Changing Healthcare System Types

Changing Healthcare System Types

Claus Wendt

Department of Sociology, University of Siegen, Germany

Abstract

This article classifies 32 Organisation for Economic Co-operation and Development (OECD)healthcare systems based on data from 2001 and 2007. It shows that European countries areclustered in different types of healthcare systems and that traditional typologies are only partiallyrepresented in the four types of healthcare systems identified in this study. Type 1 representscountries with low total health expenditure (THE), high public financing, and low out-of-pocketpayment (OOP). In-patient healthcare is higher and out-patient healthcare lower than the OECDaverage. General practitioners (GPs) are paid by capitation, and patients’ access to healthcare isstrictly regulated. Type 2 represents countries with an average level of THE, high public financing,above-average OOP, and high in-patient and out-patient healthcare. GPs receive a salary, andaccess regulation is strict. Type 3 is characterized by very low THE, low public financing, andvery high OOP. Both in-patient and out-patient healthcare is well below average, and GPs arepaid a salary. Type 4 includes systems with the highest THE, the highest public financing, andthe lowest direct payments by patients. In-patient healthcare is below the OECD mean andout-patient healthcare is well above it. GPs are paid by fee-for-service, and most countries offer freechoice of medical doctors. The clusters for the years 2001 and 2007 are quite robust. During thistime period, THE increased, and patients’ access to medical doctors has since become moreregulated.

Keywords

Healthcare systems; Typology; Comparison; Cluster analysis; Organisation for EconomicCo-operation and Development; Access to healthcare

Introduction

Healthcare systems have experienced major changes in recent decades. InCentral and Eastern Europe (CEE), socialist healthcare systems have beenreplaced by Western European types. Scandinavian countries and the UKhave experimented with internal markets and Western European countrieswith strong corporate actors in the healthcare arena have entered a periodwith both more competition and stronger state intervention. Moreover, theUSA has intensively debated and partly improved its healthcare system’s

Author Email: [email protected]

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coverage (Freeman and Moran 2000; Rothgang et al. 2010; Marmor andWendt 2011, 2012; Montanari and Nelson 2012). However, information aboutdifferent modes of regulation, financing and service provision do not yetprovide a clear picture regarding similarities and differences among health-care systems in modern societies. In particular, the measurement of regulationremains challenging when comparing a larger number of countries (Rothganget al. 2010). Furthermore, the direction of change which goes beyond trends inhealthcare expenditure and financing remains unclear. As emphasized byFreeman and Moran (2000: 55), in British and Swedish health policy, ‘com-petition has turned relatively quickly into collaboration between larger units’.A few recent articles have started to characterize healthcare systems by notonly concentrating on expenditure, financing and modes of governance, butalso by including healthcare provision and patients’ access to healthcareproviders (Rico et al. 2003; Wendt 2009; Reibling 2010). These studies,however, only cover European countries and do not comprehensively analyzehealthcare system change.

This article will go one step further by analyzing and classifying 32Organisation for Economic Co-operation and Development (OECD) health-care systems in 2001 and 2007. The main purpose is to identify similarities anddifferences among OECD healthcare systems by clustering countries intotypes of healthcare systems. We do not expect to identify ‘frozen types’; rather,we expect to see that healthcare system types have experienced change, andthat some countries may even shift from one type to another. Such knowledgeis relevant since demographic developments, growing demand, and scarceresources have increasingly put healthcare systems under pressure and poli-ticians have begun to respond to these changes with structural reforms.Regarding health policy measures, however, it is important to know whetherotherwise similar healthcare systems operate better in certain respects and are,for instance, more successful at controlling costs, have higher levels of health-care providers, and place lower financial burdens on the individual patientwhen compared with other healthcare systems. The typology may also serveas a tool for future studies which analyze such issues as the relationshipbetween healthcare system types and inequalities in health, access to health-care and trust in healthcare systems.

Furthermore, concepts for analyzing healthcare systems have been hithertopoorly equipped to analyze healthcare system change (Béland 2010). Muchlike welfare state typologies (Esping-Andersen 1990; Arts and Gelissen 2001;Scruggs and Allen 2006), earlier healthcare system typologies suggested whatcould be interpreted as ‘frozen types’ (see e.g. Field 1973; OECD 1987; Moran1999). However, by simultaneously applying the role of three groups of actors(state, private non-profit, private for-profit) and three healthcare policy areas(financing, healthcare provision, regulation), Wendt et al. (2009) arrived at 27types of healthcare systems, including three ideal types: a state healthcaresystem, a societal healthcare system, and a private healthcare system. Byreferring to Hall’s (1993) concept of first-, second- and third-order change, thismodel suggests three forms of change: a ‘system change’ (from one ideal typeto another), an ‘internal system change’ (only one dimension changes itsdominant form, e.g. the provision of healthcare shifts from public to private

SOCIAL POLICY & ADMINISTRATION, VOL. ••, NO. ••, •• 2014

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actors), and an ‘internal change of levels’ (a shift of levels in one or moredimensions but without changing the dominant form). Based on this concep-tual framework, Wendt, Frisina and Rothgang (2009) suggested that CEEcountries are more similar to state-based healthcare systems than to Westernsocial health insurance schemes, though this suggestion was not empiricallymeasured. This model could also help to improve the understanding of the UShealthcare system, which, when including tax exemptions, today receivesmore than 50 per cent of its financing from public money but has not achievedsufficient public administrative capacities for controlling costs (Rothgang et al.2010; Schmid et al. 2010).

