The Model for New Healthcare Reform?

The United States has the highest health care expenditure per capita ($7,960 in 2009) across all other Organization for Economic Cooperation and Development (OECD) countries. Despite this, the US is ranked twenty-third out of the thirty countries measured in the OECD for mean life expectancy. It is no small secret that the costs of medical care in the United States are growing at a seemingly uncontrollable rate, leaving the government and many citizens questioning about how to pay for health care services. Switzerland, in comparison, spent $2,816 less per capita in 2009 than the US, yet was ranked second in mean life expectancy.

So what can the broken US healthcare system learn from the Swiss? In Switzerland, the administration of health insurance is privatized. In other words, the government is not funding a Medicare or Medicaid equivalent. In 2008, government spending on health care in Switzerland was a mere 2.7 percent of GDP. In contrast, US government spending on health care was at 7.4 percent of GDP in the same year. There are almost 100 different private companies that offer insurance packages in Switzerland. The fundamentals of economics would suggest that this provides an environment that increases quality and service while moderating price.

In the United States, healthcare is dominated by third parties, namely employers and insurers, who decide the goods normally traded between consumers and suppliers. Employers in the US give their employees only a limited number of health plans to choose from and sometimes, may offer only one policy. This one-size-fits-all idea does not work among employees who have varying health histories and are in different stages of life (i.e. married with kids versus young and single).  In Switzerland, individuals must purchase insurance for themselves and their family. This idea likely increases product awareness as consumers research insurance plans that best weigh their direct health care needs by the cost of the plan.

Switzerland’s healthcare system has also managed to achieve universal coverage. Health insurance is compulsory across the Swiss confederation and all citizens must purchase a basic package plan. Low-income families can receive a subsidy from their canton (state) of residence that they put towards their premiums so their premium payments are no more than 10 percent of the family income. Insurers cannot profit off of the sale of the basic package plan, which is a mandated list of medical services that must be offered. The basic package is restricted to treatment that is deemed appropriate, medically effective and cost-effective. Thus, a Swiss citizen would have to purchase additional supplementary insurance to cover treatments that are for example, costly or experimental.

A transition to an American healthcare system that models the Swiss’s would undoubtedly be a difficult undertaking. There are variances in population demographics (namely the amount of low-income families that represent the total population) between the two countries that would have to be considered. Nevertheless, Switzerland’s healthcare model is a good starting point for policy makers to envision a direction that offers a sort of political compromise while hopefully reducing the amount of government health care spending.

References and Articles of Interest;

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