PUBPOL 3780 Prelim 2

Canada vs US spending in 1970s

In Early 1970s, Canada and U.S. Were Both Spending About 7.5% of GDP on Medical Care.  Canada’s Spending Has Slowed Down Substantially Since Then

Canada vs US rationing of medical care

U.S. Rations Medical Care Via Patient Cost Sharing;

Canada Rations Via Supply Restrictions

How Canadian Medicare is Financed

ØFederal government provides each province with some funds

(from federal income taxes); remainder of cost is financed by

provincial income taxes. No premiums.

ØInitially, the federal government paid for about 50% of the

cost and provinces the other 50% (like Medicaid in the U.S.).

ØFederal government's share has fallen to 24% over time.

ØCanadian Medicare accounts for 70% of total medical spending;

private health insurance 12%; out-of-pocket spending 18%

(e.g., "patients often bypass the waiting time for diagnostic

tests by having them done at these private clinics and then wait

for treatment at Canada's public hospitals").

out of pocket spending in the US

12 percent

Private Health Insurance (PHI) in canada, which Supplements But Does Not Replace Canadian Medicare (67% of people have PHI)

•Relevant for: vision care, prescription drugs, dental care,

    complementary and alternative medicine, long-term care,

    “non-medically necessary” physician and hospital services.

•Usually in form of employment-based group policies.

•Part of fringe benefits.  Sponsored by employers, unions. Tax exempt.

•PHI as a replacement for Medicare is prohibited or discouraged:

  -  6 provinces and 3 territories prohibit.

  - 4 provinces discourage, e.g., physicians can’t work in the     private and public systems at same time.

•Most provincial governments provide public supplemental coverage

     for prescription drug services for the elderly, low-income

     households, and children.

strengths of canadian healthcare system

access and equity

•Phase I of the chinese healthcare system

(1950 - 1978): A government-owned, -funded, and -operated health system

•Post-1949, China established a government-owned and centrally planned health system

phase 1 of the chinese healthcare system entailed

•Private practice and ownership of health facilities were eliminated

•The Ministry of Health (1954) coordinated resources, ensured access, and implemented health policies. 90% insurance rate.

•Government-funded system provided affordable health care to all citizens, regardless of payment ability

•All healthcare personnel, including doctors, nurses, and pharmacists, were government employees with fixed salaries

•Prices for medical services and medications set and regulated by the government

Phase II of the Chinese Health Care System

•Phase II (1978 - 2002): Health system in the era of economic reforms

•Economic reforms shifted China from a centrally planned economy to a market-oriented economy

•Health care financing changed dramatically, impacting service delivery

•Most rural residents lost health insurance and relied on out-of-pocket payments

•In urban areas, reduced government funding led to user fees for health services

•Significant cost-sharing measures decreased coverage in urban health insurance plans

•Percent of population with health insurance fell from about 90% to 10%

insurance coverage in china

98% of Population Has Health Insurance

when was significant insurance coverage achieved in china

phase 3

China Has 3 Separate, Complementary Health Insurance Programs (the 2nd and 3rd have been combined since 2016)

Urban employee:

Basic Medical Insurance for Urban Employees (BMIUE)

Medical Financial Assistance Program:

Urban residents:

Basic Medical Insurance for Urban Residents (BMIUR)

Rural residents:

New Rural Cooperative Medical Scheme (NRCMS)

Basic Medical Insurance for Urban Employees (BMIUE) in china

•Launched in 1998: employment-based insurance, mandatory for all people employed in formal jobs in urban areas.

•Hospital provider network:

- Most large public hospitals are included (92% of beds).  Hospital

   crowding and long waits for hospital care are a major issue.

- Does not cover private hospitals 

how is Basic Medical Insurance for Urban Employees (BMIUE) in china financed

•Social health insurance that is required for certain people.

•Financed through payroll tax: employer usually pays 6% of salary and employee pays 2%. Like Germany's SHI we will discuss soon.