In this article, we employ the trilogy of financing, provision and regulationsuggested above, but we change the perspective. It is not the changing role ofthe state which we are mainly interested in, but rather the question of howmodes and levels of financing and healthcare provision are related to institu-tional regulations concerning patients’ access to medical care.

By classifying 32 OECD healthcare systems, we expect to improve theknowledge about the characteristics of various types of healthcare systems andto thereby support the formulation of hypotheses for ongoing research on theimportance of these types for inequalities in health, healthcare utilization andsatisfaction with the healthcare system. In the following section, we provide anoverview of healthcare system typologies and develop our hypotheses on thisbasis. Second, we provide information on the data and methods used forcomparing healthcare systems. Third, we identify different types of healthcaresystems as well as their main characteristics, and analyze healthcare systemchange.

Typologies of Healthcare Systems

The history of healthcare system classification has been described in much ofthe literature (Burau and Blank 2006; Wendt et al. 2009; Freeman and Frisina2010). The OECD (1987) study Financing and Delivering Health Care distinguishedthree basic models: the National Health Service (NHS) model, the socialinsurance model and the private insurance model. However, according toFreeman and Frisina (2010), we cannot expect to learn anything new abouthealthcare systems and how they work on the basis of this typology. Classify-ing countries from CEE as social health insurance systems and SouthernEuropean countries as NHS systems, for instance, may not capture thesystems’ most important characteristics. After the transformation from social-ist healthcare systems to social health insurance schemes, CEE countries seemto have maintained a higher level of state regulation, as is typical of socialhealth insurance in Western Europe (Wendt et al. 2013). NHS systemsfrom Southern Europe, on the other hand, still seem to lack administrativecapacities and infrastructures, and have higher shares of private financingcompared with NHS systems in the Scandinavian countries and the UK(Moran 1999). Another case which has proven difficult to classify is theNetherlands, which is traditionally classified as a social health insurancesystem with strong access regulation to medical care. In 2006, the responsi-bility for financing was transferred to private insurance companies, which has


© 2014 John Wiley & Sons Ltd 3

been interpreted by some authors as a privatization of the Dutch healthcaresystem. As emphasized by Okma et al. (2011), however, private plans in theNetherlands are strictly regulated and, therefore, do not represent a privatehealth insurance model.

Moran’s (1999, 2000) work represents one of the first attempts at combiningthe dimensions of funding, service provision and governance in healthcare.Using the three governing arenas of ‘consumption’, ‘provision’ and ‘produc-tion’, Moran constructed four types of ‘healthcare states’: the ‘entrenchedcommand and control state’, the ‘supply state’, the ‘corporatist state’ and the‘insecure command and control state’. Based on Moran’s typology, Wendtet al. (2009) combined the involvement of state actors, non-governmentalactors and the market with the dimensions of ‘financing’, ‘service provision’and ‘regulation’, and identified a taxonomy of 27 healthcare systems, threeof which being ‘ideal types’. Both typologies contribute to the analysis of therole of the state in healthcare, and capturing the healthcare systems’ maincharacteristics and how they work has not been their main focus.

A major goal of healthcare systems can be seen in their provision of patientswith access to necessary healthcare services, and two typologies have recentlybeen introduced which cover patients’ access in European countries. Reibling(2010) used the criteria of gatekeeping, cost-sharing, provider density andmedical technology, and Wendt (2009) classified healthcare systems onthe basis of the following eight criteria: total healthcare expenditure, thepublic-private mix of healthcare financing, private out-of-pocket payment(OOP), out-patient healthcare provision, in-patient healthcare provision,entitlement to healthcare, remuneration of medical doctors, and patients’access to healthcare providers.

This study makes use of the concepts provided by Reibling and Wendt, andextends the scope of healthcare system typology by covering a larger numberof countries (including non-European countries) and by analyzing healthcaresystem change. However, there is a payoff between the necessary work ofaggregation and simplification on the one hand, and the accuracy of therepresentation of individual cases on the other hand (Freeman and Frisina2010), and we should, therefore, remain cautious in our use of the results ofclassification. Accordingly, when comparing 32 OECD healthcare systems,we do not aim at a better understanding of a particular case but rather at ananalysis of the following hypotheses on country groups, the extension of earliertypologies, and healthcare system change:

H1 In contrast to earlier typologies, this article provides the opportunityto contrast European and non-European countries. Due to the earlydevelopment of welfare states and healthcare systems in Europe com-bined with the process of European Integration (Taylor-Gooby 1996;Montanari and Nelson 2012), we may identify more similarities amongEuropean healthcare systems compared with countries of other worldregions.

