The Advantage of Single-Payer National Insurance

Abstract

The world leaders have committed to achieve universal health coverage as set on the goal of 3.8 of the SDGs by 2030. Only public financing could achieve UHC for everyone in a country. There are three sources of public financing, i.e., tax-funded or national health service system, social health insurance applied national or national health insurance scheme, and a combination of the two. Low- and middle-income countries are often easier to start with social health insurance schemes with multiple and single schemes. The option of a single-payer National Health Insurance scheme has a lot of advantages in terms of effectiveness, efficiencies, and equitable health financing for all people in a country. This chapter explains the rationales of health financing and options of public financing with various levels of the impacts on the people in particular and the country. A single-payer system facilitates easy understanding and ensures equitable access with the same benefits for everybody. A single-payer system also potentially has monopsony powers to ensure cost-effective health care. Expenditures data demonstrate relatively lower among single-payer systems with the relatively the similar health outcomes.

1. Introduction

Leaders of the world have committed to achieve universal health coverage (UHC) goal number 3.8 of the sustained development goals (SDGs) by 2030. This means that people of any country should have access to at least essential health services regardless of their income or social groups within a country. Two indicators are used in monitoring the UHC covering indicator 3.81 of service coverage and indicator 3.8.2 of catastrophic health spending [1, 2]. Service coverage ensures that everyone should have essential health services when she/he needs them and catastrophic health spending ensures that no one goes bankrupt when paying for health care to meet his/her need. Recent monitoring by three global organizations, the World Health Organization, the World Bank, and the OECD have demonstrated the progress of the incidence of catastrophic health spending with two thresholds percentage of 10% and 25% of the total household incomes or expenditures [3]. Catastrophic health spending (CHS) is an important measure of out-of-pocket (OOP) expenditure by household members that should not exceed 10% of income [4]. Above that, the household may become impoverished. The indicator 3.8.2 is essential to protect people from being poor due to the consumption of health care when ill health or accident occurs.

Market mechanism in health care means that everyone must purchase health care out of his/her pocket and the health care providers set prices above the production costs to get profit and develop the business. Because of the uncertain needs for health care, ability to pay at the prices set by the sellers (health care providers) market mechanism tend to impoverish people. The WHO reported that 996 million people in the world (13.2%) spend more than 10% of their budget on OOP health care consumption [5]. Health economic literatures have long acknowledged that health care is not normal goods because of its unique characteristics. For the normal goods or services, market mechanism leads a fair competition and to adequate supplies the people could purchase, lower prices and higher quality of products. One of the requirements of perfectly competitive market is the information symmetry between the purchasers and the sellers.

There are three main distinct characteristics of health care needs that make fully competitive market mechanism of health care does not function well [6]. The first characteristic is uncertainty of health care needs in terms of time in the future, location, amount of money, and amount of health care consumed. Health care consumption may be affordable if the ill-health is mild, but it can be devastating to an individual’s wealth or income if someone is suffering from severe illness such as heart attack, stroke, or cancer. In an insurance theory, an uncertain future event with large financial risks can be transferred to an insurer as in insurance mechanism by paying premium or contribution [7, 8]. The amount of premium is an average expected amount of money, which relatively small amount and affordable, to cover financial risks of an insured population. For example, in a simplified commercial health insurance scheme, an insurer may sell single benefit of renal transplant with the average cost of $100,000 and the probability of occurrence of renal failure that required renal transplant in that community is one per 10,000 population. The pure or net premium (no loading factor to cover administrative, marketing, and profits) will be $10 ($100,000 multiple with 1/10,000 probability). By paying $10 premium, a person will be insured to afford a renal transplant, once s/he suffers from a renal failure.

There are two main types of health insurance based on the mandatory or voluntary transfer of risks. The mandatory insurance scheme is called social health insurance, which is normally used in national health insurance (NHI), while the voluntary joining health insurance is called commercial health insurance. Another way of managing risk of uncertainty in health care is to cover all health care needs by the state budget like in the National Health Service (NHS) scheme in the United Kingdom [9].

