Key Findings from the 2020 FREOPP World Index of Healthcare Innovation

Single payer is not the only route to universal coverage

One of the central misconceptions in the U.S. debate over health reform revolves around the term “universal coverage.” On both the left and the right, “universal coverage” is understood to equate to a health care system in which a single, government-run insurer provides coverage to all residents: that is, a “single payer” system.

But as the FREOPP World Index of Healthcare Innovation illustrates, not all countries with universal coverage do so via government insurance. The three countries on top of the Index—Switzerland, Germany, and the Netherlands—all have achieved universal coverage using private insurance.

Indeed, while many believe that the U.S. has a market-based health care system, over 100 million U.S. residents are enrolled in single-payer, government-run health insurance, provided by the traditional Medicare program, Medicaid, the Children’s Health Insurance Program, or the Veterans Health Administration. While Switzerland, Germany, and the Netherlands subsidize coverage for their low-income residents, they do so through the private sector.

Indeed, in the World Index of Healthcare Innovation, the nine most highly-ranked countries overall reserve a significant role for private insurance:

• In the United States (#4), roughly 60 percent of residents have private coverage.
• Ireland (#5) has a mixture of state-sponsored and private coverage.
• Israel (#6) has a German-style system of universal private insurance.
• Singapore (#7) has a consumer-driven system of universal health savings accounts.
• The Czech Republic (#8) has a universal private insurance system.
• Belgium (#9), like the U.S., has a majority private insurance system.

Sitting at #10 is the highest-ranked single-payer country, Taiwan. Other single-payer countries follow, including Norway (#12), the United Kingdom (#13), Denmark (#14), Sweden (#15), Canada (#17), South Korea (#19), New Zealand (#20), Finland (#23), Spain (#24), Hungary (#25), Greece (#27), Italy (#29), and Poland (#30).

In American K-12 education, everyone is entitled to free primary and secondary public education, but many people opt to send their children to private school. A handful of countries use an analogous, two-tiered approach in health care, where a universal public system operates alongside an optional private system. The most notable examples are Australia (#11) and Hong Kong (#16), both of which depend on the private system to relieve overcrowding in public facilities.

Why do countries with universal private insurance do so well in the FREOPP survey? There are several reasons. Private insurance systems empower patient choice, and create room for insurers to organically evolve their benefit designs without having to wait for politicians or regulators to act. In addition, universal private systems tend to be more fiscally sustainable, because countries can means-test their subsidies and phase them out as one ascends the income scale.

(Notably, the United States, with its hybrid public-private system, does not meaningfully means-test its subsidies. Wealthy individuals over 65 get heavily subsidized coverage through Medicare, and high earners under 65 receive large subsidies through the tax code for employer-based coverage.)

North America & Oceania

United States #4 • Overall score: 54.96 (Excellent)
Australia #11 • Overall score: 48.38 (Good)
Canada #17 • Overall score: 47.05 (Good)
New Zealand #20 • Overall score: 45.97 (Good)

All four of the major countries of the English-speaking New World rank Good or better in the Index. The United States stands atop the group due to its #1 rankings for both Choice and for Science & Technology. On the Choice dimension, the U.S. is the runaway winner in access to new treatments (#1) and solid on freedom to choose health care services (#11), despite ranking last (#31) in affordability of health insurance. The high cost of U.S. health care also shows up in its second-to last ranking on the dimension of Fiscal Sustainability (#30).

Australia ranks higher than the U.S. on freedom to choose health care services (#5), because its dual-track public and private systems enable a robust safety net while allowing superior flexibility on the private side, relative to the U.S., but is poorer on access to new treatments (#10) and middling on affordability (#19). Australia stands out for its high scores on the Quality dimension (#2), with strong performance on patient-centered care (#4), measures of preventable disease (#7), and infrastructure (#7).

