Is Swiss Health Care a Good Model for Ours?

While perusing Arnold Kling’s post for my previous, I came across the following, which simply cannot go unchallenged:

…why not try single-payer in one part of the country and radical deregulation in another? Switzerland, which is about the size of Maryland, has different health care systems in each of its 20-odd cantons, which are about the size of Maryland counties. Surely it must be possible to try different health care approaches in Texas and Massachusetts.

I have no doubt that Arnold knows perfectly well (on some level of consciousness) the profound errors in these statements, assertions, and proposals. The Swiss health care system is heavily regulated. There are no cantons that are experimenting with “radical deregulation.”

To begin with, nobody in Switzerland gets turned down for insurance, or cut off when they get sick. All the rest (in some form or another) inevitably follows from that.

Here’s a quick precis of the Swiss system that I found here.

  • All insurers that offer the mandatory basic plan need to register with the Swiss Federal Office of Public Health. The health insurance market is decentralized and operates at the canton level (there are 26 cantons and each can have up to three regions.)
  • There is no group coverage, coverage for dependents or employer sponsored insurance; all plans are purchased on a per capita basis.
  • Most people purchase additional supplementary coverage for services excluded from the basic package (dental coverage, for example). Often times, an insurance company will have a non-profit branch that offers the basic plan and a for-profit branch that offers private, supplementary insurance.
  • Basic plans have a minimum deductible and coinsurance requirements; enrollees may opt for a higher deductible and obtain a reduced premium. (There is a minimum deductible of $225 and maximum deductible of $2,125. Once the deductible has been met, enrollees pay a 10 percent coinsurance rate with an annual maximum of $595. Maternity care and several preventive services are excluded from the deductible.) Switzerland tends to have relatively high out-of-pocket expenditures.
  • Aside from some variations in deductibles; individual insurers can vary premiums only according to age group (0-18, 19-25, 26 and older).
  • Insurance companies are free to set the prices for individual policies, but the Federal Office of Social Insurance has the power to reduce the price.
  • There is a risk equalization system that redistributes premium revenue among insurers according to the age and sex of their enrollees. This helps insurers with high-cost risk pools.
  • The Swiss have the option to change insurers each year during the annual open-enrollment period.

In many respects, it sounds surprisingly like…what we’re now trying to implement. If the ‘Pubs had actually gotten involved constructively instead of posturing for the cameras, our plan would probably look even more like the Swiss one.

So what do you think, Arnold? Would that be a good thing? Do you think we can get there “incrementally”? When, exactly?



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9 responses to “Is Swiss Health Care a Good Model for Ours?”

  1. Oliver Avatar

    The only reason Swiss health care hasn’t gone the same way as in most other European countries, namely to a single payer system, is because a: politics is hijacked by special interests (especially pharmaceutical), b: the Swiss love their inefficient federalism and c: all political decisions have to pass through the excruciatingly slow and centring process of direct democracy. Health care here is of high quality but it is also the second most expensive in the world. I’d aim higher if I were the US…

  2. mcl Avatar

    You need to shut down your idiotic spam filter, which incorrectly detects information-rich comments which link to specific newspapers articles documenting the facts, as spam.

    Get a clue. Your comment system is badly broken–almost as badly broken as America’s health care system.

    With respect, the Swiss system differs radically from the HCR bill just passed in America.

    First, the HCR bill imposes no meaningful cost controls. It dumps the responsibility for controlling insurance costs onto the states — but, if you study the history of individual state insurance regulatory commissions, you’ll find them wholly toothless. In Massachusetts, for example, the state regulatory commission recently denied 234 of 275 requests for increases in health insurance premiums by the insurance companies doing business in that state. In response, the insurance companies, refused to provide insurance on the MA public exchange system. This is of course what will happen with the failed and disastrous HCR bill recently passed by congress, since the HCR bill essentially recreates Massachusetts’ system nationwide.

