Which Country Has the World's Best Health Care?


By Ezekiel J. Emanuel

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The preeminent doctor and health policy expert Ezekiel J. Emanuel gives an incisive tour of eleven health care systems across the globe, including our own, in search of whose is best—and how we can be more like them.

One thing we can all agree on: the United States does not have the world’s best health care, at least not for all its citizens across fifty very different states. But which country does, and what can they teach the US?

After analyzing the US and ten other countries—Australia, Canada, China, France, Germany, Netherlands, Norway, Switzerland, Taiwan, and the UK—the results are in. No health care system is perfect, whether the problem is too many hospital beds in Germany or treating chronic illness in France, and some problems are shared across many countries, from addressing mental health care to containing the rising costs of chronic care. 

With a new coda that examines the handling of COVID-19 around the world, Dr. Emanuel offers evidence of the flaws and triumphs of health systems in the US and globally, and the lessons we can learn from each other.



All the countries covered in this book have dynamic health care systems. They are frequently—even constantly—modifying their health care systems. Occasionally this is by a major piece of legislation, but more frequently it is by new regulations or other arrangements. Furthermore, many of the nongovernmental actors in a country—the insurance companies, the physicians, the hospitals, and others—are taking action. For instance, insurance companies merge or cease functioning.

In addition, the countries studied in this book tabulate and report data in substantially different ways. For instance, official statistics regarding drug costs vary widely. In some cases, validated drug spending is reported only as retail pharmacy sales. In other cases, official drug spending statistics include drugs administered in hospitals. Other governments only report the cost of drugs the government subsidizes.

Finally, some of my sources disagreed about how some aspects of the health care system operate or should be described. For instance, there is disagreement about whether to consider long-term care financing as part of the health care budget. These differences are a function of both professional judgment and the particular history of each country’s health care system.

The consequence of these issues is that accuracy is a matter of direction and degree. I have done my best to report all facts using 2017 data and to make the data as comparable as possible, so that the overall picture conveyed is as close to reality as it can be. I apologize if I have missed any changes in these health care systems since the writing of this book. Nevertheless, the overall structures and tendencies I report are valid and, I hope, helpful to the reader.



Mrs. Wilkes gave birth to a bouncing 10-pound baby at full term. When his circumcision would not stop bleeding, a hematologist was called and diagnosed the healthy-looking baby boy with hemophilia. He was transferred to the neonatal intensive care unit (NICU) and infused with clotting factor. After a day of observation the baby was discharged.

Despite having health insurance, Mrs. Wilkes was billed $50,000 for the one night in the NICU—not including the hematologist who came and generously infused the clotting factor at no charge for both her time and the drug.

Ironically, Mrs. Wilkes made sure both her OB-GYN and the hospital were in network. But to her surprise, the hospital had subcontracted out the NICU to a 3rd party that refused to sign a contract with the insurer and, thus, was out of network—and able to charge whatever it wanted directly to the patient.

A dedicated and generous hematologist. Quick access to clotting factor. A system of in-network and out-of-network coverage that is impossible to navigate. Hidden and outrageously high prices for hospital care. Exorbitant patient out-of-pocket costs. In a few days, Mrs. Wilkes experienced many—though not all—of the evils of American health care… and this is with “good insurance.”


In 19th-century America, hospitals and physicians were not highly regarded.

Benjamin Rush, the father of psychiatry and signer of the Declaration of Independence, called hospitals the “sinks of human life.” Physicians were called snake oil salesmen. Change ensued at the end of the 19th century when scientific advances began making medical care safe and effective. Ether and subsequent anesthetics, initially demonstrated in 1846, allowed for painless, longer, and more careful surgeries. Germ theory, bacterial staining, and aseptic techniques reduced hospital-­acquired infections, making surgery, recovery, and hospital stays safer. X-rays allowed for more accurate diagnoses. Consequently, middle-­class Americans stopped fearing hospitals and began using them in larger numbers in the early 20th century.

In 1910, the Flexner Report on medical education led to the closure of many proprietary medical schools, replaced by university-affiliated medical schools modeled on those at Johns Hopkins, Case Western Reserve, and the University of Michigan. Instructors were no longer community practitioners earning side money but now full-time academic professors. The Report also ushered in a new curriculum composed of 2 years of preclinical scientific training and 2 years of clinical rotations in hospital wards. These changes drastically improved physicians’ quality and social standing, though the changes decreased the number of students from lower-income and rural communities.

Employers made the earliest attempts to provide health care or insurance in America. Many of these early plans consisted of employers hiring company doctors to care for rural workers, such as lumberjacks, who could not otherwise access medical services. In some cities unions created sickness funds to provide health benefits for their members. Physicians in rural locations also experimented with prepaid group practices.

