that when the cost of insurance becomes more
the Swiss market, leading to the over provision
transparent, consumers shift their purchasing
of care to the healthy and the under provision
of care to the sick.280 In addition, the prohibi-
preferences toward true insurance (spreading
catastrophic risk), rather than purchasing pre-
tion on risk management discourages the
payment for routine, low-cost services. That
development of new and innovative products.
gives consumers an overall incentive to make
Peter Zweifel of the University of Zurich, a
cost-versus-value decisions when purchasing
member of the Swiss Competitive Committee
health care, resulting in reduced costs while
which oversees insurance regulation, believes
maintaining individual choice and quality
that a return to some degree of risk-rating is
care.
essential to the long-term success of the Swiss
system.281 As Zweifel puts it, "Let competition
work its magic. Let those who are bad risks get
Germany
the message that they need to become better
risks, if possible. If not possible, [they would]
still get a subsidy which [keeps their costs]
Germany ranked 25th in the WHO rat-
ings.287 Despite that low ranking, however, the
down to little more than 810 percent of tax-
able income."282
country is worth examining because it is fre-
The Swiss system
quently cited as a model by advocates of
Third, the cartel structure for negotiating
provides a useful
national health care.
reimbursement schedules can create a num-
National health insurance in Germany is
ber of distortions. Effectively monopsony
lesson for the
part of a social insurance system that dates
purchasers, the cartels have enormous lever-
United States
back to Bismarck. All German citizens with
age when it comes to negotiations. Not sur-
incomes under €46,300 (roughly $60,000) are
about the value
prisingly, physicians have tended to set up
€
required to enroll in one of approximately 250
practice in cantons with the highest levels of
of consumer-
statutory "sickness funds." Those with higher
reimbursement, leading to shortages in other
directed health
incomes may enroll in the funds if they wish, or
areas. Reimbursement rates have reportedly
may opt out of the government system and
created wasteful incentives--for example, hos-
care.
purchase private insurance.288 About three-
pitals shifting patients from outpatient to
inpatient care.283 And the combination of
quarters of workers with incomes above the
statutory limit choose to remain in the sick-
increased demand and low reimbursement
ness funds, which currently cover approxi-
has led to the first signs of queues for the
most complex surgeries.284
mately 90 percent of the population. Overall,
insurance coverage is nearly universal.
In addition, the negotiations freeze in
However, the number of uninsured has been
place a pricing structure that inhibits the
rising, roughly tripling in the last 10 years to
development of innovative approaches that
300,000 people.289 About 9 percent of the pop-
do not tie payments to specific benefits. This
includes both managed care approaches and
ulation purchases supplemental insurance to
health services integration.285
cover items that are not included in the stan-
dard benefits package.290
Finally, Switzerland has some of Europe's
strongest regulation of nonphysician health
Sickness funds are financed through a pay-
care professionals.286 As a result, patients are
roll tax split equally between the employer and
employee. The size of the tax varies depending
often forced to use more expensive providers
on which fund the worker has chosen, but
where a less expensive professional would do.
averages around 15 percent of wages.291 Sick-
All of the above combine to undermine the
consumer-driven nature of Switzerland's
ness funds are supposed to be solvent and self-
supporting, but in reality the system ran a €7
health system. Despite these problems, the
€
292
Swiss system provides a useful lesson for the
billion deficit in 2006. The German govern-
United States about the value of consumer-
ment has proposed a 1 percent increase in the
directed health care. In particular, we can see
payroll tax, split evenly between employer and
29