Part 6: Paying for Denmark’s Free Health Care

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TL; DR Summary

This final installment looks at the claim that Denmark has free health care – health care is free at point of service, but obviously, health care expenses still get paid some how.

FREE HEALTHCARE

Clinics are free. However, (as of 2012) there was an 8% flat rate “Health contribution” tax on income. This tax was being phased out and rolled in to general income taxes. However, this gives us a baseline for what “free” health care costs in Denmark. Additional tax revenue, especially from local government income taxes, is added to this to pay the costs of “Free” health care.

The 8% health care income tax applied to all earnings above the US$7600 level. Starting in 2012, this is going down by 1% per year and merged into the general income tax (Source Danish government web site reviewed in 2015. For additional reference, see also  http://www.civitas.org.uk/pdf/Denmark.pdf)

TAXES IN DENMARK

Taxes in Denmark are the highest in the world. The typical Dane worker pays between 50% and 70% of their income, as taxes, including “Gross”, “Health”, “Income”, and “Local” taxes, plus a 25% Value-Added-Tax (VAT) which is similar to the U.S. concept of a sales tax. The “50-70%” figure is NOT a marginal rate – that is the total percentage of one’s income that is paid in taxes.

The basic tax scheme in Denmark is roughly:

  • 8% Gross tax (applies to all income, starting with the first earnings)
  • 8% Health contribution tax (being moved to the income tax)
  • 6-15% National income tax
  • 24-36% local income tax
  • 25% Value-Added Tax on most purchases made with your after tax income
  • Additional taxes such as a 150% tax on the purchase of an automobile (just reduced from 180% – plus other annual taxes like fuel taxes).

Sources for Denmark tax information:

The 8% Health contribution tax that existed to 2012 did not fully fund the Danish health system. Local government provides additional funding from local income taxes.

While health clinics provide free medical care, dental care and vision care are not free. Prescriptions are not entirely free either. These additional expenses are paid out of pocket or via insurance benefit programs.

DOCTOR TRAINING AND PAY

“Doctors” in the Danish system earn a Bachelor + “Candidate of Medicine” degree (equivalent to a Masters degree) in a combined total of 6 years. In the U.S., “Doctors” earn a 4 year undergraduate degree (Bachelor) and then a 4 year Medical Doctor degree (combined total of 8 years). Those with a “Candidate of Medicine” degree may optionally choose to pursue a dr.med. or PhD degree; both are typically research degrees. Many doctors may choose to pursue additional training and specialty certifications. These differences should be considered when comparing the two health care systems.

Danish doctors are paid less than U.S. doctors, on average. According to a relative who is a U.S. medical doctor, most Danish doctors have a standard work week, unlike U.S. doctors who often work 55-60+ hours per week, plus being on call at various times. A consequence is that US doctors are paid more, on average, but also work more hours.

MDs per 1,000 patients

In discussions comparing U.S. health care to that in other countries, a common metric introduced for comparisons is the number of doctors per 1,000 patients. A common claim seen on social media is that  “Germany, France, UK, Canada, Australia, Japan have more MD’s per 1,000 patients”.

First, we look at data from the World Health Organization, and then we look at the definition of “doctor” – as there are differences in the training of “doctors” by country.

Country, MDs/1000 and Mortality rate, sorted by the MDs/1000 value:

  • Germany 3.889, 11.29
  • Australia 3.273, 7.07
  • France 3.19, 9.06
  • U.S. 2.451, 8.15
  • Japan 2.297, 9.38
  • Canada 2.068, 8.31

Sorted by mortality rate:

  • Australia 3.273, 7.07
  • Canada 2.068, 8.31
  • U.S. 2.451, 8.15
  • France 3.19, 9.06
  • Japan 2.297, 9.38
  • Germany 3.889, 11.29

Data comes from the World Health Organization. Mortality rates also depend on other demographic factors including age distribution and common health issues that may be unique to each country.

The Definition of Doctor Depends on the Country

Doctors in the U.S. earn a medical doctor degree as their terminal degree, while in other countries, a “doctor” may complete a training program (sometimes equivalent to the U.S. and sometimes not).

  • A U.S. doctor has 8 years of training, a German doctor has 6 years of training, and in the U.K., a medic initially has 5 years of training. In many countries, physician candidates go on to more training, such that their training is similar to that in North America.
  • In Germany, a medical degree is a total of 6 years undergraduate training (2 years basic sciences, 3 years clinical, 1 year practical). All tuition is free in Germany – versus around $300,000 in the U.S. just for the 4 years of medical school.
  • In the UK, a medical degree is a total of 5 years of training (2 years foundation courses, 3 years general practice) resulting in a “Bachelor of Medicine” or “Bachelor of Surgery” degree and becomes a general practitioner. Additional training may be undertaken, adding more years to the training. Until 1998, tuition was free. Now students pay tuition similar to our public universities.
  • In France, a medical degree is 6 years. Tuition is subsidized by the government.
  • In Australia, students enter directly out of high school for 5 or 6 year training programs (both the 5- and 6-year programs exist there). Tuition cost is a fraction of U.S. tuition cost (perhaps 1/4 to 1/3d).
  • In Japan, students enter directly out of high school equivalent and enter a 6-year program. Tuition is similar to a US public university.
  • Canada is the same as the U.S.

