Sick Around the World

DVDs + Transcript

Sick Around the World

T.R. Reid

Jon Palfreman and T.R. Reid

Jon Palfreman

ANNOUNCER: Tonight on FRONTLINE: American health care is in big trouble. It's the world's most expensive medical system, yet it leaves 47 million people without coverage and drives hundreds of thousands into bankruptcy each year.

Sen. BARACK OBAMA (IL), Democratic Presidential Candidate: I believe the problem is not that folks are trying to avoid getting health care. The problem is they can't afford it.

Sen. JOHN MCCAIN (AZ), Republican Presidential Candidate: We are approaching a perfect storm of problems that if not addressed by the next president, will cause our health care system to implode.

Sen. HILLARY CLINTON (NY), Democratic Presidential Candidate: I am not running for president to put band-aids on our problems. I want to get to universal health care for every single American.

ANNOUNCER: In the middle of our national debate, Washington Post reporter T.R. Reid journeys to five countries--

T.R. REID, Correspondent: Have you ever paid a medical bill?


ANNOUNCER: --and finds out how other rich free-market democracies provide health care for all.

T.R. REID: How many people in Switzerland go bankrupt because of medical bills?

PASCAL COUCHEPIN, President, Swiss Confederation: Nobody. It doesn't happen. It would be a huge scandal if it happens.

ANNOUNCER: Tonight on FRONTLINE, what it's like to be Sick Around the World.

T.R. REID, Correspondent: That's the capitol of the richest, most powerful nation in history. But when it comes to providing health care for people, that great country, our country, is a fourth-rate power. The World Health Organization says the U.S. health care system rates 37th in the world in terms of quality and fairness. All the other rich countries do better than we do, and yet they spend a heck of a lot less. How do they do it? That's what this film is about. We're going to go around the world to see what lessons we can learn to fix America's sick, sick health care system.

[voice-over] I've covered the world as a foreign correspondent, and right now, I'm writing a book about health care systems overseas. First stop on my tour is Great Britain, where our family lived for five years. Even though the U.K. is our closest European ally, its health care solution -- that is, the government-run National Health Service -- may seem too close to socialism for most Americans.

Still, we can learn something here. For about half of what we pay per person, the NHS covers everybody and has somewhat better health statistics-- longer life expectancy, lower infant mortality.

[on camera] Britain's National Health Service is dedicated to the proposition that you should never have to pay a medical bill. In the NHS, there's no insurance premium, no co-pay, no fee at all. The system covers everybody. And you know, when we lived here, my family got really good care from the NHS, although we often had to wait to see a doctor. And yet the newspapers here are full of NHS horror stories-- rationing, waiting lists, terrible mistakes. So I've come to London to see this NHS. Is it an answer for the U.S. or just some horrible socialist nanny state?

[voice-over] The Brits pay for health care out of tax revenue, so the government owns the hospitals, like this one, the Whittington Hospital in North London. The doctors who work here are salaried government employees. Does that sound like socialized medicine? Well, according to the hospital CEO, David Sloman, the Brits like it that way.

DAVID SLOMAN, CEO, Whittington Hospital: I think people are proud of it. Ninety percent of people who use the NHS think it's good or excellent, so people think very, very highly of it. People who don't use it don't think so well of it, actually.

T.R. REID: [on camera] Would you say most British people go their whole lives and never get a medical bill?

DAVID SLOMAN: Every single person who's born in the U.K. will use the NHS at one point in their lives. The majority of people will use it as the only provider of their medical care, and none of them will be presented a bill at any point during that time.

T.R. REID: [voice-over] No medical bills. Sounds sweet to me. And here's something else that's different. There's no medical bankruptcy.

This is Jeremy Cadle. His son, Tom, is being treated for leukemia at the Whittington. At least he doesn't have to worry about going broke.

JEREMY CADLE: He's had eight weeks in hospital. Apart from the times when he needs chemotherapy, we've got community health care that comes in on a weekly basis to take his blood. Hasn't cost us a penny. You know, it's astonishing the care you can get.

T.R. REID: Of course, it's not free. The Brits pay much higher taxes than we do to cover health care. But even so, does it sound a bit too good to be true? To find out, I sought out a long-time NHS watcher, Nigel Hawkes of The Times, for a more critical perspective.

[on camera] Look, this all sounds really sweet. Does it work?

NIGEL HAWKES, Health Editor, The Times: It works in some respects. I think primary care, the family doctor service, is pretty good. And emergency care works quite well. Where I think it can fall down is on elective care-- hip replacements, heart operations, this kind of thing. It used to be on the order of 18 months to get a new hip. That's been greatly reduced by the current government over the last 10 years. It's down to certainly less than 6 months, and for most people about 2 or 3.

Prime Minister TONY BLAIR: There are 400,000 fewer people on waiting lists than in 1997. Waiting times--

T.R. REID: In the last decade in Britain, Tony Blair and other politicians have reduced the waiting lists. They did it by spending more money and by bringing some market mechanisms into a government-run system. Today, government-owned hospitals like the Whittington compete against each other for government money. In today's NHS, patients can choose which hospital to go to.