H2 Modes of financing and organization, which are the main dimensionsfor distinguishing NHS systems and social health insurance, may stillrepresent the dominant features of modern healthcare systems. We will,



therefore, test whether the traditional typology of NHS, social insuranceand private insurance (Kokko et al. 1998; Hassenteufel and Palier 2007;Hassenteufel et al. 2010) remains valid when comparing healthcaresystems or if CEE countries and Southern European countries dem-onstrate major differences compared with social health insurance andNHS systems, respectively.

H3 The intensity of healthcare reforms has increased over the past decades(Freeman and Moran 2000), and a number of healthcare systems haveundergone more recent structural reforms (Rothgang et al. 2010), whichhas not been studied by earlier typologies. Due to structural reforms, weexpect to identify healthcare system change in the 2000s.

Data and Methods

Healthcare expenditure and financing, provision and regulation are capturedby data taken from the OECD Health Data 2010 (OECD 2010), as well aswith data collected by the author as part of a research project focusing on theyears up to 2007 (see tables 1 and 2). For analyzing healthcare system change,data for 2001 and 2007 are included. In the next section, healthcare systemtypes are calculated by cluster analysis, and both the quantitative data onexpenditure and provision as well as the information on regulation are,therefore, expressed as numerical data.

Total healthcare expenditure can be measured as a percentage of gross domesticproduct or in monetary units per head of the population. Calculating health-care expenditure per capita provides us with information on the actualresources invested in healthcare. This typology focuses on how healthcaresystems work (including patients’ access). Since we are mainly interested in thehealthcare system’s financial capacity to provide the population with access tonecessary healthcare and not in a given society’s willingness to pay, we use theindicator total health expenditure (THE) per capita measured in US$ per head ofthe population by using purchasing power parities (PPP/general deflator).

The share of public healthcare financing, measured in public health expenditure(PHE) as a percentage of THE, is used as an indicator to capture the role ofthe state in the healthcare arena. A strong role of the state can be used forcontrolling healthcare costs and for reducing inequalities.

The share of patients’ co-payments, measured as private OOP as a percentageof THE, is used to capture the financial burden placed on the individualpatient in the case of sickness. Even if exemptions from co-payments are to beconsidered, higher private OOPs generally increase the difficulty for thosewith lower incomes and lower health statuses to access necessary healthcare.

Healthcare provision is more difficult to assess than expenditure andfinancing, which can be measured in monetary units. Total health employ-ment does not differentiate between healthcare providers with different levelsof qualification and overestimates the level of healthcare provision in coun-tries with a high number of low-skilled personnel. Using the number ofdoctors as an indicator for the level of total healthcare provision, on theother hand, over-estimates the level in countries where a high number ofdoctors collaborates with a lower number of other healthcare givers. We,



therefore, use two healthcare provider indices to estimate the level of health-care provision: an in-patient index and an out-patient index. These indices provideinformation on whether healthcare systems rely more on in-patient or onout-patient healthcare. We calculated the healthcare provider indices by:

