Swiss health care system offers middle path

Switzerland's consumer-driven health care (CDHC) system offers an alternative to the American model for health care that avoids some of the pitfalls of a government-run system, say Regina Herzlinger and Ramin Parsa-Parsi, writing in the Journal of the American Medical Association.

CDHC combines three major elements:
 

• Freeing demand: Consumers buy health insurance plans (rather than their employers) and they know the full cost of care.
   
• Freeing supply: Insurers freely design and price insurance plans and providers freely design and price their services.
   
• Market efficiency: Consumers have excellent information about the quality and cost of insurers and providers, thus look for the best value for their money.
  
  Switzerland has adopted a CDHC-styled system and has enjoyed a fair degree of success, say Herzlinger and Para-Parsi. Some of the more notable characteristics of the Swiss system include:
   
• Swiss citizens are required to buy health insurance; no insurance plans are complete, leaving out incidental expenses which must be paid out of pocket.
   
• Means-tested subsidies are available for compulsory insurance; 33 percent of the insured receive subsidies, accounting for 19 percent of all insurance premiums.
   
• The largest market share for insurance plans is held by high-deductible plans, while managed care plans have a relatively small market share.
   
• The Swiss system achieves 30 percent lower per capita health care costs and universal coverage than the United States and provides reasonable quality of care.
  
  The Swiss experience provides a number of lessons for nations looking to pursue CDHC such as permitting experimentation in insurance policies, rewarding efficient health providers to encourage innovation in the delivery of health care, and limiting the number of mandatory benefits included in insurance policies, say Herzlinger and Para-Parsi.
  
  Source: Regina Herzlinger and Ramin Parsa-Parsi, Consumer-Driven Health Care: Lessons from Switzerland, Journal of the American Medical Association, September 8, 2004.
  
  For JAMA text (subscription required) http://jama.ama-assn.org/cgi/content/full/292/10/1213
  
  For more on Medical Savings Accountshttp://www.ncpa.org/iss/hea/
  
  FMF Policy Bulletin/28 September 2004