Canada, a single-payer country, ranks in the middle of the overall Index due to its mediocre performance on the dimensions of Choice (#18), Science & Technology (#17), and Fiscal Sustainability (#15). The relative bright spot for Canada is on the dimension of Quality (#11). On all dimensions, Canada benefits from having its population centers close to the U.S. border, for relatively easy access to high-end care and the latest technology when Canadians need it.

New Zealand’s health care system is a fully socialized one like that of the United Kingdom, in which government runs both the insurance system and the hospital system. New Zealand ranks higher than Canada on Quality (#6), with notable strength in infrastructure (#3), but is closer to the bottom tier in Choice (#23), Science & Technology (#21), and Fiscal Sustainability (#20).

Europe

Switzerland #1 • Overall score: 59.56 (Excellent)
Germany #2 • Overall score: 59.28 (Excellent)
Netherlands #3• Overall score: 59.14 (Excellent)
Ireland #5 • Overall score: 54.48 (Excellent)
Czech Republic #6 • Overall score: 49.80 (Good)
Belgium #9 • Overall score: 49.65 (Good)
Norway #12 • Overall score: 48.26 (Good)
United Kingdom #13 • Overall score: 47.78 (Good)
Denmark #14 • Overall score: 47.59 (Good)
Sweden #15 • Overall score: 47.40 (Good)
Austria #18 • Overall score: 46.59 (Good)
Portugal #21 • Overall score: 44.82 (Moderate)
Finland #23 • Overall score: 43.65 (Moderate)
Spain #24 • Overall score: 43.31 (Moderate)
Hungary #25 • Overall score: 41.47 (Moderate)
Slovakia #26 • Overall score: 41.36 (Moderate)
Greece #27 • Overall score: 40.12 (Moderate)
France #28 • Overall score: 40.08 (Moderate)
Italy #29 • Overall score: 37.29 (Poor)
Poland #30 • Overall score: 34.44 (Poor)

Every high-income country in Europe has achieved universal health insurance, but as noted above, they have done so in markedly different ways. Switzerland (#1), Germany (#2), the Netherlands (#3), the Czech Republic (#6), and Slovakia (#26) have all done so through universal private insurance.

Denmark (#14), Sweden (#15), Hungary (#25), Greece (#27), Italy (#29), and Poland (#30) have single-payer systems but private hospitals and doctors, while Norway (#12), the United Kingdom (#13), Finland (#23), and Spain (#24) have fully government-run insurance and hospital systems.

Ireland (#5), Belgium (#9), Austria (#18), Portugal (#21), and France (#28) have hybrid public-private systems, roughly comparable to the United States.

On Quality, the best performers in Europe are Switzerland (#1), Portugal (#3), Ireland (#4), and the Netherlands (#5). Switzerland is the top-ranked country for infrastructure, third for patient-centered care, and fifth for measures of preventable disease. Portugal’s Quality ranking was driven by its second-ranked performance on patient-centered care, where the Netherlands took first place, while Ireland was #1 for measures of preventable disease. Globally, the four poorest performers on Quality were all eastern European: Poland (#31), Hungary (#30), Slovakia (#29), and Greece (#28).

On Choice, the top three countries in Europe are the Netherlands (#2), Germany (#3), and Switzerland (#5). The Netherlands was strong across the board, especially in access to new treatments, where it was tied with Germany for second place globally (#2). Switzerland took first place for freedom to choose health care services (#1), due to its robust, universal individual market for health insurance, and its breadth of provider options for patients. The three poorest performers on Choice both globally and in Europe were Finland (#31), Italy (#30), and Norway (#29).

On Science & Technology, the leading European countries are Denmark (#2), the Netherlands (#3), Sweden (#4), and the United Kingdom (#5). Denmark, Sweden, and the Netherlands are all leaders in health digitization (#1), while the United Kingdom is the top European performer in scientific discoveries (#2). Denmark, with its robust biopharmaceutical and medical device sectors, led by companies like insulin titan Novo Nordisk and hearing aids maker Demant, performed strongly in medical advances (#3). The poorest performers in Europe in the Science & Technology dimension are Poland (#31), Portugal (#25), the Czech Republic (#24), and Slovakia (#23).

