Zakaria: Health insurance is for everyone
March 16th, 2012
12:35 PM ET

Zakaria: Health insurance is for everyone

By Fareed Zakaria,

Two years ago, Barack Obama signed into law the most comprehensive reform of American health care since Medicare. Most of its provisions haven’t been implemented yet. But the debate about it rages on at every level. Twenty-six states have filed legal challenges to it. And this month the Supreme Court will hear arguments about its constitutionality.

The centerpiece of the case against Obamacare is the requirement that everyone buy some kind of health insurance or face stiff penalties - the so-called individual mandate. It is a way of moving toward universal coverage without a government-run or single-payer system. It might surprise Americans to learn that another advanced industrial country, one with a totally private health care system, made precisely the same choice nearly 20 years ago: Switzerland. The lessons from Switzerland and other countries can’t resolve the constitutional issues, but they suggest the inevitability of some version of Obamacare.

Switzerland is not your typical European welfare-state society. It is extremely business-friendly and has always gone its own way, shunning the euro and charting its own course on health care. The country ranks higher than the U.S. on the Heritage Foundation’s Index of Economic Freedom.

Twenty years ago, Switzerland had a system very similar to America’s - private insurers, private providers - with very similar problems. People didn’t buy insurance but ended up in emergency rooms, insurers screened out people with pre-existing conditions, and costs were rising fast. The country came to the conclusion that to make health care work, everyone had to buy insurance. So the Swiss passed an individual mandate and reformed their system along lines very similar to Obamacare. The reform law passed by referendum, narrowly.

The result two decades later: quality of care remains very high, everyone has access, and costs have moderated. Switzerland spends 11% of its GDP on health care, compared with 17% in the U.S. Its 8 million people have health care that is not tied to their employers, they can choose among many plans, and they can switch plans every year. Overall satisfaction with the system is high.

When Taiwan - another country with a strong free-market economy - decided to create a new health care system in the mid-1990s, it studied every existing model. It too chose a model of universal access and universal insurance but decided against having several private insurers, as Switzerland and the U.S. do. Instead it created a single insurer, basically a version of Medicare. The result: universal access and high-quality care at stunningly low costs. Taiwan spends only 7% of its GDP on health care.

The most striking aspect of America’s medical system remains how much of an outlier it is in the advanced industrial world. No other nation spends more than 12% of its total economy on health care. We do worse than most other countries on almost every measure of health outcomes: healthy-life expectancy, infant mortality and - crucially - patient satisfaction. Put simply, we have the most expensive, least efficient system of any rich country on the planet. Costs remain high on every level. Recently, the International Federation of Health Plans released a report comparing the prices in various countries of 23 medical services, from a routine checkup to an MRI to a dose of Lipitor. The U.S. had the highest costs in 22 of the 23 cases. An MRI costs $1,080 here; it costs $281 in France....

The Swiss and Taiwanese found that if you’re going to have an insurance model, you need a general one in which everyone is covered. Otherwise, healthy people don’t buy insurance and sick ones get gamed out of it. Catastrophic insurance - covering trauma and serious illnesses - isn’t a solution, because it’s chronically ill patients, just 5% of the total, who account for 50% of American health care costs....

The Obama bill expands access to 30 million Americans. That’s good economics and also the right thing to do. But it does little in the way of controlling costs. Medicare’s costs have stopped rising as fast as in the past. But for broader costs to decline, there is no alternative to having some kind of board that decides what is covered by insurance and what is not - as exists in every other advanced country. This has been demagogued as creating “death panels” when it is really the only sensible way to make the system work.

When listening to the debate about American health care, I find that many of the most fervent critics of government involvement argue almost entirely from abstract theoretical propositions about free markets. One can and should reason from principles. But one must also reason from reality, from facts on the ground. And the fact is that about 20 foreign countries provide health care for their citizens in some way or other. All of them - including free-market havens like Switzerland and Taiwan - have found that they need to use an insurance or government-sponsored model. All of them provide universal health care at much, much lower costs than we do and with better results....

Read my full article at, behind a paywall.

