A Swiss Fix for U.S. Health Care Problems; Harvard Business School Professor Regina Herzlinger Finds Lessons in Switzerland's Consumer-Driven System.

BOSTON -- The U.S. health care system is ailing. The solution, says Harvard Business School professor and health care expert Regina Herzlinger, is a universal, consumer-driven, private-sector system that enables enrollees to tailor insurance plans to their needs in terms of prices, benefits, and coverage. The result is a competitive environment that both moderates costs and improves quality.

In this country, consumer-driven health care (CDHC) is just beginning to gain admirers and converts. But in Switzerland (alone, in fact, among developed nations), it has been standard operating procedure for some time. This is a place, therefore, where American policy makers, politicians, and health care professionals can learn some important lessons, according to an article coauthored by Herzlinger and published in tomorrow's (September 8) issue of The Journal of the American Medical Association (www.jama.com).

"Switzerland's consumer-driven health care system achieves universal insurance and high quality of care at significantly lower costs than the employer-based U.S. system and without the constrained resources that can characterize government-controlled systems," according to the article.

In Switzerland, all citizens must purchase a compulsory health insurance policy that covers essential benefits such as hospital care. Herzlinger and her coauthor, Ramin Parsa-Parsi, MD, MPH, urge the same kind of universal access and consumer control in this country, which currently has 45 million citizens uninsured. The authors also recommend providing financial subsidies for those unable to afford insurance premiums.

Among their other prescriptions:

--Permit considerable experimentation in insurance policies' coverage, benefits, and terms.

--Risk-adjust insurers to reflect the enrollees' risk status, as the Swiss system attempts to do.

--Permit health-care providers to innovate freely in the delivery of health care and its pricing.

--Permit providers to adjust their prices for the risk of consumers, as overseen by governmental strictures against price gouging and discrimination.

--Require reporting and dissemination of risk-adjusted results for physicians, hospitals, and other health-care providers by type or procedure, problem, and disease, over time. As in any competitive marketplace, information is essential to higher quality and lower costs.

Copies of this article are available from HBS Communications.