Health insurance can be differentiated according to the financing function of the health system. There are systems mainly financed by taxes while others are mainly financed by social health insurance (SHI). Both income tax and SHI contribution are compulsory in the world. Both SHI and income tax are taken proportionally from income or salaries. To top up those mandatory contributions, in many countries, there are markets for private (voluntary) health insurance, except in few countries such as the United States where private health insurance is the main source of health care financing for working population. However, for the elderly population with high health risks, the US health care system uses mandatory of a kind of SHI (the Medicare Program) [9, 10].

The second distinct characteristic of health care is the very high asymmetric information. Information symmetry is the key to a fully competitive market mechanism that leads to lower prices and higher quality of products or services. The symmetry of information facilitates a buyer to choose a product or service to be purchased. When a buyer has a lack of information, she/he could ask the details of the product, the benefit of the product, and compare prices with other products or substitutions or bargain the seller for the price. The buyer of a normal product makes his/her decision to purchase or consume fully or partially according to his/her ability to pay or his/her “perceived needs” with no harm. In health care, this independent and fully informed choice does not happen. In a market mechanism, an ordinary patient is unable to get full information about his/her needs, choices of appropriate health care, the fair price, the benefit, and the adverse effect of a health care she/he will consume. But the doctor (independent or representing a health care provider) knows much more, and at the same time, the doctor is advocating the patient what to consume. This very high asymmetric information between the patient (the buyer) and the doctor (the seller) poses a threat of moral hazard, abuse, and fraudulence act due to financial/profitable interests of the seller. This information asymmetry is the main cause of market failure [10].

What about health insurance market? It has also high information asymmetry. At the individual level, an individual has very little knowledge about the probability of health care needs covered by a health insurance policy, its appropriate premium, and how good is the insurance policy paying health care providers. The main drawback of private or commercial health insurance schemes is how an individual (called a prospect) understands his or her health risks and how much of these risks can be transferred, method of risk calculation to set premium, and how the insurer underwrites the health risks. Therefore, private health insurance is normally sold as group insurance, either as the main health care protection or as a top-up coverage in the NHI or NHS scheme. In commercial health insurance, the purchasing mechanism for individuals follows the “take it or leave it” business model. Both commercial health insurance and health care do not meet the requirement of independent decision to purchase health care or health insurance. Since the nature of transaction of commercial insurance is voluntary and insurers are companies seeking profits, commercial health insurance schemes are always multipayers. Every business entity has a freedom to enter the health insurance market. A health system that depends heavily on commercial health insurance will not achieve effective (cover all people or UHC) and efficient health system (a relative low portion of GDP is spent for health). Designing, marketing, and managing commercial health insurance require multiple professional workers, and the economy of scale will not achieve efficient system. Competition in health insurance market pushes insurers to create unique and competitive plans (health insurance products) leading to only portions of people or groups of people that may purchase. This condition absolutely will not achieve the law of a large number of the main predictable events of insurance principle.

The third distinct characteristic of health care is the externalities of health care consumption or products. An externality occurs when a person consumes a good or a service and there are effects created on other people with are not expressed in the price. Positive externality occurs, for instance, if a tuberculosis patient consumes medication, people around him/her will benefit for not being contacted by TB. On the other hand, a negative externality may occur if someone regularly smokes cigarettes that risk his/her heart or lungs or cause cancer, and other people around him/her who inhale the smoke will be subject to a higher risk of tobacco-related diseases (TRDs). This externality poses unfairness of purchasing health care. It is not fair to pay for treatment of TRDs when someone has never smoked. Therefore, externality becomes the basis for public subsidy or public finance. Since it is difficult to identify who was causing negative impact of smoking, the application of sin tax [11] for health care is commonly practiced in many countries. Sin tax is a term used in some countries to signify that consumption of certain products such as tobacco or alcohol negatively affects health of the people. To reduce such negative externality of consumption of tobacco or alcohol, a financial disincentive called tax or excise is charged to the consumers. The term “earmarked tax” is used if a portion or whole of the sum of money collected from sin tax is dedicated by law to finance health services.

