among them were the financial deficits that plagued the NHI in the period from 1998 to 2010. The government had not been raising premium rates regularly to meet rising costs out of concern for public backlash (the NHI Law allowed for such rises every two years). In 2009, NHI’s cumulative deficits reached 15.1 percent of its annual revenue.92 The government employed both supply- and demand-side measures to make ends meet, such as higher copayments, sale of lottery tickets, higher tobacco taxes, borrowing from banks, and introducing case-based payments (DRGs) for hospitals. Ultimately, it also introduced global budgeting, a measure proven to be effective for cost containment in OECD countries in the 1980s.93

It was not until 2010 that the fiscal hemorrhaging stopped, after the government introduced the long-overdue premium rate increase, only the second in NHI’s history. By 2012, all deficits had been eliminated, and the NHI began to build a surplus. The NHI’s contribution-based financing, however, proved insufficient to meet the growing expenditures. In 2013, this prompted the government to start charging supplementary contributions over six sources of non-payroll income: interests, dividends, rents, bonuses, professional fees, and pay for second jobs. This move enhanced the financial stability of the NHI through 2017, at which point the government will have to find new sources of financing to meet rising costs.

Other challenges that put financial pressure on the NHI include Taiwan’s rapid population aging, the rising burden of non-communicable disease, new technologies including expensive drugs, and the public’s ever-rising expectations. In addition, the government is in the process of implementing social insurance for long-term care that will significantly increase overall health spending. At this writing, it is considering including capital gains as an additional source of the supplementary contribution. There is also increasing support for using total household income as the base for levying contributions. Such a move will not only bring in additional revenue but also improve the equity in financing of the NHI.

Health Reforms in Ecuador

by Santiago Illescas Correa

Ecuador has a mixed and highly fragmented public-private health system. The public sector includes institutional providers financed by the Ministry of Public Health (MSP) and the National System of Social Security. The latter includes the Ecuadorian Institute of Social Security (including the Rural Social Insurance), the Armed Forces Social Security Institute, and the National Police Social Security Institute. The third public financing source is the national Mandatory Traffic Accident Insurance Fund (fonsat) of 2009 that compensates victims of traffic accidents. Other ministries play a role in the health system, too: for example, Defense, Transportation and Public Works, Education, Economic and Social Inclusion, and the Coordinating Ministry of Social Development. All residents have access to MSP-financed facilities, but those mostly provide services to individuals who cannot afford coverage of other subsystems.

Private healthcare includes both for-profit organizations (health maintenance organizations, private insurance providers, physician’s offices, community clinics, hospitals) and non-profits like NGOs or social associations. Certified private entities can contract with the Social Security System. Large non-profits play a key role in Ecuadorian healthcare and act as public-sector service providers. The most important ones are the Guayaquil Welfare Board (a charity serving middle- and low-income individuals), the Guayaquil Children’s Protection Society, the Cancer Society (providing specialized diagnosis and treatment in the main cities), and the Red Cross. The Guayaquil Welfare Board and the Cancer Society have service contracts with the MSP.

The major sources of Ecuador’s health financing in the early 2000s were general taxation, social insurance, and private payments. General taxation covered government-offered healthcare, mainly through the MSP. The Social Health Insurance, oriented toward the formal sector, general (IESS) or specific (issfa, isspol, SSC), was mainly financed by contributions. Third, private payments came from private insurance premiums and out-of-pocket payments. Fourth, a smaller stream of charitable financing and foreign development aid supported specific activities. Barely 30 percent of the population was insured by any of the public or private schemes by 2010.

Constitutional Reforms of 2008

The 2008 Constitution established that health financing “must come from permanent sources of the General Government budget” and be distributed according to demographic and epidemiological criteria (population and health needs). Likewise, it defined which institutions can receive funds from the state. Further, it set an annual increase in the share of GDP allocated to health (0.5 percent, about $240 million), until this would reach at least 4 percent. There are no copayments in the public system, except for some health services in the issfa and isspol subsystems. The previous administration proposed earmarked taxes (e.g., on alcohol and tobacco) for additional healthcare financing. There are no financial contributions from subnational governments (such as provinces or municipalities) for public health. The specialized insurance agencies IESS, issfa, and isspol collect contributions to finance the specific disease and maternity services they cover. The same applies to the private insurers and the MSP. The financing of Ecuador’s healthcare is thus highly fragmented. Both the Social Security System and the National Health System envisage universal provision of healthcare. The Social Security System, however, serves to provide insurance coverage so that its beneficiaries may access healthcare, while the National Health System is responsible for actual service delivery.

