Plain and simple, our healthcare system is broken. The United States spends almost double what other high-income countries pay per person on healthcare, while we see worse health outcomes on average. Even after the groundbreaking passage of the Affordable Care Act (ACA) in 2010, we still see prices rising and little to no improvement in life expectancy- statistics from before the COVID-19 pandemic. To fix the system, I believe an expansion of one of the ACA’s cornerstones, consumer-driven healthcare, is the most optimal course of action. We can turn to Switzerland for an example of such a system.
A POTENTIAL SOLUTION
The Affordable Care Act was rooted in a fundamental belief to return some power to the consumers through the Consumer Oriented and Oriented Plan (CO-OP) Program and overall transparency in the system for consumer protection. Ultimately, the goal of the ACA was to provide increased access for individuals to more affordable and high-quality healthcare. This was to be achieved partly through increased competition among insurance companies for premiums and prices. It is quite clear that there are numerous parallel pillars of the ACA and Switzerland’s healthcare system. The Swiss have also achieved universal coverage, with nearly 100% of their population covered.
Overall, Switzerland’s spending on healthcare is significantly lower, spending about 40% less on healthcare in 2009 than the U.S. However, the development of a Medicare or Medicaid for All plan may underpay providers and may likely underprice the current enrollment, essentially borrowing from the future. Numerous studies have demonstrated that public plans, such as Medicare, significantly under reimburses the providers through their lower costs to enrollees, currently shifting the burden of payment onto private insurers and their enrollees. If this were to continue, transitioning an entire population onto the Medicare of Medicaid would leave providers at risk.
The Swiss healthcare system is centered around consumer-driven competition among insurance companies. It is a highly decentralized system, giving most of the power to its cantons (the Swiss equivalent of a state), mostly funded through the premiums paid by residents, taxes, and out-of-pocket expenses. Every individual is required to purchase a private insurance plan. To make affordability more practical, the federal government requires a basic plan that no company can reject an enrollee for. This can include general practitioner services, preventive care, maternal care, and a whole range of other services. The Swiss also have an out-of-pocket spending cap on their coinsurance costs.
As a result of these more regulated costs and insurance plans, Switzerland has considerably higher healthcare standards. The mandatory coverage of basic healthcare ensures more equitable access to care. OECD surveys have found that the range of medical services accessible to the Swiss is broad and that their overall satisfaction is quite high. Furthermore, general performance and clinical outcomes were rated very well, and the equity and sustainability of their system received positive ratings as well. These factors allow the Swiss healthcare system to respond to economic instability, such as the COVID-19 pandemic. Studies from the Commonwealth Fund have also ranked Switzerland to have the third-best system in terms of equitable access. The same study found the Swiss to have well-coordinated care, through communication between general practitioners and specialists. These systems allow Switzerland to have the lowest rate of preventable mortality.
The insurers also must contract with every provider in the Cantons, ensuring the freedom of choice for each patient. This removes any of the surprise billing risks that the recently implemented No Surprises Act aims to fix. Additionally, the government may also provide subsidies based on income level to assist in the payment of mandatory premiums. Alternatively, the Swiss can purchase an alternative “managed care” plan, which requires lower premiums, but has selective contracting with providers and gate-keeping by primary care physicians. The cost-regulation is also able to be much tighter through this system, placing caps on deductibles and coinsurance payments.
The Swiss system has demonstrated several capabilities that, if similar programs are implemented in the U.S., may allow for a cheaper and more accessible market. Because insurers in Switzerland are required to contract with every provider, there was less pressure for hospitals to consolidate. Studies have shown that hospital consolidation that eliminates competitors within a 15-mile radius has 12% higher prices than competing hospitals in the U.S. Some also argue that the system encourages consumer cost-control. Because the costs of health insurance are not hidden in employer-provided plans, consumers may overall self-regulate the costs of their spending.
Beyond a reform of the entire healthcare system, I believe that it is of utmost importance that we remove “pay-for-delay” practices. When brand-name pharmaceutical companies keep more affordable drugs off the market, consumers are much less likely to be able to afford the life-saving drugs that they may need. Such agreements allow branded manufacturers to decrease competitors that make generic drug products. In such patent settlements, the branded manufacturers stifle the generic companies by paying them not to produce lower-cost generics. It is estimated that it costs taxpayers $3.5 billion in increased drug prices every year. I support legislation such as the Preserve Access to Affordable Generics Act, introduced by Senators Amy Klobuchar (MN) and Chuck Grassley (IA). This policy would limit the anticompetitive practices among pharmaceuticals.
Through a more committed and thorough application of the Swiss system to the current attempts at consumer-driven healthcare, I believe that we can both drive costs down while retaining consumer freedom and provider compensation.