The combination of the three distinct characteristics of health care generates other unique health care needs called “patient ignorance, patient short-sighted, patient inability to pay, unfair health financing, and provider moral hazard or fraud.” In addition, because unmet health care needs could result in severe disability or death, health care consumption is a human right. Therefore, combination of those unique characteristics of health care needs requires collective efforts and public funding. The goal of 3.8 of SDGs, UHC is the global commitment to meet health care needs for everyone. One of the key element of UHC is public financing using insurance mechanisms or tax-funded system.

2. Health insurance contract

Generally, many people think health insurance is commercial insurance, which is a rational and good instrument to overcome uncertainty of health care needs, especially in high-cost health care. Not many people understand social health insurance (SHI) schemes as a solution to financing health care for everyone. Some Muslim leaders and scholars (those who are preaching Islamic religion) mistakenly consider health insurance as not meeting Sharia requirements. Some of them understand health insurance as a trade of intangible products which violates the principle of Sharia, the Islamic law. In a narrow definition, a health insurance policy is a commercial transaction between one party to an institution called insurer of an intangible product or service which consider gharar in Islamic thought. However, current Muslim scholars agree to modify the meeting of mind of insurance contract as hibah, or donation for general benefit of all members of insurance. This school of thought then delivers an Islamic version of insurance mechanism called takaful, based on mutual help principle. In western countries, this mutual help is called a risk-sharing arrangement.

In wider definition of minimizing uncertainty, a publicly funded health care system such as the NHS can be considered providing health insurance for all people. When a country provides UHC using funding from general tax revenue, there is no uncertainty of health care needs at an individual level in the country applying NHS model. However, not all countries are able to establish and finance an NHS model. Many low and middle-income countries are looking for financing schemes that gradually meet the health care needs of all people in the country. One of the essential elements of the objectives of UHC is equity health financing, which means that financing for health care by individual is based on the ability of an individual to contribute (to pay), but the health care services consumed by the individual are based on his/her health care needs. This equitable financing can only be achieved by publicly funded system, based on tax-funded or social health insurance (SHI) mechanism. Once there is a pool-fund, the purchasing of health care for everyone should be managed effectively and efficiently.

Some country leaders may be trapped to rely on commercial health insurance (CHI) instead of SHI. Basically, both CHI and SHI share the characteristics of insurance contracts. The key difference between CHI and SHI is nature of entering into insurance contract. The CHI is voluntary transaction while the SHI is mandatory for individuals to enter into an insurance contract. Another key difference between CHI and SHI is the premium for CHI is based on the levels of health risks while the premium (often called “contribution”) for SHI is based on a proportion of individual income or salary. The SHI can be implemented using multiple or single organizations. If the SHI scheme is administered by a single organization, a government agency, or a quasi-government organization, it is called a National Health Insurance (NHI) such as implemented in South Korea, Taiwan, the Philippines, and Indonesia. In many other countries, the SHI schemes are administered by various organizations such as implemented in Germany, French, and Japan.

An insurance contract stipulates right and obligation that bind each party. There are four distinct insurance contracts applicable to CHI and SHI: conditional, unilateral, aleatory, and adhesion [12, 13]. Both CHI and SHI schemes share at least three types of contracts. The main difference between CHI and SHI contract is the CHI use contract called insurance policy while the SHI utilizes regulation to mandate every individual in the country to join SHI. Both insurance policy (contract) and regulation of SHI provide rights and obligations of individuals and the insurers, insurance agencies, or administrators.