Split financing similar to US employer-sponsored health

insurance, but that is voluntary.

•Local governments can require higher contributions (e.g., 14% of an employee's salary in Shanghai).

•Minimal government funding.

Health Savings Accounts (HSAs) for outpatient care in china

•Employer and employee make deposits every month, tax-free (the entire 2% employee share and about 2% out the 6% of the employer share).

•Money can only be used for medical expenses.

•Any unused balance carries over to next year (like in Singapore and in U.S. MSA accounts).

•Main issue for sick employees is lack of money in their HSA account.

Basic Medical Insurance for Urban Residents (BMIUR) china

•Launched in 2007.

•Applies to urban population not covered by BMIUE: people with informal jobs, unemployed, children, and the elderly/retired.

•Voluntary, not mandatory, but high take-up due to generous government subsidies. Like ACA exchanges in the U.S.

•Funded by individual contributions (minor); relies heavily on government subsidies from central and local governments.

•Same hospital network as BMIUE.

•Focus on covering hospital services, with coverage gaps in outpatient care.

New Rural Cooperative Medical Scheme (NRCMS) china

•Covers rural residents and is voluntary.  Likewise, high take-up due to generous government subsidies.

•Initiated in 2003, now covers 95% of the rural population!

•Funded by individual contributions (minor); relies heavily on government subsidies from federal and local governments.

•Central government matches the contributions of a local government only when 80% of the targeted population signs up.

•Focus on covering hospital services, with coverage gaps in outpatient care.

•Quality of care in rural areas is much worse than in urban areas (more on this later in the course).

Patient cost sharing in china

•"up front"

•Small co-payments for physician services

•Hospital deductibles average about $1,500, which would be

10% of annual income for the average person. Very large.

covered services with health insurance in china

•The benefits included in health insurance coverage are determined

by a local government but usually include most services (e.g.,

hospital care, physician services, and prescription drugs).

•Traditional Chinese medicine is usually integrated into coverage;

public hospitals often have a wing devoted to such care.

major problems with health system in china

•There are no caps on out-of-pocket spending

•Insurers have limits on what they will reimburse providers,

and patients must pay the balance to the provider.

•Example: insurers only pay up to $850 for outpatient care in

Beijing under BMIUR program; a patient has to pay the rest.

Role of Private Health Insurance in china

private insurance premiums still account for less than

10% of total, national medical spending.

28% of total health care spending is out-of-pocket (versus

12% in the US and 18% in Canada).

ØThis creates financial risk and reduces the amount of medical

care that would otherwise be used.

ØMany higher-income individuals purchase private health

insurance that covers out-of-pocket spending and expensive

services not included in public health insurance plans.

ØEmployers often pay for private insurance for their employees.

percentage of total health care spending out-of-pocket in china

28%

Medical Financial Assistance Program china

•Public program for people living below poverty line, established in 2002.

•Covers both rural and urban areas.

•Provides support for an individual's health insurance premium or out-of-pocket spending, but prioritizes the latter (especially catastrophic spending above the maximum that an insurer will reimburse to a provider/clinician).

•In 2018, about 10% of the population received financial support from this program.

funding of Medical Financial Assistance Program china

•Government subsidies

•Social donations

History of Germany’s Health Insurance Program

•World's first social national health insurance program introduced under Otto von Bismarck in 1883, later expanded to cover accidents (1884), old age and disability (1889), unemployment (1927), and long-term care (1994).

•Up to 13 weeks of sick leave payments. Sick leave accounted for 50% of costs early on.

Strengths of Germany’s Health Care System

•The system ensures near universal healthcare coverage, freedom to choose providers and insurers, and comprehensive and generous healthcare services

weaknesses of Germany’s Health Care System

•Rising healthcare costs due to possible overuse of medical care, a high tax burden to fund the system, and balancing generous benefits with economic sustainability

government's role in germanys healthcare system

•The government regulates and legislates the system by setting drug prices, regulating private insurance standards, and subsidizing health care for unemployed and low-income citizens, while leaving daily operations to local entities for greater flexibility and efficiency

how does germany achieve universal health insurance coverage

Mandating It For Middle- and Low-Income Individuals, and

Requiring Replacement Coverage for Higher-Income Individuals

germany two tier system

1.Public Health Insurance (SHI) covers 90% of population (74 million people):

  -  Mandatory for employees who earn less than $91,000.

