Health Care Insurance Without a Public Option

A recurring concern within our national health care debate has been about insurance, and how to make it work for our friends that don’t want, or cannot afford, to participate. This led some of us to examine how that problem is solved elsewhere. One approach is seen in Switzerland. As many are aware, Switzerland is a country with a history of high-quality health care. It has 7.2 million people living in 26 cantons (states). The 1994 Swiss health insurance law requires everyone staying in that country for 90 days or more to purchase a basic health insurance policy.

Before 1994, health care insurance was not compulsory in Switzerland and premiums were risk-related. That older system was similar to what we have now in the United States. At that time, most people with jobs had some form of private health care insurance supplied by an employer. Members of the military and full-time government employees had health care insurance through a government-owned company. People outside of those categories were able to purchase insurance, and the rates varied over a wide range. A publicly discussed concern at that time was the fact that certain individuals, classed as high-risk because of chronic disease and age, found health insurance unaffordable. In response to the public outcry about that, the Swiss Federal Health Insurance Act was designed to help all the people without insurance and to promote competition between health insurers.

Now there are 91 Swiss health insurance companies that offer these compulsory policies through their “not-for-profit” divisions. Market forces are such that some companies have chosen to limit the cantons where they sell insurance. In each canton, as a result, there are about 50 companies competing in the health care insurance marketplace. The compulsory policy premiums are community-based, so everyone living within the same mail code is charged an identical fee, without regard to any previous medical problems. The competing insurers differentiate themselves and make their profits by selling extra benefits through complementary policies managed by the for-profit divisions of those companies. The extra benefits available through those insurers include things like dental care programs, hotel-quality single bed hospital rooms, “in-your-home” child care when a parent is ill, spa/gym memberships, etc.

The Swiss health plan purchasing process is designed to make consumers aware of their personal ownership of the insurance policies. A nationwide website guides people to the most appropriate plan to match their personal needs. Each policy must be bought by an individual, even though the government may reimburse a purchaser for part of the cost. The policy belongs to the purchaser, and goes with the purchaser when moving to a new job, because it is not a job benefit.

People that are indigent have health care insurance, too. In each canton, a “means test” determines how much the canton will reimburse an indigent resident, but that person gets to pick their own preferred private insurer just like everyone else. Then, the cantonal government issues a voucher that the recipient transfers to the insurance company. In 2001, the cantonal governments paid about 19 percent of the health care policy premiums.

Regulations there require a given insurer to charge the same fee to each purchaser for the basic policy, without regard to any preexisting health conditions. This results in a universalized program that provides for the treatment of illnesses, accidents, and pregnancies, and which includes the costs of all medical treatments, hospitalizations, and medications. However, at every interaction with the health care system, an individual must contribute something out-of-pocket. This is intended to make the purchaser acutely aware of the medical costs. These payments are not just nominal amounts of money, as seen in health insurance co-pays in this country; it is the full price of the interaction. In a typical Swiss policy, an individual pays a deductible, and the initial cost of all treatment and medications are paid out-of-pocket. Then, after the event, the patient is reimbursed by the insurer for almost 90 percent of the amount paid. However, to avoid any sudden economic calamities, the compulsory policies have a pre-set maximum out-of-pocket level, and all expenses beyond that are paid directly by the insurer.

The Swiss compulsory universal health insurance program was developed through a series of referendum elections in each canton. Significant improvement in health care access has been reported, because the system is intended to allow everyone to see a physician whenever necessary. Perhaps as a result, about five years ago Swiss life expectancy at birth was 79 years for men and 84 years for women. In comparison, U.S. life expectancy is just this year beginning to approach 78, and in Missouri, during the most recent year with accurate data, it was only 76.4.

Such care is not inexpensive, but it costs less than what we pay here. Implementation of the Swiss plan resulted in spending on health care representing only 11.5 percent of that country’s GDP, at a time when the health care spending in the United States approached 15.3 percent of our GDP. Although our country is not the same as theirs, maybe there is something we can learn from them.

To learn more about the Swiss and other health care systems, please see “The Grass is Not Always Greener: A Look at National Health Care Systems Around the World,” by Michael Tanner of the Cato Institute.