Saturday, September 19, 2009

Private health care by Swiss Like Republican corporate model, but Big Differences.

When Republicans brag about Sweden's nationwide school voucher program, they often leave out the national curriculum and standardized test. There's a reason for that: Their main objective is to dismantle public schools by allowing private schools to be accountable to taxpayers while promoting the idea that parents know what's best for their kids.

The same is now true of the Swisses private health care system. According to the NY Times:

1. Switzerland instituted an individual mandate by which people are legally required to purchase health insurance in a competitive market. People buy coverage from private insurers, and the government provides subsidies for those who can’t afford coverage. About a third of the population receives subsidies. Group health insurance does not exist in Switzerland.
This is where the Republican Party will end the argument. What they won't tell you:

The most important difference is that health insurance in Switzerland is provided by nonprofit insurers — though some are affiliated with for-profit companies that offer supplemental policies along the lines of Medigap in the United States. The basic benefit package is defined by law and is quite generous. Maximum drug prices are regulated.
Don't hold your breath waiting for them to bring up the government mandate and drug price controls. Their system is also the second most expensive, just behind the U.S.. Here are a few other important elements to the Swiss health care plan.

A third of the population purchases voluntary supplemental insurance that covers things like private hospital rooms and dental benefits. The policies differ mainly on deductibles ... $200 for adults. There is no deductible for children under 18. After the deductible you pay coinsurance of 10 percent of covered expenses, up to a maximum $500 ... There is no insurance exchange, but Internet comparison sites are available and forms are standardized to minimize switching costs.

Are the policies expensive? Yes. In 2004, 40 percent of households — or one third of individuals — received subsidies. But the country is still struggling with how to handle individuals who fail to comply with the mandate — mainly the poor and recent immigrants.

What is the biggest criticism of the Swiss system? It hasn’t done well at controlling costs. Switzerland is second only to the United States in the percent of GDP spent on health care. It’s also second to the United States in the rate of health care inflation.

In theory, insurers compete with each other to bring down prices. In fact, it doesn’t work all that well. There is also enough wiggle room in the system that insurers are able to cherry-pick — to attract enrollees who are good risks and get rid of those at higher risk. As long as insurers have control over the plan design and some control over the premium classifications, they can manipulate the risk pool. For example, if they give good service to the healthy and less adequate service to the less healthy, the less healthy may try to move on to another insurer.

What is the most important lesson Americans should learn from the Swiss system? You can achieve universal coverage through an individual mandate, coupled with subsidies for people who can’t afford health insurance. But it’s not going to get you cost control unless you enact further measures.

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