• Switzerland still doesn’t prove we need less regulation

    Avik Roy and Douglas Holtz-Eakin reply to the many people who have discussed their recent piece. I’m going to ignore the discussion of politics and “surrender” and just focus on the parts that apply to me.

    I don’t want to be told I’m playing “gotcha” so here is exactly what is said:

    Strangely, Aaron claims that private non-profit insurers in Switzerland are “closer to a ‘public option’ than anything we have.” No one who follows the insurance industry would agree.

    Indeed, the United States has plenty of non-profit insurers—Blue Cross Blue Shield, most notably—and their conduct in the marketplace is far closer to that of the for-profit insurers than it is to government payors.

    Aaron claims that “there is no ‘public option’ here” in the United States, which ignores the fact that more than 100 million Americans will soon be enrolled in the “public option” systems of Medicare and Medicaid.

    Ok. “Public option” has a very specific meaning among health wonks, especially when it comes to health care reform. It’s not referring to Medicare or Medicaid, or even to non-profit insurers. Go google “public option”. Really! Go do it. I bet not one hit, for many, many pages, references either of those programs.

    The public option, as even the insurance industry understands it (regardless of what Roy says), refers to a non-profit plan that met the requirements of the ACA that was to be offered by the government on the exchanges. It’s not in the law. In Switzerland, on the other hand, they require every insurance plan on the exchanges to offer a non-profit product that meets the requirements of their laws. So I think I’m correct in saying that’s closer to a “public option” than what we have here.

    Of course, if you think that Medicare is a “public option” then you won’t agree. Then don’t use the very specific words “public option”. Say they have no Medicare.

    Finally, Aaron says that he would applaud anyone who offered exchange-based coverage to the Medicaid population; he implies our plan does not, when in fact that is one of its core features: a serious misrepresentation on his part.

    That’s not what I said. This is what I said:

    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.

    That’s because most plans want to give everyone a meager subsidy and then let them go buy insurance on a much less regulated exchange. That is NOT the same thing.

    But look, this is getting silly. My problem with the original piece was literally one thing: the misuse of Switzerland.

    If you want a system with less regulation and less mandates than ours, you’re going to have a really, really hard time finding one out there. If you look at the rest of the world, and you want to find an example of a system that’s arguably more market friendly, you’re left with Switzerland and Singapore (and maybe the Netherlands and Germany, but those have other unpalatable issues). Most people don’t want to suggest we become Singapore. So they go Switzerland.

    There’s a problem, though. Switzerland is in many ways more regulated and mandated than the ACA, as I said before. Plus, it has some of the highest cost-sharing around (even more than we do), and it still spends more than almost every system but ours. So it doesn’t even support “more cost-sharing” as a way to reduce spending when compared to pretty much every other system. So what’s a person who wants free markets to do?

    Well, you can either abandon the idea of using other systems to make your case, or you can pretend those systems are different than they really are. I’d rather people do the former, but many do the latter. They hold up Switzerland as if it proves something it doesn’t.

    If you want to say Switzerland proves you don’t need Medicare and Medicaid to get everyone covered, so be it. That’s Wyden-Bennett. But you can’t say Switzerland shows we can do it without community ratings, without mandates, without more regulation, and without generous subsidies – because that’s how Switzerland gets it done.

    That’s my issue. Nothing more.


    • Singapore has price controls and government subsidies (i.e. the govt subsidizes the providers directly) for a lot of care. So, even there, there are things conservatives should be wary of.

      I know this because I was born there.

      IIRC Tyler Cowen is aware of these aspects of both the Swiss and Singaporean systems and still endorses/can live with them.

      • Thanks for the additions.

        Let me reiterate that there are aspects of these health care systems that are worthy of discussion. I just want them portrayed accurately!

    • Brad’s link to the HA interview with Zeltner, the Swiss Sec of Health for 19 years is excellent on this topic. Will repost link. Would be nice to find an ungated version. I am very disappointed in the response on the public option. I had always thought that Roy was at least honest even if I disagreed with him often.



    • Holtz-Eakin’s and Roy’s sketchy notions for replacing community rating would seem to require huge taxpayer subsidies for elderly people to buy health insurance. So maybe they would prefer that the subsidy not be called “Medicare.”

      But I’m not an economist. So maybe I’m missing something.

    • The most disingenuous part of Holtz-Eakin’s and Roy’s ‘rebuttal ‘ to their critics was their claim that they only care about limiting public health care expenditures, not private health care expenditures. (Quote: “Conservatives are particularly concerned about the growth in government health spending, because we are committed to ensuring that America remains solvent.”)

      But, as Krugman points out in the very blog post that they lambaste, the public/private difference in health care spending is largely an accounting fiction, since the government can accomplish similar ends with mandates or tax credits or subsidies. (And doesn’t a new tax credit affect government solvency as much as a public expenditure?) Surely Holtz-Eakin and Roy understand that, given their goal of universal health insurance, it is total health care expenditures that matters, not some arbitrary public/private split. If they don’t understand this, then they have no business being taken seriously by anybody.

    • Etymology is the last ditch refuge for the sly logical fallacy.

      I’m no health wonk, I’m just an “average person” – and I knew what “public option” means.

      If Medicare & Medicaid were public options, I’d be allowed to buy into them, wouldn’t I?
      I happen to know I can’t.
      You have to qualify for them.

      Also, non-profit insurance companies are not public options, as they can set their requirements & premiums at will, and totally refuse people, can’t they?