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Thinking Like the Dutch and Swiss

Jonathan Cohn made a good comparison today between the Baucus proposal and the recently revamped Dutch health care system. Since its 2006 inception, the Dutch enjoy universal and affordable coverage, effective market competition, and a general overall satisfaction with the health care system. The New York Times ran a similar comparison on the health care system in Switzerland.

It would be nice if there was more discussion on lesser-known health care systems (like the Netherlands and Switzerland) that our “uniquely American” reform efforts can learn from. Unlike the “socialist agendas” of Canada and the UK that opponents love to reference, systems like the Netherlands rely not on public insurance but on heavily regulated private insurance. The Dutch regulations are very similar to those being proposed in Congressional legislation: an individual mandate, premium subsidies, prohibiting pre-existing condition exclusions and a minimum benefits package are a few commonalities.

The Dutch and Swiss go further than current reform proposals, though, in insurance regulation. Risk adjustment is performed between plans to compensate those companies with higher-risk individuals, and charges a fee on those plans who’s beneficiaries are comparatively healthier. The law strictly prohibits ‘cherry-picking’ more profitable individuals, and cost sharing restrictions means all insurance companies are virtually non-profit. Much stronger policies are in place to ensure transparency across prices, consumer satisfaction, quality and other industry practices.

The debate over a public option highlights these cirucmstances. The existence of the option forces insurers to ‘play by the rules’ in order to remain competitive, and stringent regulation is not really required. It is important to understand, though, that without the public option there must be much stronger regulations on the existing insurance industry in order to make insurance affordable and ultimately reduce total health expenditure.

I did a series on international health care systems last year which you can look through here, paying special attention to the Netherlands and Switzerland.