Total health spending amounted to 8.6 percent of GDP in 2010 and 9.3 percent in 2017. About half was covered by public sources (social security and the MSP budget), the other half by private sources (insurance premiums, out-of-pocket-costs, and foreign aid). The resource allocation is based on national policy priorities: in other words, the institutional planning must correspond with the National Development Plan, the social agenda, and the priorities of the MSP. Most of the provinces’ budgets is allocated to regular activities; less than 20 percent of their funding is available for new policy priorities. Similarly, more than 85 percent of the regular MSP budget consists of salaries, so it has limited scope for purchasing supplies and drugs. The MSP Central Plan for the allocation of investment resources has a margin of 30 to 35 percent. There is no resource allocation for the subnational autonomous governments.

The last decade saw two major changes in payment for healthcare: a new tariff schedule and the Law of the Provision of Free Maternity Care. The first separated the purchase and provision functions, applicable to all services across the public health system. The new payment mechanisms introduced elements of demand subsidy and increased the financial responsibilities (with greater transparency and accountability) of the municipal-level management committees. They also widened access to funding for non-traditional providers, including non-governmental organizations, for-profit organizations, and traditional providers.

Pressures for Change: Economic and Social Factors and Health Reform Directions

The country’s new legal and political frameworks established in the early 2000s sought to break free from the antagonism between economic efficiency and social-sector investment. The frameworks reaffirmed the government’s role in participatory policymaking and in the design of inclusive, locally-based programs designed to eradicate inequity, exclusion, and discrimination, and to secure universal access to healthcare and infrastructure. Health regained its status as a human right. One crucial part of this new direction was the goal of universal coverage (as framed in the 2008 Constitution). The government realized this required additional financing, improved coordination, and reduced fragmentation of the health system; reduced duplication of activities and waste; and the need to address the health problems of specific population groups (for example, mothers and infants, rural populations, indigenous groups).

Both the Correa administration and its successor acknowledged that those challenges require not just technical solutions but also political willingness. They envisioned integrated primary services (up to the level of basic hospitals at kick-off), to be financed out of National Basic Healthcare Fund, and proposed the development of second- and third-level public networks of independent providers.

The new model of decentralization and deconcentration aimed to bring about functional consistency and clear administrative responsibilities of public services on the central, regional, and local levels. In this model, the MSPs are limited to central stewardship, regulation, and control. Regional authorities are responsible for regional planning, coordination, and management, while the local level is in charge of coordination and management, with administrative districts actually providing services. With different ministries (e.g., the Ministries of Health, Education, Economic and Social Inclusion, and Labor) applying the same model of deconcentration, this would support the provision of intersectoral services.

The government policies further aimed to decentralize political power, with greater authority, resources, and decision-making powers for provincial and municipal governments, paving the way for social participation in public administration.

Administration and Coordination

There has been much debate about the best governance model and the degree of decentralization and deconcentration of healthcare governance in Ecuador. Common issues of concern were the lack of coherence (and overlap) between services, financing agencies, and levels of governance; problems of sectoral legislation versus territorial stewardship of a broader range of population services; fragmentation in the financing and organization; and lack of attention to the determinants of health, with too much emphasis on curative care.

The quasi-autonomous National Health Council (conasa) is in charge of national coordination, sectoral consensus-building, and interinstitutional and intersectoral articulation in health. The MSP set up three specialized entities: the General Coordination of Strategic Development in Health, the Health Governance Undersecretariat, and the semi-independent Control Agency for Health Facilities. The first outlines priorities and guidelines based on the analysis of the health of the population; its determinants, tendencies, costs, and medical practices; and the consequences of policies and actions, with the purpose of improving the health of the population. This supports an informed decision-making process and the design of the health policy of the Health Authority. The Control Agency for Health Facilities will be in charge of controlling SNS healthcare facilities and adherence to current standard licensing regulations.

