Swiss system could be best of the big-government reform alternatives

At a recent forum on health care in Wichita, the system of health care in Switzerland was mentioned as a system that we could learn from.

Dr. Brian Michael, a physician at the Wichita Clinic, specializing in endocrinology, diabetes, metabolism and thyroid disease, outlined the basic characteristics of the Swiss system. Switzerland has no government health care and no employer-funded health care. Each person must purchase commercial insurance, and each person owns their own policies.

(Michael also said that policies must be in effect for five years before changing carriers, but I have not been able to verify this feature.)

A more detailed list of the features of the Swiss system can be found at Healthcare Economist.

An article in the Wall Street Journal by Regina E. Herzlinger provides more detail about the Swiss health care system:

• In 2003, health care costs were 12% of GDP for Switzerland; 15% for the U.S.
• “[Switzerland has] far better health outcomes than the U.S., even when Switzerland is compared to socio-demographically similar U.S. states such as Connecticut and Massachusetts.”
• “The sick … can afford to buy health insurance, and also pay the same price. Yet private insurers compete in the market because they are paid more for sick enrollees through various risk-adjustment systems.”
• “The Swiss government accounts for only a quarter of the health-care spending versus nearly 50% for the U.S.”
• “The Swiss system is consumer-driven because consumers themselves pay for their purchases.”

Not all is perfect with the Swiss system, however:

• “… the government limits insurance competition with requirements for extensive minimum benefit packages and considerable micromanagement of prices.”
• “Even worse is the Swiss government’s micromanagement of medical care suppliers. Unwisely adopting the U.S. government’s Medicare payment system, it not only dictates medical care prices but also specifies the bundles of care for which it will pay.”

In a policy paper The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World, the Cato Institute’s Michael D. Tanner wrote this about the Swiss system: “… it is notable that Swiss health care spending remains below that of the United States for nearly comparable care. Strong evidence suggests that the exposure of Swiss consumers to the cost consequences of their health care decisions has made them more conscious consumers and helped limit overall health care costs.” We should note that the public option plan favored by many in the U.S. would shield us from these costs, just as many employer-provided plans do now.

The purchase mandate and a government-defined benefits package is a problem, too: “Public choice dynamics are such that providers (who would make money from the increased demand for their services) and disease constituencies (whose members naturally have an urgent desire for coverage of their illness or condition) will always have a strong incentive to lobby legislators for inclusion under any minimum benefits package. The public at large will likely be unaware of the debate or see resisting the small premium increase caused by any particular additional benefit as unworthy of a similar effort — a simple case of concentrated benefits and diffused costs. … That is exactly what has happened in Switzerland, leading to a growing expansion of the basic benefits package.”

Will the Obama administration and Congress consider adopting Swiss-style health care, where at least some market forces are at work? In a recent Roll Call column that reports on Herzlinger’s research and recommendations, by Morton M. Kondracke writes: “But even more compelling than her acid evaluation of what’s wrong is Herzlinger’s recommendation of the right alternative. ‘Consumer-driven health care,’ she insists, can be universal, efficient and end up costing less money than the current system — or any system being considered this year by Congress.”

Kondracke concludes: “Right now, most health care reform plans being considered in Congress don’t even give consumers a role in controlling costs. Letting them run the system is hardly on anyone’s radar screen.”

It doesn’t seem that we’ll learn from the Swiss.