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Strong evidence

they believe the cost outweighs the value.

tems. In addition, the Swiss have a high degree

Moreover, the establishment of a government-

of access to modern medical technology, but it

suggests that the

defined benefits package is an open-ended invi-

has come at a cost. The Swiss spend 11.5 per-

exposure of

tation to special interests representing various

cent of GDP on health care, second only to the

United States.270

Swiss consumers

health care providers and disease constituencies,

who can certainly be expected to lobby for the

Since Swiss health care consumers are

to the cost

inclusion of additional services or coverage.275

exposed to the cost consequences of their

consequences of

health care decisions, this trade-off between

Public choice dynamics are such that

access and cost can be presumed to reflect the

providers (who would make money from the

their health care

desires of Swiss patients. They have chosen

increased demand for their services) and disease

decisions has

high quality care even though it costs them

constituencies (whose members naturally have

made them more

more. Given that economists consider health

an urgent desire for coverage of their illness or

care to be a "normal good"--that is, consump-

condition) will always have a strong incentive to

conscious

tion rises along with income--and Switzerland

lobby legislators for inclusion under any mini-

consumers.

is a wealthy nation, such a decision seems

mum benefits package. The public at large will

entirely reasonable.271

likely be unaware of the debate or see resisting

the small premium increase caused by any par-

At the same time, it is notable that Swiss

ticular additional benefit as unworthy of a sim-

health care spending remains below that of the

ilar effort--a simple case of concentrated bene-

United States for nearly comparable care.

fits and diffused costs.276

Strong evidence suggests that the exposure of

Swiss consumers to the cost consequences of

That is exactly what has happened in

their health care decisions has made them more

Switzerland, leading to a growing expansion

conscious consumers and helped limit overall

of the basic benefits package. In particular, a

health care costs. As Regina Herzlinger and

powerful hospital and physician lobbying

Ramin Parsa-Parsi of Harvard have concluded,

coalition known as the "Blue Front" was able

"Cost control may be attributed to the Swiss

to demand a significant expansion in covered

consumer's significant role in health care pay-

benefits in exchange for a relaxation of "any

ments and the resulting cost transparency."272

willing provider" laws so as to permit man-

aged-care contracts.277

The transparency of the system also makes it

responsive to consumer preferences. The WHO

The expansion of benefits has driven up

survey ranked Switzerland second only to the

the cost of insurance, a cost only partially off-

United States in terms of responsiveness to

set by larger deductibles. Although the pro-

patients' needs for choice of provider, dignity,

portion of health expenditures paid out of

autonomy, timely care, and confidentiality.273

pocket remains high, it has decreased by

roughly 10 percent in the past decade.278

The Swiss generally seem pleased with their

system. Earlier this year, Swiss voters over-

Moreover, the growth in covered benefits

whelmingly rejected a proposal to replace the

has helped drive up costs for the system as a

current system with a single-payer plan; more

whole, as the Swiss become more insulated

than 71 percent of Swiss voters turned down

from the costs of their health care purchas-

the proposal in a nationwide referendum.274

ing decisions. If that trend continues, it could

undermine the cost transparency that is at

Nonetheless, the Swiss system has its own

the heart of the Swiss system." As Uwe

problems, most of them predictable outgrowths

Reinhardt has noted, "Over time, the growth

of the individual mandate and the regulation

in compulsory benefits has absorbed an

inherent in managed competition. In most mar-

increasing fraction of the consumers' pay-

kets, consumers impose a certain discipline on

ment, thus compromising the consumer-dri-

prices because they can refuse to buy a product

ven aspects of the Swiss system."279

if it costs too much. The individual mandate

removes this power since consumers must pur-

Evidence shows that the community rating

chase the product (in this case, insurance) even if

requirements are creating distortions within

28