Outcomes of Health Reforms

The Correa reforms aimed to re-establish a central role of government in framing new health policy directions, based on the 2008 Constitution and the Plan National del Buen Vivir 2013–2017 (the Good Living Plan). With these reforms, Ecuador seemed to take a different route than the neoliberal reforms of other nations in Latin America, departing from the Washington Consensus.94 It had success in reducing poverty and increasing investment in the public sector (helped by oil income) and buffering economic shocks in later years.95 Today, Ecuador has a fairly good regional distribution of services but a skewed distribution of specialist services in the urban areas.96

At first sight, the Correa reforms were successful in returning to the state as a central actor. But as governments were unable to provide enough resources, new hospital buildings remained unused while the IESS was closing its rural clinics. The MSP increasingly had to contract out services to the private sector (with money disappearing in the hands of a few families). Because of the slow implementation of the reforms, healthcare remained fragmented, population health lagged, and the private sector gained ground. In brief, the country experienced “silent neoliberal” reforms despite the direction of official policy.97


Researchers in the field of international comparison frequently face two questions: One, “What is the ‘best’ health care system in the world?” And second, “What works?” We will defer the answer of the first question to a later contribution (that will also address some methodological issues), and focus here on the second. The cases of this study revealed some common features—often underreported in the American health care debate—of the health reforms and health policies that “worked” across different countries.

First of all, broad popular support for the underlying principles such as universal access to health care, equal access, fairness in allocating the financial burden (and to a lesser degree, consumer choice) helps to shore up existing arrangements and support government reform efforts. Second, effective cost controls require some form of collective action as well as political agreement on the need for overall spending ceilings for health care (translating into limits on specific categories, e.g., hospital expenditure). Third, wide risk pools that cover large segments of the population work better than narrow ones targeting specific risk groups. They generally create “we are all in the same boat” sentiments and a willingness to participate in the financial burden. Wider risk pools require stable administrative capacity, however, and that sometimes takes (much) time to develop. Fourth, systems based on social insurance and tax-based health care financing commonly have standardized administrative rules across the system and are cheaper to administer than voluntary private insurance (more segmented) or insurance mandates (hard and expensive to enforce). Fifth, consumers are generally more interested in the free choice of a health care provider than in the free choice of a health plan. Sixth, several nations were successful in improving access to health care, either by extending the reach of national insurance (Taiwan) or by specific tax subsidy for underserved groups (e.g., New Zealand), and that also led to improvement in the health of those populations.

Portions of this article originally appeared in American Affairs Volume II, Number 1 (Spring 2018): 158–89. The “Ecuador” section appears online only.

1 For example, see Social Policy in the Smaller European Union States, ed. Gary B. Cohen, Ben W. Ansell, Robert Henry Cox, and Jane Gingrich (New York: Berghahn, 2012).

2 “The U.S. Healthcare System: An International Perspective,” Department for Professional Employees AFL-CIO, Fact Sheet 2016; Eric C. Schneider, Dana O. Sarnak, David Squires, Arnav Shah, and Michelle M. Doty, “Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Healthcare,” The Commonwealth Fund, 2017.

3 Theodore R. Marmor, “Hype and Hyperbole: The Rhetoric and Realities of Managerial Reform in Healthcare,” Journal of Health Services Research and Policy 3, no. 1 (1998): 62–64.

4 The Reform of Health Care: A Comparative Analysis of Seven OECD Countries, Health Policy Studies no. 2 (Paris: Organization for Economic Co-operation and Development, 1992).

5 This study labels income-related payments for social health insurance “contributions,” and flat-rate payments for private insurance “premiums,” following the Organization for Economic Co-operation and Development (OECD).

6 Rudolph Klein and Theodore R. Marmor, “Reflections on Policy Analysis: Putting It Together Again,” in The Oxford Handbook of Public Policy, ed. Michael Moran, Martin Rein, and Robert E. Goodin (Oxford: Oxford University Press, 2006), 892–912.

7 Mary Douglas and Aaron Wildavsky, Risk and Culture (Berkeley: University of California Press, 1982).

8 Maria E. Labra, “Notas Críticas Sobre Estatificación Socioeconómica, Copagos y Acceso en los Servicios Públicos de Salud de Chile,” Revista Española de Economía de la Salud 6, no. 1 (2007): 46–50.

9 Theodore R. Marmor, Kieke G. H. Okma, and Stephen R. Latham, “Comparative Perspectives on National Values, Institutions and Health Policies,” in Soziologie der Gesundheit, Claus Wendt and Christof Wolf, eds. (Sonderheft: Kölner Zeitschrift für Soziologie und Sozialpsychology, 2006), 383–405.

10 Manuel De Viado and Alejandro Flores, “Health Insurance in Chile,” Canadian Medical Association Journal 51, no. 6 (1944): 564–70.

