Switzerland the Model

Source: OECD

In his column this morning Paul Krugman explains that the reforms making their way through the Congress would not so much move the U. S. healthcare system in the direction of Britain’s National Health Service, a system of socialized medicine, as it would in the direction of Switzerland:

In Britain, the government itself runs the hospitals and employs the doctors. We’ve all heard scare stories about how that works in practice; these stories are false. Like every system, the National Health Service has problems, but over all it appears to provide quite good care while spending only about 40 percent as much per person as we do. By the way, our own Veterans Health Administration, which is run somewhat like the British health service, also manages to combine quality care with low costs.

The second route to universal coverage leaves the actual delivery of health care in private hands, but the government pays most of the bills. That’s how Canada and, in a more complex fashion, France do it. It’s also a system familiar to most Americans, since even those of us not yet on Medicare have parents and relatives who are.

Again, you hear a lot of horror stories about such systems, most of them false. French health care is excellent. Canadians with chronic conditions are more satisfied with their system than their U.S. counterparts. And Medicare is highly popular, as evidenced by the tendency of town-hall protesters to demand that the government keep its hands off the program.

Finally, the third route to universal coverage relies on private insurance companies, using a combination of regulation and subsidies to ensure that everyone is covered. Switzerland offers the clearest example: everyone is required to buy insurance, insurers can’t discriminate based on medical history or pre-existing conditions, and lower-income citizens get government help in paying for their policies.

Switzerland is a poor model for the United States to emulate.

The Schulers are Swiss—real Switzers from Canton Schwyz. We came over to this country about 150 years ago and, unlike many new Americans, we have maintained contact with our Swiss relatives. I correspond occasionally (not frequently enough, I admit) with my Schuler relatives in Switzerland and, roughly in every generation, the American Schulers have visited the Swiss Schulers.

There are many reasons that Switzerland is in no way comparable to the United States. A quick look at some facts and figures will demonstrate that clearly.

Switzerland is a small, landlocked country of about 7 million people. We have more uninsurable people in the United States than Switzerland has population. Switzerland has a long national history and a remarkable degree of consensus. This is something I can’t prove to you with facts and figures but it’s something that every Switzer knows. That sort of consensus is a prerequisite for maintaining political support for a healthcare system like Switzerland’s and we don’t have it.

Significantly, Switzerland is surrounded by countries comparable to itself in per capita GDP, egalitarianism, and universal healthcare coverage. The incentives for emigration to Switzerland from its neighbors are limited. We, on the other hand, share a long, essentially open land border with a country with a per capita GDP a quarter our own. That tends to increase our costs, at least at the margin, a factor Switzerland does not contend with.

But for by far the most important reason that we shouldn’t emulate the Swiss model look at the graphic above. Just as in the United States healthcare costs in Switzerland are growing at an unacceptably high rate. We are starting from a much higher base than the Swiss and without serious cost controls or the national will to implement them there is little reason a Swiss-style system if implemented in the U. S. will not grow even faster than before.

I have no doubt that my hardheaded Swiss cousins, aided by consensus and traditions, will be able to cope with rising healthcare costs by making the changes to their own system that are necessary. I have a lot less confidence that we’ll be able to do that. If the temperature of our current national debate convinces you of nothing else it should convince you that there is no national consensus on healthcare here.

7 comments… add one
  • PD Shaw Link

    It’s difficult to quantify, but I think there is such thing as national character, and the United States has for hundreds of years shown little in the way of the fiscal hard-headedness that its closest relations (the UK, Canada, and Australia) have shown. We’ve relied substantially on growth strategies as opposed to balanced books. Our appetites are large; our optimism unrestrainable. An American will take a “free” lunch, with every expectation that he will be able to pay it back threefold in time and with opportunity.

    Here, in Illinois, I’ve experienced the different character of its regions. The bottom half of the state is in the Upper South and has a different set of expectations and values than the Scandinavian regions of the Northwest. There are also the Midlands region and Chicagoland. The type of governance that works in one area, doesn’t work (or doesn’t work like one would expect) in another.

  • You can’t get to national consensus by throwing up your hands and pointing out that it doesn’t yet exist.

    We have national consensus on a whole host of issues, some growing out of our constitution, some not. We have remarkably durable consensus favoring relatively free markets, relatively limited government, individual liberty, the notion of equality as an expanding circle encompassing ever more segments of the population, a belief in progress, a belief in optimism, in self-expression, innovation, in a strong defense, in an obligation to help other nations in times of crisis.

    Granted we suck at paying for things. And we’re not great at long-term planning. But we’re not quite dead yet and may still learn and grow and adapt.

  • What Michael said.

  • Am I throwing up my hands? I don’t see it that way, more that I’m pointing out the obvious: that a country of 7 million is bound to be less diverse than one of 300 million and pretending it’s otherwise doesn’t make it so.

    We can’t achieve consensus on healthcare, for example, by 10% shoving a solution down the other 90% throats whether the 10% consists of those who’d like to see a fully socialized system here or those who’d like to see a free market system. The essence of a democratic system is moderation which includes not only moderation in policy but in demeanor, tactics, and strategies.

    Working for consensus rather than merely hoping for one will take more than just capitulation. It will take a change of heart.

    Obama’s non-agonistic approach to most issues: moderate

    Delegating the heavy lifting to an unpopular and radicalized Congress: not so moderate

  • Drew Link

    Not what Michael said.

    The notion that the inhabitants of Chicago, Detroit, New York, San Francisco, Philadelphia, Los Angeles believe what the inhabitants of the non-urban areas of any state believe is preposterous.

    Ever seen a county by county map of how the last election went?? The urban vs non-urban dichotomy is truly remarkable.

    In fact we are a very polarized country. And if the voters of Detroit or San Francisco were asked about “relatively free markets” and “relatively small government” you’d get incredibly different responses than if you asked the residents of Bozeman, Montana, Lafayette, Indiana, Lexington, Kentucky, Blue Bell, Pennsylvania or Richmond, Virginia.

    Dave’s point is spot on. I often laugh when national policy prescriptions for the US are cited based on what they do in some tiny and homogenous – usually European – country with the population of Houston.

  • Dave’s point is spot on. I often laugh when national policy prescriptions for the US are cited based on what they do in some tiny and homogenous – usually European – country with the population of Houston.

    Well France is a bit bigger than that. And I think the idea of having some sort of voucher system where people can purchase amongst competing insurance plans is not a bad one. We might also look at providing a national minimum standard for insurance to open up the insurance market to greater competition. This would be a move towards a French-like system. And I readily admit it wouldn’t be sufficient, but at least a step (hopefully) in the right direction. Especially if people can keep some part of the voucher they don’t use as income (not alot, and it could decrease with income).

    The idea is that instead of one size fits all people could opt for the kind of coverage they think they will need, along with the minimal standard noted above (i.e. catastrophic care at the very least so people are not wiped out by unexpected expensive health issues). Also, people could shop for the best deal.

    France also doesn’t pay doctors nearly as much. Of course, I’m going to venture a guess that going to medical school is also considerably cheaper. Not sure what the doctor/1000 population is in France, but that is something we probably need to look at.

    Oh, and a quick look at Dave’s link to the World Fact Book indicates France does have a rather diverse population, although immigration is considerably less. I think looking at the European systems to look at the incentives can be helpful, but we should bear in mind that cultural and behavioral differences might be driving some of the results (e.g. differences in diet, or simply signing up and buying mandatory insurance).

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