Due to the uncertain nature of health care needs, the obligation of an insurer (both CHI and SHI) is conditional upon the occurrence of an illness or accident generating health care needs. This conditional contract needs deep understanding of all people to implement an NHI scheme to comply with regular contributions, even if they are healthy and have never utilized the benefit for years. In Indonesia, at the beginning of the implementation of SHI, many people questioned, where their money goes (of contribution paid) for many years, despite they have never used any benefits. Many Islamic scholars question this conditional nature as not meeting the Islamic Sharia law creating challenges in countries with significant number of Muslim populations.

The 2nd characteristic of the insurance contract is unilateral. This unilateral contract is to compensate conditional contract that in favor of the insurer. Only insurer can be contested by policyholder if the insurer fails to meet its obligation. Policyholders could not be contested to the court for failure to pay contribution. It simply lapses the contract, and no benefit could be utilized by the policyholder.

The 3rd characteristic of insurance contract is aleatory meaning the asymmetry in rights and obligations of parties (insured and insurer). This aleatory contract legally allows unequal rights and obligations of the amount of money of insured and insurer. In CHI scheme, a policyholder may pay premium for only months (say $100 per month) then she/he suffers from heart attack and $100,000 for a bypass cardiac surgery, there is no obligation for the policyholder to make up the $99,800 difference. The insurer’s right is only a two-month premium of $200 (which is the obligation of the insured). The insured right is $100,000 worth of surgical procedures, although the insured only pay $200. On the other hand, if the insured continuously receive premiums for 20 consecutive years of $100 per month (so total is 12 months x $ 100 x 20 years = $ 24,000) but she/he has never suffered from any illness—never claim (the trigger for the obligation of the insurer), the insurer has no obligation to return the $ 24,000 money the insured had paid the premium. A similar aleatory characteristic also applies in SHI scheme.

It is this contract that differs from the term of prepayment that is often used in some health care financing papers. The term “prepaid health care” was first used by Paul Ellwood in the USA for the Health Maintenance Organization (HMO) contract in 1973 just to get acceptance by the American Medical Association that opposed health insurance scheme at that time [14]. The term “prepayment” may be misleading to describe health care financing because of this aleatory contract. The term prepaid or prepayment as often used in mobile phone business is appropriate because the payer can consume phone service up to the amount paid in advance.

The last characteristic of insurance contract is called adhesion, in which one party is much weaker than the other. It is a type of information asymmetry where the prospect (a person who will purchase insurance) has no way to negotiate the price or the benefit. It is simply a “take it or leave it” transaction. Because of this contract nature, insurance businesses are heavily regulated to protect policyholders from unfair business practices by insurers. In SHI scheme detailed regulation is needed and oversight commission is in place to ensure that policyholders or members of SHI receive fair treatment.

3. Financing for UHC

Financing UHC using traditional health insurance concept of CHI poses significant problems. The double information asymmetry of health care need and health insurance contract create market failure to ensure everyone is covered to meet his/her health care needs. The unique characteristics of health care needs and the long-term externality of having healthy lives as the main requirement for individual economic productivity push all governments to ensure health services are available for everyone regardless of individual income or social status. The COVID-19 Pandemic has demonstrated how strong the health sector affected the World economy which declined by 3.4 percent in 2020 [15]. The COVID-19 pandemic emphasizes the importance of UHC as a set of the 3.8 Goal of SDGs. The UHC can only be achieved if there is sufficient public health financing.

There are three possible public financing for health that allow UHC with different efficiency levels. The first automatic covering all people is the tax funded or NHS model; the second one is the mature SHI model; and the third one is a combination of the two. Often SHI model is complemented with tax funded subsidies for the low-income people. The administration of funds of the SHI model varies widely across the countries with dominant SHI model. Currently, no country with CHI model could fully achieve UHC. There are differences in funding UHC based on health financing mechanisms as shown in the following Table 1.

