• Go read this. Go read this now!

    New piece in the NEJM on what we can learn in setting up exchanges from the Netherlands and Switzerland. Some sample wisdom:

    But experience in the Netherlands and Switzerland, where insurance exchanges are part of health care reforms that have been ongoing for some time, provides two cautionary lessons. The first is that competitive insurance markets will not contain costs without reforms of the health care purchasing market. In theory, health insurers should negotiate with health care providers on price, volume, and quality of care. Innovative payment methods should result in the purchasing of efficient care. In the United States, there has been little discussion about strengthening the purchasing market, although the ACA intends to promote provider competition by requiring yearly publishing of standard charges for items and services. Experience from the Netherlands and Switzerland shows that such efforts are not enough. Purchasing-market reforms in those countries are a work in progress, but the results so far in terms of cost containment and quality improvement have been negligible.

    Here’s more:

    As the Dutch and Swiss experience shows, even when health insurance exchanges are functioning moderately well, rapid improvements in quality of care (in the health care provision market) and cost containment (in the health care purchasing market) do not automatically follow. Both countries have recognized that reforming the purchasing market is crucial if regulated competition is to succeed. Yet insurers still lack the tools, expertise, and leverage to be competitive purchasers and thereby achieve efficiency in the delivery of health care services; also, the purchasing market on the whole remains heavily regulated. In addition, good data on performance and quality are urgently needed to permit better assessment of value for money.

    You know what? Stop wasting time here. Go read the whole thing. It’s not that long.



    • I lived in Switzerland for three years and they do have a competitive private insurance system like the US and it does work very well.
      However, as these articles point out, the reason it works well is that they have very strong government regulation of health care services and prices. The dictate the prices that will be charged for everything and they dictate which services will be provided and which will not be provided. This is how they keep their costs in line.
      I’m not sure the health industry likes it but they have survived and actually done quite well. There is good access to care for everyone.

    • It seems to me like the insurance are just the go between in the market and there is not much to gained there. The providers seem to be the place to look for lowering costs.

    • I live in Switzerland, and the description of the Swiss system in the paper is not quite right.

      It is important to note that health insurance here really has two tiers. There is a fairly basic, mandated coverage. This is guaranteed issue and has community-rated prices. There are also a wide variety of supplemental coverages that extend the basic policy. For example, you can buy coverage for Traditional Chinese Medicine (at a very modest premium). The supplemental coverages are NOT guaranteed issue and certainly not mandated, though the underwriting seems quite limited compared to my experiences in the US.

      Under the basic mandated policy, you are required to use the main hospital in your home Canton. Many policies will also allow you to use a local private hospital, but only if the private hospital agrees to match the Cantonal hospital on price. The Cantonal hospitals are owned and managed by the Cantonal governments.

      Access to hospitals beyond these is possible only if you are able to buy supplemental coverage.

      There really isn’t any negotiation on price between insurers and the hospitals, since the prices are fixed by each Cantonal government and the same for all insurers. There is lots of negotiation between the hospitals and local government officials on pricing, and between hospitals and doctors on fees.

      The private hospitals can, and do, compete with the public hospitals and with each other on the basis of quality and patient experience.

      One advantage of the system is that it is fairly easy to compare the Cantonal hospitals to each other. In a relatively homogeneous society, any hospital that is inefficiently run or has poor outcomes relative to the others quickly becomes visible and there is immediate pressure on the Cantonal governments to take action.

      But there are a LOT of hospitals here, given the size of the population. Not only does this add overhead costs, it also means that high-skill procedures may not be performed very often, with the usual consequences for outcomes.