US healthcare reform looks to the Swiss
As Americans prepare for major surgery on an ailing health-care establishment, lawmakers and pundits say elements of the Swiss system could provide the tools.
With the world's only democratic, consumer-driven market and the right to choose from a vast array of providers, Switzerland's healthcare system strikes chords that are pleasing in the United States.
"The mix that Switzerland represents between private enterprise and general state regulations that make health care accessible to everyone is really an interesting example for the US," said Felix Gutzwiller, a Radical Party senator and head of Zurich University's department of public health.
Americans currently spend more than any other country on health care, about 16 per cent of gross domestic product – the same as the economic output of France. Switzerland spends 11 per cent of its GDP on health care, second only to the US.
But whereas nearly 50 million people in the US have no health insurance at all, the Swiss have quality, universal coverage, while spending 40 per cent less than Americans, a savings of $1 trillion (SFr1.06 trillion) a year.
20-80 rule
The question of how best to overhaul the US system is largely one of economics.
Although Switzerland struggles with bloated hospital subsidies and few incentives for doctors, Regina Herzlinger, a Harvard Business School professor, studied the Swiss system for her book, Who Killed Health Care. She says the Swiss health system is an excellent model for the US.
To revamp the US system, Herzlinger argues that Americans should be required to buy their own insurance, as in Switzerland, instead of having employers purchase it for them.
"When people buy their own health insurance with their own money they think about value," Herzlinger said. "I don't want someone else to buy my car, my house, my food or my clothes, so why do I let them buy my health insurance?"
In developed countries, 20 per cent of the population generates roughly 80 per cent of the health care costs. Mandatory coverage is key. When everyone pays, the healthy can subsidise the chronically ill. When they don't, the system collapses. Consumers still have the right to buy coverage that is best for them.
Regina Herzlinger, Harvard Business School
Subsidies
To make insurance affordable, Herzlinger says US employers should not deduct healthcare premiums from salaries but give that money to workers tax free to buy private coverage. Subsidies are still necessary.
In Switzerland, about one-third of the Swiss population cannot afford insurance. The Swiss government provides help on a sliding scale with about SFr4 billion a year.
"I don't think people really understand just how profound that is," Herzlinger said. "Poor people become dignified consumers. This is what makes Switzerland so unique."
Of course, to make a good decision, consumers need information about quality and prices of healthcare providers and insurers. In Switzerland, groups like Comparis.ch give consumers easy access to comparative data. That is not always the case in the US.
"I have very little information about the people who give me health care," Herzlinger said. "I know more about the tea I'm drinking than I would about a surgeon."
Competitive health
Health insurance companies also need dusting off. In Switzerland, administrative costs consume on average five per cent of health insurance revenue. In the US it's closer to 20 per cent.
More importantly, high consumer demand has created 87 private Swiss health insurance companies that offer an enormous menu of services. In Massachusetts, a state about the same size as Switzerland, there are five such companies.
To ensure equal access, the government must step into an otherwise free-market scenario. In Switzerland, federal regulators determine what services a health insurance company must cover. Premiums are based on a person's age and residence. No one can be turned away or suffer high rates because of illness.
But an insurance company could go broke if it had too many chronically ill clients and no healthy ones.
For Swiss companies, it makes little difference if you're a beacon of fitness or in need a heart transplant. A joint foundation overseen by government regulators redistributes high profits earned off healthy clients and divides them among companies with expensive, unhealthy ones.
"Switzerland is right in the middle between what the US has now and more state-driven systems like in Britain," Gutzwiller said.
"We might not be as efficient as we could be but the basic lesson here is that you develop a system with regulatory framework and not just based on employment status."
Tim Neville, swissinfo.ch
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US HEALTH CARE REFORM
United States President Barack Obama has instructed Congress to come up with proposals on how to overhaul the struggling system in the US, where premiums have grown three times as fast as wages since 2000.
