A Look at Universal Healthcare

What it is, how it works, and how the U.S. healthcare system stacks up.

Written by Devon Delfino / May 16, 2022

Quick Bites

  • A universal healthcare system ensures access to quality care for all citizens without financial hardship.
  • Countries adopt different models for delivering universal care, and there are pros and cons to each.
  • Universal healthcare may involve roles for both governments and private insurers.
  • The United States uses a mix of healthcare systems, including Medicare and employer-sponsored insurance, but coverage is not universal.

When you hear the term “universal healthcare,” you might envision free trips to the doctor and no-cost prescriptions for everyone. Or you might imagine long waiting times to get care. The phrase universal healthcare encompasses a lot of methods for delivering medical services on a country-wide scale, and it can play out in very different ways.

Here’s what to know about universal healthcare, including common ways to deliver it and how the U.S. healthcare system fits in—and stands out.

What is universal healthcare?

Under a system of universal healthcare, everyone has access to the health services they need, from preventive care to treatments to rehabilitation services, typically without having to incur a financial hardship. [1] According to the World Health Organization, 75 countries have legislation to deliver a universal access to healthcare.[2] But not every system is created equal.

“Universal healthcare ensures all eligible individuals in a country have health coverage,” explains Munira Z. Gunja, a senior researcher for the International Program in Health Policy and Practice Innovations at The Commonwealth Fund. “It does not, however, guarantee a perfect health care system.”

Types of healthcare systems

There are four primary ways a county can deliver health care to its residents, but not all result in universal healthcare.

Single-payer national health service

This form of universal healthcare is also known as the Beveridge model for the man who created it in the United Kingdom in the 1940s. Under this system, healthcare is provided by the government and funded by taxes. Having the government as the single payer for healthcare generally keeps prices low. Countries that use this system include the United Kingdom, Spain, New Zealand and Cuba.[3]

Pros

  • No out-of-pocket costs when you receive healthcare services

  • All citizens are guaranteed access to healthcare

  • Benefits are standardized

Cons

  • Potential for higher income taxes when transitioning from another model

  • A national financial crisis could lead to less healthcare funding

Employer/employee-funded health insurance

Under this model, also called the Bismark model due to its origins, health insurance is generally available from private companies rather than the government. However, the government regulates insurers to help ensure that costs don’t get out of control. Insurance premiums are taken out of worker paychecks.

Because this model doesn’t include coverage for people who don’t work, it is not considered a universal healthcare system. You can find examples of this approach in Germany, Belgium, Japan and Switzerland.[3]

Pros

  • Insurers cover workers regardless of pre-existing conditions

  • Employed people have access to healthcare

Cons

  • Doesn’t account for the unemployed and the disabled

  • Can be problematic as workers age and stop working

National health insurance

This model is a hybrid of the previous two. While healthcare providers remain private, the government acts as the single payer for care. The national health insurance (NHI) model, also known as single-payer national insurance, is a type of universal healthcare since everyone has access to care. [3] The NHI model is used by countries like Canada, Taiwan and South Korea.

Pros

  • No or low out-of-pocket costs for healthcare services

  • With no private insurers, potentially lower administrative costs

  • Private insurance may be available if desired, depending on the system

Cons

  • There may be limits on what national health insurance programs will cover. [4]

  • This model can result in long waiting periods for treatment. [4]

“Despite providing health coverage to all individuals in Canada, the country has been known for long wait times, says Gunja. A recent Commonwealth Fund study found that nearly a third of older adults in Canada had to wait more than a week to make an appointment when they were sick.

Market-driven healthcare

This model is not what anyone would think of as universal healthcare. Patients must fund their own health care out-of-pocket. In other words: Those with money can get treatment, while those without, cannot. This model can be found in certain rural areas in India, China, Africa and South America.[3]

Pros

  • No mandatory healthcare payments

Cons

  • Leaves people on the hook for all of their medical costs

  • Can make people wait for treatment, worsening outcomes

How U.S. healthcare stacks up

Although universal healthcare isn’t a true reality in the U.S., there are examples of it within the system. For example, Medicare and Medicaid function similarly to the national health insurance model, with the government paying for care and the providers private. (Medicare, however, is not pure single-payer since private insurers are also involved in financing care.)

The Veterans Health Administration functions under the Beveridge model, with healthcare both provided and paid for by the government. [3]

Those not covered by Medicare, Medicaid or VA benefits typically rely on private health insurance, funded by an employer, the individual or both. The Affordable Care Act (ACA), also known as Obamacare, was an attempt to turn this hybrid of various approaches into universal healthcare.

To help all Americans find affordable health insurance, the ACA created insurance marketplaces where people could purchase coverage from private companies. To help control costs, the government subsidizes premiums for people with incomes between 100% and 400% of the federal poverty level.[5]

Under the ACA, preventive healthcare is provided with no out-of-pocket costs. Insurers cannot deny coverage to those with pre-existing medical conditions or charge them more.[6]

Even with health insurance, patients are responsible for deductibles, co-payments and co-insurance, though total out-of-pocket costs are capped. For plans covered by the ACA, the out-of-pocket maximum can go as high as $8,700 per year for an individual and $17,400 per year for a family plan.[7]

Tip: If you’re having trouble paying for medical bills, there are federal support systems and programs you may be able to use.

Despite the ACA, tens of millions of Americans have no health insurance coverage. [8] “There is room for improvement in each country’s health system, but failing to provide coverage to all people puts the U.S. behind from the start,” says Gunja. “For change to happen, policymakers must agree on what the structure of this country’s healthcare system should look like, in terms of both financing and values.”

Gunja says small policy fixes—like extending Medicaid coverage and enhancing ACA subsidies—could help expand coverage in the United States. “Regardless of which road policymakers choose to take to achieve universal coverage,” says Gunja, “guaranteeing every individual has health insurance has been shown to lead to lower costs and better health outcomes for consumers.”

Article Sources
  1. World Health Organization. “Universal Health Coverage.” https://www.who.int/health-topics/universal-health-coverage.
  2. World Health Organization. “Supporting national health policies, strategies, plans.” https://www.who.int/activities/supporting-national-health-policies-strategies-plans.
  3. Princeton Public Health Review. “Health Care Reform: Learning from Other Major Health Care Systems.” https://pphr.princeton.edu/2017/12/02/unhealthy-health-care-a-cursory-overview-of-major-health-care-systems/.
  4. Physicians for a National Health Program. “Health Care Systems - Four Basic Models.” https://www.pnhp.org/single_payer_resources/health_care_systems_four_basic_models.php.
  5. Healthcare.gov. “Affordable Care Act (ACA).” https://www.healthcare.gov/glossary/affordable-care-act/.
  6. Healthcare.gov. “Health coverage rights and protections.” https://www.healthcare.gov/health-care-law-protections/.
  7. Healthcare.gov. “Out-of-pocket maximum/limit.” https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/.
  8. U.S. Census Bureau, “Health Insurance Coverage in the United States: 2020.” https://www.census.gov/library/publications/2021/demo/p60-274.html

About the Author

Devon Delfino

Devon Delfino

Devon Delfino is a writer who’s covered personal finance—including everything from student loans to budgeting to saving for retirement and beyond—for the past six years. Her financial reporting has appeared in publications like the L.A. Times, U.S. News and World Report, Teen Vogue, Masha

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