  -  Funded via wage contribution (employee and employer each pay 8%

     of a worker’s salary).  Automatic enrollment.

  - Government pays premium for low-income and unemployed

  - Can choose from about 100 non-profit “sickness funds.”

2.Private Health Insurance System (PHI) covers remaining 10% (8 million people):

  - High-income households and self-employed can either enroll in SHI or

    choose a PHI plan, which generally offers better access to physician

    services

  - PHI plan must cover at least the same basic services as SHI.

Public Health Insurance (SHI) germany

covers 90% of population (74 million people):

  -  Mandatory for employees who earn less than $91,000.

  - Can choose from about 100 non-profit “sickness funds.”

how is SHI germany funded

- Funded via wage contribution (employee and employer each pay 8% of a worker's salary). Automatic enrollment.

- Government pays premium for low-income and unemployed

Private Health Insurance System (PHI) germany

2.) covers remaining 10% (8 million people):

  - High-income households and self-employed can either enroll in SHI or

    choose a PHI plan, which generally offers better access to physician

    services

  - PHI plan must cover at least the same basic services as SHI.

Strength of German System

access and equity

how does the German System Encourage Competition Between Insurers

Individuals have a choice of health plan, although health plans do not differ much from one another in practice because there aren’t many dimensions on which a plan can differentiate itself.

Government sets the physician fee schedule, which all sickness

     funds and private plans use.  PHI fees are higher than SHI fees.

Sickness funds pay physicians fee-for-service with limits on number of patients and procedures per MD, which encourages

    physicians to ration their time (like in Canada).

Physicians prefer and favor privately-insured patients, who thus

     have shorter waits.

Hospitals pay specialist physicians a salary (like the UK).

Germans are also required to have (and be taxed for) long-term care insurance.

SHI Sickness Funds (germany)

Sickness funds are pretty similar:

•All SHI sickness funds are nonprofit private plans.

•Benefits and cost-sharing determined by the federal government and thus are identical across funds. Very comprehensive coverage.

•No provider networks; can choose any MD or hospital (like Canada).

•Only minor differences between funds: some offer optional benefits (e.g., homeopathy, malaria immunizations)

•Multi-payer system, similar to Japan; NOT single-payer.

SHI Cost Sharing (germany)

•Rules are established by the federal government.

•Deductibles and co-insurance are prohibited.

•Copayments for physician outpatient visits were also recently abolished.

•Small co-payments for hospital stays ($13/night), for a maximum of 28 days.

•Small prescription drug co-payments (between $6.50 and $13).

•Small co-payments for rehabilitation services and medical devices (mostly $13/day or per device).

•A person's total copayment is capped at 2% of their annual income (unlike China and US Medicare, where are no caps).

out of pocket spending in germany

•Total out-of-pocket spending accounts for about 13% of total medical spending (similar to the U.S.) and is primarily for prescription drugs and long-term nursing home care.

SHI (Public Insurance) Financing

Pay-as-you-go system (like Medicare):

Working population finances care for everyone; rich pay more.

•Financed through contribution rates by working population (i.e., a payroll tax).  Employer and employee each contribute about 8% of an employee’s salary up to a threshold/ceiling.

•Funds are pooled by the government and paid to sickness funds based on the underlying health of people who pick each fund (like Medicare Advantage in the U.S. – risk-adjusted capitated payments).

•This reduces incentives for sickness funds to try to attract the healthiest people.