But none of these efforts led to widespread health insurance coverage. This changed in 1929 in Dallas, Texas. Because of the Great Depression, hospital occupancy rates declined. To increase bed occupancy, Baylor University Hospital made a deal with Dallas schoolteachers. Baylor offered up to 21 days of hospital care per year for an annual premium of $6 per teacher. This arrangement succeeded and spread to other locales. It also evolved. Contracts were not with just one hospital but rather gave potential patients free choice among any hospital in a city. This nascent health insurance arrangement was further catalyzed because states permitted such plans to be tax-exempt charitable organizations, allowing them to circumvent many of the traditional insurance regulations, particularly the need to have substantial financial reserves. These hospital-focused plans adopted the Blue Cross symbol.

For a long time physicians were hostile to health insurance for physician services, worrying that insurance companies would threaten their clinical autonomy. Simultaneously, they worried that Blue Cross plans might begin to include hospital-based physicians in their insurance, taking business away from those in private practice. Ultimately, resistance to health insurance for physician services eroded because of the need to preempt Blue Cross plans and the persistent financial stress of the Great Depression. In 1939, the California Medical Association created an insurance product covering physician office visits, house calls, and physicians’ in-hospital services. Physicians controlled the insurance company, and it enshrined a patient’s right to choose their physician. The patient was to pay the physician and get reimbursed by the insurance company without any financial intermediary. This physician-focused model spread, and it often called upon state Blue Cross plans for management assistance and expertise. These physician-­focused insurance companies became known as Blue Shield. Eventually the Blue Cross and Blue Shield plans merged. They were state-based because health insurance was regulated in the United States at the state level. They embodied key values: they were not for profit and sold community-rated policies that charged all people the same premium (regardless of health status) to cover as many people as possible at affordable rates.

In 1943, the first bill to create a national social insurance model for health coverage was introduced to Congress. After his unexpected victory in 1948, President Harry S. Truman also pushed for enacting government-provided universal health insurance. Primarily because of AMA opposition and worries about socialism at the start of the Cold War, the House and Senate did not vote on his proposal.

In the 1940s and 1950s, the US government enacted policies that accelerated the spread of employer-focused health insurance. First, in 1943 the US government enacted wage and price controls but exempted health insurance, allowing employers to provide coverage valued up to 5% of workers’ wages without violating the wage controls. Then in 1954, to encourage the further dissemination of employer-sponsored insurance, Congress enacted the tax exclusion, excluding an employer’s contribution toward health insurance premiums from an employee’s income and payroll taxes. This made a nontaxed dollar in health insurance more valuable than a taxed dollar in cash wages.

In 2019, this tax exemption amounted to nearly $300 billion per year and remains the largest single tax exemption in the United States. This spurred employers to cover more workers with richer health insurance offerings. Also, Congress passed the Hill-Burton Act in 1946, which provided federal funds to community hospitals for constructing and expanding facilities. It is estimated that through the 1970s the federal government paid one-third the cost of the country’s hospital construction and expansion.

Something became obvious in the 1950s, though: an employer-based system excluded retired, self-employed, and unemployed Americans from health insurance. In 1957, the first bill to provide coverage to seniors—Medicare—was introduced. But it took until 1964 and Lyndon Johnson’s landslide election victory for Medicare, government payment of care for the elderly, and Medicaid, government payment for some of the poor, to finally be enacted. The federal government’s generous payments to hospitals under Medicare further facilitated hospital expansion.

There were additional efforts to improve the US health insurance system—most notably in the early 1970s under President Nixon and in the early 1990s under President Clinton. Neither succeeded.

However, during these decades the health care system became increasingly costly and complex, with the addition of many new technologies and services, ranging from MRI scanners, new drugs, and laparoscopic surgical procedures to hospice, home care, and skilled nursing facilities. After adjusting for inflation, the annual cost of health care increased from $1,832 per capita in 1970 to $11,172 per capita in 2018.

Finally, in March 2010, President Obama and the congressional Democrats passed the Affordable Care Act (ACA), achieving what had eluded politicians for decades: a structure for universal coverage. Rather than enacting a social insurance model, the ACA expanded Medicaid to cover lower-income individuals and established insurance exchanges with an individual and employer mandate as well as income-linked subsidies for Americans earning up to $100,000. It also instituted policies to change payment structures and to achieve significant cost savings. This basic structure has remained in place despite the repeal of the individual mandate under President Trump.


