Map of life expectancy at birth from Global Education Project.

Wednesday, July 16, 2008

A half-good example?

Props to our friend Ana -- what's not to love about a country that gave us fine chocolate, holey cheese, precision watches, leather pants, giant wooden trumpets, yodeling, sliding down mountainsides on various contrivances, a treacly shipwrecked family that inspired an iconic 60s sci-fi show, resolute neutrality, secret bank accounts for obscenely wealthy tax evaders, and Vatican guards in clown costumes?

But in spite of all these marvelous innovations, I do have a bone to pick with the land of melting ski resorts, and that is their health care system to which many an American wonk, including some of my best friends here in Massachusetts and the presumptive Democratic nominee for president, are looking for inspiration. The basic idea is, maybe it isn't perfect, but a) it's better than what we've got now and b) it just might be politically feasible. Yes, somewhat to point (a), but I've got a problem with (b).

Ana can clean this up if any of it is imprecise, but the basic description of the system is that there is a universal, individual mandate to purchase a basic health insurance product, that covers a specified set of services, from any of competing private insurers. The insurance companies are required to offer the same prices regardless of people's health status or factors that might predict their risk of consuming services, in other words they must use community rating. (On a canton-by-canton, rather than national basis, I believe.) They can charge more based on sex (women get pregnant) and age, to some extent, although the age differential is regulated. People can choose to make tradeoffs among premium costs, co-payments and deductibles, but in general out of pocket costs are high. Finally, there are subsidies so that nobody pays more than 10% of their income for insurance.

The Swiss spend less than the U.S. on health care, although they spend the most of any country in Europe, indeed the second most of any country in the world. And just about everybody is insured. So that it would seem like a step forward for the U.S., right? Proponents of the system call it "consumer driven," and claim that the reason for the lower costs is that with high co-payments and deductibles, people shop around for good deals and don't consume services they don't really need.

Sadly, no. Swiss consumers have almost no information about the comparative cost and quality of competing providers, and like health care consumers everywhere, they pretty much depend on their doctors to tell them what they need. The reason why costs are lower is that prices are regulated. Insurers negotiate fee schedules with doctors, which must be approved by the canton. Drug prices are federally controlled. There is also a set of mandated guidelines for cost-effective services, and people have to buy supplementary insurance to get services beyond the basic benefits package. Finally, the insurance companies aren't allowed to make a profit on the basic plans.

Now, you know as well as I do that if we were to introduce such a universal mandate system here in the U.S., the drug companies would make sure there were no price controls on drugs; the AMA would make sure there were no controls on physician incomes; the insurance companies would make sure they could hold on to 100% of their current profits; the health care industry as a whole would yell and scream about "rationing" and we'd have the same squandering of resources on $10,000 cancer treatments that give people 2 1/2 weeks of added survival that we do now. Subsidies for low income people would be insufficient, insurers would wiggle out of the community rating requirements and find ways to cherry pick healthy consumers, people in their 50s and early 60s would be forced to buy insurance they couldn't afford, that didn't offer them any real benefits because the deductibles and co-pays would be so high, and the whole thing would just end up being a massive infusion of even more money into the pharmaceutical industry and high-tech medical specialties.

Alright, call me a cynic. Just you watch.

No comments: