Friday, September 24, 2004
DON C. BRUNELL
The Swiss are famous for two things: Banking and chocolate. Now, they may add another category - health care.
Faced with the same spiraling health care costs that plague the rest of the world, the Swiss long ago adopted something called "consumer-driven health care." Unlike managed care, with its one-size-fits-all health plans, provider lists, and gatekeepers, consumer-driven health care is all about choice.
Under the Swiss model of consumer-driven health care (CDHC), everyone is required to have health insurance. Government subsidies are available for those who cannot afford it, and the government "risk adjusts" premiums for insurers who have a lot of sick enrollees. This ensures that the poor and sick are protected under the CDHC system.
CDHC puts consumers in charge. Insurers compete for market share by offering the widest variety of plans at the best prices. And because the consumer is directly involved in his or her health care choices and costs, the most popular plans are high deductible plans that encourage consumers to stay healthy. Consequently, the Swiss model doesn't suffer from the overuse that cripples many "free" government health care systems.
The result? The Swiss enjoy ready access to high-quality health care at costs 30 percent lower than those in the United States.
Of course, CDHC has its detractors. Some health policy experts believe that consumers are incapable of making decisions about their health care, and that someone must do it for them. In other words, the average person can't possibly choose wisely among a sea of complex health care products. Interestingly, the average person seems to have no trouble choosing from a dizzying array of cars, computers, appliances, home insurance plans and mutual funds.
Another criticism of CDHC is that insurers with lots of sick enrollees are allowed to increase their premiums to cover their costs, eventually pricing sick people out of the market. In practice, however, the choices available in the Swiss system have resulted in specialized plans that focus on special health care needs, such as chronic diseases and disabilities. That focus has resulted in innovations that actually reduce costs. For example, a program that focused on congestive heart failure reduced the costs of the disease by more than $8,000 per enrollee in just one year.
The Swiss system is not perfect. In order to choose among alternate plans, consumers must have enough information to make informed decisions. In Switzerland, this need has created a new business - entrepreneurs that independently research various providers and market that in-depth information to consumers. In addition, the government should audit the information put out by insurers, much as our Securities and Exchange Commission does with stock offerings.
America should take a hard look at the Swiss health care system. The Swiss demonstrate that competition is the key to better products and lower prices - even in health care.
Don C. Brunell is President of the Association of Washington Business.