A Swiss lesson in health reform

Worth A Look, Healthcare & Welfare, Frontier Centre

As Ujjal Dosanjh, the newly minted federal Health Minister, girds his socialist loins for the battle against private health care delivery, we offer this advice: To prevent facts from threatening to subvert your dogma, avoid Switzerland. Avoid it like a planeload of SARS carriers. Because in Switzerland, people buy their own health insurance, private clinics do much of the heavy lifting, hospitals contract out services among competing suppliers, taxes are low and personal choice reigns. A veritable Dosanjhian dystopia.

Here in Canada, defenders of the Best Health Care System In The World invariably frame discussion in either-or terms: Either we maintain medicare unchanged (save for billions in extra spending) or we descend into U.S.-style barbarity, with uninsured gunshot victims bleeding to death in emergency room doorways.

It’s a distorted portrayal and a false dichotomy. Civilized countries worldwide include far greater private-sector participation in health care than does Canada, yet health outcomes are often far better. Local people frequently like their system; some even consider theirs the Best Health Care System In The World, unwittingly usurping that Canadian trademark.

Switzerland is a particularly interesting example because it places a special emphasis on personal responsibility.

The Fraser Institute calculated the private sector accounts for about 43% of total health spending in Switzerland, versus 29% in Canada and 56% in the United States. Swiss burghers choose their own insurance from among competing public- and private-sector health plans. Like Canadian car insurance, the Swiss Krankenkasse (“sickness account”) is mandatory. Until 1996, you could even opt against insurance and just pay from your wallet; today, 99% of the Swiss are covered. Lower-income people receive an income supplement, not an insurance subsidy, maintaining individual choice and responsibility.

Insurers set their own premiums based on actual health care costs; competition keeps prices honest, while regulations ensure that high-risk patients are not refused coverage. Insurance prices reflect the insured’s age and place of residence (but not income), plus the deductibles chosen and the selected suite of non-core services, such as private rooms, vision coverage, alternative medicine and even cosmetic surgery. One result is that Swiss insurance costs, the individual’s health risks and the health services offered are all connected — which means the Swiss, unlike Canadians, have an incentive to live healthy lives.

Monthly premiums range as low as $100, but are more typically $200-$400. Premiums are tax-deductible. Deductibles and “co-payments” remain uninsured and must be paid out-of-pocket.

What about objective health outcomes? The news is also positive, and thus disconcerting to worshippers of statist solutions. Although Switzerland doesn’t track waiting times, a recent Organisation for Economic Co-operation and Development analysis concluded they’re not a significant issue. Swiss media report lengthening waits. But this, ironically, is attributed to the Swiss starting to view health care as a “right” (in the Canadian style) and over-using their system.

Like the United States, Switzerland offers better access to key technology, doctors and hospital beds. It has 12.9 MRI machines per million population versus 3.5 in Canada; 3.5 physicians per thousand population versus 2.1 in Canada; and 4.1 acute-care hospital beds per thousand population versus 3.2 in Canada.

Switzerland is also ahead in that most important health outcome: life expectancy. It averages 80 years versus Canada’s 79.

The simple explanation for all of this is that Switzerland offers the private sector a wider role. Though not purely free market, its system includes many genuine market mechanisms, both among the system’s providers and between patient and system. The most important element is splitting health-care purchaser from provider — the very thing Mr. Dosanjh and much of the Canadian health-care establishment evidently oppose — which creates huge incentives for efficiency and high-quality care. Switzerland’s payment system makes the patient a source of profit sought eagerly by competing health-care providers, rather than a burden to be kept at arm’s-length through waiting times, indifference, horror stories and other informal rationing.

The cost of this excellent system is high but bearable. Switzerland’s health spending as a share of GDP is slightly higher than Canada’s — 11% versus about 10% — owing in part to an older population.

Mr. Dosanjh will no doubt find much to object to in the Swiss system, as will Canadian ideologues who consider it their patriotic duty to wait six months for heart surgery or a year-and-a-half for a new hip. For us, though, Heidiland’s health care choices could be a lifesaver.