Sick Around the World

Does Universal Coverage Mean Socialized Medicine?

Correspondent T.R. Reid finds out it's not all "socialized medicine" in the rich capitalist democracies he visited. But he also finds out they don't trust health care entirely to the free market -- they all impose limits.

Prof. Karl Lauterbach
Health economist and member of German parliament

The German health care system is unique in its attempt to combine competition among sickness funds [nonprofit health insurers] on the one hand and a universal coverage plan on the other hand. Most health care systems are either one or the other, so you either have private insurance and competition but not everyone is covered for everything, or you have a single-payer system. So the ideal types are like the American system on the one hand or the Scandinavian or U.K. systems on the other end.

Germany tries to combine the advantages. Everyone is covered; all sickness funds have to provide a comprehensive benefit package; ... and there is nevertheless competition for price and quality between the sickness funds. ...

See, we're confused by that because, to an American, the reason companies compete is to make more profit, but these sickness funds aren't making a profit, are they?

No, they're not permitted to make a profit. 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. The management is basically losing its job and its prestige if the sickness fund is becoming smaller.

So the idea is that there is enough of an incentive for competition, even if it is nonprofit competition. Not every form of competition that works is for profit, and the nonprofit competition in health care, in my view, is actually a good solution. ...

... Would you say that Germany has socialized medical care?

No, it's not a socialized system, because you can pick your insurance, public or private. Many people can even opt [out], and the sickness funds compete for members. You have free hospital or physician choice; there are very few limits on choice in the system. ... In a socialized system, everything is planned; in Germany, basically everything is open for nonprofit competition.

For me, another definition would be, who owns the facilities? Are the hospitals private?

Roughly 10 percent of the hospitals are private and for profit, 90 percent are nonprofit hospitals, and about 100 percent of all office physicians are for a profit.

Prof. Naoki Ikegami
Health economist, Keio University School of Medicine

We have a debate going on about health care in America. Some of the candidates basically say that anything in a foreign country is socialized medicine. Is Japan using socialized medicine?

Yeah. I mean, ... this is all part of the social health insurance system, so it is socialized medicine. For the government to decide unilaterally that the prices would go up or down, this is a socialized system.

Does the government own the hospitals?

No. ... The federal government owns only 10 percent. ... Ten percent is for the voluntary organizations. Eighty percent is truly private.

That's a higher percentage of private hospitals than in the U.S., isn't it?


The doctors are privately employed businesspeople, is that correct?

Two-thirds of our doctors are employed by hospitals. One-third are private practitioners working in clinics, but they do not have hospital privileges. ...

So hospitals are private, only 10 percent of the doctors work for the government, to me that's not the description of socialized medicine: the government running, the government providing the health care.

But, for example, England's National Health Service, they have tried to privatize their hospitals by creating foundation trusts. I think that is a general direction in that it's just a tradition of the government being both the financing part and the providing part. They have been trying to split that so that there should be more market efficiency. It's the same internal market argument.

Do market efficiencies work in medicine?

To a certain extent. For example, the lowering of drug prices and for devices, that is an area where there are tangible aspects of it so that you can compare apples to apples. But if you are talking about comparing health insurance grants and trying to make them compete, they will compete on cherry-picking.

By picking healthy patients?


These health care plans covering basic health care for a worker and his family, do they make a profit?

No, because they are not allowed to make a profit. And anything left over is carried over to the next year, and if there's a lot carried over, then the premium rate would go down.

Pascal Couchepin
President of Switzerland

Switzerland has a health care system that covers everybody; the quality is good; the costs are lower than in America, per capita. Is it socialized medicine here?

What do you mean by socialized medicine?

Run by the government?

No, it is not considered as socialized medicine. ... The doctors are paid by the mandatory health insurance system, so it is not quite a free market. On the other side, there is a kind of competition between the health insurance companies, between the hospitals. So it is probably not a socialized system, but it is a step further into the direction than the American system. ... I don't think it is a free-market system 100 percent -- by at least, let us say, 70 percent.

Could a 100 percent free-market system work in health care?

No, I don't think so. If you do that, you will lose solidarity and equal access for everybody. ... We think that is a basic value of living in our society.