•Sickness funds mostly compete on basis of prices because a supplementary contribution is paid by a worker directly to the sickness fund, and each fund sets this rate (which is about 1% of salary, on average).

switching from PHI to SHI in germany

•Once one starts with PHI, it is very difficult to shift to SHI. This rule is intended to prevent people from paying low premiums when young and then shifting to 16%-of-salary premium when older (next slide will help explain this).

•To switch, one's income needs to have fallen (substantially) due to an employment change.

•Makes sense for people who are healthy and/or want flexibility.

•Differences across health plans in service coverage (but must cover what SHI covers) and cost-sharing.

population on PHI in germany

For people who opt out of the public SHI system (9 million, or 10% of the population):

- high income individuals

- self-employed

- civil servants

Private Health Insurance Premiums/Prices in germany

•Experience-rated when a person first chooses a PHI plan based on:

  - age

  - health diagnoses/conditions

  - # of physician visits in last 3 years

  - # of hospital visits in last 10 years…

•In subsequent years, premium increases are community-rated: i.e., premiums differ between enrollees initially, but then all enrollees in the same plan experience the same annual increases in premiums (e.g., 5% annually)

insurer strategies for How and How Much Will They Pay Physicians Who Agree to be in the Insurer’s Provider Network?

1.Determine which providers to include in their network

2.Determine how and how much to pay providers

3."Manage" the medical care provided to minimize low-value

Set cost sharing rules when a patient receives medical care (e.g., co-pay or deductible)

capitation payments

• MD receives, say, $40

  per enrollee per month

  regardless of how often the

  enrollee comes to her office.

• MD decides whether

  enrollee/patient should see

  a specialist (i.e., acts as gatekeeper).

physician fee for service payments

• MD treats patient and

sends bill to HMO

itemizing each service.

• HMO pays MD an

agreed-upon fee for

each medical service

provided.

Fee-for-service incentive to the physician

See many patients; work long hours, provide many services

pay for performance incentive to physicians

provide the medical care that is being monitored / measured

Medicare’s Resource-Based Relative

Value Scale (RBRVS) Payment System

Patients are categorized into one of 8,000 different Current Procedural Terminology (CPT) codes for office visits, consultations, and surgery

Each CPT is assigned three separate relative value units (RVU) - see next slide

Congress sets payment for each RVU unit (conversion factor of $34.89 in 2021). Changed annually ($32.2 for 2025)

Product of the RVUs for the CPT and the payment per unit determines how much the MD is paid

Medicare forbids MDs from “balance billing” (above the patient’s co-insurance); MD must accept Medicare’s RBRVS payment amount as final.  Ditto Canada and Germany, but not China.

MDs can decide whether or not to participate in Medicare; about 97% of MDs participate in Medicare

how to calculate a RVU

Total RVU=Work RVU+Practice Expense RVU+Malpractice RVU

how does RBRVS Influence Private Insurer Pay

74% of private health insurance plans pay physicians, after negotiating with them, by adjusting the entire Medicare RBRVS schedule, usually up, but maintain the relative payments between CPT codes

Private Insurers’ Physician Fees are About what % Higher Than Medicare’s

40%, and Twice as High as Medicaid’s

Why Do Some Health Systems and MDs Receive Much Higher

Payments From Private Health Insurers Than Others?

1.A private health insurer negotiates with a provider regarding whether the provider will be included in the insurer’s network, and how much the provider would be paid if in the network.  An in-network provider

      can’t balance-bill a patient (unlike in China).  Must accept negotiated fee.

2.Providers who are valuable to an insurer’s prospective enrollees will

       command higher prices (and will cause the insurer to raise its premiums –

       the insurer’s tradeoff).  Value driven by consumers’ perceived quality of

       provider and access/market share.

3.Insurers who are important to a provider’s revenue/profits will pay lower

      prices (the provider’s tradeoff).  Importance driven by insurer’s share of

      provider’s revenue and the provider’s alternatives.

why are MDs Are Forming Larger Groups, 48% Are in Practices with 10 or Fewer Physicians in 2024. 

