• I don’t think the Swiss health care system is what they think it is

    Yglesias praises Douglas Holtz-Eakin and Avik Roy, and notes that their continued call for a more-Swiss like health care system is a “surrender” to Obamacare. I’ll leave that political nuance to him. But I have got to point out that while Switzerland seems to be some “holy grail” to many conservatives, with respect to a health care system, I’m not sure they know what it really is.

    For instance:

    While most Americans view their healthcare system as “free-market,” Switzerland actually has the most market-oriented healthcare system in the West. It translates into universal coverage and low entitlement costs. Swiss government entities spent about 3.5 percent of gross domestic product on healthcare in 2010, compared to 8.5 percent in the United States. That’s a difference of more than $5 trillion over 10 years: real money, especially relative to our $16 trillion debt.

    The reasons other countries spend less are not because they are “free market”. Why not cite how much less the UK spends? Or Canada? Or pretty much any other country in the world? The reason they spend less is because everything (including drugs, physicians, etc.) costs less there.

    There is no “public option” in Switzerland. Instead, citizens qualify for means-tested, sliding-scale subsidies and choose among a variety of regulated, private-sector insurance products. The Swiss have the freedom to choose their own doctors, as Americans do, and access to the latest medical technologies. They also have short waiting times for appointments.

    There is no “public option” here. What are they talking about? But more importantly – do they know that the Swiss health care system forces every insurance company to offer a non-profit product to everyone, which is closer to a “public option” than anything we have?

    More of their ideas:

    The first is to replace or reform Obamacare’s exchanges, which are larded with costly mandates and regulations. These drive up the price of insurance, while limiting insurers’ ability to come up with more innovative, cost-efficient products.

    Do they know that the Swiss health care system has an individual mandate? Do they know that the Swiss health care system has arguably more regulations, such that they can’t even charge a 25 year old and an 80 year old a different price (like you can in Obamacare)? Do they know that the Swiss health care system regulates drug prices and fees for lab tests and medical devices? Do they know the most someone can pay for insurance in Switzerland is 8% of income (which is less than Obamacare allows)?

    “Community rating,” for example, will dramatically increase premiums for young people, a counterproductive approach when one considers that most uninsured Americans are in their 20s and 30s. States should build free-market exchanges with affordable health plans — as Utah has done — and demonstrate their superiority to Obamacare’s costlier approach.

    Do they know that the Swiss health care system employs community ratings?

    Fourth is to gradually shift the remainder of Medicaid’s low-income enrollees into the exchanges. Today, Medicaid recipients face a strong disincentive to seek work, because entry-level jobs can force them to give up their health coverage in exchange for modestly higher income. The exchanges would allow these workers to climb up the income ladder while maintaining their insurance.

    Do they not know that this will be more expensive than giving them Medicaid? Do they not know that’s why Congress didn’t do it?

    Look, I get that they’re trying to make a political point, and I applaud the fact that they’re trying to make conservative changes to Obamacare to make it more palatable to their goals and ideology. But it’s just hard to look at the rest of the world and argue other countries make the point Roy and Holtz-Eakin assert.

    I don’t think the Swiss health care system is what they think it is.

    @aaronecarroll

    UPDATE: Please don’t tell me that the Swiss system is more free market because they don’t have Medicaid. When someone supports giving everyone below 138% of the poverty line massive subsidies for private insurance on the exchanges, I’ll applaud them. No one is. It would cost more than the expansion. Also, I edited for clarity.

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    • A mind blowingly good Health Affairs interview with Thomas Zeltner, M.D., who served as head of the Swiss federal Office of Public Health (for national duties) and as secretary of health (for international activities) for nineteen years, from January 1991 to December 2009.

      http://content.healthaffairs.org/content/29/8/1442.full

      They should have read the interview before writing their piece. Forget mechanics. You want to know why we cant replicate the Swiss system here? Values:

      Cheng:
      “Many Americans bristle at the idea of being mandated to purchase health insurance and see it as a violation of their individual freedom. The Swiss are known for jealously guarding their individual freedom, too, yet they accept their own mandate to have adequate health insurance. As one such freedom-loving Swiss individual, would you defend the Swiss mandate?”

      Zeltner:
      “That’s easy. We will not let people suffer and die when they need health care. The Swiss believe that in return, individuals owe it to society to make provision ahead of time for their health care when they fall seriously ill. At that point, they may not have enough money to pay for it. So we consider the health insurance mandate to be a form of socially responsible civic conduct. In Switzerland, “individual freedom” does not mean that you should be free to live irresponsibly and freeload from others, as you would put it.”

