Greg’s Corner May 2007
The State of our Health Care System: Part II
By Greg Petty, Operations Manager

In Part One of this series, I described some of the major areas of dysfunction within America's current system of health care.

A few additional facts are in order before discussing one of the options we must provide to achieve a wellness outcome for the "ill" U.S. system.

The net cost of private health insurance and government program administration in the U.S. from 1993 to 2002 more than doubled ($53.3 billion to $110.9 billion). Barring a change in our system, it is predicted to rise to $222.6 billion by 2012. (1)

"Three-quarters of adults believe the U.S. health care system needs to be fundamentally changed or rebuilt completely." (2)

Change is in the air. You need to look no further than the recent actions of some big business executives for evidence that the system must change (Coalition to Advance Health Care Reform, Business Roundtable). (3) For one of the few times in labor history, progressives and big business have one thing in common - the realization that the system of employer-paid insurance is broken, must be fixed and that government must now play a role. The government must be a regulatory agent ("It's the Prices Stupid"). (6)

Before we proceed further, I would like to offer the findings and recommendations offered by the Institute of Medicine in the article, Insuring Americas Health: Principles and Recommendations. (4) The following recommendations were proposed by the Institute:

• Health care coverage should be universal.
• Health care coverage should be continuous.
• Health care coverage should be affordable to individuals and families.
• Health insurance should be affordable and sustainable for society.
• Health insurance should enhance health and well-being by promoting access to high-quality care that is effective, efficient, safe, timely, patient-centered, and equitable.

One of the options we should consider is the system currently in use in Switzerland. It offers the desired solution of being a consumer-driven competitive plan tempered with common sense regulatory controls exercised by the government.

How the Swiss System Works
In Switzerland, everyone is required to purchase health insurance from one of the more than 90 private insurance carriers. Each insurer must offer, at least, a mandated, comprehensive package of health benefits. The insurer cannot make a profit on the mandated package but is allowed to profit from offering supplemental packages that offer
superior amenities.

Premiums for the type of policy sold are community-rated for risk. The risk is periodically reviewed and risk groups are allocated within the system so that no one insurer is adversely affected with higher risk. The premiums are monitored by the government for suitability to the risk. The government has the power to reduce the premium if found unfair. The premiums can vary, as in America, by the deductible chosen by the consumer. The individual also has a stake in the medical cost they incur by paying a 10% coinsurance cost up to a maximum. Insurers can also offer bonus policies to reduce costs to individuals who did not use services in the previous year.

Two types of managed care are offered, both of which are familiar to Americans. The first type is the gatekeeper model that requires the General Practitioner's approval and referral to a specialist. The second type is restricted networks such as our HMOs.

The Swiss government establishes acceptable prescription drugs and establishes maximum allowable prices. The government also determines acceptable lab analyses and medical devices for the mandatory program.

Finally, the Swiss government will subsidize citizen's payments for those low-income families for which the premium exceeds 10% of their income.

In retrospect, the Swiss system is not terribly different than the plan proposed by the Clinton Administration 14 years ago. To quote Uwe E. Reinhardt, PhD, in the Journal of the American Medical Association, September 8, 2004 article The Swiss Health System. (5) "One could debate whether the Clinton plan would have been more or less regulatory than is the current Swiss health system... the Clinton plan would have achieved universal health insurance coverage, as does the Swiss health system, and that its envisioned workhorse for cost and quality control would have been consumer choice, albeit in a tightly regulated market for health insurance, just as it is in the current Swiss health system... Absent that regulation, the Swiss health system probably would metamorphose into something resembling the much less regulated, high-cost U.S. system, which is both more inefficient and more inequitable than the Swiss system..."

Next Month -Part Three - Thoughts for Reform from an American Doctor.

Levit et al "Trends in U.S. Health Care Spending, 2001, Health Affairs.

Schoen et al "Public Views on Shaping the Future of the U.S. Health System, August 2006, The Commonwealth Fund Commission on a High Performance Health System.

Jonathan Cohn "What's the One Thing Big Business and the Left Have in Common?" , April 1, 2007, The New York Times Magazine.

"Insuring America's Health: Principles and Recommendations, Institute of Medicine.

Uwe E. Reinhardt, PhD "The Swiss Health System" September 8, 2004, The Journal of the American Medical Association.

Uwe E. Reinhardt, PhD., Gerard F. Anderson et al "It's The Prices, Stupid: Why The United States Is So Different From Other Countries, 89-105, 2003, Health Affairs.