The American health care system is a patchwork of different insurance arrangements that is very confusing to navigate. The system has 4 main components and myriad smaller programs to provide health insurance to 290 million citizens, leaving approximately 28 to 30 million Americans without coverage.

The largest part of the system is employer-sponsored insurance. Employers either buy insurance for their employees and their families or are self-insured and have an insurance company, such as UnitedHealth or a state Blue Cross Blue Shield plan, paying claims and administering the plan. In 2017, employer-sponsored insurance covered about half of all Americans.

Second, Medicare covers all Americans aged 65 and older as well as permanently disabled Americans under 65. Medicare is composed of 4 programs covering different overlapping groups of people.

The original—what is called traditional Medicare—is Part A (hospital care) and Part B (physician and other ambulatory care services). The federal government’s Centers for Medicare and Medicaid Services (CMS) administers it. Elderly Americans and those who are disabled and have contributed taxes to Medicare (or are a relative of someone who has) get Part A, but people need to sign up and pay a premium to receive Part B benefits.

Enacted in 1997, Part C—or Medicare Advantage—allows Medicare beneficiaries to select a private insurer or a health care plan associated with a delivery system for health insurance rather than traditional Medicare (Parts A and B). In 2003, Part D, Medicare’s drug benefit program, was passed. Private pharmacy insurance plans administer it. Medicare beneficiaries must pay a modest premium if they want the drug coverage. In 2017, Medicare covered about 18% of the population—58 million Americans, composed of about 49 million elderly and nearly 9 million disabled. About 20 million (34%) have Part C, and 43 million (76%) have Part D.

Figure 1. Health Care Coverage* (United States)

*Some individuals have more than one type of insurance. For instance, some veterans have VA health care and Medicare, and some elderly are “dual eligible” being poor and eligible for both Medicare and Medicaid.

**Data varies depending upon method of study.

Third, Medicaid provides coverage to lower-income Americans as well as the blind and disabled. The original Medicaid program was limited to the “deserving poor”—specifically, poor children, pregnant women, poor elderly, and the disabled. Each state administers traditional Medicaid, and they determine the qualifying level of income for coverage; sometimes it is as low as 25% of the poverty line for able-bodied adults.

Traditional Medicaid exists in the 14 states that have not expanded Medicaid. However, for states that expanded Medicaid under the ACA, eligibility changed. It is no longer limited to the deserving poor with state-determined income thresholds. Instead, all people with incomes under 138% of the federal poverty line ($16,643 for an individual and $33,948 for a family of 4 in 2017) can receive Medicaid.

Figure 2. Financing Health Care (United States)

Another layer of the American health care system, the Children’s Health Insurance Program (CHIP), provides health coverage for children whose parents earn too much to qualify for Medicaid but whose private health insurance does not allow them to get the children insured. In 2017, Medicaid and CHIP together covered just over 19% of the population (62 million people); of that, about 9 million were children in the CHIP program. Notably, Americans who qualify for both Medicare and Medicaid—as old and poor—receive additional payments and are referred to as “dual eligible.”

Fourth, individuals under 65 who otherwise do not have employer-­sponsored insurance or earn too much for Medicaid buy their own health insurance. They can purchase insurance from insurance companies either through the insurance exchanges the ACA created or directly through insurance companies. If Americans purchase through the exchanges, they are eligible for income-linked subsidies to offset premium costs. Overall, about 7% of the population (22 million people) buy their own insurance, with about 11 million buying on the insurance exchanges and with over 8 million receiving subsidies.

Finally, there are myriad special insurance programs for special groups that cover other Americans. There is the Indian Health Service (IHS) for Native Americans, Department of Veterans Affairs (VA) health care, Tricare for the military, and other programs.

A SIGNIFICANT PORTION of the population moves between insurance programs each year and, thus, might have multiple types of insurance during any given year. Experts call this “churn.” For instance, it is common for someone to be unemployed and have Medicaid, then to find a job with employer-sponsored insurance. Similarly, older veterans may have veterans’ health coverage and Medicare simultaneously. One measure of this churn is that between one-quarter and one-third of the people who get insurance through the exchanges set up by the ACA are new each year.

There is yet another layer of complexity for health insurance. The ACA required dental and vision care be provided to children under the age of 19. However, for adults, dental and vision care are not part of traditional health insurance and need to be purchased separately with additional premiums. Employers often offer dental and vision insurance. Medicare does not cover dental care, although some of the Medicare Advantage plans cover it. In Medicaid dental care is covered for children, but coverage for adults varies between states. Preventive care, such as cleanings, has no deductibles and co-pays, while for more expensive treatments, such as crowns, insurance may cover only 50% of the cost.