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Topics: Analysis • From Fareed • Health

soundoff (184 Responses)
  1. georgex

    This health insurance reform will become a great milestone in our history as millions of more Americans gain access to regular medical and the nation becomes healthier

    March 19, 2012 at 5:58 pm | Reply
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      March 19, 2012 at 9:30 pm | Reply
  2. Holt Satterfield

    Mr. Zakaria -

    In your piece, you state: "The most striking aspect of America’s medical system remains how much of an outlier it is in the advanced industrial world." We are an outlier in more ways than one. America's political/cultural system makes it an outlier from all the other countries of the world. Our freedoms, our liberties, our rights. And yet, with all that, we have the insidious yearning to be like all the other countries, esp. European countries. With the advent of Obamacare, for the first time in our history, when an American citizen turns 18, without paying annual governmental fees/insurance, s/he is at once illegal. There could no longer be a Thoreau on Walden Pond. In one fell swoop, we make our citizens criminals when they turn of legal age UNLESS they pay their annual govt FEE/TAX. Now, everyone makes much of "It's just the right thing to do." But you know, everyone has health care in America; and everyone can get it. What we're talking about is cost of healthcare, not lack of heathcare. And if the cost is more because we have more freedom, more liberty, because America is more of an "outlier," then so be it. We have so many other methods at our disposal to drive down the cost curve, like allowing Ins. Cos. to compete across State lines; Tort reform. Let's try those things that don't encroach on our liberty prior to those that do.

    March 19, 2012 at 10:12 pm | Reply
  3. Karen I. Frank

    Great article. Right now I am benefiting from the new healthcare law here in California called PCIP. I have a video on YouTube pcip OK.mp4. However, I word love to have a single payer plan here in the USA similar to the Taiwan model or at least what they have in Switzerland. Thank you Mr. Zakaria for bringing reason and information to the debate on healthcare.

    March 21, 2012 at 3:58 pm | Reply
    • max

      i cannot help but have to respond to those that think the taiwanese model is great after watching that show. the taiwanese doctor featured in the report said he has to see 200 patients/day. and if you read those comments above by taiwanese doctors themselves echoing that fact, i hope you will realize how dangerous it is for patients and doctors alike to only allow a doctor visit of at most 5 minutes (you can do the math). imagine going to a restaurant that your waiter has to serve 200 customers/day in a course of 12+hours. not only will you have to wait for your foods to arrive, and hopefully it's the right food that you ordered.
      so, you don't want your doctor see 200 patients/day, do you?

      March 21, 2012 at 4:54 pm | Reply
  4. Nick

    The Netherlands has a free market health care and insurance system with some government (=we the people) regulation. Here is how it works:

    Every adult person (every) buys (mandatory) a health insurance from a choice of private insurers. Thanks to regulation, there is a set price for these plans, which is around $125 per month, and there is guaranteed coverage for all medical necessary procedures. No one is being denied, no one is dropped. The base plan covers all medically necessary care (except dental) and prescription drugs. Co-payment or co-insurance does not exist. There is a set deductible which is $200 per year. There are no denials of care and no insurance cancellations. Everybody has access to quality health care and there are almost no waiting lists.

    On top of this, the effectiveness of care is very high and patient satisfaction is high as well. Otherwise, there are similar problems as in most countries, such as the rising cost of health care delivery, caused by ever improving medical knowledge, new costly technologies, newer high cost pharmaceuticals, and an aging population. (I lived there for 45+ years.)

    March 24, 2012 at 8:49 pm | Reply
  5. American who lived in Switzerland

    I usually completly agree with Fareed, but I think he has really tried compairing apples to oranges in this article. After living in CH for 7 years and living with the healthcare system (which was fantastic) I think Fareed and you have missed several important points.

    1. Switzerland has a solvent government and can afford this coverage. The CH tax rates are almost 30% lower than in the US which causes many business to move into CH over other countries, which in turn creates jobs and massive tax income which can offset healthcare costs.
    2. Swiss people are very healthy. You can spend weeks in any canton in CH and be lucky to find one overweight person, which lessens the burden of complicating cost on society.
    3. Everyone pays into the basic insurance in CH, not just couples who make over 350K per year like the health care bill passed in the US.
    4. They have a virtually non-existent unemployment rate and salaries that for me and my husband was about 40% higher than the same jobs in the US. So, the rate you put in is insignificant to the amount of money you take home.
    5. Government doesen't pay for everything. After the birth of our child, under basic insurance, we owed 17K. We had additional private insurance that covered the cost not paid by the basic CH insurance.
    6. Government isn't as big as in the US. We paid a 12% total tax rate in our canton so again the health care cost was less burdensom than it is in the US where we pay a much higher rate (40% between federal and state taxes).
    7. CH uses some sort of bidding system for insurance which lowers rates for basic insurance.
    8. People pay health insurance for life. There is no safety net like what we call Medicare here in the US.