11 Labra, “Notas Críticas.”

12 Alejandro Foxley, Experimentos Neoliberales en América Latina (México, DF: Fondo de Cultura Económica, 1988); Timothy S. Jost, “Managed Care Regulation: Can We Learn from Others? The Chilean Experience,” Michigan Journal of Law Reform 32, no. 4 (1999): 863–98.

13 Armando Barrientos, “Health Policy in Chile: The Return of the Public Sector?,” Bulletin of Latin American Research 21, no. 3 (July 2002): 442–59; Ricardo H. Höfter, “Private Health Insurance and Utilization of Health Services in Chile,” Applied Economics 38, no. 4 (2002): 423–39.

14 Maria E. Labra, “Modes of Health Policy Making and Medical Interests in Chile in the 20th Century,” updated English translation of the article “Padrões de Formulação de Políticas de Saúde no Chile no Século XX,” DADOS-Revista de Ciências Sociais 43, no. 1 (2000): 153–82.

15 Superintendencia de Salud, Estadísticas, August 3, 2011.

16 Labra, “Modes of Health Policy.”

17 Jost, “Managed Care Regulation.”

18 “Informe: Estudio y Propuesta de un Nuevo Marco Jurídico para el Sistema Privado de Salud,” Comisión Asesora Presidencial para el Estudio y Propuesta de un Nuevo Marco Jurídico para el Sistema Privado de Salud (2014).

19 Jean-Pierre Unger, Pierre De Paepe, Giorgio Solimano Cantuarias, and Oscar Arteaga Herrera, “Chile’s Neoliberal Health Reform: An Assessment and a Critique,” PLoS Med 5, no. 4 (April 2008).

20 Asociación de isapres, “Isapres 1981–2016: 35 Años de Desarrollo del Sistema de Salud Privado en Chile,” Enero 2017.

21 Jost, “Managed Care Regulation.”

22 Maria Labra and Amarilis Tapia, Reformas del Sector Salud y Salud Sexual y Reproductiva en América Latina y el Caribe: Tendencias e interrelaciones—una revisión. El caso de Chile (Mexico City: UNFPA, 2005), 69–80.

23Realizing Rights through Social Guarantees: Analysis of New Approaches to Social Policy in Latin America and South Africa,” World Bank Social Development Department, Report No. 40047-GLB, accessed August 2, 2011.

24 Thomas J. Bossert and Thomas Leisewitz, “Innovation and Change in the Chilean Health System,” New England Journal of Medicine 374 (2016): 1–5.

25 Guillermo Paraje and Antonio Infante, “La Reforma AUGE 10 Años Después,” in Las Nuevas Políticas de Protección Social en Chile, Segunda Edición, ed. O. Larrañaga and D. Contreras (Santiago, Chile: Uqbar Editores, 2015), 73–111.

26 Labra, “Notas Críticas.”

27 Rachel Nissanholtz Gannot, David Chinitz, and Sara Rosenbaum, “What Should Health Insurance Cover?: A Comparison of Israeli and US Approaches to Benefit Design under National Health Reform,” Health Economics Policy and Law (January 2018): 1–20.

28OECD Health Statistics 2017,” Organisation for Economic Co-operation and Development.

29 Government of Israel, “Report of the State Judicial Commission of Inquiry into the Health System” (Jerusalem: Government Printing House, 1991).

30 David Chinitz, “How Israel Got Universal Health Care 20 Years Ago, and Why It’s Working,” Tablet magazine, September 27, 2017.

31 Ibid.

32 Ibid.

33 Government of Israel, “Report of the State Judicial Commission.”

34 Chinitz, “How Israel Got Universal Health Care.”

35 Ibid.

36 David Chinitz and Avi Israeli, “Not Everything Is Black or White: Commentary on Filc D and Cohen N, Blurring the Boundaries between Public and Private Health Care Services as an Alternative Explanation for the Emergence of Black Medicine: The Israeli Case,” Health Economics, Policy and Law 11, no. 2 (2016), 215–21; “More and More, the Universal Healthcare System in Israel is not Enough,” Taub Center for Social Policy Studies in Israel, August 3, 2017.

37 Chinitz, “How Israel Got Universal Health Care.”

38 Ministry of Health, “German Committee Report,” Jerusalem (2014).

39 Esti Engelchin-Nissan and Amir Shmueli, “Private finance of services covered by the National Health Insurance package of benefits in Israel,” Israel Journal of Health Policy Research 4, no. 45 (2015); Taub Center, “More and More.”