Table 1

Healthcare system characteristics, 2001

Healthcare financingand private payment

Healthcare providerindices4

Regulation

THE1 percapita, US$

PHE2 in %of THE

PrivateOOP3 in

% of THE

In-patientindex

Out-patientindex

Remunerationof GPs5

Accessregulation

index6

Australia 2382 66.3 19.3 88.8 127.8 1 4

Austria 2906 76.1 16.0 105.1 130.8 0 1

Belgium 2596 74.1 20.6 83.7 185.6 0 1

Canada 2733 70.0 15.2 87.7 116.5 0 0

Czech Republic 1081 89.8 10.2 111.2 94.7 1 2

Denmark 2522 82.7 15.9 136.7 75.5 1 4

Estonia 521 78.6 19.0 83.1 119.1 1 3

Finland 1967 71.8 21.6 120.5 135.2 2 4

France 2726 79.4 7.2 82.1 172.9 0 0

Germany 2797 79.6 11.2 122.4 93.6 0 0

Greece 1755 60.8 36.9 115.5 102.8 2 0

Hungary 970 69.0 27.7 89.1 79.6 1 4

Iceland 2844 81.0 19.0 152.2 116.2 2 2

Ireland 2070 76.1 15.0 140.7 88.4 1 3

Israel 1951 61.6 26.2 106.1 82.8 2 0

Italy 2228 74.6 22.1 113.6 129.2 1 4

Japan 2080 81.7 16.5 84.3 93.9 0 0

Korea 964 52.3 39.3 36.3 86.6 0 1

Luxembourg 2736 87.9 6.5 80.9 97.7 0 0

Netherlands 2555 62.8 8.7 128.1 44.2 1 4

New Zealand 1708 76.4 17.0 88.8 103.3 0 2

Norway 3265 83.6 15.7 143.8 76.8 0 4

Poland 642 71.9 28.1 78.0 70.8 1 2

Portugal 1570 71.5 23.2 60.9 128.3 2 4

Slovak Republic 665 89.3 10.7 116.3 59.1 1 4

Slovenia 1583 73.3 11.9 80.4 71.4 1 4

Spain 1636 71.2 23.9 82.2 107.1 2 4

Sweden 2508 81.8 15.9 126.6 93.5 2 3

Switzerland 3428 56.9 31.8 139.7 81.0 0 0

Turkey 424 68.1 22.8 20.0 55.8 2 0

UK 2004 79.9 13.4 87.0 87.5 1 4

USA 5052 44.2 13.9 108.3 92.2 0 0

Sources: OECD 2010; Reibling and Wendt 2011; Rothgang et al. 2010; country chapters of the WHO Health inTransition Series (WHO n. d.).Notes: 1 = THE: total health expenditure; 2 = PHE: public health expenditure; 3 = OOP: out-of-pocketpayments; 4 = see construction of indices in Wendt 2009; 5 = coding for remuneration: fee-for-service = 0;capitation = 1; salary = 2; 6 = coding for index construction: free choice of GP = 0; patients have to register witha GP = 2; free choice of specialists = 0, skip & pay = 1, referral to specialist = 2.



1. using the raw values of the included indicators, expressed per 1,000people;

2. recalculating the value as a percentage of the average of 32 OECDcountries; and

Table 2

Healthcare system characteristics, 2007

Healthcare financing andprivate payment

Healthcare providerindices4

Regulation

THE1 percapita, US$

PHE2 in %of THE

PrivateOOP3 in

% of THE

In-patientindex

Out-patientindex

Remunerationof GPs5

Accessregulation

index6

Australia 3353 67.5 18.0 88.5 140.6 1 4

Austria 3792 76.4 15.4 104.2 133.4 0 1

Belgium 3452 73.5 21.3 81.9 176.5 0 0

Canada 3867 70.3 14.7 75.2 116.2 0 0

Czech Republic 1621 85.2 13.2 103.7 91.9 1 2

Denmark 3540 84.5 13.8 142.0 74.5 1 4

Estonia 1094 75.6 21.9 84.7 103.5 1 4

Finland 2900 74.5 19.0 123.2 133.0 2 4

France 3593 78.3 7.1 79.2 170.0 0 1

Germany 3619 76.7 13.3 118.6 89.6 0 1

Greece 2687 60.3 37.6 129.0 101.2 0 0

Hungary 1395 70.4 24.3 81.1 78.2 1 4

Iceland 3320 82.5 16.0 148.1 117.3 2 2

Ireland 3361 76.8 14.1 145.1 99.9 1 4

Israel 2152 56.0 27.2 95.6 69.9 2 0

Italy 2701 76.4 20.1 97.8 119.5 1 4

Japan 2729 81.9 14.6 96.1 102.4 0 0

Korea 1685 55.2 35.5 45.2 85.0 0 1

Luxembourg 4210 90.9 6.5 103.0 103.6 0 0

Netherlands 3844 75.4 5.5 130.4 45.4 1 4

New Zealand 2471 79.8 14.3 84.7 95.9 0 2

Norway 4791 84.1 15.1 153.8 84.1 0 4

Poland 1049 70.8 24.2 69.9 64.4 1 4

Portugal 2151 71.5 22.9 64.5 142.2 2 4

Slovak Republic 1569 66.8 26.2 86.8 72.8 1 4

Slovenia 2077 72.0 13.3 80.7 74.6 1 4

Spain 2658 71.8 21.0 90.2 105.7 2 4

Sweden 3349 81.7 15.8 125.7 91.5 2 3

Switzerland 4469 59.1 30.7 153.1 80.2 0 0

Turkey 767 67.8 21.8 26.4 54.1 2 0

UK 2990 82.0 11.7 90.2 92.3 1 4

USA 7285 45.5 12.3 101.5 90.5 0 0

Sources: OECD 2010; Reibling and Wendt 2011; Rothgang et al. 2010; country chapters of the WHO Health inTransition Series (WHO n. d.).Notes: 1 = THE: total health expenditure; 2 = PHE: public health expenditure; 3 = OOP: out-of-pocketpayments; 4 = see construction of indices in Wendt 2009; 5 = coding for remuneration: fee-for-service = 0;capitation = 1; salary = 2; 6 = coding for index construction: free choice of GP = 0; patients have to register witha GP = 2; free choice of specialists = 0, skip & pay = 1, referral to specialist = 2.



3. calculating the respective index as the average value of the two healthcareprovider indicators (specialists and nurses for in-patient healthcare; GPsand pharmacists for out-patient healthcare).