Larger Groups Have More Negotiating Power With Private Insurers, can negotiate higher prices and recieve higher fees from private health insurers

physician payment by speciality

Non-Primary Care Specialists in the U.S. Earn Much More than Primary Care MDs, highest paying specialties = neurosurgery, pediatric general surgery, cardiology, lowest = internal medicine, rheumatology, family medicine

why do Physicians in  The U.S. Earn Much More Than Physicians in Other Countries

High Private Insurance Fees

what % of U.S. Physicians Are In the Top-1% of the Earnings Distribution,

30 percent

Structure of a Typical Hospital: the Most Expensive Part of The Health Care System in Most Countries: U.S. Model

outpatient services - emergency room, outpatient surgery, diagnostic testing, inpatient: surgery, ICUs, surgery units, clinical support services, and non-clinical support services

Implications of Physician-Health System Relationships on the U.S. Health Care System

§The dominant fee-for-service system (and high fees relative

to other countries) makes physicians/health systems interested

in treating many patients (especially the privately-insured).

§This is good for access, but pushes up spending.

§Hospitals compete with one another to attract physicians and

their patients by offering advanced medical technology and

highly skilled health professionals (e.g., nurses).

§This is good for quality and access, but pushes up spending.

§In countries where non-primary care physicians are salaried

by hospitals, this phenomenon is weaker.

§Having physicians and hospitals working closely together

improves quality of care and reduces spending.

§The trend toward health systems employing physicians is

improving coordination in the U.S.

DRG system

DRGs are Fee-for-Service; More Admissions = More Revenue (unlike Canadian budgets)

Medicare Cost Estimation

Government estimates the average cost of treating Medicare patients in each of the 750 different DRGs across all 4,700 hospitals in the United States. 

Payment = Estimated Costs

Government pays each hospital about 90% of the estimated national average cost for each DRG (so hospitals lose money, on average). 

Hospitals With High Costs Will Lose $

This payment is the same regardless of how long the patient spends in the hospital or how many services the patient receives (e.g., whether they hire a lot of nurses or use expensive surgical equipment).

the DRG system favors

complex procedures over medical treatment

Per diem payment

payment (e.g., $2,000/day)

set by Medicaid or negotiated with

a private health insurer

Health Systems Receive about what times More From Private Health Insurers Than Medicare, on Average

2.7 Times

why are some physician practices in the US paid more than others

1.A private health insurer negotiates with a provider regarding whether the provider will be included in the insurer’s network, and how much the provider would be paid if in the network.  An in-network provider

      can’t balance-bill a patient (unlike in China).  Must accept negotiated fee.

2.Providers who are valuable to an insurer’s prospective enrollees will

       command higher prices (and will cause the insurer to raise its premiums –

       the insurer’s tradeoff).  Value driven by consumers’ perceived quality of

       provider and access/market share.

●

3.Insurers who are important to a provider’s revenue/profits will pay lower

      prices (the provider’s tradeoff).  Importance driven by insurer’s share of

      provider’s revenue and the provider’s alternatives.

why do health Systems have Strong Negotiating Power Over Private Insurers

In 46% of Metropolitan Areas There Are Only 1 or 2 Health Systems, and a health system negotiates for all of its members

issues with the portugese health system

① Low perceived health status

54% rate health as 'good' — 3rd lowest in EU (EU avg: 68%)

② Erosion of trust in the public system

Private insurance share tripled (6% → 17%) since 2010;

public spending only ~6.2% of GDP

③ Emigration of health professionals

16.5% without an assigned GP; real physician pay down

21% (2010-2021); 88% of GP vacancies unfilled (Dec 2023)

④ Rapid health cost escalation

37.5% of health spending is direct household cost —

highest in comparable EU sample; OOP = 29.6% of total

spend

Origins of the SNS in portugal: Beveridgean Inspiration

Pre-1974: Fragmented System

Care was delivered by charities, employer-based sick funds, and

private providers. There was no universal coverage. Very

fragmented.

