Switzerland: A Case Study in Consumer-Driven Health Care

January 11, 2013

Switzerland is the only developed country with a long-standing consumer-driven health care system. It allows consumers to select their insurance rather than having an employer or government choose, as is the case in the United States, says Avik Roy, a senior fellow with the Manhattan Institute.

  • Swiss consumers primarily pay for the country's health care expenses.
  • In 2000, 43 percent of consumers' payments were for insurance premiums, 0.1 percent for deductibles and copayments, and 28 percent for all other out-of-pocket costs.
  • But if people could not afford it, the government provided subsidies. In 2001, 19 percent of the insured received subsidies, while 18 percent of enrollee premiums were government financed.

However, the Swiss government is heavily involved in regulating insurers and providers. For instance, it requires certain benefits ranging from health spas to hospital care. Insurers are given the opportunity to offer optional policies like private hospital rooms. Some supplementary plans, for example, contain nonsmoker options, which can save a consumer up to 20 percent if they don't smoke.

The government also approves insurance prices, ensuring that insurers with above-average medical costs receive transfers from those with lower costs. Doctors are also paid a uniform price.

Everyone is covered under the Swiss model, unlike in the United States, where more than 40 million are uninsured despite the new health care law. In U.S. states with comparable income, education level, race, and ethnicity to Switzerland, the Swiss have better outcomes for many diseases, including diabetes. Moreover, the Swiss have more resources like hospital beds, physicians and expensive equipment. However, doctors in the United States are slightly better compensated.

Swiss insurers also have lower costs than those in the United States. This is because competition among insurers has lowered annual insurance administrative expenses per employee.

Critics contend that in a consumer-driven health care system healthy people won't buy any insurance, raising premiums for sick people that do want to acquire health insurance. However, the Swiss model requires universal coverage and ensures that everyone pays the same price for insurance because premiums are risk-adjusted.

Source: Avik Roy, "Switzerland: A Case Study in Consumer-Driven Health Care," Forbes, December 26, 2012.

 

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