Element/Issue	CHI	SHI–NHI	NHS
Participation	Voluntary	Mandatory	Automatic
Ability to cover all population (UHC)	Almost impossible	Highly likely	Always
Inclusiveness	Almost impossible	Highly likely	Always
Benefit package	Vary widely, designed by the insurer	Relatively uniform for all people	Uniform for all
Nature of benefit package	Based on demand, Consideration of profit, mostly not comprehensive	Based on health care needs, mostly comprehensive	Subject to amount of state funds and health needs
Risk transfer /funding method	Risk-based premium	Income-based contribution, normal percentage of income	Income tax and other state taxes
Insurer	Private for-profit or not-for-profit	Private organization not for profit or government/public entity	The government
Number of payers	Always multiple	Single or multiple	Always single there are regional payers in some cases
Legal basis	Various regulations on various aspects	Mostly by single regulation for all people or group of people	Constitution or state budget regulation
Administrative costs	High	Very low	Mix with state expenses
Adverse selection	Inherent, likely	Avoided	Avoided

Table 1.

Comparison between CHI, SHI, and NHS model.

The main problem of CHI is the voluntary nature of participation. People are shortsighted and health risks cannot be predicted by individual. Therefore, there is unlikely that an individual will purchase CHI or private health insurance coverage. But when someone suffers from a chronic condition, then that person will demand CHI creating adverse or anti selection. The insurer that aims for profit making certainly will undertake rigorous underwriting to ensure no adverse selection. The insurer may inherently design a benefit package, terms, and conditions for prospects to minimize adverse selection. Certainly, people suffering from a chronic condition elderly and those who have congenital health problems will not be able to purchase health insurance. In addition, because the premiums (prices) are set based on health risks of individuals or small groups, higher risks of individuals or small groups must pay higher premiums. This certainly excludes low-income people from having health insurance coverage. Commercial health insurance charge loading fees is significantly high, depending on the size of the group insured that can vary up to 34% of the total premiums paid [16]. Therefore, CHI model fails to achieve UHC.

Because of the market failure of CHI and health care market, the option to cover everyone is by public financing. Public financing is based on mandatory contribution and based on the proportion of income or wealth. There are only two funding mechanisms of publicly funded health care, which are the SHI model and the NHS model.

The SHI model could apply for certain group of employed population. For example, before the implementation of NHI in Indonesia, the civil servants were covered by Askes—the SHI scheme for government employees and the private employees were covered by another SHI scheme called Jamsostek. Another example is Thailand, private employees are covered under Social Security Scheme administered by the Ministry of Labor, and the informal sector is covered by a tax fund administered by the National Health Security Office Taiwan [17]. The Philippines, South Korea, and Indonesia used to have several SHI schemes before they were integrated into a single national SHI called NHI. The level of contribution for the NHI model is normally uniform, a portion of salary for all employees. In Indonesia, current contribution is 5% of monthly income, shared by employees (1%) and employers 4%. In Germany, with multiple sickness funds, current contribution levels at around 14.6%, shared 50: 50 by employers and employees [18].

The United Kingdom initiated the NHI model in 1911 and then started the NHS in 1948 administered by the state. The NHS model is normally funded by progressive income taxes, which often exceed 50% of monthly income for the high tier of income. Low and middle-income countries often have problems in collecting and enforcing high progressive income tax. The maximum level of income taxes in European Countries that implement NHS varies from 43% in Italy to 56.95% in Finland [19]. Certainly, many low- and middle-income countries (LMICs) could afford this model. But, still some LMICs such as Sri Lanka apply the NHS model even though the income tax level has been relatively low at 18%.