DAVID SLOMAN: Oh, of course, we compete. You know, we do on our Web site-- you book in, we'll make sure you can book into our place as least as quick as all the other places around here. But we're all competing around what I think are now respectable margins, whereas previously, you know, it was 6 months or 7 months. Now in some specialties, I could proceed tomorrow.

T.R. REID: It's easy to see why choice might suit patients. But what do government-run hospitals get out of it?

[on camera] We don't understand why people would compete when you can't make more money. In America, people compete to make profit.

NIGEL HAWKES: Yes. That's a very fair point. I mean, here you would compete in order to survive because if you start losing patients to another hospital, your services are going to be under threat.

RALLY SPEAKER: What we've seen over the past 10 years is a move away from Bevin's ideal of a NHS for all. We've seen the creeping privatization of services--

T.R. REID: When I was in London, I stumbled on this rally in Trafalgar Square, and I discovered that many NHS staffers are angry about these new trends that could close some of the less popular hospitals. They were also protesting government plans to privatize some NHS services.

[on camera] You're probably 50, or even more than that. Have you ever paid a medical bill? Have you ever paid a medical bill?


2nd PROTESTER: No, never.

T.R. REID: Will you ever pay a medical bill in your life?

1st PROTESTER: Not Likely.

2nd PROTESTER: I hope not.

1st PROTESTER: We don't want to.

2nd PROTESTER: This is why we're doing this. We don't want to. And even in 10 years' time, if we're not around, we don't want our kids to do it, either.

[ More about changes to the NHS]

T.R. REID: [voice-over] While the hospitals struggle with reforms, the GPs have embraced them. I went to visit one who practices in the West London neighborhood of Shepherds Bush. In Britain, health care starts here. Nobody can to go directly to a specialist. First you have to go to a gatekeeper like Dr Ahmed Badat.

He's a family doctor, a general practitioner. GPs hold down costs for the system and give people what the Brits call a medical home. My family had one just down the street, and we liked it. GPs are paid a fixed amount based on the number of patients they have. The average list is 1,800 people.

And get this. They make a bonus for keeping their patients healthy. So when Dr. Badat does a good job of caring for patients with diabetes and heart disease, he gets paid more. How much more?

AHMED BADAT, M.D., Shepherds Bush Medical Ctr.: It works out about 90,000 pounds.

T.R. REID: [on camera] So that's increasing your salary by $180,000 a year. That's not bad.

Dr. AHMED BADAT: Yes. [laughs]

T.R. REID: I'm reading the newspaper. It says docs are doing well here.

Dr. AHMED BADAT: I can't complain.

T.R. REID: [voice-over] Dr. Badat has had personal experience with U.S. medicine. He had a heart attack while on vacation in Las Vegas and was rushed to the county hospital.

Dr. AHMED BADAT: The treatment was absolutely fantastic. But you know, I was there eight days. The total bill came to $67,000. I mean, that is preposterous.

T.R. REID: Critics say Britain has the opposite problem: Care costs the patients too little here.

[on camera] Do you have patients who come twice a week or something?

Dr. AHMED BADAT: Yes. There's always like that.

T.R. REID: Are they sick, or--

Dr. AHMED BADAT: No. I think they're just lonely people, they are, so just want somebody to chat to. But then there are people I never see at all. And they come and register, I don't see them for three years, five years.

T.R. REID: [voice-over] With access this easy, the doctor and the system have a strong incentive to keep people healthy. The result, Britain has become a world leader in preventive medicine. Just look at all these services GPs here aggressively promote and talk to their patients about.

To sum up then, there's a lot to like in Britain-- no bills, NHS waiting lists are getting shorter, there's excellent preventive medicine. But there's probably still too much government here for American tastes, even if the NHS is trying to be more market-savvy.

[ Q&A with T.R. Reid]

The next country on my tour couldn't be more different. Our family lived there twice. I was the Tokyo correspondent for The Washington Post.

[on camera] Japan has 130 million people, and whenever I come to this station in Tokyo, I feel like every one of them is right here. It's a ferociously capitalist economy. They have no natural resources, but they've built the second richest country in the world. And you know, it's 130 million healthy people. They have better national health than we do. They cover everybody. And get this. They spend half as much as the United States on health care per capita. How do they do that?

[voice-over] One thing's for certain: Japanese health care is a bargain. For just 8 percent of GDP -- that's less than even the British spend -- the Japanese have built a system with fabulous health statistics. They have the longest healthy life expectancy in the world and the lowest infant mortality rate. Now, part of that's due to diet and lifestyle, but the health system must be doing something right.

Everybody's covered, but unlike the Brits, the Japanese don't pay for all of it through taxes. Instead, everybody has to sign up for a health insurance policy. You get it at work or through a community-based insurer. The government picks up the tab for those who are too poor. This system is known as social insurance, and it's a model that's used in many wealthy countries.

As for the health care itself, that's certainly not socialist. Eighty percent of the hospitals are private -- more than in the U.S. -- and almost every doctor's office is a private business.