Prof. Uwe Reinhardt and Tsung-mei Cheng
Princeton University

Reinhardt: Basically these are social insurance systems, and this is ... what some politicians cannot get through their heads. They talk about socialized medicine as if, of course, it were something evil. But what these systems are, they use socialized insurance -- in other words, to socialize the financial risk of getting sick -- but the delivery system is private, often a for-profit mix.

If you want to look at a purely socialized health care, you would have to go to the United States, where we have it. In particular, that's the system we reserve for our veterans. So if I hear politicians run down socialized medicine -- and I have done that before the Congress -- I say: ... Do you hate your veterans? Why do you reserve purely socialized medicine -- there's only the U.S. and Cuba that have that -- for the veterans? ... So getting the terms right would be very, very helpful in our national conversation on health reform. ...

If you were designing a health care system, would you build one where the basic health insurance was a profit-making operation?

Reinhardt: I would certainly have a large nonprofit contingent as a benchmark and then tell the for-profits: "Look, if you can match their premiums, if you can somehow do this better, and you make a profit, you earned a profit, keep it. But you've got to compete with the nonprofits." And I would even put in a government plan to have all three compete side by side and as a benchmark. I think that's a good system, when you have them competing side by side.

So people could buy health care from Aetna or WellPoint or from Medicare?

Reinhardt: Yeah.

Wouldn't everybody buy Medicare?

Reinhardt: Not necessarily. Americans keep telling me they hate government. I always tell them: "Man, I've got a country for you: Go to Afghanistan. They don't have one." So if you're of that ilk, yes, you can have your private paradise. But if you're comfortable with government, then go with government. ...

This gets to a more basic question: Is health care a commodity, like toothpaste or tires?

Reinhardt: We Americans, or half of Americans, think so. Certainly the policy-making elite think it is just another commodity, a private consumption good, but an important one. And so therefore, when you're poor, we will help you, just like we help you have clothes, like we help you have food, and of course we make education that way, too. But it's a private consumption good nevertheless.

Other countries view health care as a social service that should be collectively financed and available to everyone on equal terms. My wife and I just interviewed the German minister of health, and it was an exhilarating experience, because [it was a] totally different language. It was obviously important that everyone should have the same deal in health care. That was one; she mentioned that at least five times.

And the other word she mentioned you don't hear here is "dignity." In fact, I finally interrupted her and said, "Do you notice that you have said 'dignity'" -- Wrde is the German word -- "five times?" It's a [word] that's not in the American vocabulary. Here, the president will go on TV and says: "Oh, if you're uninsured, that doesn't mean you don't get health care. Just go to the emergency room of your hospital." But you go there as a health care beggar. You don't have insurance.

And the German minister of health would say, "But that's not a dignified experience." ... And that drives their health policy, because they have 200,000 uninsured in Germany -- that's 0.2 percent of the population -- and she thought it was a huge social problem, and she solved it. And we were asking her: "Why is that a problem? We wouldn't even notice that here. We've got 47 million, or 16 percent." And she says, it had to do with dignity. ...

May, can I ask you, in most countries, do they take it as a given that everyone should have a right to some basic level of health care?

Cheng: Yes, I would say so. America is the only country, ... among the developed countries, that does not have universal national health insurance.

But if you ask Americans, "Does everybody have a right to basic health care?," what do they say?

Cheng: They say yes, everybody should have health care, on the one hand. But on the other hand, if you ask them, "Are you willing to pay for it?," they say no. So I've never been able to understand this contradiction.

And that gets to your point that a country's health care system reflects its basic social values.

Reinhardt: Yes, and one must respect differences there. There are libertarian values which say private property is the overarching value, the sanctity thereof, and there are egalitarians who say health care should be shared and so on. That's fair enough. What troubles me about the American people is they talk out of two sides of their mouths.

Prof. William Hsiao
Harvard School of Public Health


Would you say that Taiwan has socialized medicine?

No, sir. Taiwan does not have socialized medicine in any sense of the word. First of all, the doctors are private practices. Most of hospitals are privately owned. They compete with each other. People have a choice of their doctors, hospitals. They have more choice than Americans. In no sense is it a socialized system.

