This system is largely private since both providers and payers are private. The model derives its name from the German Chancellor Otto von Bismarck who is regarded to have pioneered the welfare state. Private insurance plans finance the system with the plans jointly financed by employers and employees through payroll deduction. The absence of a profit incentive allows these insurance plans to cover everybody. Tight controls and regulations by the government also allows for cost controls. The government ensures that both medical services and fees are regulated.
The model owes its name to William Beveridge who inspired the National Health Service (NHS) in the United Kingdom (UK). The government provides and finances healthcare from taxes. Medical treatment is also seen as a public service and providers can be employees of the government. As the sole provider, the government is able to keep costs down through controls. Medical bills do not exist under this model. The United States Department of Veteran Affairs relies on this model to provide healthcare to veterans.
It is sometimes known as the National Health Insurance model. Canada, Taiwan and South Korea are some of the leading countries that have adopted the model. The model distinguishes between providers and payers with the former being in the private hands while the latter is handled by a government run insurance program into which every citizen pays. It is the national insurance program that collects monthly premiums as well as paying bills. Compared to the American system, the Medicare model tends to be cheaper as the government is in a position to negotiate low prices with the providers. The ability to limit the medical services it pays for also offers the government an opportunity to control costs.
Out of Pocket
This is equivalent to no system at all. Most medical services are paid for by the patient out of pocket. Americans who do not have medical insurance or those who have inadequate medical cover are forced to rely on this method.
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