About 10% of the population, or about 28 to 30 million Americans, lacked health insurance in 2017. The highest percentage of people without health insurance are those between the ages of 20 and 40. Overall, about 75 million Americans lack dental coverage altogether, and about 63 million lack any type of vision insurance.


In 2017, the United States spent 17.9% of its GDP—about $3.5 trillion—on health care, accounting for nearly $11,000 per person. Overall, 45.2% of health care is publicly financed. Private business paid for 19.9% of total health spending; the federal government, 28.3%; state and local governments, 16.9%; individuals, 28.1%; and other private sources, 6.7%.

Employer-Sponsored Insurance

Employers arrange for—or, in technical terms, “sponsor”—health insurance for their employees. In 2018, employer-sponsored health insurance cost $6,690 per individual and $18,764 for a family. On average, employees pay out of pocket 18% of the premium for individual plans and 31% for family plans. But the extent of services covered by insurance and the amount employees pay for in premiums vary significantly among employers. On average, the insurance provided by smaller employers is less generous and is accompanied by higher employee payments. In addition, there are out-of-pocket costs for deductibles, co-payments, and uncovered services.

Both economic theory and empirical data indicate that the employer contributions are, to some extent, taken from wages—that is, if the employer did not offer health insurance, the amount the employer contributes would, over time, go back into employees’ cash wages. Finally, employees pay no taxes on the employer’s contribution to their premiums; this is called the health insurance tax exclusion.


The federal government finances and administers Medicare. But each of the 4 parts is financed differently.

Part A for hospital costs is financed by a mandatory payroll tax of 1.45% of employee wages paid for by employers, plus 1.45% paid for by employees. For well-off individuals and families there is a Medicare surtax, an additional 0.9% for earnings over $125,000 for individuals or over $250,000 for couples. All workers pay this tax, including those under age 65, those with other forms of insurance coverage, and those not eligible for the program.

Part B for physician services is financed by income-linked premiums assessed on individuals who elect coverage (covering around 25% of costs) and general federal revenue (covering the remaining 75%). For most elderly who earn under $85,000, the premium in 2018 was about $130 per month.

Part C—Medicare Advantage—is financed by the federal government and flows through private health plans. The private insurance companies can charge enrollees additional premiums, but they can also offer additional services such as dental care.

Part D, the drug benefit, is financed similarly to Part B, with only those who elect coverage paying premiums.


The federal and state governments jointly finance and administer Medicaid. The federal government pays states a fixed percentage of total costs, known as the Federal Medicaid Assistance Percentage (FMAP), for traditional Medicaid; the money comes from general revenues. On average for the traditional Medicaid part, the federal government pays 57%, but how much it pays each state depends on that state’s economic status. For example, Mississippi, the poorest state, receives 76%, while the richest 14 states receive only 50% of the costs. The percentage the federal government pays differs for the ACA expansion. For states that expanded Medicaid, the federal government now pays 90% of the cost for newly insured people. Similarly, the federal government pays over 90% of the cost of CHIP; states pay the remainder. In many states Medicaid is the single largest part of the state budget, ahead of even primary and secondary education.

Individual Insurance Plans

Individuals who are either self-employed or whose employer does not offer insurance and who earn too much for Medicaid can purchase health insurance on their own. They can do so either through the ACA’s insurance exchanges or directly from an insurance company. They pay for these insurance policies out of pocket. If they earn between 100% and 400% of the federal poverty line (between $24,600 and $98,400 for a family of 4 in 2017) and purchase in the insurance exchanges, they can receive income-linked subsidies for their premium payment. The subsidies come from general federal tax revenue. However, individuals get no preferred tax treatment for their purchase of health insurance. About 8 million people buying insurance on the exchanges receive subsidies.

For lower-income individuals and families who purchase insurance on the exchanges—those earning less than 250% of the poverty line ($61,500 for a family of 4 in 2017)—the federal government used to offer cost-sharing subsidies to insurance companies to cover deductibles and co-pays. Although President Trump suspended payment of these cost-sharing subsidies, insurers nonetheless still need to provide them. To compensate for this added cost, insurers have increased the premiums on the exchanges.

Overall, in 2017 individual purchase of insurance constituted approximately $90 billion, and the federal government subsidized $34 billion.

Cost Control

Health care costs in the United States have increased substantially from $1.86 trillion in 2000 (in 2017 dollars) to $3.5 trillion in 2017—or roughly from $6,580 per capita in 2000 to $10,700 in 2017. There have been many cost-control initiatives. One of the more promising initiatives began in 2012 when Massachusetts established the Health Policy Commission to define a limit on health care cost growth based on growth in the state’s GDP and aging of the population. Despite being mostly voluntary and lacking legal enforcement powers—mainly the power to shame institutions contributing to high cost growth—this approach has been somewhat successful. Massachusetts has had below-average health care cost growth for 7 years; it even reduced private health care spending. Several other states have adopted this cost-control approach as well.