The 1974 Revolution changed everything.

The 1974 Revolution ended 48 years of dictatorship, opening the

door to a universal NHS-inspired health system.

The SNS (Serviço Nacional de Saúde = National Health Service)

guarantees:

free access at the point of care

Coverage for all residents regardless of income

• Funded through general taxes (not payroll deductions)

key characteristics of the portugese health system

Universal Coverage

SNS covers the entire population regardless

of employment status or income

Tax-Funded

General taxation funds 87% of the SNS

budget. Remaining from subsystems.

Mixed Provision

Public hospitals coexist with growing private

and social sector providers

Parallel Subsystems

ADSE (civil servants), military schemes and

occupational health funds cover ~25% of

population

Decentralised Delivery

Governed nationally by the NHS Executive

Board (DE SNS, est. 2021) and delivered

through 39 Local Health Units (ULS) —

integrated primary & hospital care units

rolled out nationwide in 2024

Regulatory Framework

ERS (Entidade Reguladora da Saúde):

regulates quality, access and competition

across all health sectors; INFARMED

(Autoridade Nacional do Medicamento):

regulates medicines, medical devices and

clinical trials

Public (SNS) in portugal

62% of total

health spend

• General

taxation (OE)

• Managed by

DE SNS

• Free or low-

cost at point

of use

• User fees

largely

symbolic

private insurance in portugal

9%, growing

rapidly

• Voluntary

supplementary

• 4M insured

(2024)

• Employer

schemes

expanding

• Key driver: SNS

wait times &

access gaps

out of pocket spending china

~29% — EU's

highest

• Dental largely

uninsured

• Medicine co-

pays

significant

• Equity

concern

• Waived for

exempt

groups

key drivers of insurance growth in portugal

Long SNS waiting times for specialist care and elective

surgery

Expansion of employer-provided group insurance

schemes

Rising incomes and growing middle-class demand for

choice

cost control mechanisms in portugal

Global budgets for public

hospitals

• DRG-based hospital payment

• Pharmaceutical price regulation

• Generic substitution mandated

• Troika austerity cuts 2011-2015

• ACSS centralises purchasing

policy concern of growing enrollment in SNS portugal

The SNS grew by 522,000 enrolled patients (+5.1%) between 2016 and 2025. Norte and LVT together represent 72.4% of

all SNS users.

Policy concern: Rising enrollment intensifies pressure on a strained primary care workforce, while immigrants represent a growing

share with distinct clinical and cultural needs.

hospital organization and payment models portugal

Public Hospitals (ULS)

• D.-L. 102/2023: all

hospital EPEs → 39

ULS (Jan 2024)

• ULS: hospital +

primary care under

one board

• Single management

board

• Hybrid funding:

capitation + DRG

cross-billing

ULS Model

• Integrated primary +

hospital care

• Population-based

capitation

• Incentivises

prevention

• 39 units nationwide

(2024)

• Target: reduce

avoidable

hospitalisations

PPPs

• Private

management of

public hospitals

• Examples: Braga,

Cascais, Loures

• Fixed per-capita

contract with SNS

• Mixed efficiency

evidence

• Politically contested

Private Hospitals

• ~30% of hospital

beds

• Insured + self-paying

• Luz Saúde, José de

Mello, Lusíadas

• Also contracted by

SNS

• Key in reducing SNS

wait lists

informal care burden portugal

Formal LTC: RNCCI & ULS

National Network for Continuing Care (RNCCI)

10,190

RNCCI beds (2024, +7% vs 2023)

ULS coordinate RNCCI referrals and

community LTC

4 tiers: convalescence, rehab, long-

term, palliative

Coverage gap: 3.5 LTC beds/1,000

elderly vs EU avg 47/1,000

Informal Care Burden

Portugal carries one of Europe's heaviest informal

care loads

827K

estimated informal caregivers in

Portugal (INE 2022)

