One of the most striking things about the Patient Protection and Affordable Care Act is that it was never clear exactly what problem it was supposed to address. The President defended the necessity of an overhaul almost solely on fiscal grounds. In order to get our budget under control, we had to reduce our health care expenditures. Yet the act as passed was almost completely innocent of any genuine mechanisms for cost control.
We were told that way too many people lack adequate health insurance. To address that problem, however, one needs to be clear about why it is a problem. Is it because many Americans are not receiving adequate health care? Or is the problem again one of economics: too many people facing ruin or hardship because of personal health care costs? There was never any attempt to determine the extent of either problem.
One of the things I complained about early on was the astonishing lack of interest in Washington and in the MSM regarding other health care systems. Which ones work best and which are worst and why? You'd think that a White Paper laying out the general details and statistics about health care systems in other nations would have been in order. If there was one, the New York Times didn't tell me about it.
Avik Roy and Pascal-Emmanuel Gobry are filling in for Meagan McArdle at her Atlantic blog. Much as I admire McArdle, Roy and Gobry have been very enlightening. Gobry argues that the French system, often said to be one of the best in the world, is amazingly similar to the U.S. model. The French system is based on a highly regulated private health care industry and employer provided insurance. At present, the French system has much lower costs but it is facing the same long term challenges that threaten our health care regime.
Roy argues that conservatives were wrong to fear socialized health care because that is what we already have. The market is dramatically restricted in the U.S. He has his own favorite health care system: Switzerland. Here is Roy writing in Forbes:
The Swiss system, called Santésuisse, is striking in its differences to ours. Government spending on health care in Switzerland is only 2.7 percent of GDP, by far the lowest in the developed world. By contrast, in 2008, U.S. government spending on health care was 7.4 percent of GDP. If the U.S. could move its state health spending to Swiss levels, it would save more than $700 billion a year.
Despite this apparent stinginess, the Swiss have achieved universal coverage for all its citizens. The Swiss have access to the latest technology, just as Americans do, and with comparably low wait times for appointments and procedures. And the Swiss are among the healthiest people on earth: while life expectancy is not the ideal proxy for overall health, nor of a health care system's performance, life expectancy for a Swiss citizen on his 65th birthday is second only to that of Japan's.
Now he has my interest. Effective and convenient healthcare at a fraction of the cost would surely solve our health care problems, whatever they may be. So how does Santa Swiss pull this off?
Swiss citizens buy insurance for themselves; there are no employer-sponsored or government-run insurance programs. Hence, insurance prices are transparent to the beneficiary. The government defines the minimum benefit package that qualifies for the mandate. Critically, all packages require beneficiaries to pick up a portion of the costs of their care (deductibles and coinsurance) in order to incentivize their frugality.
The government subsidizes health care for the poor on a graduated basis, with the goal of preventing individuals from spending more than 10 percent of their income on insurance. But because people are still on the hook for a significant component of the costs, they often opt for cheaper packages; in 2003, 42% of Swiss citizens chose high-deductible plans (i.e., plans with significant cost-sharing features). Those who wish to acquire supplemental coverage are free to do so on their own.
99.5% of Swiss citizens have health insurance. Because they can choose between plans from nearly 100 different private insurance companies, insurers must compete on price and service, helping to curb health care inflation. Most beneficiaries have complete freedom to choose their doctor, and appointment waiting times are almost as low as those in the U.S., the world leader.
Yes, Virginia, there is a market. However, Roy points out that Santa Swiss also has a mandate, a minimum benefits standard, and Medicare style cost controls. These would not be palatable to conservatives. Since I consider the mandate to be constitutionally problematic, I would have to think that part of it through.
Liberals won't like the Santa Swiss because of its heavy reliance on market mechanisms. Over and over in the debate we heard experts tell us that ordinary people aren't expert enough to make judgments about their health care. That may be true with regard to specific treatments; however, people can figure out that the Mayo Clinic is better than other hospitals. They can also weigh the costs and benefits of copays, flexible spending accounts, and deductibles.
It is possible that something like the Swiss model could have been adopted in the U.S. What we got instead the most problematic features of the Swiss model grafted onto the existing system with all of its warts. Republicans are as much to blame as Democrats. The GOP could have done the hard work that the left was uninterested in doing. They might have insisted on comparisons such as the one Roy presents, and they could have done them on their own if the Democrats resisted.
Instead, both sides spent all their time and energy fighting ancient battles. The Democrats won. They got a lot more government control over health care, which was what they really cared about. The only hope now is that the High Court will trash the whole thing. Then maybe we can go back to the drawing board and this time draw something on it.