Lastly, two indicators are included to measure the degree of regulation inhealthcare systems (see tables 1 and 2). Healthcare systems have establisheddifferent concepts of paying medical doctors, and these concepts containincentives for both the level and quality of service provision. The remunerationof GPs is particularly important since GPs are often the primary caregiver andmay guide the patient through the healthcare system. Decisions, however,may depend on the mode of remuneration. Whereas a fee-for-servicepayment may set an incentive for doctors to see their patients as often aspossible, a reimbursement per capita or a fixed salary might create an incen-tive for reducing the workload (Rice and Smith 2002). For this analysis,remuneration has been coded as follows: fee-for-service = 0; capitation = 1;salary = 2, with ‘0’ representing the lowest level and ‘2’ the highest level ofregulation.

For analyzing patients’ access to healthcare provision, we calculated anaccess regulation index. This index captures whether patients have a free choiceof doctors or whether they have to sign onto a GP’s list for a longer period(‘gatekeeping’) (Reibling and Wendt 2011; Rico et al. 2003). Furthermore,patients have several options when visiting healthcare specialists. They may:

1. have a free choice of and direct access to specialists;2. need a referral by a GP to access specialist healthcare; or3. skip the referral system by accepting additional co-payment (skip&pay).

In order to construct healthcare system types, these indicators are com-bined into an access regulation index, which ranges from no regulation at theone end to strict ‘gatekeeping’ at the other. This strict ‘gatekeeping’ requirespatients to sign up on a GP’s list and necessitates a referral to specialisthealthcare. The index makes use of a scale which ranges from 0 to 4: freechoice of GPs = 0; signup on a GPs list = 2; free choice and direct access tospecialists = 0; skip&pay = 1; and referral by a GP to access a specialist = 2.To give GPs and specialists the same importance, we selected the same value(‘2’) in both areas for the strongest access regulation.

With few exceptions, all countries for which data are available in theOECD Health Data 2010 (OECD 2010) have been included. Chile andMexico have been excluded due to difficult access to information on regula-tion. The 32 countries included in the analysis represent 14 countries fromWestern and Northern Europe (Austria, Belgium, Denmark, Finland, France,Germany, Iceland, Ireland, Luxembourg, the Netherlands, Norway, Sweden,Switzerland, the UK), four countries from Southern Europe (Greece, Italy,Portugal, Spain), six countries from CEE (the Czech Republic, Estonia,Hungary, Poland, the Slovak Republic, Slovenia), two countries from NorthAmerica (Canada, the USA), two countries from Asia (Japan, Korea), twocountries from the Australia and Oceania region (Australia, New Zealand), aswell as both Israel – which belongs geographically to Asia but has a political



association agreement with the EU – and Turkey – which bridges Europe andAsia and is an associate member of the EU.

The data are summarized in tables 1 (2001) and 2 (2007). Quantitative dataon expenditure, financing, and service provision are taken from the OECDHealth Data 2010 (OECD 2010). Information on regulation is taken fromsecondary literature and in particular from the WHO Health in TransitionSeries (WHO n.d.).1

The data summarized in tables 1 and 2 demonstrate vast country differ-ences in all dimensions. In 2001, the level of THE ranged from US$424 perhead in Turkey to US$5,052 in the USA; the share of public financing rangedfrom 44.2 per cent of THE in the USA to 89.8 per cent in the Czech Republic;private OOP ranged from 5.7 per cent of THE in Luxembourg to 39.3 percent in the Republic of Korea; the in-patient index ranged from 20.0 inTurkey to 152.2 in Iceland; and the out-patient index ranged from 44.2 in theNetherlands to 185.6 in Belgium. GPs are paid on the basis of fee-for-servicein 12 countries, on a capitation basis in another 12 countries, and with a fixedsalary in eight countries. In 2001, ten countries had no access regulation, 12countries had implemented strong access regulation, and the remaining tencountries lay in-between.

By 2007, the situation had changed and the amount of resources invested inhealthcare had increased. THE now ranged from US$767 in Turkey toUS$7,285 in the USA; public financing as a percentage of THE ranged from45.5 per cent in the USA to 90.9 per cent in Luxembourg; private OOP as apercentage of THE ranged from 5.5 per cent in the Netherlands to 37.6 percent in Greece; the in-patient index ranged from 26.4 in Turkey to 153.8 inNorway; and the out-patient index ranged from 45.4 in the Netherlands to176.5 in Belgium. Remuneration of GPs hardly changed: 13 countries reliedon fee-for-service, 12 on capitation, and seven on a fixed salary. Accessregulation to medical care became somewhat stricter, with nine countriesbeing in the category with no access regulation, 15 countries in the categorywith the strongest access regulation, and the remaining eight between the twoextreme poles.