Dr. Kono Hitoshi is a typical doctor. He runs a private 19-bed hospital in the Tokyo neighborhood of Soshigoya.

KONO HITOSHI, M.D., Director, Kono Medical Clinic: [subtitles] The best thing about the Japanese medical system is that all citizens are covered--anyone, anywhere, any time. And it's cheap.

T.R. REID: The Japanese are prodigious consumers of health care. They go to the doctor three times as often as Americans do. And since there are no gatekeepers, they can go see any specialist they want.

[on camera] Do you have to make an appointment to come?

Dr. KONO HITOSHI: [subtitles] No appointment is necessary.

T.R. REID: Never.


T.R. REID: How long do you see the doctor?

Dr. KONO HITOSHI: Three minutes.

T.R. REID: It seems like such a short visit.

Dr. KONO HITOSHI: [subtitles] Some patients just have their blood pressure taken, receive medication, and then they leave, taking only about a minute, like a health check, very quick. So if you take the average, it's from 3 to 5 minutes.

T.R. REID: [voice-over] Surveys show the Japanese are highly satisfied with their health system.

[on camera] [talking to female patient] You know, I -- excuse me -- she says, you know, "This annual physical is really a great idea. I think that's why I've stayed so healthy, because they really look out for me and check out all my problems."

[talking to male patient] Yeah. "Well, it's not bad, as a matter of fact. You can't call it bad because everybody has the insurance and the insurance pretty much takes care of the bills."

[female patient] "So I think the Japanese health care system is really good. I know nothing about other countries. What do people in your country think about your health care system?" she says.

T.R. REID: [voice-over] Here's something else that's different. Japanese patients have much longer hospital stays than Americans, and they love technology, like scans. They have nearly twice as many MRIs per capita as Americans, eight times as many as the Brits.

So how do they keep costs under control? Well, it turns out the Japanese health ministry tightly controls the price of health care, right down to the smallest detail. Every two years, the physicians and the health ministry negotiate a fixed price for every single procedure and drug. Like the items in this sushi bar, everything from open heart surgery to a routine check-up has a standard price, and this price is the same everywhere in Japan.

If a doctor tries to boost his income by increasing the number of procedures, well, then, guess what? At the next negotiation, the government lowers the price. That's what happened with MRIs, which are incredibly cheap in Japan. I asked the country's top health economist, Professor Naoki Ikegami, to tell us how that happened.

[on camera] In Denver, where I live, if you get an MRI of your neck region, it's $1,200, and the doctor we visited in Japan says he gets $98 for an MRI. So how do you do that?

Prof. NAOKI IKEGAMI, School of Medicine, Keio Univ.: Well, in 2002, the government says that the MRIs, "We are paying too much. So in order to be within the total budget, we will cut them by 35 percent."

T.R. REID: So, if I'm a doctor, why don't I say, "Well, I'm not going to do them, then. It's not enough money"?

Prof. NAOKI IKEGAMI: You forgot that we have only one payment system. So if you want to do your MRIs, unless you can get private-pay patients, which is almost impossible in Japan, you go out of business.

T.R. REID: [voice-over] So that shafts the medical device makers and must limit innovation, right? Well, no. Japanese manufacturers of scanning equipment, like Toshiba, found ways to make inexpensive machines they could sell to doctors. And guess what? Now they're exporting those machines all over the world.

But price regulation also hits the doctors hard. Dr. Kono can't charge what he wants, he can only charge what the official price book dictates.

Dr. KONO HITOSHI: [subtitles] The treatment fee for a wound, anything under 100 square centimeters, that's 450 yen. The treatment fees are all listed here.

T.R. REID: [on camera] If somebody comes in with a cut that's less than 6 square inches, so a fairly small cut, he gets 450 yen -- $4.30 -- to sew that up. That's incredibly cheap.

Dr. KONO HITOSHI: [subtitles] It's extremely cheap.

T.R. REID: [voice-over] He then told me what it costs to stay in his hospital.

[on camera] OK, you're going to love this. So you know how much it costs to spend the night in a hospital here, according to this price book? If you stay in a room with four people, $10 a night. If you have a private room, $90 to spend the night in a hospital in a private room here. That's because the government sets the price.

Dr. KONO HITOSHI: [subtitles] The prices are all the same in Japan.

T.R. REID: [subtitles] In Tokyo, Okinawa, anywhere?

Dr. KONO HITOSHI: [subtitles] Yes, that's true. They're all the same.

T.R. REID: Is that fair?

Dr. KONO HITOSHI: It's fair.

T.R. REID: Oh, it is.

Dr. KONO HITOSHI: [subtitles] But doctors can't get rich. [laughs]

T.R. REID: [voice-over] The doctors have to live with the price book, but Japanese patients have to play their part in financing the system by paying into a social insurance fund. If you lose your job in Japan, you don't lose your health insurance. Unlike the U.S., you switch to a community insurer. And these insurance companies have very little in common with their American counterparts.

[on camera] Can they turn her down if she has heart disease or something?

NAOKI IKEGAMI: That is forbidden.