66% of elder/disabled care provided

by family — 73% women

Lei 100/2019: carer allowance —

slow uptake (30K by 2024)

Avg carer: 59 yrs; 40% report health

deterioration

Demographic Pressure

One of Europe's most aged populations

23.7%

of population aged 65+ (2024, 3rd in

EU)

Projected 32% aged 65+ by 2050 —

LTC demand doubles

LTC public spend: 0.5% GDP vs EU

avg 1.7%

~160K with dementia — strains

ULS and family carers

primary care physicians portugal

Primary Care / GPs

• USFs (Family Health Units) + UCSP

• GP = gatekeeper to specialist care

• Pay: salary + capitation + P4P bonuses

• USF model (A, B, C): team-based care

• 1.74M (16.5%) without a GP — worse

than 2009; 2019 best was 7.3%

• Dec 2023: 924 vacancies, 88% unfilled;

pay -21% (2010-2021)

• Dual practice permitted

specialists and hospital physicians portugal

Public statute (CTFP) or individual

contracts

• Salary + on-call & exclusivity

supplements

• Exclusivity: ~20% salary premium

• Dual practice common

• Long waits drive private demand

• Training: residency / national exam

(internato)

• Regulated by Ordem dos Médicos

SNS structural financing gap

The SNS faces a structural funding gap: budgets are consistently set too low, leading to annual deficits that require year-end government bailouts. This is not temporary—it’s a systemic problem.

Optimistic budgeting

Systematic underestimation of real costs and demand

CFP recommends realistic initial allocations

Labor cost pressures

€475M spent on overtime (2023)

18.2M overtime hours (+12.7%)

Rising demand (ageing population)

Healthcare needs growing faster than funding capacity

SNS share of public spending increasing

The Structural Trap

Each year:

Government announces a “record health budget”

Budget proves insufficient

SNS runs a deficit

Emergency year-end bailout is required

strengths and challenges of quality of medical care portugal

Strengths

• Strong primary care infrastructure (USF model)

• National vaccination programme — coverage >95%

• Oncology results improving; stroke pathway nationally

organised

• Hospital infection control — progress post-2010

✗ Challenges

• High caesarean section rate (38% vs EU avg 29%) —

overuse concern

• Long waiting times for specialist care and surgery

• Mental health — severely underfunded and undersupplied

• Geographic inequalities in access (interior vs. coast)

quality assurance mechanisms portugal

INAS (suspended 2022)

National quality classification system

for health establishments —

discontinued without replacement

ERS Supervision

Regulatory oversight of quality, safety,

access and patients' rights across all

sectors

DGS Quality Plans

National Quality Strategy (SNS

Qualidade) — clinical guidelines and

safety programmes

Accreditation

JCI and DGS accreditation for hospitals

— voluntary; limited uptake in public

good outcomes with low spending in portugal are due to

Portugal's specialised care architecture — SRN networks, IPO cancer hospitals, National Reference Centres, and CRIs

(Integrated Practice Units) — concentrates expertise where it matters most and partly explains good outcomes despite low spending.

Yet the architecture rests on precarious staffing: hospitals depend heavily on "tarefeiros" (sessional/contracted doctors) to keep

emergency services running — at €213M in 2024 and growing — covering an estimated 50-80% of urgency shifts. The structural

paradox: a world-class referral architecture, staffed on gig-economy medicine.

how is the portugal system delivering unequally

Portugal achieves good hard outcomes (LE, cancer survival, avoidable mortality) through efficient clinical

pathways, concentrated expertise in IPOs and Centros de Referência, and strong vaccination — but this top-tier hides widening

equity gaps. Low perceived health, high OOP costs, chronic underfunding of mental health and dental care, and geography-driven

inequality show the system is delivering unequally.

quality performance in portugal health system

strong primary care and vaccination, but avoidable mortality and long waits remain significant concerns.