We performed cluster analyses for 2001 and 2007 in order to model health-care system types and classify countries (see Powell and Barrientos 2004;Jensen 2008; Wendt 2009; Reibling 2010). Cluster analysis aims to group casesby simultaneously taking a number of selected characteristics into account.We used agglomerative hierarchical clustering techniques, starting with acluster for each country and then gradually merging similar countries intoclusters until finally all countries form one cluster. Since we used a mixture ofbinary and continuous data, the clusters were constructed using the Gowerdissimilarity coefficient (Everitt et al. 2001). Once a country has been allocatedto a cluster, it remains within this initial cluster. Other procedures were used(single- and complete linkage, ward method and waverage linkage; see Everittet al. 2001) in order to check the stability of cluster solutions. All procedurescreated four identical clusters. The development of the level of homogeneity(as expressed in the distance coefficient or similarity coefficient) within countrygroupings suggested that four clusters best represent the structure of thedata. Furthermore, the robustness of this solution was checked with k-means



clustering (Powell and Barrientos 2004; Jensen 2008). With this method, thenumber of clusters is set by the researcher, and cases are thus selected andre-combined to form the optimal solution regarding homogeneity withinclusters in the a priori set number of clusters. Again, the four-cluster solutionreached by these algorithms shows the highest degree of homogeneity andproves stable when using k-means clustering.

Results: Classifying Healthcare Systems andAnalyzing Change

OECD countries are grouped in four types of healthcare systems in both 2001and 2007. However, some countries cannot be classified for either year (seefigures 1 and 2, as well as tables 3, 4 and 5).

In 2001, Cluster 1 represents the largest group of countries and includeshealthcare systems conventionally known as NHS systems (Australia,Denmark, Ireland, Italy, the UK), social health insurance systems from CEEcountries (the Czech Republic, Estonia, Hungary, Poland, the Slovak Repub-lic, Slovenia), and the Western European social health insurance system of theNetherlands. Cluster 2 covers NHS countries from Scandinavia and Southern

Figure 1

Dendrogram resulting from hierarchical cluster analysis (using average linkage), 20010

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Dendrogram resulting from hierarchical cluster analysis (using average linkage), 20070

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Table 3

Four-cluster solution, 2001

Type 1 Type 2 Type 3 Type 4 Not classified

AustraliaCzech RepublicDenmarkEstoniaHungaryIrelandItalyNetherlandsPolandSlovak RepublicSloveniaUK

FinlandIcelandPortugalSpainSweden

GreeceIsraelTurkey

AustriaBelgiumCanadaFranceGermanyJapanLuxembourgNew Zealand

KoreaNorwaySwitzerlandUSA



Europe (Finland, Iceland, Portugal, Spain, Sweden). Cluster 3 includes Greece,Israel and Turkey. Cluster 4 includes mainly Western European social healthinsurance countries (Austria, Belgium, France, Germany, Luxembourg) aswell as both Japan’s social health insurance system and the mainly tax-financed systems of Canada and New Zealand. It has not been possible toclassify Korea, Norway, Switzerland, or the USA.

We do not see major changes in the number of clusters or the classificationof countries between 2001 and 2007. The countries in Cluster 1, Cluster 2, andCluster 4 remain the same. Greece no longer groups together with Turkeyand Israel in 2007, leaving five countries which cannot be classified into any ofthe four healthcare clusters. Although the number of clusters remains thesame in both years, we detect some changes over time when analyzing themain characteristics of the four clusters.

In 2001, the identified healthcare system types can be described as follows(see table 5):

– Type 1 represents countries with a low level of THE per capita, a highshare of public financing, and below-average private OOP. The level ofin-patient healthcare is higher than the OECD mean, and the level ofout-patient healthcare is much lower than this measure. GPs are remu-nerated on a capitation basis in all countries in this cluster, and the levelof access regulation is very high (at the highest level in eight countries andat a somewhat lower level in four countries).

– Type 2 represents countries with a level of THE at the average of OECDcountries, a high share of public financing, above-average OOP, andabove-average levels of in-patient and out-patient healthcare. The controlof doctors’ remuneration is even stricter than in Type 1, with GPs being

Table 4

Four-cluster solution, 2007

Type 1 Type 2 Type 3 Type 4 Not classified

AustraliaCzech RepublicDenmarkEstoniaHungaryIrelandItalyNetherlandsPolandSlovak RepublicSloveniaUK

FinlandIcelandPortugalSpainSweden

IsraelTurkey

AustriaBelgiumCanadaFranceGermanyJapanLuxembourgNew Zealand

GreeceKoreaNorwaySwitzerlandUSA

No change No change (minus Greece) No change (plus Greece)



Tab

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paid on a salary basis. Access regulation is strict, but Iceland and Swedenare exceptions with lower levels of access regulation.

– Type 3 represents healthcare systems with both a very low level of THE(about 35 per cent of the OECD average) and a low share of publicfinancing. Both in-patient and out-patient healthcare are well below theaverage, and GPs are remunerated on a salary basis. However, patients’access to medical doctors is hardly controlled by instruments of regulation.