Comparing the number of MDs per 1,000 across countries might not be a good metric for comparing the health systems between countries since not all “doctors” are equivalent.

U.S. Politics and the Danish Health Care System

The creation of a single-payer health care model in the U.S. was widely promoted by candidate Bernie Sanders during the 2016 Presidential campaign.

Much of what he offered, however, was lacking in details.  Reporter Ezra Klein wrote that Bernie Sanders’ single payer health care proposal did not make sense in a detailed review of what Sanders proposes.

Other posts in this series

Note – All data source links used were re-checked in January 2017 and were “live”.

Notes on Single Payer

Note – I am not opposed to a single payer scheme. I need to add this because of the logical fallacy that if I criticize or question X, then I obviously approve of Y, when I have not said any such thing.

To elaborate, a problem with ObamaCare is it failed to control costs in the non-group market, which was one of the primary goals for which ObamaCare was created. Rates in the non group market skyrocketed in significant part because the insurance “risk pools” are too small, coupled with the non-group risk pools absorbing all of the risks (costs) of the previous state-run high risk insurance pools, and other new risks. As of 2017, these risks are not shared with any other insured parties – consequently, rates in the non group market shot up so high that many can no longer afford to buy ObamaCare health insurance.

Our own ObamaCare health insurance premiums rose by 140% from 2014 to 2015 to 2016 to 2017.

Using HealthCare.gov, I collected price quotes around the U.S.

For many scenarios, the price of a basic “Silver” plan runs families $2,000 to $3,000 per month. For 2017, an age 64 couple living in Flagstaff, AZ, and earning $64,000/year in income – just above the subsidy level – has a nearly $3,000/year or $36,000/year health insurance bill. The same 64 year old couple has a bill of over $2,500/month in Asheboro, North Carolina or $4,000/month in Homer, Alaska. In Klamath Falls, Oregon, a 52 year old couple with 3 kids has a monthly bill of about $2,000/month. No one can afford to pay these rates.

Actual screen shot from HealthCare.gov for Flagstaff Arizona for 2017:

ObamaCare insurance is not like corporate insurance plans but leads the way in high deductibles (up to nearly $7,000 per person per year depending on plan and market) and narrow provider networks (we  had access to some providers in 3 counties only – all other access while traveling, for example, has up to a $14,000 per person per year deductible and is billed at higher “out of network” rates.) Literally, in a worst case situation, a family could have pay $24,000 per year for health insurance, but then not collect anything until paying an additional $7,000/person out of pocket for the deductible. While not likely, the 52 year old couple with 3 kids could have to pay $55,000 out of pocket in one year before collecting benefits.

What happened? Due to defects in the Affordable Care Act, high risks were pushed into the small individual insurance risk pools. The individual (or non group market) was turned into a high risk, high cost insurance pool, driving rates sky high for much of the non group market.

What happened to the patients in the 35 state run high risk pools? Almost all were rolled into the non-group market place since “pre-existing conditions” were no longer excluded and prices are based solely on age, location and whether you smoke. While these patients made up 2% of the non-group market, they are extraordinarily expensive. As of 2017, all of their risk (cost) is borne solely by the other members of the small individual market risk pools. There are additional examples of other risks that were pushed into the small non group market, resulting in unaffordable insurance rates.

Consequently, the non-group market was turned into a high risk pool with rates. As of the end of 2016, the size of the ACA nongroup marketplace was less than half what was expected and too small to distribute the risks (costs).

There are several ways to address this failure which concentrated all of the high cost patients into the non-group market. One way is a single payer model as that would spread the risk (cost) to the entire population.

If you wish to learn more, I have written an entire paper, with numerous cited references, that explains the problem and potential solutions in far greater detail. Unfortunately, 100% of my elected representatives ignored this input. Due to their being stuck on ideological stupidity, no elected official in the US seriously wants to fix these problems. They – regardless of which side – were interested solely in ideology and not addressing the problems faced by real people – their own constituents. Literally, they did not care.

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Why is the Denmark ranked the happiest country in the world by the United Nations?
$20 minimum wage
33 hour work week
Free University
Free Child Care
Free Health Care

Why is Denmark the happiest country in the world?
$20 minimum wage

33-hour work week

Free university

Free childcare

Free healthcare

Share if America should follow their lead

Occupy Democrats

Denmark v. USA
$21/hr. minimum wage   $7.25/hr. minimum wage
Free healthcare, childcare, college and job training – Healthcare, childcare and college are a luxury, can bankrupt you or saddle you with debt
Paid sick and parental leave – No paid sick/parental leave
Only 6.1% of children live in poverty – 23.1% of children are poor, highest rate in rich world
Ranked #1 happiest country
Ranked #1 country for business
Ranked #1 most unequal rich country
Share if Americans can learn from Denmark!
Occupy Democrats

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