T.R. REID: These health care plans covering basic health care for a worker and his family, do they make a profit?

NAOKI IKEGAMI: No, because they are not allowed to make a profit, and anything left over is carried over to the next year. If there's a lot carried over, then the premium rates would go down.

T.R. REID: [voice-over] Insurance companies barred from making a profit, national price regulation-- that's all good news for patients. The average premium for a Japanese family is just $280 a month, with the employer paying at least half, a lot less than most Americans pay.

It's good news for Japanese employers, as well. J.R. Tokai, the company that runs this bullet train to Osaka, told me that its health care costs are about half of 1 percent of operating expenses. General Motors pays eight times as much as that.

So here's a country with the longest life expectancy, excellent health results, no waiting lists and rock-bottom costs. What's not to like?

But the president of the Nagoya Central Hospital, Professor Saito Hidero, showed me the downside.

SAITO HIDERO, M.D., Pres., Nagoya Central Hospital: I think our system is pretty good, pretty good, but no system is perfect. But now 50 percent of hospitals are in financial deficit now.

T.R. REID: [on camera] No, I didn't know that. In Japan?

Dr. SAITO HIDERO: Fifty percent in Japan. So I'm afraid hospitals may be one of the endangered species in Japan now.

T.R. REID: [voice-over] Fifty percent in financial deficit? That sounds unsustainable.

So here's the weakness. While we spend too much on medicine, the Japanese seem to spend too little. In a country with $10 per night hospital stays, the prices are just not high enough to balance the books.

But the Japanese system is so popular that they're not going to rip it apart. The experts say they'll have to increase prices a little to save the hospitals from going broke. Back home, our problem is patients going broke.

[on camera] In Japan, how many people go bankrupt from medical costs?

Dr. SAITO HIDERO: I don't know. We never heard of it. Yeah, almost never hear of, yeah.

T.R. REID: [voice-over] Before leaving Tokyo, I went to the Meiji Jingu Shrine, a deeply spiritual place. I left a prayer asking for something I think almost all of us can agree on, a health system where, as in Japan, everyone gets care and nobody goes broke paying doctor bills.

[ Watch this program on line]

Next, to a country a bit more like the U.S., the nation that gave us aspirin and X-rays, the third richest economy in the world. It's Germany. In many ways, they're just like us. Except, that is, for their health care.

[on camera] That imposing figure behind me is Otto von Bismarck, the Prussian chancellor in the 1880s, and he's the guy who invented the concept of health care systems, the notion that a government has to provide mechanisms so all its people can get medical care when they need it. And today, the Bismarck model is used all over the world.

[voice-over] Thanks to the Bismarck model, everybody in Germany is offered health care. While the rich are allowed to opt out and pay privately, about 90 percent of Germans choose to stay in the national system. And that system is famous not only for covering all the basics, plus mental health, dental and optical, they also pay for alternative therapies, like homeopathy. They'll pay you to go to a spa. The system's even been known to cover belly dancing lessons.

[voice-over] As in Japan, the delivery of health care is largely a market affair, carried out by private doctors and private hospitals. I visited Dr Christina von Kockritz, a family doctor practicing in the small town of Kladow, south of Berlin.

[on camera] If I call your office and say, "Oh, my shoulder kind of hurts. I'm not sure what's wrong," how long would it take me to see you?

CHRISTINA VON KOCKRITZ, M.D., Family Practitioner: Well, two weeks.

T.R. REID: Two weeks?

Dr. CHRISTINA VON KOCKRITZ: If it's serious, same day.

T.R. REID: Serious, same day. If I come in here and you look at my shoulder and say, "Well I think maybe an orthopedic specialist should look at it," then how long would I have wait to see the--

Dr. CHRISTINA VON KOCKRITZ: It's different. Perhaps another week or two, yes.

T.R. REID: What if the orthopedic specialist said, "Well, we have to operate on your shoulder"? Do you know how long I would have to wait for that?

Dr. CHRISTINA VON KOCKRITZ: Not too long. Three weeks.

T.R. REID: Three weeks before I could get in.


T.R. REID: [voice-over] That's about the same waiting time as the U.S. It's faster than Britain, but not as quick as Japan would be.

To finance health care, Germans pay premiums based on income to one of 240 private insurers. They call them "sickness funds." A worker earning $60,000 would split a $750 monthly family premium with her employer. It's more expensive than Japan and the U.K., but still a bargain by U.S. standards, about two thirds of ours.

Prof. KARL LAUTERBACH, Member of German Parliament: It is a system where the rich pay for the poor and where the ill are covered by the healthy.

T.R. REID: [voice-over] This is Professor Karl Lauterbach, a member of the German parliament and one of Germany's foremost experts on health policy.

Prof. KARL LAUTERBACH: So it is a nice social support system which is highly accepted by the population.

T.R. REID: Katie Haaser is one of those patients. She's having her third baby.

KATIE HAASER: I'm very satisfied with the system, especially during my pregnancy. I think it's maybe not perfect, but it's the best I can imagine.

T.R. REID: What does she pay?

KATIE HAASER: Actually, nothing. I don't have to pay anything.

