Swiss model of medicare works best

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The Article

United States President Barack Obama has touched off a lively and informative debate over the best way to reform health care, but in Canada, no politician of any party is willing to do the same. Why is that? Why is there so little support for major medicare reforms in Canada.

After all, it’s plainly evident that the Canadian system is far from perfect. In a recent international survey, the Commonwealth Fund found that the proportion of adults with chronic health problems who had to wait four weeks or longer for elective surgery was 33 per cent in Canada, but only eight per cent in the United States.

Among the 30 members of the Organization for Economic Cooperation and Development (OECD), Canada ranks fifth in total health care expenditures per person, yet lags in advanced medical technology. For example, Canada has just 6.7 magnet resonance imaging (MRI) units per million population, far below the OECD average of 11.0 and the record 25.9 MRI units per million in the United States.

Given Canada’s shortcomings in medicare services and equipment, it’s hardly surprising that the five-year survival rates for cancer are significantly lower in Canada than the United States.

Granted, the U.S. health-care system is also beset with serious problems. Costs are out of control. Over the past 15 years, total U.S. health care spending has more than doubled to $7,290 per person. That’s almost twice the Canadian level and much the highest in the world.

Some 47 million Americans do not have even basic health insurance, while millions more fear they could also end up with no coverage if they lose their jobs or contract a serious illness. That’s scandalous.

To remedy these defects, Obama initially proposed a comprehensive public-sector medicare plan to compete with private medical insurance. However, he seems to be backing away from this “public option” under pressure from critics who apprehend that it would be ruinously costly and lead to the imposition of a Canadian-style medicare monopoly.

In a recent column in The New York Times, Paul Krugman, the left-wing, Nobel-prize winning economist, pointed out that a public option is not the only route to universal coverage. As an alternative, he speculated that Obama might endorse the Swiss medicare system, which relies entirely on private insurance companies to provide affordable medical care for everyone under strict government regulation.

The Swiss model requires every resident to purchase a basic medicare policy from one of several competing private insurance companies. To assure affordability, the government subsidizes premiums for the needy and requires the health insurers to offer basic coverage to all applicants at a uniform rate, regardless of age or medical history. The additional expense of insuring higher-cost clients is offset through a system of reinsurance. 

Unlike Canadians, the Swiss are allowed to contract with private insurance companies for supplementary benefits beyond the basics required by the government. Yet on an age-adjusted basis, the total costs of medicare in Switzerland are no higher than in Canada.

This Swiss model works. It provides the Swiss people with superior medicare services without the long waiting times, shortages of medical technology and other chronic deficiencies that plague Canada’s grossly inefficient, public-sector, medicare monopoly.

Krugman is not alone in taking note of the Swiss success. After extensive study, the Dutch Parliament decided in 2006 to replace the Netherlands’ inefficient and unresponsive mixture of public and private medicare with an all-private system on the Swiss model. The Dutch health ministry boasts that the new system delivers “more choices for customers, more competition and guarantees of affordability.”

Let us hope the Obama administration likewise embraces the Swiss model of medicare that relies on competing private insurance companies to provide efficient and affordable coverage for everyone under strict government regulation. Perhaps eventually, even Canada might do the same.

The Dutch health ministry persuasively argues that there is no alternative to competing private insurance companies as a means of ensuring “better quality of care, greater cost consciousness, better affordability and more tailor-made care through greater influence by customers.”

Rory Leishman
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