Healthcare Systems in Australia, Germany and US

Table of Contents


Health services are basic social necessities that any national government should bestow upon its people. This is why every country’s health system is blatant reflection of its history, economic and social development. Its overall characteristics depend on each of the system’s component parts. In scrutinising any healthcare system, Roemer (1993) informed that it is crucial to look into “five principal components: resources, organization, management, economic support, and delivery of services”. Going back to earlier times, national healthcare systems have shared similar objectives like to aid the sick on low incomes and. guarantee a substitute income for salaried workers suffering from illness. After the consummation of World War II, the common grounds for healthcare systems in all over the world were to ensure access to healthcare. Thus, the ideal healthcare system should focus on the ease of its access towards the people who need it badly.


Over the years, the cost of demand for healthcare services has ballooned and some countries have chosen to concentrate on different priorities within the components of their state healthcare system. It is highly unlikely that this prioritisation in some components would not cause problems with other components that were underscored. Added to the weight of the burden is restructuring of the healthcare system is happening around the world. McGuire (1995) deemed that “one of the most significant changes is the rapid growth of integrated healthcare systems, networks of organizations that provide or arrange to provide a coordinated continuum of healthcare services to a defined population and are willing to be held fiscally and clinically accountable for the health status of the population served”. What is essential in establishing integrated healthcare systems is the driving the need for sustainability of health services given in each country and that it could “address such issues as controlling health-care costs, using technology appropriately, better managing information, and improving quality”.

In order to see a snapshot of the status of healthcare systems around the world, it would be beneficial to compare the key delivery mechanisms, important policy issues and strengths/weaknesses of the type of system that different countries have adopted. For this study, the healthcare systems of USA, Germany and Australia will be weighed against each other in order to see the social, medical, economic and political aspects of the dominant healthcare policies upheld by each country. In doing so, we will be able to determine the sustainability and applicability of each system by trying to delve on questions like: What are the priorities of each health care system and how is it working for each country? Does their system lean towards the development and the efficacy of implementing its health services or is bound to self-destruct in the future because of the rising costs that patients would not be able to afford it? Are there any threats that abound the policies being implemented in the health sector? In exploring these questions, we expect to draw up recommendations on what health reforms should be undertaken in each country, so that citizens can truly enjoy the quality health services that are entitled to every human being who needs it.

Among all the three systems, the German healthcare system is the oldest because it pioneered in 1883. Otto van Bismarck (1815–1898) introduced the social insurance, the first type of health insurance to be developed. In this case, the German healthcare sector is mobilised through the social insurance systems, which came from revenues generated from payroll taxes. In their health system, the private sector provides health insurance, private facilities are common, and the government sometimes sets payment rates for providers. Although insurance is compulsory, and thus accessible to all, the scope of healthcare benefits may vary by plan. Germany has continued to use the social insurance system, and several European nations and other countries like Japan and Korea have modified the basic social insurance model to meet their own needs (Glaser, 1991). Compared to the United States, the German multipayer insurance system has the ability to provide “nearly universal comprehensive benefits” and it has “a superior record… in constraining health expenditures” (Weil 2001, p. 159). With regards to the ease of access, the German healthcare system ranks the best in the world. This is because it has control on its budget and a “trim, administratively efficient national system can maximize consumer choice by offering 1,100 different insurance options” (Eastaugh, 2000). Eastuagh (2000) informed it is easy to get medical access in Germany because they only “have three claims forms (not 1,520 like the United States), but they offer a wide variety of benefit plans (1,100, not five like Korea or one like the Canadian single-payer approach)”. Also, the Germans offer variety and consumer choice, yet they spend only 5.1 percent of the health economy on administration and paperwork; the United States spends over 20 percent on administration and paperwork”. Lastly, efficiency of the German healthcare system lies mainly in “promoting primary care and health education through their general internists and paediatricians”, this is why “Germans do not have the American problem of a gross oversupply of specialists”.

On the other hand, the United States healthcare system is characterized by its liberal nature, where there is free medical care for those on lowest incomes and for the children of low-income families (Medicaid & State Children Insurance Programme) and healthcare for the elderly (Medicare). Also, there is private insurance for the middle and well-off classes, financed by employers or paid by the individuals themselves. While America’s health care system prides itself as one of the best in the world, millions of Americans can barely cope with the skyrocketing prices to be able to avail premium health care services. For example, National Coalition on Health Care (2007) reported “health care spending in the United States reached $2.3 trillion”, which means each person needs $6,700 for health care costs. While “total national health expenditures were expected to rise 6.9 percent” and the government “spends more on health care than other industrialized nations”, 47 million Americans remained uninsured. This makes the US healthcare system not only inefficient, but it also failed to instigate equitable healthcare services to its people.