T.R. REID: [voice-over] While pregnant women pay nothing, there is a co-payment for most patients. But you'll love this. It costs 10 euros. That's about 15 bucks. And you only have to pay that once every three months.

[on camera] If you lose your job, what happens to your health insurance?

Prof. KARL LAUTERBACH: Health insurance continues with no change if you lose your job. We do know very well that people who become unemployed are at an increased risk of becoming ill, and therefore becoming unemployed is about the worst time to lose health insurance. So therefore, everyone who loses a job remains in exactly the health insurance system that he is in.

T.R. REID: [voice-over] German insurance plans actively compete among themselves for customers, even though they're not allowed to make a profit. So what's in it for them?

Prof. KARL LAUTERBACH: Sickness funds do not want to perish. They want to survive and grow, and the management is better paid if the sickness fund is growing. So I think the German health care system is a nice third way between a for-profit system, on the one hand, and let's say, single-payer system on the other hand.

T.R. REID: It all sounds good to me. But how does the German system compare with ours? To get a U.S. view, I went to McGury's Cafe in the former East Berlin to meet Mike McGury, an American whose been living in Germany for six years.

[on camera] Good to see you. It's been since Kladow. Wow, I love the new bar. It looks great. [speaks in German] [laughs] That's all the German I know. I want a big beer.

MIKE McGURY: Oh, that's all you need! [laughter]

T.R. REID: Do you ever have to go to the doctor? I mean, you've used the health care system?

MIKE McGURY: Oh, absolutely.

T.R. REID: Yeah. And what do you think? How would you rate it?

MIKE McGURY: Top notch.

T.R. REID: Oh, really? How come? What's good?

MIKE McGURY: You have many different choices, and the cost is a fraction of what is covered in the States. Most of your prescriptions are covered with very, very small co-pays.

T.R. REID: And how's the quality? I mean, do you think you're getting good health care here?

MIKE McGURY: Excellent. Actually, I see no difference as far as quality goes between here and when I was in the States.

T.R. REID: Really?


T.R. REID: [voice-over] Surveys show Germans are satisfied with their health care. The system is also efficient. Medical providers and sickness funds negotiate standard prices, and this cuts administrative costs. They're only around 6 percent. That's a quarter of what they are in the U.S. And drugs are a bargain here, too.

Prof. KARL LAUTERBACH: The same drugs are way cheaper in Germany than in America because, obviously, if all sickness funds negotiate with the drug companies for a single price, then the market power of the sickness funds is fully used.

T.R. REID: Every year, the sickness funds also negotiate standard prices with medical providers. And just as in Japan, some of these doctors feel undervalued and underpaid. Professor Detlev Ganten is chairman of Berlin's giant Charite Hospital.

[on camera] So do you think your hospital is paid enough for the services it provides people?

Prof. DETLEV GANTEN, M.D., Chmn., Charite Univ. Hospital, Berlin: No. As I mentioned, it's not being paid enough because we are providing very expensive care, a university hospital. So we have to economize enormously within the university system also.

T.R. REID: An American hospital that felt it wasn't getting enough money for its services would raise prices. Could you do that?

Prof. DETLEV GANTEN: No, we cannot do that. These prices are negotiated every year and this is done by states. So within Berlin, all the hospitals get the same kind of DRG re-compensation. We cannot raise our prices.

T.R. REID: [voice-over] By U.S. standards, doctors who work in hospitals here are not paid very well. A 35-year-old might earn about $80,000 a year, about half of what he'd earn in the U.S.

Prof. DETLEV GANTEN: It's not a high salary, and people correctly complain because they work not 8 hours, they work 12 hours, 14 hours, 16 hours, and sometimes seven days a week. And I think they deserve more.

T.R. REID: Dr. Christina von Kockritz also feels shortchanged by the system. A family doctor makes around $120,000 a year, about two thirds of what she'd earn in the U.S. But then, she has a lot lower overhead. Her malpractice premium is just $1,400 dollars a year, about a tenth of what she would pay in the U.S. And medical school didn't cost her a penny.

[voice-over] In America, we have an image of a doctor as a pretty rich person, who drives a Lexus to the country club and takes vacations in Majorca and stuff like that.

Dr. CHRISTINA VON KOCKRITZ: It be like this in Germany until I think '80s, the '80s, perhaps '90s, but it's changed in the mid of '90 years. So your doctor normally has a small car today. [laughter] But he still goes to Majorca.

T.R. REID: Still goes to Majorca, yeah. And skis in St Moritz?


T.R. REID: [voice-over] But a lot of doctors aren't laughing. In March of 2006, they felt sufficiently angry to stop work and take to the streets in the heart of Berlin. Dr. Christina was one of them. She marched three times that spring.

Dr. CHRISTINA VON KOCKRITZ: I think about 18,000 or 20,000 doctors, and doctors don't usually demonstrate. But nothing changed.