    This kind of stuff isn’t permitted in Switzerland. The idea of slapping a maximum deductible on U.S. insurance plans is also found nowhere in the HCR bill just passed, and it explains why we’ll see a slow-motion trainwreck in U.S. health care delivery over the next few years. To cope with constantly rising costs, U.S. insurers will be forced to either increase premiums to stratospheric levels, or jack up deducitbles to the point where the so-called “health insurance” offered by American insurers in fact forces enrolees to pay for most of their health care costs on their own. Moreover, this last solution is already appearing across the U.S. Recent “affordable” insurance plans throughout the U.S. offer such large deductibles ($48,000 per family per year — yes, that’s right, the insurance doesn’t even kick in until you start to pay more than $48K in medical costs per year) and no coverage at all for maternity costs. (If your wife has a baby, you pay 100% of the medical costs. The insurance company pays nothing. Zero. Zip. Squat. Diddly. Jack. Nada.)

  3. mcl Avatar

    Since your commenting system is so badly broken and so incompetently designed that it incorrectly flags valid comments as spam, I have to post this comment in a series of blocks. An excellent case study in “how not to do it,” just like America’s horribly dysfucntional health care system.

    Notice the important difference that in Switzerland, insurance premiums are regulated by a federal agency. Not so in the current HCR “reform” bill, where regulation is left to the states. In CA, state regulation is so toothless that insurance companies typically merely ignore the state regulatory agency’s rulings, preferring instead of pay the fines. This too bodes ill in the current HCR bill: fines are set at $100 per day per patient. If you ran an insurance company, wouldn’t you prefer to pay a $100 per day fine for a patient whose treatment might potentially cost you millions? Why not just pay the fine until the patient dies. When the patient sues, you gamble that s/he won’t live long enough to collect. That’s the way American health insurance works. Once again, radically different from the Swiss system.

    Swiss federal profit redistribution is also not found in the current HCR “reform” bill.

    In fact, we can see the future of the U.S. HCR bill just passed by observing Massachusetts, where the system is already falling apart. Because the most fundamental differences twixt U.S. and European (never mind Swiss) health care delivery go far beyond insurance.

    The fundamental differences between European and American health care involve costs at a level which runs throughout the entire health care delivery system. In Europe, costs for medical care are moderate and constrained. In America, the health care delivery system has been monopolized by a nested series of anti-competitive cartels which collude corruptly in order to fix prices, monopolize markets, and force up prices to outrageous levels.

    Consider the following comparison: American doctors make 2x to 5x what European (including Swiss) doctors make. This is not “bad luck” or “an unhappy accident,” it’s the result of the corrupt collusive AMA monopoly on certifying doctors in America. The AMA artificially restricts the supply of doctors (by reducing the number of medical schools — 22% fewer today in the U.S. than 100 years ago) to artificially jack up the income of American doctors to 2x-5x what doctors make in the rest of the world.

  4. mcl Avatar

    Continuing with my comment to route around your horribly broken comment system which falsely identifies information-rich comments as “spam,” consider the following quotes:

    While the Anthem case has raised a political storm, the underlying surge in costs gets far less scrutiny. But each sector of the health industry points fingers at the other for driving up prices, and all are raking in money.

    Insurers blame hospitals and doctors, doctors blame insurers, and hospitals blame doctors and medical devicemakers in what academics call an inscrutable medical-industrial complex that rivals anything the defense industry ever invented. All these groups are combining into what many experts describe as cartels.

    Many industry insiders are afraid to speak on the record for fear of antagonizing the medical groups they rely on for their survival. Contracting practices are draped in secrecy. Prices are almost impossible to obtain because of “confidentiality agreements” among hospitals, physician groups, insurers and devicemakers who do not want their markups exposed to competition or public scrutiny.

    Source: Experts Warn of Medical Industry Cartels’ Power

    Consider: medical devicemakers produce disposable plastic surgical tools no more complex than a spork, yet charge $40 for utensils which cost only a few cents to manufacture — then the costs really start to skyrocket, and that 15 cents worth of cheap disposable plastic winds up getting billed to the insurance company for $1200.

    Christina Bernstein, a medical-device engineer and independent sales representative based in San Francisco, sells disposable surgical tools made mostly out of plastic that she estimates are manufactured for about $40 each. These are marked up and sold to hospitals for as much as $350, she said, for a single use in a surgery on a patient.

    “But if you were to get a detailed bill of what the hospital was charging the insurance company for the insured patient, those things get marked up to something like $1,200,” Bernstein said. “It’s ridiculous. There’s no open competition.”

