BigGovHealth Improve and Strengthen Health Care for all Americans

Case Study: Switzerland

Universal coverage through private insurance

Switzerland has the most market-based system in Europe. Coverage is obtained through private, for-profit insurance companies, unlike those in other European systems. ¹

• Insurers operate on the canton (state) level, similar to most in the U.S. Switzerland tries to maintain robust competition among insurers by allowing them to offer different prices and plans that cover different types of treatments. ²
• All Swiss citizens must purchase coverage or pay a stiff fine. Virtually 100 percent participation has been obtained.
• Coverage is not obtained through employers, rather, all Swiss purchase insurance directly from providers. Consumers have the freedom to decide among plans and companies. ³ Those who cannot afford to buy insurance are given subsidies to help them do so. ⁴

Two-tier coverage

Swiss insurance companies are required to make available a basic plan that is open to everyone, regardless of preexisting conditions or health risks. ⁵ The price for this basic package is based on location and age. As a result, those who consume little medical care are forced to pay high premiums to cover those who incur high costs. ⁶ The healthy receive incentives to remain so only in a few domains, for instance non-smokers do have reduced premiums. ⁷

Insurers also offer plans that include supplemental coverage and perks like private rooms. On these they may discriminate among consumers based on risk, health status, etc. and set prices accordingly. However, the multitude of health plans can confuse consumers and obfuscate which plans offer the best value or coverage. ⁸

Benefits of the Swiss System

• High quality care
• The system does not ration, in fact treatments are abundant and available ⁹
• Little waiting
• Total patient choice in doctors and other healthcare providers within the canton
• Satisfaction is fairly high and a recent referendum on whether to adopt a single payer model was resoundingly rejected. ¹⁰
• The Swiss system is solvent, something that cannot be said for many in Europe and around the world

Costs of the Swiss System

The health system in Switzerland consumes a higher percentage of GDP than in any other European country

• Switzerland spent 11.3 percent of GDP on health care in 2006. That percentage is rising much faster than in other countries, 2.4 percent versus an OECD average of 1.5 percent. ¹¹
• Escalating costs are driven, in part, from rising premiums, which are going up “twice as fast as costs.” ¹²
  • Families pay a premium for each person, with the prices varying by age. A family of four spends an average of $680 per month or $8,167 annually for the basic plan. ¹³ Unlike in the U.S., this is paid directly by consumers without contribution from employers.
  • Cost is the most common complaint among the Swiss about their system. The Swiss pay more out-of-pocket than every country in the OECD except Greece, and more than twice what Americans pay. ¹⁴
• Prices for services are also high and there is little incentive for doctors or hospitals to bring them down. ¹⁵

The market does not always rule

• Switzerland is not a completely market-driven system since prices are set annually through discussions between insurers, doctors and medical facilities. On the canton (state) level, the state must give its approval. Drug prices are not fixed, but they are not allowed to rise above a certain level.
• The fact that the prices are fixed and negotiated collectively means that individual doctors and hospitals have no reason to work more efficiently or improve the quality of their care because they are paid the standard fee for service and receive no bonuses. ¹⁶
• The government-set components of the basic health coverage package are extensive, and have burgeoned over the years, forcing the Swiss to purchase unnecessary services. ¹⁷

American Interest

Supporters of a Swiss-type system have included Hillary Rodham Clinton and John Edwards. Switzerland was one of the models behind that ongoing initiative in Massachusetts to provide universal coverage. ¹⁸ Republicans have also looked to Switzerland’s system as a model, including Senator Tom Coburn who praised the idea behind the Swiss system and drew on it in creating his Universal Health Care and Access Act. ¹⁹

In autumn 2007, U.S. Health and Human Services Secretary Michael Leavitt traveled to Switzerland to investigate the health system there, but HHS indicated that the U.S. would not adopt the Swiss model. ²⁰

1. ¹ Jim Landers, “Swiss health care system may become U.S. model,” The Dallas Morning News, 20 February 2006; Michael D. Tanner, “The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World,” Policy Analysis, no. 613, 18 March 2008, available at http://www.cato.org/pub_display.php?pub_id=9272.
2. ² “Dallas Morning News Looks At Switzerland’s Health System,” Medical News Today, 13 February 2006, http://www.medical newstoday.com/articles/37544.php; “OECD and WHO survey of Switzerland’s health system,” http://www.oecd.org/document/47/0,2340,fr_2649_201185_37562223_1_1_1_1,00.html
3. ³ Landers.
4. ⁴ “OECD and WHO survey of Switzerland’s health system;” Harris; “Dallas Morning News Looks At Switzerland’s Health System.”
5. ⁵ “Dallas Morning News Looks At Switzerland’s Health System.”
6. ⁶ Regina E. Herzlinger and Ramin Parsa-Parsi, “Consumer-Driven Health Care: Lessons from Switzerland,” JAMA, vol. 292, no. 10, (8 September 2004); Michael D. Tanner, “The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World,” Policy Analysis, no. 613, 18 March 2008, available at http://www.cato.org/pub_display.php?pub_id=9272.
7. ⁷ Tanner.
8. ⁸ Landers
9. ⁹ “OECD and WHO survey of Switzerland’s health system.”
10. ¹⁰ Tanner.
11. ¹¹ “OECD and WHO survey of Switzerland’s health system.”
12. ¹² “Le système de santé suisse,” interpharma, http://www.interpharma.ch/fr/189.asp.
13. ¹³ “Dallas Morning News Looks At Switzerland’s Health System.”
14. ¹⁴ Tanner.
15. ¹⁵ “OECD and WHO survey of Switzerland’s health system”; “Le système de santé suisse coûte trop cher,” Radio Suisse Romande, http://info.rsr.ch/fr/rsr.html?siteSect=602&sid=7171776&cKey=1161156973000.
16. ¹⁶ Ibid.
17. ¹⁷ Tanner; Herzlinger and Parsa-Parsi..
18. ¹⁸ Harris.
19. ¹⁹ Bill Steigerwald, “How the Swiss do health care,” Pittsburgh Tribune-Review, 9 September 2007.
20. ²⁰ Gardiner Harris, “Swiss and Dutch health care systems attract U.S. attention,” International Herald Tribune, 30 October 2007.