NCPA - National Center for Policy Analysis


November 19, 2007

America, a nation prone to love at first sight with seductive health-care fixes, is now falling for the systems of the Netherlands and Switzerland, says Regina E. Herzlinger, professor of business administration at Harvard University Business School and a senior fellow at the Manhattan Institute.

The Swiss and Dutch systems share one feature that Americans increasingly want -- universal coverage, says Herzlinger:

  • The Swiss are required to buy health insurance themselves, using their own money -- they account for 65 percent of health care expenditures.
  • There are neither employer nor government health-insurance programs for the poor or elderly.
  • The Dutch government funds consumers to purchase their own health insurance to a much greater extent -- five million people in the country are on some sort of government program.

The results:

  • The Swiss have lower health-care inflation -- 2.8 percent versus 4.1 percent for the Dutch and the United States from 1996-2003 -- and substantially more in the way of health-care resources.
  • Swiss providers also compete because, in addition to paying for their health insurance, the Swiss pay for nearly 32 percent of their health-care services out of their own pockets, as compared with only 8 percent for the Dutch.
  • Even with its limitations, Dutch health-care inflation fell from the time when Dutch employers bought health care, and waiting lists have reportedly tumbled.

Nevertheless, neither system is perfect, says Herzlinger.  Yes, the consumer-driven health care of these two nations is clearly the best model for implementing universal coverage. But their limiting of insurance competition with requirements for extensive minimum benefit packages and considerable micromanagement of prices and medical care suppliers should be avoided, not emulated.  Instead, government should help lower-income people, enforce transparency, prosecute fraud and abuse -- but otherwise get out of the way.

Source: Regina E. Herzlinger, "Foreign Health Affair," Wall Street Journal, November 19, 2007.

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