NCPA - National Center for Policy Analysis


October 20, 2009

Why don't we hear more about the Swiss health care system -- especially by folks on the left?  After all, just about every study of the topic finds the Swiss system to be the most egalitarian in the whole world, says John C. Goodman, President, CEO and the Kellye Wright Fellow with the National Center for Policy Analysis.

What is good about the Swiss system?

  • Swiss health care is predominantly private; Individuals are required to buy insurance and almost all of them do.
  • Private companies compete to provide insurance, and there are subsidies for lower income buyers; the insurance is individually owned, personal and portable
  • In comparison to the U.S. system, the Swiss tend to join a health plan and stay in it for many years; this long-term relationship with an insurer encourages a long-term relationship with doctors, which is important for continuity of care.

What is bad about the Swiss system?

  • Despite competition, choice, private ownership and portability, the Swiss system is still very bureaucratic -- perhaps as much as or more so than our own.
  • It has mandated benefits, price controls on providers and other regulations that make it hard for entrepreneurs to solve problems.

What is ugly about the Swiss system?

  • Although long-term insurance relationships are the norm, the Swiss have been moving in the direction of managed competition, which encourages people to switch health plans; when plans are forced to charge community-rated premiums, no one ever faces a real price, pays a real price or receives a real price, leading to perverse incentives.
  • On the buyer side, people have an incentive to underinsure when they are healthy and overinsure when they are sick.
  • On the seller side, health plans have an incentive to overprovide to the healthy (on whom they make a profit) and underprovide to the sick (on whom they incur losses).

Source: John C. Goodman, "Swiss Health Care: The Good, the Bad and the Ugly," National Center for Policy Analysis, October 19, 2009.

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