As an option to cover health care needs, many LMICs could start SHI model based on employment. The SHI was first introduced in Germany, called statutory health insurance, by Otto von Bismarck the chancellor of liberal party in 1883 [20]. However, at that time, Von Bismarck mandated contributions to pay income loss of a laborer who was suffering from serious sickness and unable to work for income. At that time most labor forces were based on daily paid work. Now, the SHI covers health care costs, which vary from limited hospitalization to comprehensive medical and family benefit. In Germany, since the SHI concept was introduced, there are multiple funds called sickness funds but in decreasing number [21]. In many countries, most SHI started to mandate large-size employers such as civil servants and private employers with more than 100 employees to contribute a portion of incomes to cover defined health care benefits. South Korea [22], Indonesia [7], Taiwan [23], and the Philippines [24], for example, started to mandate public and formal sector employees, years before mandating the informal sector to contribute to the single-payer NHI.

4. Single-payer National Health Insurance Scheme

In most LMICs where tax-funded system is not the option taken by the political leadership, SHI schemes can be a good choice to ensure equitable access to essential health care in LMICs. The SHI model can be gradually implemented for employed population for partial health benefits that the population can afford. Indonesia started SHI for civil servants in 1968 and then for private employees in 1993 and finally for everybody in 2014 [7]. China also introduced this social insurance model starting for employed groups. The challenges in implementing SHI for whole population are collecting contributions for the informal sector. The informal sector or non-waged earners do not have a regular monthly income. In LMICs, the proportion of non-waged earners is generally very high, more than 50%. Therefore, scaling up to cover the whole population to achieve UHC in LIMCs may take decades. One option is to subsidize the informal sector from the government budget, integrated to the NHI. When a country implementing SHI became a high-income country, normally the SHI model is continued to be implemented as happened in Germany, Korea, Japan, the Philippines, and Taiwan.

The choice of administrators of the SHI can be implemented by special SHI fund for special groups such as civil servants, private employees, teachers, farmers, etc. Multiple payer systems create possibility that some groups will have more coverage with higher contribution levels than others. Different SHI and different groups of population create oligo- or multi-payer systems that may provide problems in negotiating prices of health care from various providers. The Japan employer-based health insurance system creates a virtual single payer by forcing all SHI plans to purchase health care organized by Central Administrative Offices. Regardless of the plans, all Japan’s residents could go to the same health care providers. Implementing different SHI for different groups may create unequal benefits across different population groups and may not be acceptable in some countries. On the other hand, some small differences of contribution or preventive services like implemented in Japan are socially accepted [25]. Germany once had more than 5000 sickness funds; they now have less than 100 sickness funds. To ensure equity across different employment groups, Germany requires equalizing funds across different sickness funds [26]. South Korea once followed the German and Japan SHI model with multiple plans then in early 2000 integrated all SHI schemes into a single NHI model [14].

The politics, cultural values, social norms, and the national constitutions of countries play crucial roles in determining single- or multi-payer system of NHI. Indonesia also followed the Korean model, integrating SHI and social assistance schemes into a single NHI. The fight to establish a single NHI in Indonesia involved union strikes, extensive academic debates, and legal battle in the parliament and in the constitutional court [7]. Despite of the very high health expenditures, the USA has not achieved UHC. Only the elderly population is covered by the public fund of SHI model, called Medicare. The poor are covered by sharing of federal and state funds. The Obama Care is basically providing tax incentive for the informal sector to purchase CHI. Turkey integrates all SHI plans into a single NHI in 2008 by reforming the social security system [27].

5. Advantages of a single-payer NHI

In the last 30 years, four Asian countries started innovative health reform by establishment of a single-payer NHI. Taiwan started to implement the NHI in 1995, managed by the Bureau of the National Health Insurance of the Ministry of Health, providing comprehensive health care benefits [28]. Then, the Philippines followed in 1997 by establishing PhilHealth, the NHI Corporation attached to the Ministry of Health providing inpatient care only [29]. South Korea integrated more than 300 SHI plans into the NHI Service in 2000 providing comprehensive benefits with relatively high cost-sharing [30]. Indonesia followed enacting the national social security reform including the NHI in 2004 with comprehensive health care benefits, including preventive care. However, the political battles delayed the implementation of the NHI scheme (called JKN, Jaminan Kesehatan Nasional) in 2014 [7]. The single-payer NHI has several advantages as follows:

1. Meeting the Constitution mandate, which normally provides the right to health care for everyone. When the Constitution requires that every citizen has the right to health care, a single NHI could purchase health care from public and private health care providers, providing equitable access to meeting health care needs. The NHS model often limits access to public health care providers, while the single-payer NHI ensures the same access to everyone using any health care resources in the country.

