Santa Swiss Delivers Health Care

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.

Comments

[Mark Anderson]

You have two comments on Liberals and Democrats, you don't know many Liberals or Democrats, do you. I believe that Republicans have killed total coverage in America since Truman. What do you want Republicans to draw on the drawing board? I thought that most everything in the Affordable Care Act was originally a Republican idea. I know that once Obama agrees with anything Republicans used to be for, Republicans will be against it. I believe that's a genetic disorder.

[Ken Blanchard]

Mark: yes. Everyone who disagrees with you is retarded. Now go back to sleep.

[Bill Fleming]

Good overview, KB. Mark's right though, the current bill is largely made up of GOP ideas. Specifically (and most recently) Mitt Romney's ideas. The upshot is, alternatively, we already have (and have for some time) a form of universal health care. It's called "the emergency room." Problem is, it's the most expensive and least intentional form of universal health care imagineable. We can do better. Let's do it.

[Bill Fleming]

p.s. Nice picture, KB.

[D.E. Bishop]

That is helpful info, thanks.

I can't speak for all libs or Dems, but for me, a liberal Democrat, the goal of healthcare reform was affordable coverage for everyone.

I can clearly see the sense of copays and deductibles to foster frugality. It's a great idea, and not suitable for everyone.

In 2006 I became ill. It's taken me to the present time to recover, and I'm as recovered as I ever will be. I am not able to work full time. I do receive money from Social Security. That, with my part-time paycheck and Medicare, keeps a roof over my head and a few other necessities. Prior to becoming ill I had a 403B, a pension, savings, a car, small tent camper, and basic belongings. I went from $45,000 to $00.00, in a week.

I had good insurance. I sold everything but the car. My pension, 403B, savings --- all gone. Every cent. It went for copays, deductibles, and living expenses. Massive medical bills. I filed bankruptcy, something I never in my life thought I would have to do. We just don't do that in my family. We work. We pay our obligations.

Those are the kinds of things that have been wiping out individuals and families. Those are the kinds of issues that health care needs to address. I wish I was a rare example of an individual or family being wiped out by health care needs. I really wish that. But I'm not. Health care reform needs to address that.

[Bill Fleming]

D.E. Agreed. People shouldn't have to go bankrupt just because they get sick.

[Loomans]

This was a great post, thanks for the info.
goog luck for you.

[Mark Anderson]

Ken,
I believe the term you should use is developmentally delayed. Now I'm going to bed.

[Ken Blanchard]

Mark: I was describing your view, not mine.

[Ken Blanchard]

Bill and D.E.B.: yes, helping people avoid bankruptcy due to heath care costs is one aim of an effective health care reform. Avoiding public bankruptcy is another. Not wrecking the health care system is yet one more.

[Bill Fleming]

Sadly, as long as money=free speech, then corporations=people, and health=money.

[Anthony Renli]

I would LOVE to go to a Swiss based health care system. But it isn't going to happen. Not because of the of the mandate or the controls...it's one control in specific.
from: http://www.commonwealthfund.org/usr_doc/Leu_swissdutchhltinssystems_1220.pdf?section=4039

"In contrast, the Swiss insurance system (7.5 million people) is highly
decentralized, with plans operating and setting premiums at the canton level
(26 divisions). In Switzerland, only nonprofit insurers may participate. The 10 largest of some 85 carriers insure 80 percent of the population. Swiss insurance risk equalization efforts adjust only for age and sex factors at the moment. Currently, Swiss premiums vary widely by health risks of insured pools across the country and within regions"

I would love to go to a mandated non-profit status for Insurance Companies - that would fix a massive amount of problems we have.

[Ken Blanchard]

Anthony: your post includes precisely the kind of considerations that might have preceded and informed the debate over health care reform. They didn't.

[Mass Suit]

I was hooked up to an IV for 3 hours, between 2:30 and 5:30 am, and was made very comfortable. The bed was comfy, they gave me lots of blankets, and the room was kept warm (I'm always cold, and when I'm cold, I'm very uncomfortable). It's pretty amazing how comfortable I was, and how well I slept, for someone with an IV hooked up to their vein.