In Referendum With U.S. Implications, Swiss Voters Reject Single

In a decision with meaningful implications for the future of U.S. health reform, Swiss voters on Tuesday overwhelmingly rejected a proposal to replace their fully privatized health care system with a government-run, single-payer one. Why does this matter for Americans? Because efforts by both Democrats and Republicans to reform U.S. health care have been modeled after the Swiss system. Switzerland offers us a glimpse as to what a popular, market-oriented health-care system could look like.

Many Americans assume that all European countries have single-payer health care systems. That's not true. They all offer universal coverage -in which health insurance is subsidized for all citizens-but only some of those countries, like the United Kingdom, actually have a system in which private insurers play no meaningful role, because the government serves as the sole insurance company (i.e., the single payer).

Switzerland is a model for U.S. health reform

In Switzerland, however, there are no government insurers-only private ones. The Swiss achieve universal coverage by offering means-tested premium-support subsidies, on a sliding scale, for low-income individuals. If you're really poor, your premium might be fully subsidized. If you're modestly poor, it might be partially subsidized. If you have above-average income, it won't be subsidized at all.

This approach has two substantial benefits. First, it means that Swiss citizens don't have a disincentive to increase their incomes, because federal benefits decline gradually as you go up the income ladder. This is much better than the typical 'benefit cliff' approach that discourages work in the United States.

Second, it means that the government doesn't spend a ton of money subsidizing health care, outside of the safety-net population. Swiss government spending on health care is less than that of nearly every advanced economy, and less than half of that of the U.S. If we had a Swiss health care system here, we'd have no budget deficit.

And the Swiss have achieved universal coverage in a way that avoids the problems of the typical single-payer countries. The Swiss have quick access to doctors' appointments, with all of the high-tech medicine that Americans are accustomed to. It's for these reasons that I've described the Swiss system as a model for U.S. health reform.

The convergence of Paul Ryan and Obamacare

Paul Ryan's proposal for reforming Medicare deploys the Swiss model to offer premium-support payments to seniors who would shop for their own, privately-sponsored health coverage. In 2006, the Massachusetts health reforms known as Romneycare deployed the Swiss model to offer privately-sponsored coverage to the uninsured. And in 2010, Obamacare, borrowing from Romneycare, used the same Swiss model to offer private-sector health coverage to individuals with incomes between one and four times the Federal Poverty Level: in 2014, $11,670 for a childless adult.

As I've said many times, the Swiss system is no libertarian utopia. Switzerland has an individual mandate requiring its citizens to purchase health insurance, and the insurance products that the Swiss may buy are over-regulated by various government entities. But my own health-reform plan, ' Transcending Obamacare,' uses the Swiss experience as a template for how market-based health reform could happen here.

The plan would take the Obamacare exchanges, which are structured very similarly to the Swiss ones, and liberalize them: repeal the individual mandate, and roll back the suite of regulations that make Obamacare-based insurance so expensive. Then, gradually, migrate America's single-payer populations-Medicare, Medicaid, and the VA-onto the reformed exchanges. Presto! Swiss-style, fully privatized, universal coverage.

Swiss voters like their system, and elect to keep it

Some conservative commentators here in the U.S., like Philip Klein, have feared that a Swiss-style system could increase the risk of single-payer health care here at home, despite the fact that such a system would actually move more than 100 million Americans off of single-payer health care. But that's belied by the Swiss experience, and also by our own.

Efforts to partially privatize Medicare, through the Medicare Advantage program, have proven highly popular with seniors. Among people turning 65, 50 percent are choosing privately-sponsored Medicare Advantage plans over traditional, 'public option' Medicare. Democrats have tried, but failed, to undermine this program. Instead, it keeps growing.

And we now have a referendum from Switzerland demonstrating the popularity of private-sector health reform. The initiative to replace that system with 'public health insurance,' sponsored by the Social Democratic Party and the Green Party, failed, 62 to 38 percent. Only four of Switzerland's 26 cantons-the equivalent of U.S. states-voted in favor; Swiss referendums must not only capture a majority of the popular vote, but also succeed in a majority of the cantons, in order to pass. This isn't the first time Swiss voters have rejected single-payer health care. A similar referendum in 2007 also failed by an overwhelming margin. What it shows is the fiscal durability, and political popularity, of a system that achieves universal coverage through the private sector.

Lesson for conservatives: Private health care is popular

Conservatives have long feared going on offense on health reform, because they worry that expanding health coverage to the uninsured would lead to a bigger, and more intrusive, federal government. The Swiss experience shows that the opposite is true. In America, we spend trillions of dollars subsidizing health care for the wealthy, through Medicare and the tax code. We could cover more people, and spend less, by subsidizing private coverage for the poor, as the Swiss do.

Conservatives who focus on health care spend a lot of their time in a state of pessimism and anger, decrying Obamacare and flailing for a better solution. That solution is right in front of us, in the land of yodeling and chocolate.

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AVIK'S NEW HEALTH-REFORM PLAN, Transcending Obamacare: A Patient-Centered Plan for Near-Universal Coverage and Permanent Fiscal Solvency, is available online. Follow @Avik on Twitter, Google+, and YouTube, and The Apothecary on Facebook. Or, sign up to receive a weekly e-mail digest of articles from The Apothecary.

INVESTORS' NOTE: The biggest publicly-traded players in Obamacare's health insurance exchanges are Aetna (NYSE: AET), Humana (NYSE: HUM), Cigna (NYSE: CI), Molina (NYSE: MOH), WellPoint (NYSE: WLP), and Centene (NYSE: CNC), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.