What is Universal Health Care?

Universal Health Care Explained

By Kimberely Amadeo | Updated June 27, 2021
Reviewed by Janet Berry-Johnson

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The Balance / Nusha Ashjaee

Universal health care is a system that provides quality medical services to all citizens. The federal government offers it to everyone regardless of their ability to pay.

This model is in contrast to other health care systems that require individuals to pay at least a portion of their medical costs directly. There are several models of universal health care, and the system has many advantages and disadvantages compared to what most Americans are used to.

Definition and Examples of Universal Health Care

Universal health care comes in several different forms, but the basic idea is the same across the board: The government steps in with taxpayer money to ensure that every citizen has access to the medical care they need. With universal health care, no citizen is denied coverage based on their ability to pay.

The sheer cost of providing quality health care makes universal health care a large expense for governments. Medical coverage must be paid for by taxpayer-funded programs.

Thirty-two countries in the world have universal health care, including Canada, much of Europe, several Asian countries, Australia, and New Zealand. The U.S. has the distinction of being the only wealthy, industrialized nation without universal health care.

How Universal Health Care Works

Universal health care can work in several different ways, depending on the exact system. There are three universal health care models: single payer, mandatory insurance, and national health insurance.

Single-Payer Model

In a single-payer system, the government provides free health care paid for with revenue from income taxes. Services are government-owned and service providers are government employees. Every citizen has the same access to care. This is called the Beveridge Model.

When governments provide health care, they work to ensure doctors and hospitals provide quality care at a reasonable cost. To do this, government agencies must collect and analyze data and use their purchasing power to influence health care providers.

The United Kingdom developed the single-payer system. Other countries include Spain, New Zealand, and Cuba. The United States offers it to veterans and military personnel with the Department of Veterans Affairs and the armed forces.

Social Health Insurance Model

Countries that use a social health insurance model require everyone to buy insurance, usually through their employers. Employers deduct taxes from employee payroll to cover the costs, and the taxes go into a government-run health insurance fund that covers everyone. Private doctors and hospitals provide services. The government controls health insurance prices. It also has a lot of clout to control the private providers' prices.

Germany developed this system, which is also known as the Bismarck model. France, Belgium, the Netherlands, Japan, and Switzerland also use it. The U.S. Obamacare system also requires insurance, but there are many exemptions, and this rule is no longer enforced by penalties. It is also similar in that it provides subsidies to health insurance companies for low-income enrollees.

Advantages and Disadvantages of Universal Health Care

Advantages

  • Lowers overall health care costs
  • Lowers administrative costs
  • Standardizes service
  • Creates a healthier workforce
  • Prevents future social costs
  • Guides people to make healthier choices

Disadvantages

  • Healthy pay for the sickest
  • Less financial incentive to stay healthy
  • Long wait times for elective procedures
  • Doctors incentivized to cut care to lower costs
  • Health care costs may overwhelm government budgets
  • Government may limit services with low probability of success

Universal Health Care Comparison Chart (2019)

Country Type % of GDP Per Capita Infant Mortality Rate (2019)
Australia 2-tier 9.3% $5,187 3.1%
Canada Single 10.8% $5,418 4.2%
France 2-tier 11.2% $5,376 3.8%
Germany Mandate 11.7% $6,646 3.2%
Switzerland Mandate 12.1% $7,732 3.6%
United Kingdom Single 10.3% $4,653 3.7%
United States Private 17.0% $11,072 5.6%

Key Takeaways