Medical costs are the number one reason for personal bankruptcy in the US. Benefits have decreased for many as costs have climbed. Since 2000 premiums have almost doubled.
At the current rate, health care costs will consume more than 20 per cent of the US gross domestic product by 2018. That is more than the entire economic output of France.
US officials have been interested in visiting Switzerland to study its health care system for many years now.
"Foreign delegations are interested above all in questions about cost control," said Sabina Helfer, a spokeswoman from the Federal Health Office in Bern.
SWISS HEALTH CARE REFORM
According to the European Observatory on Health Care Systems, formalised health insurance began in Switzerland as early as 1899, but the system, based on Germany's, was rejected at the poll.
A new proposal passed by referendum in 1911. To qualify for federal money, "health funds" had to provide a set list of benefits and allow consumers to change plans. Cantons could decide whether to make insurance compulsory. Many funds collapsed after miscalculating demand.
Partial reforms came in 1958, followed in 1964 with measures that bolstered federal subsidies. Rates continued to increase and in 1987 legislators introduced reforms to control costs. The measure failed.
On March 18, 1994, the Swiss voted in favour of more reforms that contained costs. Another round of reforms will go into effect in 2012 that are designed to make hospitals more dynamic by restructuring subsidies and requiring providers to publish quality indicators.
CONTEXT
The average American supermarket has 42,000 different products, but most Americans have one health insurance company to choose from – the one their employer picks.
The average American family spends $17,000 a year on health insurance. Most families in the US have a yearly income of less than $73,000.
One of the most rapidly expanding groups of uninsured Americas makes more than $75,000 a year.
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Comments
Having lived and worked in Switzerland - and wondering now why I ever gave up my C-permit and repatriated - I can say there is no way the US could ever adopt the Swiss system. Why not? The US health care system is so bloated and consumed by fraudulent practices the likes of which I never saw in Switzerland. Add to that our litigious society. We have Draconian laws like HIPAA that place tremendous administrator burdens on providers as well as fail in delivering what they were intended to (insurance portability in the case of HIPAA). Neither could we adopt Singapore's system. I do agree that we should buy our own insurance, but the system we currently have prevents that. As to administrative costs of insurers, could that be because of the ridiculous provider network scheme that stifles competition and dictates care to providers.
I will give credit to Regina Herzlinger, when she states ""When people buy their own health insurance with their own money they think about value" . One of the major problems with the current healthcare system in the U.S. is that those who are given it free, abuse the system. They clog emergency rooms and health care facilities at the slightest sniffle. Doctors are required to examine patients at their whim. If a co-pay was required even by the poor, especially those already receiving other welfare, then a large percentage of these abuses would end. Possibly with the correct governmental intervention to assist (not mandate) private insurance purchasing can the free market system come into play based upon demand. But first, there needs to be regulation against frivolous malpractice claims and exorbitant malpractice awards provided in the court system. Then follow this up with a change that allows hospitals to deny repeat coverage to illegal immigrants, and a real change for the better can be observed. The U.S. needs to get a handle on the free services given out to those who have entered the country illegally and who have never paid taxes and never will. Once these corrections are underway, only then can we move forward with an economically viable universal health care plan.
Regina Herzlinger obviously speaks from a position of wealth. She does make good points. I agree in the freedom to choose your health care provider but to say that employers should simply not take healthcare $ out of an employee's paycheck but let them purchase their own, individually, is ludicrous. Tax free is a good idea, and that should be an option, but even without taxes, that amount of funds would still not make privately purchased health care viable. Only through group associations can we keep health care costs reasonable, at least in this point of time. Has she not ever looked into to disparity between employee provided health care and that available to an individual? There is a huge difference. Most middle class families would be without healthcare if it was not offered by their employee. Currently we in the US do have to elect into our company health care. I know of no one not already covered by another medical plan, that does not take advantage of employer health care. Only the more wealthy can afford the choice to opt out of company provided health care.