      • Could not have stated our responsibility to our fellow citizens any better.

        • Then pray tell, sir, why I can no longer purchase catastrophic coverage and must instead buy coverages I don’t need, at prices I can’t afford, to hold down the premium costs of over 50s who should have made provision for their rising medical costs when they were my age?

          This “free-loading” nonsense cuts both ways.

          • @Mike,
            You must buy stuff you don’t need because then you subsidize those older people …. just like YOU will be subsidised whey YOU are older.
            This not only happens in pretty much EVERY other nations health care system, but in ALL other insurance systems, like car insurance.
            the careful drivers subsidize the careless drivers. And if we all drive careless, premiums go up. Sometimes, premiums even go down if all of the insured drive very carefully.

            But thanks, Mike, for displaying the narrowminded myopic egotism for which the Repubes have become so infamous.

            • @Jack Myswag: I would have put it “You must buy stuff you don’t need because then you subsidize those private redundant more expensive insurance companies with their highly paid executives and large staffs devoted to finding ways to deny coverage to their customers.” The reason you have to do this is because the private insurance companies, pharmaceutical companies, hospitals, and doctors have so much money and therefore so much political power. As long as voters continue to elect Republicans you will be forced to pay for stuff you don’t want.

          • “…to hold down the premium costs of over 50s who should have made provision for their rising medical costs when they were my age?”

            Because time machines don’t exist. Sorry about that.

            The Swiss have an expensive universal healthcare system because they reformed late. The US will have a more expensive universal healthcare system (eventually) because it’s still being reformed.

          • As a 60-year old, I can say that we made provisions, by staying with bigger companies at lower salaries to maintain good health insurance, only to see the costs rise far beyond what anyone predicted, or to get laid off and lose it anyway. You cannot make provision for price gouging and con games. Steven Brill at TIME lays it all out for people such as yourself, who have not been paying attention:

            http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

            • “As a 60-year old, I can say that we made provisions, by staying with bigger companies at lower salaries to maintain good health insurance”

              That’s a very good point. Let’s also note that the union workers who made that provision with their employers in contract negotiations, essentially sacrificing wage income for future healthcare benefits, have been castigated by conservatives for doing so, even though that negotiation was presumably considered a good deal for the employers at the time.

    • Holtz-Eakin forfeited any reputation for integrity in 2008 (McCain campaign).

    • Thanks Aaron. As always, a reasoned, researched, thoughtful, and rational analysis.

      Holz-Eakin, Roy, and others like them, however, have no interest in reason and rationality. They seek only to make political points (however poorly they make them) and then stand back and watch. Their point here is to bash Obama for not giving us a Swiss-like system. If Obama had proposed “Let’s be like Switzerland” they and their colleagues would bash it as European style socialism.

      When Holz-Eakin and Roy use their considerable resources and soap box to pressure GOP politicians and other Obamacare naysayers to propose a Swiss-like system, including all the nitty gritty details, then I’ll take them more seriously.

      Bring it on! We’ll take Switzerland over the mess we now call the U.S. health care system.

      • I always wonder how amused or annoyed the Germans, Dutch, Swedes, Fins, French Japanese are to hear that the looney Teabaggers describe them as “socialists” as if they were Soviet communists ….
        This is, I suspect, the major reason why Obama would have beaten Generic Republican by 80-20 percent in any European country: The completely moronic description of their own countries by the Con-men

    • I hear similar arguments about Singapore being a model of healthcare. And of course, the same counterpoints are in play. Singapore has a individual mandate. They subsidize those in poverty, etc. The very things things that are demonized here. I gave up trying to use evidence to win those arguments long ago. The simple truth is that too many Americans believe that healthcare is an earned privilege. And too many others engage in man’s oldest dilemma — finding a moral justification for ones greed.

      • The individual mandate and subsidies are just about the only parts of ObamaCare that Eakin, Roy, and other wonkier Republicans support. They really don’t think what you and Carroll think they think. Carroll was clearly battling a strawman.

        • Straw man? I would be hard pressed to quote more of their piece than I did. Where am I wrong specifically?

          • You suggest that they oppose the individual mandate. Just the opposite. They do oppose some mandates just like everyone else, but not THE mandate.

            The part about the public option was clearly in reference to the Democratic desire for one, not that there currently is one.

            The latter part of their piece is not in reference to Switzerland but you give the impression that it is. It’s fair to point out why they may be wrong about Switzerland but that was one paragraph. Reading your rebuttal, you’d think they wrote a piece about Swiss health care.

            Finally, you said, “When someone supports giving everyone below 138% of the poverty line massive subsidies for private insurance on the exchanges, I’ll applaud them.” I don’t hear you applauding. Did you think they wanted a minimum income threshold for subsidies?