Structurally, the SNS runs an annual deficit — reaching a record €1.38B in 2024 — requiring year-end emergency injections to prevent

hospital insolvency

The separated model of care provision is characterized by

(1) utmost autonomy

of the players (patients and providers); (2) contractual relationships

between the parties; and (3) ample freedom of choice (both for

patients and healthcare professionals).

distinctive traits of the integrated model

integrated model is more similar to an internal

organization.  A distinctive trait of the integrated model lies in the fact

that the players are affiliated with the same organization; this entails

adhering to a single role structure, supporting a shared culture and

abiding by common rules.”

In a Fully Integrated Model, Payer/Insurer and Providers are in Same Organization – the Payer Employs MDs and Owns Hospitals

Providers assigned

to an organization

Employment

contracts: hospital

budgets; MD capitation,

salary, and/or P4P bonus

primary care MDs are in group practice, act as the

     gatekeeper

Universalist Financing Models Tend to Have what kind of model

Integrated Care

Models

Social Health Insurance (SHI) Financing Models Tend

to Have what kind of care model

Separated Care Models

Universalist financing (“Beveridge model”):

a single-payer

insurance scheme…covering all residents and financed through

taxation…guarantees healthcare coverage to the entire population…

the right to healthcare is not linked with payment of a premium or

a contribution, but to residing in a given country.  Healthcare is

therefore a right of the citizens of that country.”

Social Health Insurance (SHI) financing (“Bismarkian model”):

the government requires certain categories of workers to pay

contributions from their salary in order to have coverage for the

risk of illness.  In this model, the role of the insurer is played not

directly by the national government but by sickness funds, which

are quasipublic, nonprofit organizations that are subject to

strict governmental regulations.”

portugal has what kind of health care financing model

Portugal has a Universalist health care financing model

portugal has what kind of medical care provision model

Portugal has a predominantly integrated medical care provision model

Physicians and hospitals

within the same ULS are

all members of the same organization

risk adjusted capitation is a cost control

mechanism

Patients are assigned

to a primary care

physician

use of risk adjusted capitation in the US

U.S. Government (CMS) Uses Risk-Adjusted Capitation Payments So That a Private Plan is Paid More When a Very Sick Medicare Enrollee Chooses the Plan Versus a Healthy Enrollee

Government

pays most of

the premium,

which depends

on enrollee’s

health

CMS Pays physicians/hospitals fee-for-service as a person uses medical care.  Broad choice of providers.

why are there ▪Institutional bonuses: extra payments tied to access targets (waiting lists) and efficiency metrics in portugal

These payments are intended to address a potential weakness of an integrated provider model ("simulating market conditions")

In a separated model, the market is more likely to adjust to increase

provider pay/profit if

the demand for medical care exceeds the supply

pay for primary care physicians in portugal

salary + capitation + P4P bonuses

why is dual practice of physicians common in portugal

its a concession to retain MDs in public system, not the ideal of integrated

model. MDs can earn more in private practice vs. ULS employment.

Contract doctors are also intended to address a potential weakness of an integrated provider model (insufficient access to physicians in ULS).

Advantages of the integrated provider model

ØInsurer exerts greater control over provider capacity, resources,

supply of services, and thus greater control over medical spending.

ØPrimary and specialty/non-primary care are better coordinated.

ØGatekeeping promotes continuity of care and can reduce

unnecessary specialist visits and hospital care.

ØGreater economic and medical efficiencies when physicians

practice in groups rather than solo.

disadvantages of the integrated provider model

ØNot as responsive to market forces, causing physicians shortages

and patient waits/poor access.

ØLess autonomy for providers and patients.

ØIf done poorly, gatekeeping can result in too little specialty care.

ØAllowing patients to choose their provider can facilitate

good matches.

The Surge in Health System Employment of Physicians is Creating a Much More Integrated Care Model in the U.S.

Many health systems can now contract with a health insurer to provide

all of the medical care that an insurer’s enrollees need: primary care,

specialty care, and hospital services.  But insurers are generally not

employing providers, the health systems are employing providers