The Swiss Amendment

The Swiss Amendment as I define it would force every insurance company to sell “basic qualified” health insurance on a non-profit basis. Premiums collected for basic minimum insurance can't be used for profit or executive pay. At minimum 90% of the premiums collected for basic insurance must be paid out in claims. Insurance companies could sell for-profit “complimentary coverage” (this would cover dental, optics, non-generic non-life saving medication, etc...) only to costumers that it already provides non-profit basic insurance for. Only funds from complimentary coverage could be used for profits or executive pay.

Background

Switzerland has a universal health care system. It uses something similar to a regulated health insurance exchange for people to select a private plan. Insurance is sold using community rates. There is an individual mandate that people must buy basic health insurance (In Switzerland this is called, “social health insurance”). The government provides people with subsidies to help buy private insurance. There is not a government run public option for people to choose. But Switzerland has a very important law that makes their private health insurance system some whate workable. All social health insurance plans must be not profit-making. Additional "complimentary coverage" can be sold to costumer for profit.

Ideally, I do not think the Swiss health care system is one that we should replicate. While Switzerland does have a universal system and pays less than us per capita on health care, it is still one of the most expensive systems in the world. If we are trying to reduce health care spending, copying another very expensive (but much less expensive) system does not seem like a smart move.

I do think that if we are going to have a health care system that relies heavily on private health insurance we do need the copy the Swiss amendment. If the government is going to provide some people money to help afford health insurance, it should subsidize health care, not corporate profits.

If there is a public option the Swiss amendment would be very important but not critical. There would at least be a comparison to help Americans determine if the for-profit insurance companies are ripping off costumers and the government.

Without a public option the Swiss amendment is essential to avoid a complete fiscal disaster. An individual mandate and subsidies based on the average price of the cheapest plans offered in an area would create a perverse incentive for private insurance companies to increase premiums, gauge costumers, and rip off the American taxpayer. Competition would be insufficient to control cost for many years.

Most health insurance markets are highly concentrated and it is very difficult for new insurance companies to expand into new markets. Creating provider networks requires a large costumer base, but costumers won't sign up for a plan unless there is significant provider network. Doctors also won't sign up with insurance plans that don't have customers. It is a classic catch-22. That is why a government backed public option is so important.

If there is not a public option at minimum there must be the Swiss amendment to avoid disaster. There is no ideological reason that Republicans or conservative Democrats should oppose the Swiss amendment. It is unconscionable to force everyone to buy insurance and provide government money to help people afford minimum insurance without at least the Swiss amendment. Without it, health care reform is a massive transfer of money from the taxpayers to health insurance profits and their millionaire executives.

A Public Plan is the End All, Be All of Health Care Reform

The goal of health care reform is to provide universal access to affordable, quality health care to every American. There are two ways to achieve this goal. One is through the use of a public health insurance plan. There other is through a very highly regulated health insurance market.

It is technically possible to achieve real health care reform without a public plan. We can call this the Dutch or Swiss model. Switzerland pays a lot less for health care than the United States but still much more than most of the first world. What is required is a very highly regulated health care market. There would need to be a list of all conditions and procedures that must be covered; a limit on co-pays, out-of-network charges, out-of-pocket expenses, etc.; and rules preventing customer shopping and dropping. Premiums must be based on community risk. Hopefully there would be a special board or court to deal with insurance companies which refuse to pay for procedures.

The other way to achieve real health care reform is to simply offer a public plan option. All that is needed is to provide all Americans with the option to purchase a plan offered by the government. The plan would be affordable, low hassle, and wouldn't turn down anyone based on pre-existing conditions. The public plan could be modeled after Medicare or the health care plan that members of Congress have. Very little regulation would be needed for the private health insurance market. For-profit health insurance companies would need to offer plans as good as the public plan or they would slowly lose customers and market share.

Given the Republican party's nearly religious devotion to de-regulation, I fear for the longer term success of a highly regulated private-only health care market. The chance that a decade from now Republicans would start stripping many of the health care regulations that make the system work is very real. A popular public plan would be much more politically difficult to modify or eliminate.