40 Nissanholtz et al., “What Should Health Insurance Cover.”

41 Ministry of Health.

42 Ibid.

43 Ibid.

44 Abram de Swaan, In Care of the State: Healthcare, Education and Welfare in Europe and the USA in the Modern Era (Oxford: Polity Press, 1998).

45 Arend Lijphart, Verzuiling, Pacificatie en Kentering in de Nederlandse Politiek (Amsterdam: J. H. de Bussy, 1968).

46 Kieke G. H. Okma and Theodore R. Marmor, “Health Risks and Health Care Reform in Western Europe and North America,” International Review of Public Administration 19, no. 3 (2014): 274–85.

47 Commissie Dekker, Bereidheid tot Verandering (The Hague: Distributiecentrum Overheidspublicaties, 1987).

48 M. Klee and Kieke G. H. Okma, “Convenanten: Nieuw Instrument Van Beleid?” Zorg en Verzekering 8, no. 1 (2001): 8–20.

49 Frederik T. Schut and Wynand P. M. M. Van de Ven, “Rationing and Competition in the Dutch Health-Care System,” Health Economics 14, no. 1 (2005): S59–S74.

50 Kieke G. H. Okma and Aad A. De Roo, “The Netherlands: From Polder Model to Modern Management” in Comparative Studies and the Politics of Modern Medicine, ed. Theodore R. Marmor, Richard Freeman, and Kieke G. H. Okma (New Haven: Yale University Press, 2013), 120–52; Monitor Financial Sector, “Competition in the Dutch Health Insurance Market: Interim Report,” Authority for Consumers and Markets (2016).

51 Marieke Smit and Philip Mokveld, “Verzekerdenmobiliteit en Keuzegedrag” (Zeist: Vektis, 2007).

52 M. G. N. Romp and P. P. A. B. Merkx, “Zorgthermometer: Verzekerden in beeld” (Zeist: Vektis, 2017).

53 Smit and Mokveld, “Verzekerdenmobiliteit.”

54 Kenniscentrum Historie Ziektekostenverzekeringen (Houten, Netherlands, 2017).

55 Romp and Merkx, “Zorgthermometer.”

56 Okma and De Roo, “The Netherlands.”

57 Monitor Financial Sector, “Dutch health insurance market.”

58 H. Maarse, P. Jeurissen, and D. Ruwaard, “Results of the Market-Oriented Reform in the Netherlands: A Review,” Health Economics, Policy and Law 11, no. 2 (2016): 161–78.

59 Romp and Merkx, “Zorgthermometer.”

60 Ibid.

61 “Kenmerken van Wanbetalers Zorgverzekeringswet,” Centraal Bureau voor de Statistiek (2007); E. Van Ginneken and T. Rice, “Enforcing in Health Insurance Exchanges: Evidence from the Netherlands, Switzerland, and Germany,” Medical Care Research 72, no. 4 (2015): 496–509.

62 T. Laske-Aldershof et al., “Consumer Mobility in Social Health Insurance Markets. A Five-Country Comparison,” Applied Health Economics and Health Policy 3, no. 4 (2004): 229–41; Monitor Financial Sector, “Dutch health insurance market.”

63 Romp and Merkx, “Zorgthermometer.”

64 Brabers et al.,Percentage wisselaars blijft gelijk. Premie net als in eerdere jaren de belangrijkste reden om te gaan wisselen,” Nivel, 2016.

65 A. O. Hirschman, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge: Harvard University Press, 1970).

66 Zorginstituut, 2017.

67 Laske-Aldershof et al., “Consumer Mobility.”

68 There is an unsolved question regarding the legal status of the 2006 Health Insurance Act ZVW. The Dutch government initially presented the law as private but changed its mind when it realized privatization would be unacceptable in Dutch society and might run afoul of international treaties. Treaties of the International Labor Organization, Council of Europe, or European Union (EU), for example, require member states to cover a minimum share of their populations by social insurance. The only authority to determine the nature of the system is the European Court of Justice (ECJ). The ECJ will only give a formal ruling after someone has brought a case to the Court. That has not (yet) happened. This is not just a semantic question: Regulatory regimes of social and private insurance differ substantially. Under the EU Treaty, national governments can determine the nature of their health system (e.g., a National Health Service model or social health insurance). Once providers and insurers are free to negotiate over the volume and prices of their services, however, they engage in economic activity subject to EU competition law, the ECJ has ruled. That restricts government intervention, for example, in setting prices or allowing collective bargaining. Some argue that the ZVW cannot be labeled social insurance, as mandates requires residents to take out insurance but do not automatically register everybody.