– Type 4 represents healthcare systems with the highest level of THE, thehighest share of public financing, and the lowest direct payments bypatients. In-patient healthcare is below the average OECD level, andout-patient healthcare is well above the level of other OECD healthcaresystems. GPs are remunerated on a fee-for-service basis, and most coun-tries offer free choice of medical doctors.

Taking these characteristics into account, Korea shows similarities toType 3 with its low level of THE, low public financing, very high privateco-payment, and low levels of in-patient and out-patient healthcare.However, instead of a fixed salary, Korea’s GPs are paid on a fee-for-servicebasis, and formal access regulation is somewhat higher than in Type 3.Norway shares important characteristics with Iceland and Sweden, bothgrouped in Type 2. However, due to Norway’s prosperous economic condi-tion, THE is much higher (ranked number 3 – behind the USA and Switzer-land), and doctors’ income is less regulated than in Type 3. The US andSwitzerland share with Type 4 countries the high level of THE, GPs’ fee-for-service payment, and doctors’ free choice. However, the share of publicfinancing is even lower than in Type 3, and private OOP is much higherin Switzerland. Interestingly, the US and Switzerland share a preferencefor in-patient care opposed to out-patient care, which is the case with Type1 countries.

Between 2001 and 2007, the clusters and country groupings proved to berobust. However, at the same time major changes took place. Overall inOECD countries, THE per capita increased by more than 40 per cent, theshare of public financing remained at a level of 73 per cent, and private OOPalso turned out to be quite stable (at average below 19 per cent). No changestook place with respect to the main form of GP remuneration. However,access to medical doctors became more regulated than it was at the beginningof the 2000s. When analyzing within-cluster changes, some important health-care policy developments can be detected. In Type 1, THE increased by almost50 per cent and, therefore, to a higher extent than the OECD average. Theshare of public financing, private OOP, and in-patient and out-patient health-care remained stable. Access regulation to medical care became even stricterthan before. Type 2 countries also increased THE to a greater extent than theOECD average. The share of public financing increased slightly while therelative amount of private co-payments decreased. In-patient and out-patienthealthcare remained at a high level, and there were also no changes indoctors’ remuneration (salary) or in the high level of access regulation. Com-paring Type 3’s average levels in 2001 and 2007 is not very meaningful sinceGreece no longer grouped with the other two countries in 2007. In Israel and



Turkey, however, public financing remained at a low level, private OOPremained very high, and in-patient and out-patient healthcare continued tobe much lower than the average in the OECD world. Salary payment was alsocombined with free formal access to medical care. Type 4, finally, controlledand stabilized THE somewhat more than Type 1 and Type 2 countries. Publicfinancing and private co-payments continued to be at the highest and lowestlevels, respectively, and service provision concentrated on out-patient health-care while the level of in-patient healthcare remained below the OECD mean.GPs continued to be mainly remunerated on a fee-for-service basis, and whilepatients had free choice of doctors in most of the Type 4 countries, accessregulation slightly increased in countries such as Germany and France(Reibling and Wendt 2011). Norway and Korea still showed similarities toType 2 and Type 3, respectively. Switzerland and the USA, finally, demon-strated parallels to Type 4, but both countries paid much more for healthcarewhile their share of public financing remained low. In contrast to Type 4, themain focus in the USA and in Switzerland was not on out-patient but onin-patient healthcare.

Our results do not support the hypothesis that European healthcaresystems have more in common than do healthcare systems of other worldregions or that they even form a European healthcare model (H1). Europeancountries are classified in different types of healthcare systems. Furthermore,non-European countries do not form their own type but join different clusters(or, as with Korea and the USA, cannot be classified at all). Australia isgrouped into Type 1; Canada, Japan, and New Zealand into Type 4; andTurkey and Israel (in 2001 together with Greece) form their own type.

The hypothesis that healthcare systems can still be best classified as NHS,social health insurance, and private health insurance has, to a certain extent,been confirmed (H2). Almost all Western social health insurance countries aregrouped into Type 4 (the Netherlands being an exception). The social healthinsurance scheme of Japan is also grouped into this type. Although Canadaand New Zealand are mainly tax financed and no social insurance companiesare involved in (self-)regulation, the two countries seem to share more simi-larities with Western social health insurance systems than with tax-financedNHS schemes. The largest group of countries (Type 1), however, represents acombination of NHS systems, CEE social insurance schemes, and the Dutchsocial health insurance scheme. The level of access regulation and the capacityto control costs, therefore, seem to reinforce more important similarities thanthe NHS or the social insurance model. Furthermore, other established NHSsystems (Finland, Iceland, Sweden) do not join the same group as the UK,Ireland, Italy and Denmark. Lastly, countries such as Switzerland and theUSA, whose private healthcare market is of great importance, do not seem tohave much in common and do not form their own private health insurancemodel.