    (op. cit.)

  5. mcl Avatar

    Once again continuing to work around your hideously broken comment system (and you should be thankful I’m taking the effort, since I’m linking to lots of New York Times and Business Week and San Francisco Chronicle and New Yorker articles with a great deal of information about the American health care system), let’s note the following differences twixt the American and the Swiss systems:

    The greed, corruption and collusion of the anti-competitive cartels that dominate the American medical industrial-complex run all the way from medical devicemakers, with this 100,000% profits on cheap plastic utensils billed for thousands of dollars, to doctors — who open private imaging clinics and charge $950 to $1800 for a simple CT scan when the exact same scan in Spain by the exact same CT machine costs $161. For evidence, google the New Yorker article “McAllen Texas and the High Cost of Medical Care.”

    For-profit hospitals in America charge $500 for simple CBC blood panels that cost $35 in Europe. For evidence, google the Ezra Klein article “An insurance industry CEO explains why American health care costs so much.” The charts are eye-popping. Every American health care service, even down to a simple routine doctors visit, costs 5x to 10x what it costs in Europe or the rest of the world.

    And insurance companies have created corrupt collusive monopolies that conspire with hospitals and doctors and medical devicemakers to fix prices and lock in monopolies to the point where insurers in America no longer care about raising prices because they know it’ll have no effect on their market share, since they’re monopolies, or at best, colluding duopolies. For evidence, google the Firedoglake articles “Health insurance monopolization now complete” and “Health insurers are making you an offer they don’t care if you refuse.”

    On Wednesday, a leading insurance broker laid out in clear terms what many Americans could already guess: the insurers’ monopoly is so strong that they can continue to jack up rates as much as they like – even if it means losing customers – and their profits will continue to soar under the status quo.

    Speaking about the lack of competition – a key target of reform – broker Steve Lewis told investors on a conference call organized by Wall Street giant Goldman Sachs:

    “Not only is price competition down from year ago (when we had characterized last year’s price competition as being down from the prior year), but trend or (healthcare) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business resulting in some carrier changes…”

    Source: google the article “Obama points to lack of insurance competition, a problem his plan no longer solves.”

    We simply don’t find anything like this in Switzerland, let alone Europe, or the rest of the world. Nothing. America is a wild outlier in regard to its medical-industrial complex.

  6. mcl Avatar

    Once again taking heroic measures to avoid getting an informative comment destroyed by your brain-damaged comment system, which incorrectly flags and deletes it, let’s note further underlying fundamental differences between Obama’s HCR bill and the Swiss system:

    From the bizarre American obsession with heroic intervention by teams of skilled surgeons (think of the intermittant headlines trumpeting teams of surgeons who spends millions of dollars and hundreds of hours to perform dozens of surgeries to separate conjoined twins, or the countless stories of extremely premature babies put on life-support at birth at incredible cost) rather than investing much smaller amounts in preventive health care, to the perverse incentives in our health care delivery system which have resulted in most doctors avoiding primary care as a profession and instead going into lucrative specialties where they can make millions, the fundamental differences between U.S. and Swiss health care have almost nothing to do with the insurance system, or reform thereof.

    Instead, the real differences between U.S. health care and the rest of the world involve the incredible series of American health care monopolies and cartels which lock in sky-high prices by collusion with one another, and the outlandish confidentiality agreements which prevent doctors and hospitals and insurers from disclosing the true costs of their services (and thus the astronomical markup on U.S. health services, as in the $40 plastic disposable surgical utensils that get billed out for $1200).