T.R. REID: [on camera] For Americans, there's nothing particularly foreign about German health care. You get health insurance through your employer and the company makes you pay for it. And the coverage is great. They got mental, they got surgical, they got dental. If your doctor says you're tired, the health insurance pays to send you to a spa. And the Germans have made this work. They provide universal coverage for a lot less money than we do. They did it by taking the profit out of health insurance, and they also pay doctors a lot less than we do. I think there's a lot here that we could learn from.

In just three countries, I've picked up lots of ideas. The Brits pay no doctor bills and have great preventive care. In Japan, there's no waiting time and doctors still make house calls. In Germany, insurance companies compete for business, even though they can't make a profit.

What if you could pick and choose the best ideas from around the world? Well, that's exactly what one small Asian nation did.

[on camera] Taiwan's an island nation of about 23 million that became rapidly industrialized and went from poor to rich in about 20 years. And when Taiwan got rich, the government said, "Wait a minute. We need a rich country's health care system." So you know what they did? They set up a committee and they looked all over the world at different health care systems, looking for good ideas, and then designed their own."

[voice-over] In the late 1980s, Taiwanese health care was even worse than the America's is today. About half the population had no coverage at all. Hongjen Chang was one of the officials charged with designing a new health care system from scratch.

HONGJEN CHANG, M.D., Fmr. Pres., Bureau of Natl. Health Ins.: Taiwan is a small island. We always look abroad internationally for ideas. Chinese saying, we say, "The track of the previous cart is the teacher of the following cart."

T.R. REID: [on camera] So if the other guy's oxcart has found a good route to universal health coverage, follow those tracks.

Dr. HONGJEN CHANG: Follow those tracks. If they were trapped in trouble, avoid that track. Find a new track.

T.R. REID: [voice-over] So they consulted experts from around the world, and asked William Hsiao, a Chinese-born Harvard health economist, to head a blue ribbon panel.

Prof. WILLIAM HSIAO, Harvard School of Public Health: Why do you want to repeat the mistakes other people make? You want to pick up what people have done well and then move beyond that.

T.R. REID: Another expert they consulted was Taiwanese-American health economist Tsung-mei Cheng.

[on camera] How many different countries did they look at, do you know?

TSUNG-MEI CHENG, L.L.B., Princeton University: Over 10. Maybe 10, 13, 15 countries they looked at. And so in the end, the program that they finally set up in 1995 really is like a car that was made of different parts imported from overseas, but manufactured domestically.

Dr. HONGJEN CHANG: We examine quite extensive the major systems of quite a dozen, Europe, British or France, Germany, the Nordic countries, Swiss or the Dutch--

T.R. REID: Well, did you look at--

Dr. HONGJEN CHANG: --America.

T.R. REID: --the richest country in the world, the United States?

Dr. HONGJEN CHANG: [laughs] Oh, yes, yes, yes. It was the best system in the world, we thought.

T.R. REID: Yeah, you thought. And when you studied it, what did you find?

Dr. HONGJEN CHANG: Well, American is not really a system that you can copy. It's a market. So if you let things happen, it will be like the United States. There are many supporters, but in the end we said, "No, this is not the way we want to go."

T.R. REID: [voice-over] They wanted a system that gave everybody equal access to health care, free choice of doctors, with no waiting time, and a system that encouraged lots of competition among medical providers. To finance the scheme, they chose a national insurance system that forced everybody to join in and pay.

But Professor Hsiao thought Taiwan could improve on other countries like Japan and Germany.

Prof. WILLIAM HSIAO: We try to correct their mistakes. Japan has many funds, and we unified it. Germany let the rich people opt out. We do not let the rich people opt out. So we're building on what they have done correctly, but trying to overcome their deficiencies.

T.R. REID: The solution: To have one government insurer collecting the money and no chance to opt out. The result: A system that works a bit like the U.S. Medicare system for the elderly, and in fact, a lot like Canada's.

TSUNG-MEI CHENG: It has drug benefits, vision care, traditional Chinese medicine, kidney dialysis, inpatient care, outpatient care, just about everything under the sun.

T.R. REID: And to satisfy the patients in Taiwan, there's no gatekeeper and no waiting time. Clinics are open on weekends. This street clinic was bustling at 5:30 on a Saturday afternoon.

[on camera] If I woke up in Taiwan some morning and my shoulder's really hurting, how long would it take me to see an orthopedic specialist?

Dr. HONGJEN CHANG: We go now. [laughter]

T.R. REID: This morning I could see one?


T.R. REID: I don't have to go to a GP and get a recommendation?

HONGJEN CHANG: No, we-- our people don't like the idea of gatekeepers. [laughs] They want to keep-- keep themselves. They want to decide by themselves.

T.R. REID: [voice-over] High-tech Taiwan designed its new health system using state-of-the-art information technology. Everybody here has to have a smart card like this to go to the doctor. The doc puts it in a reader, and the patient's history, medications, et cetera, all show up on the screen. And then the bill goes directly to the government insurance office and is paid automatically.

So Taiwan has the lowest administrative costs in world, less than 2 percent. Compare that to the endless paperwork and all the denied claims we get with for-profit U.S. health insurance.

The smart card can also be used in other ways.

