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Another Way to Universal Health Care

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Another Way to Universal Health Care

A sign on an insurance store advertises Obamacare in San Ysidro, San Diego, Calif., October 26, 2017. (Mike Blake/REUTERS)

The Swiss model, intelligently adapted, has a shot here.

The word “compromise” is in bad odor at the moment, and anybody who listens to talk radio or cable-news commentary of either the right-wing or left-wing variety knows that to say the word “bipartisanship” is tantamount to announcing one’s intention to become a eunuch — or, the times being as unserious and hypertensive as they are — to commit treason.

We were supposed to be practicing the “art of the deal.” We are instead scouring politicians’ yearbooks for discrediting photographs or cryptic messages suggestive of misconduct. Meanwhile . . . well, you know.

Is it possible to reform that which is in need of reform?

Consider the case of health care. For Republicans, 2009 was a tragedy founded on sins of omission. Barack Obama came triumphant into Washington followed by crowds of celebrities and admirers literally chanting his name as a hymn of praise, and his first order of business was doing something about health care — or, more specifically, about health insurance. Republicans responded with something less than splendiferous wit and intelligence: “We have the best health-care system in the world!” they insisted, over and over, dozens of them, often using precisely the same words. Somehow, a political strategy based on the notion that Americans like health-insurance companies proved ineffective — surprise.

The Democrats, for their part, couldn’t quite decide what they wanted. They talked about “Europe,” as though there were a single “European” model of health care. Some of them talked about the British and Canadian systems, rarely if ever giving serious consideration to the question of why so few of those admired European countries rely on such systems (Germany? No. Sweden? No? Switzerland? No!) or why these national monopolies produce so many complaints among citizenries that generally support them or so many documented failures when it comes to access and timely patient care. They thought they were being clever by taking as their starting point a model associated with Mitt Romney in Massachusetts — “Call us irresponsible radicals, will they? Well, this is a Republican plan! Take that!”

Massachusetts had looked in part to the Swiss model of health care, which the legislative engineers behind the ACA had attempted to graft clumsily onto existing American practice.

Naturally, it went badly. The Democrats in 2019 accuse Republicans of “sabotage” vis-à-vis Obamacare, but if there were any saboteurs at all, they were Democrats: Republicans just ran against the program that not one of them voted for. Democrats designed the damned thing, and they designed it badly: They funded it with taxes that they never intended to collect and relied on a series of mandates toothlessly enforced.

And so here we are again. The Democrats are ready to go the full NHS, and the Republicans remain in their preferred posture: opposition without the responsibility of providing an alternative. The difference is, none of them will now insist that “We have the best health-care system in the world!” They will defend a status quo in which they do not believe out of habit and spite.

Yikes.

***

Here’s a thought that might provide the basis for an agreeable compromise on health care: Switzerland was the right place to look. But the architects of the ACA took the wrong lessons.

In Switzerland, health insurance and the delivery of health care are entirely private enterprises. There is no Swiss NHS, no single-payer, no “public option” — none of that. Switzerland has health care that is by European standards 1) excellent and 2) expensive. Insurance coverage, though entirely private, is universal. It is also heavily regulated and sustained through various direct and indirect subsidies, and consumption is restrained not through the god-kings of political management but through substantial out-of-pocket costs. There is a great deal of consumer choice and competition across internal political jurisdictions — as a result of which, Switzerland has one health-insurance company for every 100,000 residents. For comparison: In 2019, the United States is expected to have one insurance company on the ACA exchanges for every 1.7 million residents.

Switzerland has an individual mandate that has nearly 100 percent compliance, which is achieved through ruthless enforcement. That enforcement is made easier by Switzerland’s extraordinary civic culture, but, still: If you fail to secure health insurance for yourself, you’ll get a notice from the authorities reminding you of your obligations, and if you continue in noncompliance, they’ll just sign you up for a policy and start charging you both forward-going premiums and retroactive premiums and penalties covering the period of your lapse.

There is a legally defined bare-bones insurance policy in Switzerland, rather like the ACA’s statutory minimum coverage. Though there is no government-run insurance program in Switzerland, these programs sometimes are described as the country’s “social insurance,” and the insurance companies are obliged to offer them on a nonprofit basis. Premiums aren’t fixed by law, though insurers must charge everybody the same rate; because Switzerland has had nearly 100 percent compliance with its mandates since 1996 (it had about 98 percent voluntary coverage before that!), “preexisting conditions” are not much of an issue. Practice varies from canton to canton, but Switzerland subsidizes its system in two main ways: by providing direct subsidies for the premiums of low-income citizens and by providing financial support to the hospital system in general.

Dr. Thomas Zeltner, Switzerland’s former secretary of health, characterized the system this way in a 2010 interview with Tsung-Mei Cheng of Health Affairs:

In Switzerland, rich and poor share the same insurance plans, and physicians and hospitals are paid the same fees for rich and poor alike. But in the U.S., fees paid vary by type of insurance. Fees for the poor in your Medicaid are much lower than fees paid by commercial insurance.

