The holes in American healthcare, and how Switzerland’s example can patch them
By NATALIE GUBBAY
Last week, the New York Times published an article titled “Best Health Care System in the World: Which One Would You Pick?” The article was set up as a tournament among eight wealthy countries, a bracket-style competition between the health systems of Canada, Britain, Singapore, Germany, Switzerland, France, Australia, and the U.S. A panel of five health experts voted to determine the winner of each successive matchup. Their conclusion? Switzerland has the best healthcare system in the world, defeating France three votes to two in the final round.
Obviously, this decision is somewhat arbitrary. Most “games” were decided by just one vote; a panel of five cannot possibly hope to account for the vast disagreement in the debate on health care; and comparing health care across countries that differ by size, income inequality, and composition is tenuous at best. The Swiss system, however, is particularly interesting in the context of U.S. health policy, because Switzerland’s model is the closest international example to an Affordable Care Act (ACA), or Obamacare, that works. Indeed, three of the five panelists mentioned the two health care plans’ similarities. “The Swiss system is so close to the ACA’s structure (which, to date, has survived all manner of political attacks) that something like it could work in the U.S,” notes panelist Austin Frakt, director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System. The success of the Swiss system, therefore, has valuable policy implications, and studying the Swiss system’s limitations emphasizes the weaknesses of ACA-style legislation with which Congress will have to contend if it leaves the Obamacare framework intact.
In Switzerland, as in the U.S., health care and insurance responsibilities are split between the federal and cantonal levels of government, with cantons bearing much of the burden (a Swiss canton is analogous to a U.S. state). Insurance is largely private but sold in a highly regulated market, and government subsidies lower the cost of premiums for low-income patients. Health insurance is mandatory, and coverage is universal; consumers can opt to buy supplementary or more expensive plans in addition to mandatory health insurance (MHI), and insurance companies cannot discriminate on the basis of pre-existing conditions. Nearly 100 private insurance companies offer plans that meet the minimum benefit standards required by MHI. Health outcomes (measured by life expectancy, infant and mother mortality, years of healthy life, and the like) rank consistently among the best in the world.
So why does it work better? A noteworthy difference between the Swiss system and Obamacare is that Switzerland employs an “all-payer system,” in which prices paid to providers for a given service are constant and negotiated by what is basically a bloc of insurers. So, for example, a Magnetic Resource Image (MRI) costs the same regardless of a patient’s insurer, income, or plan. The cost of an MRI is decided ahead of time by a group of insurance companies who have an incentive to keep costs reasonable, since they’re likely paying for the bulk of each MRI. This increases efficiency and transparency and helps to curb rising health costs. In the United States, health costs have increased on average of two percentage points faster than gross domestic product (GDP) annually. As a result, the middle class—with few government subsidies yet not enough disposable income to cover high-cost services—loses out. In Switzerland and other countries with all-payer systems, the growth rate of health costs is much less skewed. To return to the MRI example: an MRI in the United States costs $1,145; in Switzerland, it costs only $138.
This difference helps explain why the U.S. struggles to match the health outcomes of other developed nations while spending far more: because the health system is so piecemeal, there is less accountability. Total health expenditure in the U.S. is 17.1 percent of GDP, the highest in the world. As Tom Sackville, of the International Federation of Health Plans, puts it, “American health care providers and pharmaceuticals are essentially taking advantage of the American public… The system is so divided, it’s easy to conquer.”
Republicans may be more amenable to an all-payer system than a single-payer one, as private plans can still compete in price and still offer varied coverage. In addition, the cost of services in Switzerland is decided regionally, rather than federally—another selling point to conservatives wary of government overreach. A regional all-payer system could offer the sort of truly state-centric health care the Graham-Cassidy bill claimed to promise but would not have delivered.
A significant drawback to the Swiss system, though—and one that can be overlooked in discussion of its reliance on out-of-pocket payments (payments made to providers by individual patients). In Switzerland, 26 percent of total health expenditure comes from out-of-pocket payments, while the European Union (EU) averages at just 16 percent. This discrepancy means low-income populations carry more of the burden of health care than high-income ones. This is a problem in the U.S. as well; in 2014, an estimated 13 percent of the population, mostly from low-income households, spent 10 percent of their income or more solely on out-of-pocket health payments. Thus, while access to health care in the U.S. may increase with lowered costs in all-payer system, the Swiss model does not offer a clear answer to the problem of inequity of access.
It’s impossible to say whether Switzerland truly has the best health system in the world, and copying their policies won’t magically fix all that is wrong with health care in the U.S. In managing costs and extending coverage to all, however, Switzerland does two things substantially better than the U.S., without a fundamentally different framework. It’s worth looking at how those options could fare in the U.S., especially since it looks like Obamacare is here to stay.