Lastly, the Australian healthcare system is characterized by its free access to healthcare for all citizens in order to guarantee universal cover for illness. It is a national health care system that is mixed in nature because “responsibilities for healthcare are divided between the federal and state governments”, where “both the public and the private sectors play a role” (Duckett, 2002). In this type of system, healthcare is organised by the state and funded by taxes, without establishing any special funds or specially differentiated tax or social insurance payments. When healthcare is considered as one of many different policy areas competing for a share of its regular tax revenues, a great degree of flexibility can be achieved because government programs underpin the key aspects of its healthcare services. Duckett (2002) elaborated that Medicare in Australia “is funded out of general tax revenue, pays for hospital and medical services”. In this case, “Medicare covers all Australians, pays the entire cost of treatment in a public hospital, and reimburses for visits to doctors”. Also, the Australian healthcare system assures “no limit on fees charged by doctors”, yet there is “a government-set fee schedule” where “doctors can bill patients or send their bills directly to the government insurance authority, the Health Insurance Commission (HIC)”. Duckett (2002) further explained that if bills are sent to the HIC:

[T]he payment is 85% of the government-set fee for out-of-hospital expenses and 75% of the government set fee for in-hospital services; the money is paid directly to the doctor, and the doctor is not allowed to charge the patient an additional fee. About 75% of family physician services are directly billed to the HIC. If a doctor bills the patient directly, the patient then applies for the rebate of the government set fee.

One problem faced by the Australian healthcare system was the growing hospital waiting list experienced in the early 1990s because many “patients were becoming older and sicker, requiring more intensive treatment” (Steele, 2007). Policies were passed on to counter the trend and at present Australia becomes at par with the nations with a satisfactory healthcare system that can provide quality services to all patients, without much costs.

In another scene, the state of healthcare systems can also be assessed using the support component that characterises the number of facilities, quality of equipment, supplies and the human personnel qualified to provide these services to its people. In Figure 1, it can be seen that Germany has generally has an increasing trend in the doctor-patient ratio over the years. According to the Economist Intelligence Unit (2008), Germany has 3.8 doctors for every 1,000 people, which is actually the highest compared to U.S. (3.1) and Australia (2.6). Weil (2001) agreed to this trend that Germany usually has an oversupply of doctors and other health resources. He said that Germany has too many insurers, too many small specialty hospitals and an about one-third the number of physicians per person. This is the reason why Germany instituted many important reforms in the health coverage and, to a lesser extent, in the care provision markets. As of 1996, sickness funds are allowed to compete for members on the basis of price and other factors, but restrictions on their ability to negotiate price differentially with individual providers or to bundle care in different ways (by disease or case, for example) remain intact. While regulated case rate payments for hospitals have been introduced, they cover only 15 to 20 percent of cases. Regulatory barriers between inpatient and outpatient care remain, as do the regulatory processes for controlling hospital and physician supply (Dorsey et al., 1996).

For Australia, the issue of the lack of doctors is seen as very critical because they have the least among the three countries. It can be seen in Figure 2 that Australia has just 2.6 doctors for every 1,000 people. The shortage of doctors in Australia was primarily the focus of “a well-publicised healthcare workforce shortage crisis”. Smith (2008) pointed out that “the Commonwealth’s health monetary and health education policies, regulations and legislation have directly contributed to the current workforce shortages within Australia” caused these shortages. Particularly at fault are “the federal government policies in the 1980s and 1990s, which limited the number of medical school places in Australia”. Also, it is quite noticeable that Australia also lagged behind the number of hospital beds per 1,000 people, in which it is only at 4.1.

In the United States, although they have recovered from the the shortage of doctors in 2001 and 2003, the number of hospital beds per 1,000 people have been on a downward trend, with 3.2 per 1,000 people in 2007. One factor that can be the culprit for this trend is the “increasing number of elderly Americans (over the age of 65) who as a group tend to require more attention from the health care system–has been growing and will double to 69 million by the year 2030”. For the reason that people are living longer than ever before, they require health care coverage for longer periods of time (Issues & Controversies on File, 2005). This translates to the ongoing decrease in the number of hospital beds available for other people. Despite the shortage in hospital beds, the United States still fared higher in the technologies available to curb deadly diseases like cancer and diabetes. In Figure 4, it can be seen that the United States has the least deaths for diabetes and cancer, as compared to Germany and Australia. This means that the problem in the United States does not rely on the lack of quality in health services, but it resides.

