Bit of a Swiss theme this week; first the Polanski drama, then the planted articles in the Times discussing Swiss health care. See, it isn’t so bad to do without the public option – the Swiss do just fine.
That is quite correct: the Swiss have a better health care system than we have, and they do so with private insurance companies. They even have a mandate, which I suppose proves that it’s possible to have a functioning mandate and no public option. But getting to the Swiss system would be far more difficult politically than getting to a public option; indeed, we would probably find it easier to take the plunge and go with a single payer system.
The Swiss live three years longer than we do. And it’s not for lack of firearms in a country that takes the militia stuff seriously – until a couple of years ago every Swiss male was required to have an military-issued service weapon and ammunition at home in the event of sudden mobilization.
The Swiss also spend less on health care: 11% of GDP versus our 16%. But they spend it very differently. Imagine that Max Baucus came up with a bill that said:
- Universal mandate;
- Personal health insurance cap at 8% (ie if insurance costs more than 8% of your income, the government will cover the excess);
- Basic plans must be non-profit;
- No different rules for the elderly; whether 56 or 65, everyone has to buy insurance out of pocket (recognizing that 8% of a reduced income is a small number). We can call that the Eliminate Medicare and Your Political Career Act.
- Employer contributions to health care costs are not tax-deductible;
- Drugs and device prices are restricted by the government; service providers are liable to be forced to repay insurance companies if their pattern of procedures cannot be justified before a medical review board. We can call that the Turbocharged Orzag Plan;
- 20% copays on branded drugs, 10% on generics;
- Average out-of-pocket expense of $1,350; insurance plans comparable to fully-loaded US plans (~$13,000 for family).
According to the Times, Bill O’Reilly likes the system. It has the stereotypical Republican values of free independent practitioners, no rationing decisionmaker, and high copays that put the first incidence of cost on the individual.
On the other hand, it also has required issue, no profit from basic insurance, medical review boards, price controls on monopoly products, and effectively a form of community rating (thanks to the 8% cap).
Perhaps the most objectionable element for both sides of the aisle is that it increases transparency. One of the unfortunate side effects of Medicare as presently constituted is that it combines two unrelated features:
- Medical insurance administration and provision;
- A subsidy equal in cost to the medical insurance
We give every American who turns 65 a $9,500 annuity to buy no-copay comprehensive medical coverage. Few of them even know it; it’s in no one’s interest that either the beneficiaries or the folks paying for it find out. Much easier to say “I am giving people medical care” than “I am giving people $9,500/year regardless of their financial circumstances as a 65th birthday present”.
Similarly, we have somehow gotten into a situation where productivity gains have been eaten up by rising health care costs yet no one feels like explaining to workers that making health care plans tax-deductible encourages an over-allocation of their compensation to health care. Instead, unions argue that taxing benefits would hit the working man – the very person who has seen the least wage growth of late.
If we were an honest enough nation to convert to a Swiss plan and implement it, I would be all for it. It’s a fine system. But theirs is a world where the trains run on time, and ours is a world where Amtrak performs no better than it did during the Korean War. Theirs is a world that gave people weapons with the ammunition in sealed boxes and then made home visits to check on the integrity of the seals.
The multiple layers of their system – the private insurers with both for-profit supplemental plans and non-profit basic plans, the review boards and drug negotiators and the rest of the subtle public-private partnerships – would be virtually impossible in our corrupt land. Here, we need to get our coverage into the public sector. It will be bloated, slow-moving, unfriendly to consumers, and otherwise similar to the current insurance system, but it will do a better job of cracking down on costs. It’s the least we can do, and probably also the most.