2. The single-payer NHI has the biggest (monopsony) power to purchase health care from any health care providers licensed in the country [7, 31]. With this monopsony power, the NHI has the power to apply strategic health purchasing or prospective payments to optimize effectiveness and efficiency of the NHI fund. The NHI can dictate prices of health care, drugs, and other medical supplies from public and private health care providers. Hence, a single-payer NHI has strong power to make health system efficient.

3. A single NHI provides uniform procedures and benefits for everybody in the countries ensuring optimum social justice [7, 31]. These uniform procedures create less laborious efforts to educate the public. People who used the benefits can be good agents to make other people know how to utilize the benefits. This scheme provides efficient administration system because everybody and every health care provider will use a standardized system. Claim procedures can be organized using a single standard mechanism creating a very efficient system.

4. A single NHI provides economic incentives for health care providers to expand the care in areas where previously there is a shortage of private healthcare providers if the prices set by the NHI meet the production costs. So, the government or regional governments do not need to worry about establishing new hospitals.

5. All health care uses and the claim payments can be recorded in a single database and trend of health care utilization effects of medical procedures or drugs, side effects, and pattern of health-seeking behavior can be observed. This huge database could facilitate a ton of clinical and implementation research.

6. The prices and procedures of procurements of medical supplies and drugs can be standardized. Indonesia develops e-Catalog system where pharmaceutical companies and medical suppliers openly bid with lower prices and high volume across the country. Industries will be willing to lower the prices of their product for high volume. In addition, open and transparent competition will further induce efficiency of the industries. Pharmaceutical industries selling patent drugs can negotiate and deal with innovative financing to supply a high volume of their products.

7. The administrative costs of running a single NHI become very small compared to high revenue and multi-payer systems. Certainly, the NHI has very low administrative expenses compared to CHI, which can absorb up to 25% of the total premium income. The administrative costs of NHI in Asia ranged from 1.8% in Taiwan to about 4% in Indonesia. Most Medicare programs in the US, Canada, and Australia also consume less than 4% of revenue. The average administrative expenses of the German’s sickness funds were also around 4% of the total revenues.

8. When the NHI already reaches its maturity, providing quality health care to all populations with no catastrophic health spending, the NHI can be national pride.

If we consider tax-funded NHS as also a single payer with the government as the payer, this single-payer system or tax-funded system also has the above advantages. Evidence shows that countries applying NHS model, such as the UK, Nordic countries, Italy, and Spain, spent less than 10% of their GDP to achieve universal health coverage. In contrast, the US with dominance CHI has spent above 16% of its GDP in the last 10 years with relatively similar health outcomes with those developed countries with NHS or single-payer NHI.

As an illustration, in Figure 1 we plot the index of health expenditures and infant mortality rates of three countries using 2011 as the base (index =1) and trend of decreasing IMR up to 2017. We use the World Bank data to illustrate the correlation between changes in health expenditures per capita and changes in IMR of Germany (blue dots), Japan (green dots), and the USA (orange dots). The figure illustrates that a virtual (quasi) single-payer health financing system in Japan had better performance in decreasing IMR with the same increase (change of index) from 2011 to 2017. Although this figure may not depict causal relationship, we can see the correlation is noted to be explored more.

Figure 1.

Illustration of the correlation between index changes in health care expenditure (% GDP) with index changes in IMR of three countries between 2011 and 2017. 2011 index = 1.