In terms of the economics of healthcare systems, the United States has the highest private health care expenditure among the three countries at $6,401 per person. That is barely half of what Germany and Australia spends on each person. Take note, all three countries have virtually the same amount of public expenditure per person in 2004. In the US, 25 percent of the population is covered by a public health programme, while 14 percent has no health coverage. Another reason for the high private healthcare expenditure are the rising cost of prescription drugs has gained much attention of late, particularly for senior citizens, who are often on fixed incomes and require continuing drug therapy for chronic ailments, and who are covered under Medicare, which does not cover prescription drugs. Drug coverage has been one of the primary legislative debates in the 1999–2000 congressional sessions. Another area to watch is the cost of “other professional services.” As alternative medicine gains a foothold, many patients are seeking alternative treatments, and many third-party payers are willing to pay the cost of such treatment, which is often lower than the cost of traditional medical care. Included in these areas might be such services as chiropractic, massage therapy, herbal medicine, and acupuncture.

In the study of Andersen and Davidson (2001), they indicated that the key potential access measure, health insurance, revealed that although an increasing number of people are being covered by Medicaid, there has been a decline in the number covered by private insurance in the last fifteen years and an overall increase in the proportion without any health insurance coverage. In the US, low-income and black populations appear to have achieved equity of access according to gross measures of hospital and physician utilisation (not adjusting for their greater need for medical care) but continue to lag considerably in receipt of dental care. Also, Andersen and Davidson (2001) observed that equity has certainly not been achieved according to health insurance coverage, as the proportion uninsured is 50 percent higher for blacks and more than twice as high for Hispanics and the low-income population, compared to the uninsured rate for whites.

Another weakness in the United States healthcare system is the major reforms that sought to establish a universal social insurance program to extend health care coverage to the entire population. After these repeated failures to enact comprehensive reform, and despite the partial solutions that have been adopted, the problems of lack of coverage remain a continuing challenge to the U.S. health system and the nation’s political institutions. Dorsey and Berwick (2008) lambasted that the closest Americans can get “to heresy in today’s health care policy debate is to suggest that managed care can help and that capitation is the best way to pay for it”. According to the authors — who both practiced medicine within a managed care system under the Harvard Community Health Plan managed care “was a great idea when it first emerged, before the term got hijacked by insurance companies that claimed to manage care but in many cases only managed money.” They added that, in managed care, details “matter a strong focus on patient satisfaction, compensation and incentives, sound leadership, transparent and sophisticated measurement and information” and that, when “done right, managed care works.” They concluded that “Maybe, properly defined and designed, these may not be dirty words after all”.


Upon reading all strengths and weaknesses of all three healthcare systems, we can see that the complicated liberal healthcare system of the United States seem to cause all problems experienced by its people because of the many complications brought about by extreme inequalities in terms of access for people and the extremely huge amount required in expenditures. Although Germany has an age-old healthcare system, it seemed to work well because of “Germany’s greater use of inpatient care led to 39 percent more resource use on average and lower productivity relative to the US” (Dorsey et al., 1996). In Australia, healthcare reforms became significant as a National Health Care Package had set down protocols for guaranteed access to services currently delivered by both federal and state governments including: emergency and admitted care in public hospitals, inclusive of appropriate after-care and diagnostic services; primary and specialist medical care through the Medicare Benefits Scheme; pharmaceutical products; dental care; mental health services; care for the aged (both residential and community-based); and community/primary health care (Steele, 2007). With all social, medical, economic and political sides explored in the healthcare system of three countries, Germany and Australia obviously has the best system that worked efficiently for them. On the other hand, United States needs healthcare reforms that should focus on 3 major issues: leveling off the skyrocketing health care costs, providing equitable access to all patients and transforming health care policies that can benefit every American. Along with the global age, national healthcare systems need to intensify its move to update healthcare policies in order to promote a well-rounded health care system that should benefit most people. Thus, improving equity, effectiveness, and efficiency should be the guiding norms for a improving the health care system to become integrated with the fast-changing times.


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