    Above all, America’s doctors astoundingly refuse to practice evidence-based medicine, preferring to prescribe vast numbers of treatments which actually harm patients and drive up costs. It sounds so hallucinogenic that it’s almost impossible to believe, but, as pointed out in the New York Times article “Believing in Treatments That Don’t Work” (which refers to doctors believing in treatments that don’t work, by the way, and weirdly persisting in prescribing said treatments even after the statistics and the studies show conclusively that the treatments don’t work!):

    * Recent press reports detailing the dangers of cough syrup for children have noted that cough syrup doesn’t work. True: No cough remedies have ever been proven better than a placebo, either for adults or children. Yet their use is common.
    * Patients with ear infections are more likely to be harmed by antibiotics than helped. While the pills may cause a small decrease in symptoms (for which ear drops work better), the infections typically recede within days regardless of treatment. The same is true for bronchitis, sinusitis, and sore throats. Unnecessary antibiotics are still given to more than one in seven Americans each year for these conditions alone, at a cost of more than $2 billion and tens of thousands of serious adverse medication effects requiring treatment.
    * Back surgeries to relieve pain are, in the majority of cases, no better than nonsurgical treatment. Yet doctors perform 600,000 of these surgeries each year, at a cost of over $20 billion.
    * More than a half million Americans per year undergo arthroscopic surgery to correct osteoarthritis of the knee, at a cost of $3 billion. Despite this, studies show the surgery to be no better than sham knee surgery, in which surgeons “pretend” to do surgery while the patient is under light anesthesia. It is also no better than much cheaper, and much less invasive, physical therapy.

    Treatment based on ideology is alluring. Surgeries to repair the knee should work. A syrup to reduce cough should help. Calming the straining heart should save lives. But the uncomfortable truth is that many expensive, invasive interventions are of little or no benefit and cause potentially uncomfortable, costly, and dangerous side effects and complications.

    The critical question that looms for health care reform is whether patients, doctors and experts are prepared to set aside ideology in the face of data. Can we abide by the evidence when it tells us that antibiotics don’t clear ear infections or help strep throats? Can we stop asking for, and writing, these prescriptions? Can we stop performing, and asking for, knee and back surgeries? Can we handle what the evidence reveals? Are we ready for the truth?

    The administration’s plan for reform includes identifying health care measures that work, and those that don’t. To place evidence above ideology, researchers and analysts must be trained in critical analysis, have no conflicts of interest and be a diverse group.

    Perhaps most importantly, we as doctors and patients must be open to evidence. Pills and surgery are potent symbols of healing power, but our faith in these symbols has often blinded us to truths. Somewhere along the line, theory trumped reality. Administering a medicine or performing a surgery became more important than its effect.

    (op. cit.)

    This just startling. It’s shocking. The very fact America even needs a movement among young doctors calling for the medical profession to start practicing “evidence-based medicine” is big red warning light that something has gone terribly wrong with American medicine.

  7. mcl Avatar

    When the American medical-industrial complex collapses and disintegrates in the near future because 70% to 80% or more of Americans can no longer afford basic primary health care, and when, in the near future, most health insurance companies in America have gone bankrupt and doctors are getting dragged out of their rolls royces and lynched, and hospitals are getting firebombed by parents who children died because the hospital turned them away for lack of insurance…at that point, it will be time to consider once again the basic reforms needed in the U.S. medical-industrial system.

    Single-payer nationalized health care, together with unleashing the hounds of antitrust hell on American doctors and medical devicemakers and for-profit hospitals, represent part of the eventual solution that will probably come out of the chaos. In the meantime, with Massachusetts providing a foretaste of the collapse and implosion which awaits America’s broken health care system, the current health care “reform” bill stands as a particularly black joke and a sinister monument to the power of the American medical-industrial lobby.

    As Harvard economist Umair Haque pointed out:

    Why does Wall St love healthcare reform? Because the current bill has no healthcare reform in it. There are no changes to either market structure, industry structure, reporting, or incentive structures.

    In fact, it’s a de facto bailout of health insurers. Welcome back our old friends rescission, premium inflation, and price discrimination – all flavours of moral hazard. Say goodbye to, well, better health care.

    Why does Wall St love healthcare reform? As the chart shows, money’s poured into health insurers over the past few days – hot money from hedge funds in search of, by the microsecond, fake, value-destructive alpha. Why? Because a massive transfer of wealth from society to pharma/hmo shareholders is written into the so-called reform bill.

    One so large, I’d wager it’s going to be, along with a broken financial sector, one of the final nails in the coffin of American economic competitiveness.

    Source: Umair Haque’s Capitalism 2.0 blog.

    Wow, your comment system is really badly broken. You need to wake up and get a clue. Stop blocking comments that link to detailed sources with documented facts. That’s stupid. It’s almost as crazy and almost as dumb as the slow-motion suicide of the American medical-industrial complex.