I think that is an interesting difference. We don’t want the poor to be stigmatized in associating them to a specific plan. So, indirectly, we come to the same result — we help the poor — but it makes a huge difference when it comes to personal dignity as a patient. In Switzerland, the doctor and hospital do not even know whether you’re subsidized or not. They get the same fee, regardless of who you are.

It is, of course, important to keep in mind that health insurance is not the same thing as access to health care, which requires doctors, hospitals, pharmaceutical companies, medical-device manufacturers, non-hospital clinics and facilities, a massive financial infrastructure providing the capital and R&D to make all that happen, etc. Switzerland has a lot of that, but so does the United States. Our problem at the moment is not personnel, capital, or expertise.

***

If the ACA was the Swiss model unintelligently adapted to the United States, what might a better version look like?

What do we want? Progressives emphasize universal coverage and benefits for the poor and middle class. (Let us set aside, for the moment, any illiterate insistence that health care or any other scarce good may be considered a “right” or the notion that pediatric oncologists are wicked and predatory because they make a great deal of money.) Conservatives emphasize consumer choice and markets. Many reasonable people of different political persuasions can concede that the pre- and post-ACA settlements were deeply unsatisfactory in many ways: price opacity, unpredictability, coverage and liability that often proved too complex for consumers to understand or predict, seemingly arbitrary decision-making by insurers, lack of choice for many consumers, a sensation of powerlessness for many patients, high compliance costs and transaction costs, etc. It probably wasn’t “the best health-care system in the world!” It surely was not the best system imaginable.

We could do something along these lines:

1) Adopt two things from the Swiss practice of insurance regulation: First, enable interstate competition. (I’d work hard to enable international competition, too, but I’m one of those zany libertarians.) Second, specify an intelligent, thoughtful minimum-coverage policy and oblige all insurers to offer it on the Swiss model: on a nonprofit basis with a universal premium irrespective of age, sex, or health status.

2) Also adopt an individual mandate with a Swiss model of enforcement: Coverage is an individual responsibility for adults and a family responsibility where there are minors, meaning those younger than 18 years, not 26-year-old graduate students. (Those I will deal with below.) Write the regulation in such a way as to forbid the termination of coverage until new coverage has been secured. If there should be a lapse in coverage, then the customer will be assigned coverage and charged retroactive premiums, penalties, and interest.

3) Simplify the collections problems implied by No. 2 by instituting a universal premium voucher. The voucher should come to ~100 percent of the premium for the minimum-coverage policy for a median-income household; it should grow to 120 percent of that premium for households near or below the poverty line and decrease to about 50 percent of that premium for households in the top income quintile. We may increase it for elderly patients. Having learned from the experience not only of Switzerland but also that of Singapore and Germany, we will want that minimum policy to include substantial out-of-pocket expenses for poor and affluent alike — because direct costs are the most effective and least arbitrary form of rationing care, and all systems ration care. You can have a price, or you can have your “death panels.” The bigger voucher for the poor will help offset some of these costs without taking away their power and choice as consumers, and the smaller subsidies for the wealthy would help to subsidize this.

4) None of the above would stop anybody from buying or selling insurance policies beyond the statutory minimum plan, nor would it interfere with direct out-of-pocket fee-for-service health care, “concierge” plans, generous employer-based or union plans, other kinds of community-based joint-interest models, or anything else.

5) Pay for this by repurposing Medicare and Medicaid, and other federal health-care benefits. At a total of about $1.2 trillion per year, this could fund an average premium voucher of about $10,000 per year per U.S. household. In 2018, the average premium for a family of four was about $14,000 a year for non-employer plans. Considering what employers already pay to subsidize their plans — $1.2 trillion annually — this should put us pretty close to getting coverage that is 1) universal; 2) guaranteed; 3) private; 4) portable; and 5) separated from employment for no more than we already are spending on health-care subsidies.

6) We repeal the preferential tax treatment for employer-based insurance. Many, most, perhaps all employer-based plans would be supplanted by consumer-based plans in the private market. Businesses are relieved of a great deal of expense and hassle. People happy with their employer-based plans will not like it. But they should be able to get comparable policies at comparable expense — or, one hopes, better ones. And: Other kinds of group plans would then be possible. Because of their numbers, the 62,000 employees of Coca-Cola were able to get a pretty good group deal for themselves. There are 70 million Catholics in the United States, 38 million members of AARP, 500,000 members of the NAACP, 18,000 members of the National Model Railroad Association, etc.

This is of course an imperfect outline. I am sure that it contains shortcomings other than the ones that are obvious to me. But it seems to me a reasonable starting place to pursue a compromise that speaks to the most important substantive concerns of progressives and conservatives alike. I welcome your thoughts.

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