We also provide Table 2 illustrating the same level of UHC Index of high-income countries, public health spending as % GDP, and IMR per 1000 live births from 2011 to 2017. Data from the World Bank and the UHC Monitoring is used to develop this table.

Countries	Year	Public finance for health, % GDP	Infant mortality rate	UHC index* 2019
US—Multiple CHI dominance	2011	7.9	6.10	> = 80
	2012	7.9	6.00
	2013	8.0	6.00
	2014	8.3	5.90
	2015	8.5	5.80
	2016	8.6	5.80
	2017	8.6	5.70
UK—NHS single	2011	7.1	4.3	> = 80
	2012	7.0	4.1
	2013	7.8	4.0
	2014	7.8	3.9
	2015	7.7	3.8
	2016	7.8	3.8
	2017	7.6	3.8
Australia—NHS single	2011	5.9	3.8	> = 80
	2012	5.9	3.6
	2013	5.9	3.5
	2014	6.1	3.4
	2015	6.4	3.3
	2016	6.3	3.2
	2017	6.3	3.2
Italy—NHS single	2011	6.8	3.3	> = 80
	2012	6.8	3.2
	2013	6.8	3.1
	2014	6.8	3
	2015	6.7	3
	2016	6.6	2.9
	2017	6.5	2.8
Spain—NHS single	2011	6.7	3	> = 80
	2012	6.5	2.9
	2013	6.4	2.8
	2014	6.4	2.8
	2015	6.5	2.7
	2016	6.4	2.7
	2017	6.3	2.7
Japan—NHI single	2011	8.9	2.3	> = 80
	2012	9.1	2.2
	2013	9.1	2.1
	2014	9.1	2.1
	2015	9.2	2
	2016	9.1	2
	2017	9.2	1.9
Korea—NHI single	2011	3.7	3.4	> = 80
	2012	3.7	3.3
	2013	3.8	3.2
	2014	3.9	3.1
	2015	4.0	3
	2016	4.2	2.9
	2017	4.4	2.8
Germany—SHI multiple	2011	8.1	3.4	> = 80
	2012	8.1	3.4
	2013	8.3	3.3
	2014	8.4	3.3
	2015	8.5	3.3
	2016	8.6	3.3
	2017	8.7	3.3
France—SHI multiple	2011	8.5	3.1	> = 80
	2012	8.6	3.1
	2013	8.7	3.1
	2014	8.9	3.1
	2015	8.8	3.2
	2016	8.8	3.2
	2017	8.7	3.3

Table 2.

Comparison of Public Finance as % GDP and IMR of Some Developed Countries with different health financing Schemes 2011–2018. Processed from World Bank Data and UHC Monitor 2021.

^*Coverage of essential health services (defined as the average coverage of essential services based on tracer interventions that include reproductive, maternal, newborn and child health, infectious diseases, non-communicable diseases and service capacity and access, among the general and the most disadvantaged population). The indicator is an index reported on a unitless scale of 0 to 100.

6. Conclusion and recommendation

To ensure UHC and equitable access of at least essential health care for everyone in a country, public financing for health is absolutely needed. Public finance for health using single-payer scheme has a lot of advantages yielding more effective and more efficient financing schemes. Tax-funded, NHS model, or single-payer NHI model appears to be more effective and more efficient to produce expected outcomes of IMR. Multiple payer system of SHI appears somehow less effective and less efficient compared to the single-payer, monopsonist system. The authors recommend that LMICs that have not achieved UHC and are under consideration to reform health financing system may explore the possibility of introducing a single-payer health financing system. If a tax-funded (NHS) model is not possible, implementing SHI gradually to achieve an NHI would be a preferred choice. However, political battles need to be anticipated.

Conflict of interest

We do not have any conflict of interest. No fund from external authors is used for this chapter.

Notes/thanks/other declarations

None.