  8. Asymptosis Avatar

    MCL, what a great comment. Thanks. I am profoundly dismayed that you had to jump through such hoops to post it. I’m currently digging into the guts of WP SpamFree, seeing how I can improve things.

    BTW, I agree with most of what you say (and much appreciate the education). My main purpose here was to point out the self-contradiction in Arnold’s post.

    Your comment especially serves to highlight the the systemic nature of the problem, and the difficulty/impossibility of achieving a good system through “incremental” changes. Sad to say, it greatly reduces my hope that the recent (terribly flawed) HCR bill would at least provide a platform from which incremental change would have some hope of succeeding.

    It’s at least a massive change from the pre-existing (non-)system which had exactly zero chance of getting better, but quite possibly not enough of a change.

  9. mcl Avatar

    Well, you’re right that the status quo ante in American health care is unsustainable. We’ll just have to hope that the non-reform “reform” recently passed through congress will get modified by enough subsequent legislation, or possibly administration fixes, that it eventually becomes functional. Realistically, I doubt that a fix-up will work. The entire U.S. helath care system seems headed for a breakdown inasmuch as the recently-passed “reforms” don’t address the basic systemic problems, as Umair Haque points out, and as the author of the flawed but valuable Atlantic Magazine article “How American Health Care Killed My Father” pointed out:

    …Fundamentally, the “comprehensive” reform being contemplated merely cements in place the current system–insurance-based, employment-centered, administratively complex. It addresses the underlying causes of our health-care crisis only obliquely, if at all; indeed, by extending the current system to more people, it will likely increase the ultimate cost of true reform.

    (op. cit.)

    Didn’t cite the Atlantic Magazine article because, while it does an excellent job of diagnosing the problems which afflict America’s health care delivery system, the solution the guy offers is absolutely stark staring bonkers — a wacky libertarian “everyone pay for their own insurance” scheme that’s just so far out of wack with the real world that it can’t be taken seriously.

    In a larger sense, the American health care boondoggle and impending (probable) collapse seems even more worrisome insofar as it’s symptomic of a much larger set of unsustainable social policies here in America. It almost seems as though the U.S. of A. has decided to run a whole series of unsustainability marathons simultaneously: not just an unsustainable medical-industrial complex, but an unsustainable military-industrial complex (google Chalmers Johnson’s article “The Pentagon’s Economic Death Spiral” for details) and an unsustainable freeway-automobile oil addiction (the Califronia politics blog recently featured an article about a proposal for a vast new public transit system with the concluding remark: “As oil prices rise later this year, part of a long-term trend upward that will lead to a sustained price of $175 a barrel by 2017 according to Deutsche Bank analysts, the LA economy will grind to a halt unless more effective mass transit options are provided.” The article “Why Antonio Villaraigosa’s 30/10 Plan Matters” contains links to the Deutsche Bank report tha forecasts $175-per-barrel oil by 2017, but of course I can’t post ’em here because of the defective spam filter) and America’s catastrophic unsustainable drug-war/prison-industrial compelx, and America’s unsustainable outsourcing binge in which essentially all high-wage high-skill American jobs other than “lawyer” and “lobbyist” are getting outsourced to third world PhDs happy to work for $5 a day, to the unsustainable increase in the cost of American higher education (google the Wall Street Journal article “Is Higher Education the Next Bubble?” for details), and last but not least, America’s stupefying decision to let entire states collapse and rot, falling apart the way the Mayan city of Tenochtitlan disintegrated when the Mayans abandoned it — Michigan, where downtown Detroit is now a ruin with trees growing out of skyscrapers, East St. Louis, which now looks like Dresden after the WW II firebombing, New Orleans after Katrina (see David Simon’s current HBO series “Trema” for more on that disaster) and currently California, not yet in total collapse but headed there as surely and as catastrophically as Michigan in the 1980s…

    …You look at all these crazy unsustainable social policies in America, and when you realize that the U.S. medical-industrial ocmplex is just one among many, it sends chills down your spine.

    You have to wonder if this is what happened to the vanished civilizations of Mohenjo-Daro or the now-empty cities of the Anasazi people.