HEALTHCARE SYSTEMS AROUND THE WORLD PART 9: SWITZERLAND
It is one thing to be like Taiwan, a newly prosperous nation with little medical infrastructure to create a new health system. “But the problems take on a whole new dimension when it comes to revamping the established healthcare system in a thriving, capitalist democracy that has an influential network of health insurance companies, hospitals, and drug companies already in place.” By the early 1990s, the Swiss healthcare system had begun to resemble that in America. Switzerland ranked second only to the U.S. in per capita spending on healthcare. The system left many people out of the system and those with preexisting conditions were uninsurable. By 1993, 5% of the population had no health insurance.
A special task force was set up to examine the Swiss system and to look at other healthcare systems in Europe. It was clear from the outset that the new system should be based on the Beveridge model. In 1993, the Swiss enacted a new law – the Swiss Federal Law on Compulsory Health Care (Loi Fédérele sur L’Assurance-Maladie commonly known as LAMal). Unlike other Bismarck countries, health insurance was not coupled to employment. All families went into the marketplace to buy coverage. All insurance companies would have to offer a basic package of benefits to all applicants. Above all, , insurers could not make a profit on this basic health coverage. All residents were required to buy insurance (individual mandate); a company is assigned to anyone not signing up and the premium deducted from their paycheck. All was not lost for insurance companies which could compete at the fringes. They were able to sell supplemental policies for cosmetic surgery, private rooms etc.
Switzerland held a national referendum in 1994 (about the time the Clinton initiative was sputtering to its ultimate demise). LAMal passed with a slim majority and went into effect on January 1, 1996. It is now firmly entrenched in Swiss society with little opposition remaining. LAMal provides healthcare to everyone in Switzerland; no one is turned down. No claim is denied if signed by a doctor or hospital. There are about 70 different plans to choose from all with the same basic package of benefits. “Most firms have used other nonprofit basic health coverage as sort of a loss leader, to draw customers to profitable lines of business…” Interestingly, the insurance companies are reporting higher profits overall than before LAMal.
Avik Roy noted in an article in Forbes that “The government subsidizes health care for the poor on a graduated basis, with the goal of preventing individuals from spending more than 10% of their income on insurance”. He further noted that 99.5% of Swiss citizens have health insurance. Because they can choose from near a 100 insurance companies, the companies compete on price and service. Beneficiaries are free to choose their doctors and appointment time, similar to the U.S. (Avik Roy, Forbes: https://www.forbes.com/sites/theapothecary/2011/04/29/why-switzerland-has-the-worlds-best-health-care-system/#3f4dcf067d74)
On the downside, Swiss health expenditures per capita are the third highest in the world behind the U.S. and Norway. The percentage of GDP spent on health care is also high at 11.7% compared to 17.9% for the U.S. The government has also enacted price controls for hospitals and doctors, like U.S. Medicare. The Princeton economist Uwe Reinhardt describes Switzerland as “a de facto cartel of insurers and health care practitioners who transact with one another in a tight web of government regulations”.