So when Americans say, we can't adopt those foreign systems because of socialized medicine, [that's] wrong?

It's absolutely wrong for American people to think that when you have universal social insurance then you're going to have socialized medicine. I would even say Great Britain doesn't have socialized medicine. Their doctors --

[But in Britain] the government owns the hospitals?

Yes, but the doctors are private, practice privately. The primary family doctors are private practitioners; they compete with each other. And then they introduced competition even for the public hospitals, and now they are creating trusts ... to manage the public hospitals. So it's a misnomer, and it's a very unfortunate thing [that] it becomes a political term for Americans, a term to scare Americans.

So these other countries generally don't have social medicine?

No. Other than Cuba today and a little bit of Iran, I don't know any other countries where you have socialized medicine. ...

... I think you're telling me that the term "socialized medicine" is kind of a scare tactic used by American politicians who oppose change, but it's false.

I definitely agree with you on that. It's a pejorative term used, actually creating fear. It [connotes] that the doctors are employees of the state, nurses are employees of the state; hospitals are owned by the state, run by bureaucrats; people have no free choice. But that's not true for all the countries you mentioned: Canada, United Kingdom, Germany, Japan, Switzerland.

So you're saying that America could borrow ideas from Germany, Japan, Switzerland, U.K. and Canada and not become socialized?

That's correct. Taiwan borrowed ideas from all these countries, and I don't think anybody will say Taiwan has a socialized medicine. And the Taiwanese themselves certainly do not believe they have socialized medicine.

Nigel Hawkes
Health editor, The Times of London

[Can you talk about the attempts to introduce internal competition into NHS?]

Yes. Originally -- and this is still true in Scotland -- you simply have a pot of money which is distributed by local NHS managers to hospitals, GPs or whatever. But in England, under Mrs. [Margaret] Thatcher and subsequently under Labor, it was decided that you could get a more efficient system if you divided those who provide the services from those who pay for them. So in other words, the hospitals are providers; the primary care trusts ... are the payers. The hospitals can compete among themselves for the available money. The idea was to create a sort of pseudo-market which would increase efficiency.

They compete by saying, "I'll deliver a baby for less money than the guy down the road"?

They're not allowed to do it for less money, unfortunately. That's why I call it a pseudo-market; it's not a real market. ... They made some attempts to sharpen it by introducing this "payment by results": the idea that each item of service has a price that a hospital can claim back from the primary care trust. And that also enables some competition, or some efficiency. The drive is to get more efficient. I have to say, it hasn't been hugely successful. But the principle, I think, is probably right. ...

... But this gets to a question we come across all the time. Do you think health care is a commodity, like lemonade or tea?

No, it isn't. The difficulty is striking the balance, really, so you get ... the sharpness that you get from a competitive market while still delivering an equitable system. I think some countries have managed that reasonably well.

... Who's doing well at it?

I think the Japanese do quite well. They have a very strange system by our standards, very strange indeed, but you get care very quickly. You can go wherever you like. There are not gatekeepers. You can get an MRI scan for $100 in two days; here, you might be waiting weeks for an MRI scan. ... Costs are quite low; they're tightly controlled by the government. So I think that's an interesting system.

The continental European systems like France and Germany, costs tend to be a little bit higher than the NHS -- not much higher now, a little bit higher. Service, I think, is prompter and in some respects better. So it isn't a market; it can't be a market. You have to make some attempt to deliver health care equitably, and a market isn't equitable. ... Somehow you've got to get the benefits of a market without the cruelties, and that is a very difficult balance to strike.

home + introduction + watch online + five countries + interviews + analysis + join the discussion + q & a with t.r. reid
live chat with correspondent t.r. reid + teacher's guide + readings & links + site map + dvd + transcript + press reaction
credits + privacy policy + journalistic guidelines + FRONTLINE series home + wgbh + pbs

posted april 15, 2008

FRONTLINE is a registered trademark of wgbh educational foundation.
background photograph © image100/corbis
web site copyright 1995-2014 WGBH educational foundation