On Fiscal Sustainability, four European countries received an Excellent rating: Germany (#1), the Czech Republic (#2), Switzerland (#5), and the Netherlands (#6). Germany has a balanced budget amendment and a strong national culture of fiscal responsibility, which is reflected in the Bundestag’s effective management of public health care spending (#1). The Czechs also performed well on that measure (#2). Switzerland excelled in terms of its overall debt-to-GDP ratio (#2), the best in Europe, while the Netherlands did well on growth in public health spending (#9). Poor fiscal performers in Europe include France (#29), Italy (#28), Sweden (#27), Greece (#26), the United Kingdom (#25), Portugal (#24), Austria (#23), Denmark (#22), and Finland (#21).

Asia

Israel #6 • Overall score: 51.14 (Good)
Singapore #7 • Overall score: 50.37 (Good)
Taiwan #10 • Overall score: 49.19 (Good)
Hong Kong #16 • Overall score: 47.35 (Good)
South Korea #19 • Overall score: 46.47 (Good)
United Arab Emirates #22 • Overall score: 44.68 (Moderate)
Japan #31 • Overall score: 31.51 (Poor)

Asia, the largest and most diverse continent, is also diverse in terms of its countries’ approaches to health care policy.

Israel (#6), the top-performing country in Asia, performs well on dimensions of Quality (#8) and Choice (#10), with more moderate performance in Science & Technology (#15) and Fiscal Sustainability (#17). While Israel ranked fifth globally in scientific discoveries (#5), it ranked poorly in medical advances (#26) due to restrictive adoption of new treatments.

Singapore (#7) stands as a global health policy innovator, with its universal system of health savings accounts and price transparency. Singapore performs strongest on Choice (#4) and Science & Technology (#6), but below average on Quality (#21), largely because Singapore is unwilling to share publicly much of its data. Singapore is a remarkably strong performer in terms of achieving universal coverage with low public health care spending (#4), but growth in public health care spending is a significant problem (#29).

Taiwan (#10) is the best-performing single-payer country in the world, with strong scores in Choice (#5) and Fiscal Sustainability (#8). Taiwan’s universal system of electronic health records gives it world-class status in health digitization (#1), a system that is in large part responsible for its effective response to the COVID-19 pandemic (#2).

Hong Kong’s two-tiered system (#16), similar to Australia’s, is struggling with overwhelmed public hospitals, high costs, and poor access to innovative treatments, leading to below-median scores on Choice (#21), Science & Technology (#22), and Quality (#27). But Hong Kong excels in the dimension of Fiscal Responsibility (#3).

South Korea (#19) has not translated its strengths in consumer technology into health care technology, ranking second-to-last in the Science & Technology dimension (#30). But South Korea does well in Quality (#12), Fiscal Responsibility (#10), and Choice (#8).

The United Arab Emirates (#22) are a confederation of seven emirates, led by Abu Dhabi and Dubai, each with its own health care system. U.A.E. has many world-class facilities, and high-quality health care for wealthy citizens and white-collar expatriates. Overall, however, the Emirates rank below-average on Quality (#24), Choice (#28), and Science & Technology (#29), with a strong performance on Fiscal Sustainability (#4).

Japan, one of the wealthiest countries in the world in terms of total economic output, ranks last globally in the World Index of Healthcare Innovation (#31). The Japanese health care system delivers good Quality (#9) and mid-range Choice (#16). But despite generating a plethora of Nobel laureates in medicine or chemistry (#3), it ranks poorly overall in Science & Technology (#28), due to poor performance in health digitization (#30). Most importantly, Japan ranked last in every element of Fiscal Sustainability (#31).