            • Really? Get them on record in support of the individual mandate. Please. Also, what other “mandate” are they referring to? Which Obamacare mandate do they oppose that Switzerland lacks?

              They are talking about how Switzerland is different than Obamacare, and say “There is no “public option” in Switzerland. Instead, citizens qualify for means-tested, sliding-scale subsidies and choose among a variety of regulated, private-sector insurance products.” How do you interpret, “Instead”?

              You’re suggesting that their piece doesn’t hinge on how “most market-oriented healthcare system in the West”? It’s not about “a way to use health-insurance exchanges to both reform our healthcare entitlements and reduce premiums for those with private insurance”?

              I’ll applaud when someone says that they support the cost of giving everyone below 138% of the poverty line full subsidies to buy private insurance in the exchanges in order to eliminate Medicaid. I believe that they support giving people far, far less than the cost of getting people onto the exchanges. But I’m happy to be proven wrong. Once again, get them on record.

              But – more generally – I’d just like for people to stop using Switzerland as the example of what they “like,” when what they really want is for Obamacare to become less like Switzerland, not more.

            • ‘Really? Get them on record in support of the individual mandate. Please. Also, what other “mandate” are they referring to? Which Obamacare mandate do they oppose that Switzerland lacks?’

              I think they mean the mandates on what kind of insurance can be offered, i.e. a minimum of highly comprehensive coverage without spending caps. I suspect they’re totally wrong in thinking Switzerland doesn’t have those, too.

    • The main reason things cost less in Switzerland is that the Canton (state) governments tightly regulate all prices. They dictate the prices for all medical services, drugs, etc. They also limit the ability of doctors to open practices and of hospitals to expand and buy expensive equipment.
      I doubt that this is what most people have in mind when they tout the “free market” Swiss health system but it is what keeps costs down.

      • dunno if that’s the main reason, but it’s up there. The Swiss system certainly doesn’t allow for wanton tests, and 10 procedures when one would suffice.
        The Swiss don’t treat people like cars: No yearly checkups!
        When you have a problem, go see a doctor.

        The us system has a lot of perverse incentives, and overhead. The Swiss system doesn’t.
        But …. the kicker is that the Swiss system is NOT that cheap! It’s the second most expensive health care system in the world, after the American one (we’re number ONE!!!)

    • Great post, Aaron. I went onto John Goodman’s blog a few days ago when he brought up the Swiss health care system. I added these points, which I learned from Uwe Reinhardt:

      - Swiss insurers practice a serious form of risk adjustment. No one makes a profit on underwriting.

      - Swiss hospitals are partly supported by taxes. This means they can charge insurers less. While in America, hospitals must try for huge overpayments from insurers through constant upcoding.

      - Switzerland does not have a low-wage sector. Even waitresses make a decent wage if not a lot.

      The last item is key. If a state like Texas or Louisiana were to really have universal insurance, about 40% of the population would need large subsidies.

      Whereas Switzerland is more like Massachusetts or North Dakota. About 10% or less of the population needs help buying basic insurance.

      • don’t be daft, OF COURSE Switzerland has a low wage sector. Sure a nurse or a waitress makes 8,000 dollars, but the bankers earn much more. Also, 8,000 dollars doesn’t get you very far in Switzerland, there’s an extreme high cost of living.

        • a person working full-time for the Federal minimum wage will earn about $15,000. The barest minimum for unskilled Swiss workers is 2200 francs per month, which translates to $30,000. Again, that’s the bare minimum – most sectors and cantons have a higher minimum wage.

    • From my reading of the interview (which I found here: http://www.pnhp.org/news/2010/september/understanding-the-swiss-watch-function-of-switzerlands-health-system ), the Swiss system seems to be a single-payer plan which has outsourced premium billing and claims payment to a consortium of insurance companies!

      If the government
      mandates coverage
      sets the insurance premium
      sets the price of medical services
      sets the price of pharmaceuticals
      sets the provisions in the insurance policy

      then that looks a lot like the Canadian system which generally has a single payer but private delivery. (I would write more but I have a doctor’s appointment, which will result in the provincial government paying my family doctor $35. If an insurance company paid him not $35 but $34 to cover the insurance co.’s admin fee, would it be less socialist?)

    • Who would argue for massive subsidies to move Medicaid beneficiaries into the exchange? Me.

      “Optimally, a refundable premium support model for Medicaid would allow families to purchase their own private coverage using the same health insurance exchanges set up by the Affordable Care Act. Such a model would permit low-income Americans to receive mainstream health insurance instead of receiving a separate but unequal “government assistance” health program.”