69 Schut and van de Ven, “Rationing and Competition.”

70 Centraal Bureau voor de Statistiek, “Kenmerken.”

71Regeerakkoord 2017: Vertrouwen in de toekomst,” Rijksoverheid.

72OECD Health Statistics 2017,” OECD.

73 David Gwynne-Jones and Ella Iosua, “Rationing of hip and knee replacement: effect on the severity of patient-reported symptoms and the demand for surgery in Otago,” New Zealand Medical Journal 129 (2016): 1432.

74 Christopher Pollitt and Geert Bouckaert, Public Management Reform: A Comparative Analysis (London: Oxford University Press, 2000).

75 Terms in “The Reform of Health Care: A Comparative Analysis of Seven OEC Countries,” Organisation for Economic Cooperation and Development (1992).

76 Toni Ashton and David Press, “Market Concentration in Secondary Health Services under a Purchaser-Provider Split: The New Zealand Experience,” Health Economics 6, no. 13 (1997).

77 J. Cumming and G. Salmond, “Reforming New Zealand Health Care,” in Markets in Health Care: A Comparative Analysis, ed. Wendy Ranade (New York: Addison Wesley, 1998), 122–44.

78 Laurence Malcolm, Pauline Barnett, and Jill Nuthall, “Lost in the market? A survey of senior public health service managers in New Zealand’s reforming health system,” Australian and New Zealand Journal of Public Health 20, no. 6 (1996): 567–73.

79 Annette King, “The New Zealand National Health Strategy,” Ministry of Health, Wellington (2000); “New Zealand Health Strategy of Health: Future Direction,” Ministry of Health, Wellington (2016).

80 Annette King, “The Primary Health Care Strategy,” Ministry of Health, Wellington (2001).

81Meeting the Challenge: Enhancing Sustainability and the Patient and Consumer Experience within the Current Legislative Framework for Health and Disability Services in New Zealand,” Ministerial Review Group, Wellington (2009).

82 “About primary health organizations,” New Zealand Ministry of Health, accessed June 28, 2016.

83 Chalmers, Ashton, and Tenbensel, 2017.

84 Esther Willing, “Hitting the target without missing the point: New Zealand’s immunisation health target for two year olds,” Policy Studies 37, no. 6 (2016): 535–50.

85 Robin Gauld, Revolving Doors: New Zealand’s Health Reforms (Wellington: Victoria University of Wellington, 2009).

86 Tim Tenbensel and Viola Burau, “Contrasting approaches to primary care performance governance in Denmark and New Zealand,” Health Policy 121, no. 8 (2017): 853–61.

87 Pierson, 1994.

88 IMF, 2016.

89 Tsung-Mei Cheng, “Reflections on the 20th Anniversary of Taiwan’s Single-Payer National Health Insurance System,” Health Affairs 34, no. 3 (2015): 502–10.

90 Second-Generation National Health Insurance Evaluation Commission, “Second-Generation National Health Insurance Comprehensive Evaluation Report” (Taipei: Ministry of Health and Welfare, 2014). In Chinese.

91 Tsung-Mei Cheng, “Taiwan’s New National Health Insurance Program: Genesis and Experience So Far,” Health Affairs 22, no. 3 (2003): 61–76.

92 Cheng, “Reflections on the 20th Anniversary.”

93 Cheng, “Taiwan’s New National Health Insurance Program.”

94  Rifat Atun et al., “Universal Coverage in Latin America: Health-System Reform and Universal Coverage in Latin America,” series of articles in The Lancet 385 (March 28, 2015): 1,230–47.

95  Mark Weisbrot, “Ecuador’s Decade of Reform,” Huffington Post, February 2, 2017.

96  Daniel Lopes-Cevallo and Chunhuei Chi, “Assessing the Context of Healthcare Utilization in Ecuador: A Spatial and Multilevel Analysis,” BMC Health Services Research 10 (2010): 64.

97 Pierre De Paepe et al., “Ecuador’s Silent Health Reform,” International Journal of Health Services 2, no. 2 (2012): 219–33.

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