We have found some evidence for the hypothesis of healthcare systemchange (H3). However, institutions like healthcare systems change slowly; theyare ‘elephants on the move’ (Hinrichs 2000). THE has increased to a highextent. However, Type 4 countries with an already high THE have been moresuccessful in controlling costs than have countries with lower expenditure



levels. One of the main focuses of health policy change has been on accessregulation, and we only see changes in the direction of higher access regula-tion and not in the direction of lower access regulation (possibly also tosupport cost control measures). The payment of medical doctors often repre-sents a mixture of different methods of remuneration, and this mixture haschanged in a number of countries. Germany, for instance, has recently intro-duced a capitation-based component of GPs’ income (Rothgang et al. 2010;Schmid et al. 2010). The main mode of remuneration, however, remainedunchanged in the period under study.

Discussion

In this article, we identify robust cluster solutions with four types of healthcaresystems in 2001 and 2007, and only one country changed clusters within thisperiod.

Our results do not confirm the concept of a European healthcare model(H1). On the contrary, European healthcare systems are classified into differ-ent clusters, and with only one exception, the clusters represent a mix ofEuropean and non-European countries. When comparing NHS-type coun-tries with social health insurance countries, these two organizational andfinancial patterns still seem to represent the core of two different types ofhealthcare systems (H2). Social insurance countries are mainly grouped intoType 4, whereas certain NHS type countries are grouped into Type 1.

However, our results support the assertion by Wendt et al. (2009) that socialhealth insurance systems in CEE countries do not share major characteristicsof Western social health insurance schemes. Instead, CEE healthcare systemsseem to be more similar to the NHS systems of the UK, Ireland, Italy andDenmark, possibly due to the weak position of corporate actors and a strongerrole of the state in CEE countries compared with Western social healthinsurance countries (Kaminska 2013; Wendt et al. 2013).

Healthcare system change (H3) has been identified mainly in the areas ofhealthcare expenditure and access regulation. Patterns of public financing,private co-payments, healthcare provision and doctors’ remuneration, in con-trast, have proven rather stable.

Comparing our findings with earlier typologies (OECD 1987; Moran 1999;Burau and Blank 2006; Wendt et al. 2009; Wendt 2009; Reibling 2010), wecan corroborate the existence of two types of healthcare system. Type 4confirms the ‘healthcare-provision-oriented type’ suggested by Wendt (2009).Due to the almost unregulated access to medical care, Type 4 also showssimilarities to the ‘financial incentives states’ proposed by Reibling (2010).Type 4 countries are characterized by the unquestioned importance of accessto medical care expressed in low access regulation and high levels of out-patient healthcare. All other features, such as low direct private payments andfee-for-service payment of medical doctors, seem to follow this overarchinghealth-policy goal.

Type 1 bears a striking resemblance to the ‘gatekeeping and low-supplytype’ suggested by Reibling (2010), and also to Wendt’s (2009) ‘universalcoverage-controlled access type’ and Moran’s (1999) ‘entrenched command



and control state’. Interestingly, CEE countries included in this analysis are allgrouped in this cluster. The label ‘gatekeeping and low-supply’ (Reibling2010), however, requires some modification since supply in the in-patientsector is higher than the OECD mean, and only out-patient healthcareprovision is much lower. ‘Command and control’ (Moran 1999) suits this typeof healthcare system due to the strict access regulation and control of doctors’income chances through capitation payment. The other two clusters identifiedin this article specify (and even disagree with) earlier typologies. Type 3 showssigns of the ‘insecure command and control state’ proposed by Moran (1999).However, today the characteristics of this type (particularly low administrativecapacity and low supply) do not seem to exist solely in the healthcare systemsof Southern Europe, but (with the exception of Greece in 2001) can also befound in Turkey and Israel. Type 2, lastly, represents a combination of strictaccess regulation and control of doctors’ income chances with high levels ofhealthcare provision in the in- and out-patient sectors. This is the case forFinland, Iceland and Sweden, but Spain and Portugal also increased theirlevels of in-patient healthcare. ‘Low budget – restricted access’ (Wendt 2009),therefore, does not describe the main characteristics of this type of healthcaresystem since regulation is not primarily used for controlling costs but rather forachieving high levels of healthcare provision. Future research relying on dataafter 2007 will show whether countries such as Spain and Portugal are able toguarantee high healthcare provision in times of economic crisis or whetherthey will fall back to a low expenditure and low provision type as representedby Israel, Turkey and (in 2001) Greece. The position of the USA is charac-terized by high costs, low public financing, average healthcare provision, andlow regulation of patients’ access to healthcare providers. The USA andSwitzerland, which revealed some signs of forming their own ‘private insur-ance’ type in 2001, are now more distinct from each other and from any otherof the four healthcare system types identified in this study.

Note1. Data on remuneration and access regulation are taken from secondary literature

(see tables 1 and 2), and have been cross-validated by contacting country experts inthis field.

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Changing Healthcare System Types