      You can read the full post here :
      http://www.policyprescriptions.org/a-health-wonk-divided/

    • John would do well to read what Roy has been writing in Forbes. He has a Dec. 2012 piece that explicitly advocates the US going to a Swiss style system. I think he titled it “why Switz has the best healthcare system” or something like that.

      Roy & Holtz-Eakin have been shown to be shills. Nothing has changed.

    • The other sorta weird thing about the occasional love thrown Switzerland’s way by conservative policy people who think their audience doesn’t know better is that Swiss healthcare is maybe the 2nd least efficient system in the world behind the United States. Way too aim high on that one.

      For me, all attempts to tell Americans what harsh medicine we need when it comes to fiscal responsibility and health care are pretty absurd if they don’t acknowledge that American could simply copy the health systems of any one of a dozen or so demographically similar countries that spend 30-60% less per capita on health care. Obviously, there are practical hurdles in the way of any transition to national care and/or insurance and it’s arguably unfair to people who planned their careers/lives around profitting off an inefficient health system, but those hurdles seem less daunting than reducing care for the poor and elderly or raising taxes to the extent needed to achieve the same fiscal goals.

    • I think you’re mostly right, Zach, but I think continuing health reforms aren’t going to dramatically kill off insurers, hospital administrators and other bureaucrats. Even if the U.S. were to shift all the way to single-payer, there would continue to be a market for supplemental private insurance for those who’ll pay for cushier and speedier treatment.

    • In Switzerland (I live there), most large hospitals are owned and operated by the government (the Cantons). There are some (smaller) private hospitals, but to be covered by the basic, mandated insurance they have to accept the same reimbursement as the public hospitals.

      If you choose the basic insurance, you are severely restricted in your choice of hospitals. If you are hospitalized, you can expect to be in a ward with 12-20 other people.

      From my own premiums, I don’t think it is correct that a 25 year-old and an 80 year-old pay the same price. I am not sure of the precise formula, but there is definitely an age-related increase in premiums.

    • It might be helpful for your readers to expand a bit on the very heavy regulation of the Swiss market.

      First the mandate: every Swiss resident (including temporary expats) is legally obliged to carry insurance from a recognized provider. This insurance must be in the name of an individual, and employer payments for premiums are taxed as part of a salary. Residents who do not enrol after 3 months, are enrolled by the canton in a plan. Non-payment of insurance premiums is a criminal offence and in extreme cases could carry a prison term.

      The Swiss health insurance law mandates not only coverage, and no price discrimination on the basis of risk factors, including age, but — in some detail — the basic provisions that all health insurance policies must cover (see http://www.admin.ch/ch/f/rs/832_10/ for French speakers), down to details such as a legal requirement that all basic insurance plans must reimburse up to 180 CHF every 5 years for eye tests and replacement glasses.

      Competition on premiums is fierce. Newspapers publish special supplements comparing premium levels by canton, and in some cases by provider. Websites such as comparis.ch allow direct comparison of what are to all intents and purposes identical products. There is some innovation around HMOs and family doctor plans and phone-first plans, but these are not yet widely adopted; most insurance is of the choose-your-own-specialist type. There is also some competition on the basis of size of deductible, though the minimum and maximum deductibles that insurance companies may offer is specified by law. Supplementary insurance — for alternative therapy, nicer hospital rooms, dental cover, etc. — is a much less regulated market. Many people (who also complain about the cost of insurance, like everyone the world over) hold these insurances; I don’t because the basic coverage is already better than what I would get in my native UK, and that’s good enough for me.

      Finally, an additional element of cost control is the insurance companies themselves. Medical practitioners generally send bills directly to insurance firms for payment (who then pass any deductibles, etc., to the consumer). The insurance companies act aggressively to manage costs. In particular, practitioners who repeatedly are seen from analysis of thei bills to be prescribing expensive or unnecessary interventions, or brand-name drugs rather than generics, for example, are sent written warnings (“blue letters”). If you get too many of these, you are black listed en masse by insurers, and essentially can no longer practice medicine in Switzerland, except for private cash-paying patients, who tend to be few and far between.

    • America could accomplish the mandate that Mike S describes easily.

      Anyone who could not prove that they had insurance could be enrolled in Medicare for 2 or 3 per cent of their income.

      If necessary, they could be signed up when and if they appeared at a hospital, and then charged back taxes for the months that they evaded detection.

      Also, Switzerland is not the only country that drives out doctors who bill too much. So does Canada and Germany,

      We in America should tell the AMA that if they do not discipline the McAllen types, then the government will.