    Although, the system is still controversial in CH, in my opinion it works. The problem is that we are not Switzerland. Our government is too big and indebted to consider feasibly affording this right now. We should consider what CH has done first by making a much smaller and efficient government and inviting businesses and workers in with extremenly low tax rates. Then people could have high paying jobs and afford to provide stronger socialized medicine here in the US.

    March 26, 2012 at 9:41 pm | Reply
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  11. kevin0820

    Dear Mr.Zakaria, as you have mentioned the health insurance in Taiwan has high-quality care at stunningly low costs. The so-called high quality care was done sacrificing the welfare of medical workers. We have suffered from severe shortage of nurses due to low salary and heavy work load. Hospitals have to implement a series of cost down plans in order to sustain it's function. Doctors are also suffering from such insurance policy. They turn their practice to self-paid cosmetic profession, rather than treating critical ill patients in various sub-specialties such as ER,Critical Care, OB/GYN and internal medicine.

    One of our nurse staff has posted the harsh working condition in CNN ireport . May be you would be interested to find out more about how National Health Insurance has brought medical crisis to Taiwan throught all the comments responses to this publishment :

    April 19, 2012 at 6:06 am | Reply
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  15. D. Richmond, M.D., F.A.C.S. Associate Professor of Surgery

    Your CNN March 2012 program, repeated on May 27, 2012 on CNN, is EXCELLENT. Your discussion of medical care in the USA completely ignores one key factor that is responsible for up to 22% of medical costs in America. That key factor is MALPRACTICE SUITS & MALPRACTICE INSURANCE. as well as the cost of unnecessary and excessive testing in the prevention of potential Malpractice suits. The MALPRACTICE system in our country is responsible for: 1) unnecessary tests ( in my 45 years as a general surgeon, I never ordered a MRI in the diagnosis of acute appendicitis. Today if the MRI is not ordered, there is exposure for malpractice if a normal appendix is found. A normal appendix is present in 10 to 12 cases where exploration is indicated by history, physical exam, and indicative laboratory results); 2) the cost of MALPRACTICE INSURANCE that must be carried by doctors, nurses, hospitals, EMTs, and any person who offers direct treatment to patients.

    May 28, 2012 at 12:15 am | Reply
  16. Gerald C W Heng Sr.Metrowest Boston,MA.

    Greetings ! I have read and seen your TV program Health care is for Everyone !Although I agree mopstly on the Points of Solidarity and Vulnerablity that you raised, I was rather disappointed that you didn't mention how historically the British Labour Party via its post WWII Minister of Health/Human Services Nye Bevan MP a Coal-Miner [ whose Family had three generations in the Coal Pits of Wales had Black Lung Diseases including Nye] made it a Legislative Victory for All when the British Parliament passed the National Health Care Trust Act that brought in a Single Payer National Health Care System.Subsequent British Government both Tories and Labour didn't repeal the NHS and the private sector Medicine/Surgery is practise4d from Harley Street London and other private localtions whereas over 90% of the Health Facilities are nationally owned with private privileges for wealthy rich Arabs and others praleying their needs from Government Facilities ! In that sense the free market of the Tory Conservatives haven't lost,justa minority interest if the NHS !All British and permanent residents get Free Health Care including members of our family in ER and other settings !

    Gerald Heng Sr.
    Metrowest Boston,MA. USA
    [1969-1981 Londoner]
    JFK Era Fulbright Fellow/Scholar at Boston/Harvard Universities
    on Health Hospital and Psychaitry Services.
    B.Sc[Hons] LLB [King's College London U] Juris Doctor
    [508] 872-1380 [Leave message if necessary or needed] .
    Associated Health/Human Services Facilitie

    May 31, 2012 at 2:15 pm | Reply
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