The Swiss example on health insurance reform

MASSACHUSETTS isn't the first place to mandate that everyone buy insurance as a way to achieve universal health coverage, and it isn't the first to get queasy about seeing through that solution.

Like Americans, the Swiss were not eager to accept the double principles of universal coverage and a mandate on individuals to purchase health insurance. It took almost a century and political debates as contentious as those in the Massachusetts Legislature before these two elements were added to the Swiss system in 1996.

What made a very reluctant Swiss population finally accept (by a small majority of 52 percent) such a fundamental change? Prior to the individual mandate, insurers were largely unregulated and could reject older people or those in poor health or charge them very high premiums. As a result, lifetime coverage was uncertain and health insurance was increasingly unaffordable for people with low incomes.

The goals of the Swiss reforms sound familiar to Massachusetts: Cover everyone, make insurance more affordable for low and moderate income people, and control health care costs. The individual mandate was combined with insurance market reforms that require Swiss insurers to offer a standardized, comprehensive benefit package defined by the federal government. Individuals can choose from products that have different deductibles (ranging from $240 to $2,050), and they have the right to change health insurers every year. Federal subsidies are available to low and moderate income people to make coverage more affordable.

Eleven years later, Switzerland has achieved its goal of universal coverage: Everyone has access to the same comprehensive health insurance coverage, at the same premiums, and to the same quality of medical care.

So, why did a coalition of stakeholders -- mainly the Socialist Party and the Popular Group of Families -- propose in March to vote on a radical restructuring of the system: the adoption of a single payer system?

First, affordability of health coverage has become a major issue, particularly for middle income people who do not qualify for government subsidies. Some Swiss families are paying as much as 16 percent of household income for health coverage.

Second, the availability of high-deductible health plans, promoted as a panacea to the problem of affordability for middle income people by the right wing of the Swiss parliament, has brought no relief from rising health insurance premiums. Premium rates for all types of health insurance, including high-deductible plans, have continued to rise at rates that far exceed general inflation. There is growing concern that people enrolled in these plans are more likely to avoid, skip, or delay needed care because of costs.

Finally, there is growing public concern and distrust of private non profit health insurers. Swiss citizens believe that insurers have profited unduly from the individual mandate, in part by adopting a range of pernicious practices to hunt for good insurance risks and avoid people in poorer health, in violation of Swiss law.

In the March vote on the initiative, voters in only two Swiss states out of 26 approved the single payer initiative. Even states with the highest premiums, like Geneva, defeated it. Polls show that voters were concerned about what the measure would mean for their individual health insurance premiums, and they were not persuaded that a single payer system would be more effective at controlling rising costs. So, even if there was strong opposition to the individual mandate 11 years ago, today few Swiss want to be relieved of this obligation.

What have we learned in Switzerland from our decade long experience with an individual mandate that is instructive for Massachusetts?

First, the queasiness felt in Massachusetts is natural, but is certainly not a reason to waver. Despite the fact that 97 percent of the population already had insurance in Switzerland, the introduction of the individual mandate induced deep modifications in Swiss culture: the obligation to be insured throughout one's life, the freedom to change insurance every year, the relief to no longer be subject to discrimination by insurance companies according to age or gender, and the guarantee to have access to a wide range of benefits determined at the federal level.

Second, there is growing scrutiny of insurance companies and heightened demands for accountability in a system in which everyone must purchase coverage. Specific concerns about insurers have focused on the opacity of their business practices and finances, the lack of competition among insurers, and their illegal attempts to identify and enroll healthy people and avoid people in poorer health.

Third, affordability of health insurance has become a huge public issue. With rising health care costs, more than one-third of Swiss families now qualify for public subsidies. Even though federal spending for subsidies for health insurance has more than doubled since 1996, an increasing number of middle-class families cannot afford their premiums.

Finally, the mandate and the affordability issue are focusing attention on the problem of health care costs and have sharpened attention on the relative responsibility of major players. Physicians, hospitals, consumers, and insurers cannot escape being involved in the debate about health expenditures which, thanks to the mandate, has reached a national level.

Although last month's vote demonstrated that the Swiss prefer incremental change to revolution, it was far from an all-out endorsement of the current system. The parliament is now debating a number of new modifications to the law from all sides.

Switzerland has led the way for Massachusetts on the adoption of a mandate on individuals to purchase health insurance. Perhaps the diverse, broad-based coalition of stakeholders that supported health reform in Massachusetts can develop some lessons to share with the Swiss in the areas of affordability and health care cost control. The Swiss experience suggests that these issues will certainly be your next policy challenges, and critical to the ultimate success of your health reform law.

Béatrice Schaad Noble is a Swiss journalist who this month got her master's in public health at the Harvard School of Public Health.