TSUNG-MEI CHENG: If a patient goes to see a doctor or hospital over 20 times a month, or 50 times in a three-month period, then the IT picks that person out and then gets a visit from the government, the Bureau of National Health Insurance, and they have a little chat. And this works very well.

T.R. REID: That may be too much like Big Brother to get by in the U.S., but surveys show the Taiwanese are highly satisfied with their health care.

[on camera] How many people in Taiwan every year go bankrupt because of medical bills?


T.R. REID: [voice-over] So the patients are safe from bankruptcy. But just like Japan, the system itself is under strain.

[on camera] How much of the Taiwan's GDP are you spending on health care?

Dr. HONGJEN CHANG: We spend some 6.23 percent.

T.R. REID: Do you know the number in America?

Dr. HONGJEN CHANG: Yes, it's about 16 percent.

T.R. REID: Sixteen percent. Yes, that's right.

[voice-over] So we spend too much on health care and don't even cover everybody. But the Taiwanese spend too little, less even than Japan. They just don't bring in enough money to pay for all the services they offer.

TSUNG-MEI CHENG: So actually, as we speak, the government is borrowing from banks to pay what there isn't enough to pay the providers.

T.R. REID: Taiwan's politicians are reluctant to increase premiums. They think voters will punish them. So that's their problem. They know the solution is fairly straightforward, increase the spending a little to maybe 8 percent of GDP. Now, there's a problem the U.S. would love to have.

Like the other countries we've seen, Taiwan is struggling to balance the hopes of patients and the expectations of doctors against the price people are willing to pay for health care.

Before leaving Taiwan, I tried some acupuncture for my bum shoulder. I hurt it years ago in the Navy. Of course, Chinese medicine is covered by Taiwan's plan, too.

Taiwan's achievement got me thinking about what it takes to carry out health care reform. But to create a universal health system in an emerging Asian nation is one thing. To get there in a mature free market economy is something else. So my final stop was in a country more like us that did take on health care reform.

[on camera] Some people say it's politically impossible to fix our health care system. And in fact, the last time we tried it in 1994, the result was disastrous failure. But that same year here in Switzerland, a country famous for huge insurance companies and drug companies, they did take on health care reform and changed the system. Today they have universal coverage with high quality. We've come to Switzerland to see why they made the change and how it's working.

[voice-over] Like Americans, the Swiss tend to think they're exceptional. They don't follow the crowd. It's a nation of eight million people right at the center of Europe, but it won't join the European Union. It denied women the vote until -- are you ready? -- 1971. And it has higher gun ownership than the USA.

In 1994, Switzerland's health care system resembled America's. Medical insurance was voluntary, generally linked to employment. If you lost your job, you could lose your coverage. And many did.

Ruth Dreifuss back then was health minister of the left-leaning Social Democratic Party and later the first female president of the Swiss Federation. She spearheaded a new law called LAMal, or the sickness. It mandated that everybody buy insurance, with the state paying for the poor. In return, it guaranteed a comprehensive package of medical care for all. Amid opposition from drug companies and insurers, the Swiss voted in a referendum.

RUTH DREIFUSS, Fmr. Pres., Swiss Confederation: The difference between the "Yes" and the "No" was a very teeny one, a very slight one. And the result was quite 50-50, just with a little bit more on the "Yes" side, so that the law was passed.

T.R. REID: After that, insurance companies could not cherry pick the young and healthy to avoid the old and the sick. And they were not allowed to make a profit on basic care, although they could profit from supplemental policies. People who refused to get coverage were automatically assigned to an insurance company and had to pay the monthly bills. More than 10 years later, LAMal is well accepted.

Pascal Couchepin, from the center-right Free Democratic Party, is the current president of Switzerland. Originally unenthusiastic about LAMal, today he's a supporter.

PASCAL COUCHEPIN, President, Swiss Confederation: Everybody has the right to health care.

T.R. REID: [on camera] Yeah. Now, see, that's striking for an American because we would certainly say everyone's entitled to an education--


T.R. REID: --everyone is entitled to legal protection, if you get in trouble with the law. But we don't say that everyone's entitled to health care.

Pres. PASCAL COUCHEPIN: Why? Because it is a profound need for people to be sure that if they are struck by destiny, by a stroke of destiny, they can have a good health system.

T.R. REID: [voice-over] Dreifuss, from the opposite political camp, agrees.

RUTH DREIFUSS: I think it's a basic human right. This is really the aim and this is really the reason why I think that everybody now, or a large, large majority, would renew the confidence in this system because they see what it means to have a universal coverage.

T.R. REID: But I wondered about LAMal's impact on drug and insurance companies. Pierre Marcel Revaz is CEO of Groupe Mutuel, one of Switzerland's biggest insurance companies. What's different here is that many Swiss insurers were already non-profit, so the transformation was easier than it might be for us. Ten years on, the insurers are doing fine. As in Germany, a lack of profit has not meant a lack of competition.

PIERRE-MARCEL REVAZ, CEO, Groupe Mutuel: [subtitles] It's very competitive because each company wants to keep its old customers and get new clients. So there's extreme competition for service and price.

