I think I could live with this system:
1. There is an insurance mandate for all individuals. Meaning: Everyone is required by law to have health insurance, and it it not provided by employers. This is a compromise between two warring positions: Libertarians hate the "individual mandate," and so do most conservatives. But liberals hate the idea of ending employer-based health insurance.
I think this kind of compromise might be the price we have to pay for a system that works. Regina Herzlinger, a Harvard Business School professor, has studied and written about the U.S. health care system and other countries' systems for some time:
What about people who can't pay for their own insurance? (Yes, they have poor people in Switzerland too.)
2. The government defines a what the insurance benefit will be for all standard health insurers. Another intervention in the market that is hard for conservatives to swallow.
3. Insurance companies are not allowed to deny coverage to any individual. No "pre-existing conditions."
4. Health insurance and medical procedure prices are made publicly available. Now we're talking more free enterprise. Do you have any idea what a procedure costs in the U.S.?
5. In exchange for providing health insurance to consumers, insurance companies receive premiums from consumers and risk-adjustment payments from the government in order that insurance companies are not punished if they decide to insure a sicker population. This is how they compensate for making insurance companies take everyone, regardless of pre-existing condition:
6. Premiums are community rated, meaning that sick and healthy individuals pay the same price within each age group (the age groupings are 0-18, 19-25, >25 years old). More intervention in the market, but if you have elements 1-3 above you really have to do this too.
7. Individuals are allowed to purchase supplement insurance as well (there is no regulated benefit for supplemental insurance). This is how they keep it from being "one size fits all." I like this provision a lot, and it really saves the entire system, in my view.
8. There is significant cost sharing in all insurance plans (i.e.: deductibles, 10% coinsurance rates up to an annual ceiling). This is the individual responsibility piece that is missing from most current American proposals.
9. Open enrollment occurs twice per year (June and December). This means twice a year you can switch insurance plans, and it means the insurance companies are competing actively all the time.
How do the Swiss people use this system?
And does the system produce competition for the consumer's business? This is where the Swiss system gets really interesting:
A Swiss model for the USA might even be great for us. No, it doesn't follow free market principles strictly, but that's not possible with healthcare -- or, at least, in the USA we've made a (proper and humane) decision as a society that we will not let the market alone decide whether people get medical care. Switzerland has made the same decision, but has insisted on competition among insurance companies, individual involvement in choosing insurance, and transparency of cost -- all core free-market principles.
I'd like to see more thinking along these lines instead of the clunky socialized medicine ideas the Democrats are coming up with. They seem to be asking, "How can we copy the British National Health Service without going all the way to a single-payer system?" Not a very creative approach.
1. There is an insurance mandate for all individuals. Meaning: Everyone is required by law to have health insurance, and it it not provided by employers. This is a compromise between two warring positions: Libertarians hate the "individual mandate," and so do most conservatives. But liberals hate the idea of ending employer-based health insurance.
I think this kind of compromise might be the price we have to pay for a system that works. Regina Herzlinger, a Harvard Business School professor, has studied and written about the U.S. health care system and other countries' systems for some time:
To revamp the US system, Herzlinger argues that Americans should be required to buy their own insurance, as in Switzerland, instead of having employers purchase it for them.
"When people buy their own health insurance with their own money they think about value," Herzlinger said. "I don't want someone else to buy my car, my house, my food or my clothes, so why do I let them buy my health insurance?"
"When people buy their own health insurance with their own money they think about value," Herzlinger said. "I don't want someone else to buy my car, my house, my food or my clothes, so why do I let them buy my health insurance?"
What about people who can't pay for their own insurance? (Yes, they have poor people in Switzerland too.)
In Switzerland, about one-third of the Swiss population cannot afford insurance. The Swiss government provides help on a sliding scale with about SFr4 billion a year.
I don't think people really understand just how profound that is," Herzlinger said. "Poor people become dignified consumers. This is what makes Switzerland so unique."
I don't think people really understand just how profound that is," Herzlinger said. "Poor people become dignified consumers. This is what makes Switzerland so unique."
2. The government defines a what the insurance benefit will be for all standard health insurers. Another intervention in the market that is hard for conservatives to swallow.
3. Insurance companies are not allowed to deny coverage to any individual. No "pre-existing conditions."
4. Health insurance and medical procedure prices are made publicly available. Now we're talking more free enterprise. Do you have any idea what a procedure costs in the U.S.?
5. In exchange for providing health insurance to consumers, insurance companies receive premiums from consumers and risk-adjustment payments from the government in order that insurance companies are not punished if they decide to insure a sicker population. This is how they compensate for making insurance companies take everyone, regardless of pre-existing condition:
[A]n insurance company could go broke if it had too many chronically ill clients and no healthy ones.
For Swiss companies, it makes little difference if you're a beacon of fitness or in need a heart transplant. A joint foundation overseen by government regulators redistributes high profits earned off healthy clients and divides them among companies with expensive, unhealthy ones.
For Swiss companies, it makes little difference if you're a beacon of fitness or in need a heart transplant. A joint foundation overseen by government regulators redistributes high profits earned off healthy clients and divides them among companies with expensive, unhealthy ones.
6. Premiums are community rated, meaning that sick and healthy individuals pay the same price within each age group (the age groupings are 0-18, 19-25, >25 years old). More intervention in the market, but if you have elements 1-3 above you really have to do this too.
7. Individuals are allowed to purchase supplement insurance as well (there is no regulated benefit for supplemental insurance). This is how they keep it from being "one size fits all." I like this provision a lot, and it really saves the entire system, in my view.
8. There is significant cost sharing in all insurance plans (i.e.: deductibles, 10% coinsurance rates up to an annual ceiling). This is the individual responsibility piece that is missing from most current American proposals.
9. Open enrollment occurs twice per year (June and December). This means twice a year you can switch insurance plans, and it means the insurance companies are competing actively all the time.
How do the Swiss people use this system?
In 2003, 49.7% of Swiss individuals choose ordinary deductible health insurance, 42.0% choose higher deductible health insurance, and 8.2% chose insurance with limited choice of provider networks (HMO-style contracts). Since only 8% of individuals are in managed care insurance firms, quality is fairly homogeneous across insurance companies.
And does the system produce competition for the consumer's business? This is where the Swiss system gets really interesting:
[H]igh consumer demand has created 87 private Swiss health insurance companies that offer an enormous menu of services. In Massachusetts, a state about the same size as Switzerland, there are five such companies.
A Swiss model for the USA might even be great for us. No, it doesn't follow free market principles strictly, but that's not possible with healthcare -- or, at least, in the USA we've made a (proper and humane) decision as a society that we will not let the market alone decide whether people get medical care. Switzerland has made the same decision, but has insisted on competition among insurance companies, individual involvement in choosing insurance, and transparency of cost -- all core free-market principles.
I'd like to see more thinking along these lines instead of the clunky socialized medicine ideas the Democrats are coming up with. They seem to be asking, "How can we copy the British National Health Service without going all the way to a single-payer system?" Not a very creative approach.
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