Long-Term Care

Long-term care in the United States is both in high demand and very expensive. It is estimated that in the coming decades about one-half to two-thirds of elderly Americans will need some form of long-term care. But the median annual cost of a private room in a nursing home is over $90,000, the cost for an assisted-living facility is over $45,000 per year, and for a home health assistant is about $50,000 per year.

Yet there is no comprehensive long-term care insurance program in the United States. The ACA had a provision for voluntary long-term care insurance—the Community Living Assistance Services and Supports Act (CLASS Act) of 2010. Because it was voluntary, though, it was deemed fiscally unsustainable and was repealed.

Existing long-term care arrangements are largely funded in 3 ways. One is through voluntary insurance usually purchased as a fringe benefit through employers or other groups. Surprisingly, sales of these plans are declining sharply just when the need is increasing. Only 12 insurers exist, and only about 0.5% of employers offer such long-term insurance. Typically employees must pay the full amount of the insurance; as a result, fewer than 10% of employees offered long-term insurance buy it and few Americans have such insurance.

The 2nd main funding mechanism for long-term care is through Medicaid, the federal-state program to provide health care coverage for lower-income Americans. Medicare pays for only 100 days of skilled nursing care per illness. This care must be triggered by a 3-day hospitalization and be related to the illness that caused the hospitalization. Medicare does not pay for custodial care. Conversely, Medicaid helps lower-income individuals pay for long-term care. This care includes both nursing homes and custodial services to help people stay in their own homes, such as bathing, feeding, and housecleaning. Overall Medicaid pays $72 billion for long-term care, including $55 billion for nursing homes. This covers 62% of nursing home residents and 50% of all long-term care costs in the United States.


Payments to Hospitals

Hospital payments in the United States consume over $1.1 trillion, or about 33% of total national health care spending.

Hospital payment in the United States is complex. Since the early 1980s hospitals have been paid largely—but not exclusively—based on Diagnosis Related Groups (DRGs). Importantly, the monetary value of a DRG is not uniform among all the different private insurers and government payers.

DRGs are fixed, prospective payments designed to reflect the resources used to treat a typical patient with a specific condition. There is a base case DRG—a hypothetical single condition. This DRG incorporates operating and capital expenses and is adjusted based on regional variations in labor costs. It is then modified by a weighting factor to reflect the patient’s specific clinical condition. This basic component is then further modified to incorporate the patient’s other health problems or secondary diagnoses, whether there were complications during hospitalization, and several other adjustments (discussed below). This current system is now called the Medicare Severity Diagnosis Related Groups System (MS-DRG). There are over 750 MS-DRGs, ranging from pancreas transplants to pleural effusions without major complications.

Importantly, the DRG is supposed to cover all the direct hospital costs associated with a diagnosis. It excludes physician services provided in the hospital, such as radiologists reading images or anesthesiologists administering anesthesia. These physician services are billed separately. It also excludes payments for outpatient care, even if it is incurred at the hospital.

Figure 3. Payment to Hospitals (United States)

DRGs provide a classification of services and goods for payment. But the amount hospitals are actually paid varies depending on who is paying. Typically, private insurers pay the highest rates, Medicare rates are in the middle, and Medicaid has the lowest payment rates.

The absolute highest DRG rate is called the charge master rate


  • "Valuable... It's hard to imagine anyone better suited to rank the world's health care systems than an oncologist with a Harvard medical degree and a Harvard Ph.D. in political philosophy who was deeply involved in crafting the Affordable Care Act and currently chairs the Department of Medical Ethics and Health Policy at the University of Pennsylvania."—The New York Review of Books

On Sale
Mar 22, 2022
Page Count
512 pages

Ezekiel J. Emanuel

About the Author

Ezekiel J. Emanuel is the Vice Provost for Global Initiatives, the Diane v.S. Levy and Robert M. Levy University Professor, and Chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. He is also a Senior Fellow at the Center for American Progress. Dr. Emanuel was the founding chair of the Department of Bioethics at the National Institutes of Health and held that position until August of 2011. Until January 2011, he served as a Special Advisor on Health Policy to the Director of the Office of Management and Budget and National Economic Council. He is a breast oncologist and author of several books, including Healthcare Guaranteed and Reinventing American Healthcare (both PublicAffairs).

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