T.R. REID: The benefit package here is fixed -- it's the same for everybody -- so companies compete in other ways.

[on camera] Is this one of the ways you compete with other companies? You say, "We'll pay faster"?

PIERRE-MARCEL REVAZ: [subtitles] Yes, it's one of the elements of competition, but the main one is the price.

T.R. REID: [voice-over] Groupe Mutuel has a strong incentive to keep administrative costs low.

PIERRE-MARCEL REVAZ: [subtitles] Our administrative costs are 5.5. percent, so we're performing well.

T.R. REID: Do you know what that figure is in American health insurance companies? The average administrative cost is about 22 percent, and you're running at 5 percent.

[voice-over] But where the Swiss insurance companies can make a profit is on supplemental coverage for, say, better hospital rooms. This is also how they attract more customers. But what about the drug companies?

[on camera] In America, the drug companies say, "Well, if you cut the price we get for the drugs, then we won't have as much money for research and innovation." Is that a legitimate argument?

RUTH DREIFUSS: It was the same argument here in Switzerland.

T.R. REID: I'm sure.

RUTH DREIFUSS: But I can say also that the Swiss pharmaceutical industry 10 years after this struggle is not bad. In the international competition, I think the Swiss are still belonging to the top 10. And when you hear them, they are not crying about the bad shape of their industry.

T.R. REID: [voice-over] That may be because Swiss drug companies still make more than a third of their profits from the less-regulated U.S. market.

[on camera] One of the problems we have in America is that many people -- it's a huge number of people -- go bankrupt because of medical bills. Some studies say 700,000 people a year. How many people in Switzerland go bankrupt because of medical bills?

Pres. PASCAL COUCHEPIN: Nobody. It doesn't happen. It would be a huge scandal if it happens.

T.R. REID: [voice-over] But here's Switzerland's challenge. Having achieved universal health care, it has to decide how much citizens are willing to pay. Today, an average monthly premium for a Swiss family is about $750. But there's pressure to raise the premiums. And it's already the second most expensive health care system in the world, although still much cheaper than ours.

[ Compare these countries' systems]

What's interesting about Switzerland is that after LAMal's success, people in this proud capitalist country see limits now to the free market.

[on camera] Could a 100 percent free market system work in health care?

Pres. PASCAL COUCHEPIN: No, I don't think that. If you do that, you will lose solidarity and equal access for everybody.

T.R. REID: Which is what you were finding in the late '80s.

Pres. PASCAL COUCHEPIN: Yes. We think that is a basic value of living in our society.

Sen. HILLARY CLINTON (NY), Democratic Presidential Candidate: My plan combines employers and individual responsibility, while maintaining Medicare and Medicaid. I think that--

T.R. REID: [voice-over] Back in the U.S., in an election year, everybody's talking about health care.

Sen. BARACK OBAMA (IL), Democratic Presidential Candidate: My belief is that if we make it affordable, if we provide subsidies to those who can't afford it, they will buy it.

T.R. REID: Although, if you listen carefully, none of the candidates talks about the lessons we could learn from other rich democracies, like the ones I visited.

Sen. JOHN MCCAIN (AZ), Republican Presidential Candidate: The solution, my friends, isn't a one-size-fits-all big government takeover of health care.

T.R. REID: What I've found is that it's not all "socialized medicine" out there. Many countries provide universal coverage with private insurance, private doctors, private hospitals, using market ideas that might work for us.

But here's the thing. These capitalist countries don't trust health care entirely to the free market. They all impose limits.

There are three big ones. First, insurance companies must accept everyone and can't make a profit on basic care. Second, everybody's mandated to buy insurance, and the government pays the premium for the poor. Third, doctors and hospitals have to accept one standard set of fixed prices.

Can Americans accept ideas like that?

Well, the fact is these foreign health care ideas aren't really so foreign to us. For American veterans, health care is just like Britain's NHS. For seniors on Medicare, we're Taiwan. For working Americans with insurance, we're Germany. And for the tens of million without health insurance, we're just another poor country.

But almost all of us can agree that this fragmented health care mess cannot be ignored. The longer we leave it, the sicker it becomes, and the more expensive the cure.


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ANNOUNCER: This report continues on our Web site, where you can watch the full program again on line, find out more about correspondent T.R. Reid and his reporting of this story, read our interviews with some of the world's leading health care experts and learn more about how the U.S. health care system compares to those in other countries. And then join the discussion about this program at

Next time on FRONTLINE:

EXPERT: Global warming is the most vivid emblem of so much that's gone wrong in America.

ANNOUNCER: Global warming has been ignored and denied.

VIJAY VAITHEESWARAN, The Economist: Even Al Gore would have found it very difficult to meet the Kyoto targets.

ANNOUNCER: Why didn't the White House do something?

CHRISTINE TODD WHITMAN, EPA Administrator, 2001-2003: It was the equivalent to flipping the bird to the rest of the world.

ANNOUNCER: And what happens now?

Sen. JOHN McCAIN (R), Arizona: The argument about climate change is over. Now it's time to act.


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