We're here because, as you know, Americans are very unhappy with our health care system, but each time we try to change it, the political forces are too strong to bring about much change. Then we look at Switzerland, and you've passed LAMal, and you've made major changes. And we're interested in how a democratic, capitalist country can make that kind of change. So can you tell us the circumstances that led to LAMal?

Yes. First of all, there is a long story of health insurance in Switzerland. It was created in many cantons in the end of the 19th century. ... It was a work of solidarity among same-minded people. Groupe Mutuel was a health company of the liberal voters, ... and on the other side there was a Christian social health company.

So each political grouping had its own health insurance?

Yes, and in most of the cantons of Switzerland it was the same. So people were accustomed to being members of a company, and when the LAMal was voted at the end of the '90s, more than 95 percent of the people were insured ... on a voluntary basis. So it was not a great step to make the LAMal compulsory for everybody; it was only 5 percent. I'm not sure today that it was a real good idea, but at the time, it was considered as absolutely necessary to bring more solidarity in the system. ...

When you say solidarity, you mean equal treatment for everybody?

Equal [insurance] premium, ... and that everybody can be insured. As long as it is voluntary, it means that the health companies are not obliged to accept any new member.

Before LAMal, they could turn people down?

They could, but they didn't do it practically, because the 5 percent who were not insured were the people [who were] absolutely poor, that we have to pay the health insurance premium for them --

The government pays it?

Yes, through subsidies. Or the very rich, who say, "We don't care to have an insurance; we can afford to pay the real costs of our treatments." But we decided [everyone must have insurance], and I supported that as a member of the parliament. Today I am not sure that it was a very [good idea], because [since] then, there was a huge increase in the expenses of the health insurance.

But medicine costs more all the time anyway. Why --

I accept that, ... but with such a huge scale, the growth probably is partially due to the fact that we decided it is compulsory, because when it is compulsory, people change their attitude. They say, "If it is compulsory, at least I want to get back my money, and so I expend more." ...

So you're saying, when the insurance became mandatory for everyone, more people went to the doctor more?

Yes. ... But it is over. Nobody will propose to go back and to have a voluntary system. I think it will be impossible to go back. ...

... When it passed and you supported it, what were the political forces driving this? Was it just concern for these 5 percent who didn't have coverage?

No. There was the idea of this 5 percent, but also the idea that with the increase of the expenses in this matter, solidarity will be more and more necessary to be able to give to everybody good service. I think it was more future-oriented.

But I can hear in what you're saying that that concern that everyone get covered, everyone get equal care, that's really important.

Oh, yes. ... For the Swiss, whether you are right or left doesn't matter; I think there is a consensus on that. We want that every [one] of our citizen[s] can get the best medical treatment when they need it. ...

One of the things really striking for Americans is that under LAMal, you now say the insurance companies can't make a profit on basic coverage. What's the thinking there?

The idea is very simple: If it is a social insurance, and everybody is obliged to be a member of a health insurance system, you can't ask them to pay so that the shareholders get a better revenue. It is a little the same, if I can compare with SBB, our railway system. We are very attached to the railway system; Switzerland is a country of railway. ... I think that the people wouldn't [have] agreed to privatize the railways [as] it is done now in Great Britain. To think that they can [make] a profit on the railway system, it [would] be against equality in this matter.

Naturally, you can question that, ... but till now we were able to afford a good railway system, to improve it and to have a high quality in transportation. ... We want also high quality for everybody in the health system, and after that you can earn more money than your neighbor. ... School, health care, railway system, aging, to have a good place for nursing homes for old people, retired people, we think that we must have equality of that -- not quite complete equality, it is impossible, but to have a great sense of solidarity among the people.

Now, see, that's striking for an American, because we would certainly say everyone is entitled to an education, everyone is entitled to legal protection if you get in trouble with the law, but we don't say that everyone is entitled to health care.

Why? Because it is a profound need for people to be sure that, if they are struck by a stroke of destiny, they can have a good health system.

... So if you ask the people of Switzerland, is everyone entitled to decent health care, the Swiss would say?

Everybody has a right to health care.

You would say, yes, they have a right, and you provide it.

Yes, and high quality. Naturally, you can have a better quality. To be in a room with only one bed, you have to pay something supplementary. But even that, I see in my own canton, which is not a rich canton -- and hospitals belong to the cities or to the canton now; they belong to the canton -- they intend to improve the system so that the people can be alone in a room when they are in hospital, rich or poor.

... When you said to the insurance companies, "No more profit on the basic health plan," what did they say?

They accept it; they have no choice. And [all these] companies are [heirs] of former social companies. For instance, the Groupe Mutuel ... was built on this idea: no profit; everything must be given to the people who are members of it. So there is a tradition of social attitude in these systems.

I am not systematically against the idea of having profits in the health insurance system, but if we introduce it, it is more with the idea to balance the power in the health insurance system, because now there is a lack of balance of power.

Who has the power?

Who has the power? The small group of the people who leads these companies. And it is something for me which can be dangerous, because it is a business with a billion of Swiss francs, and the check and balance is not optimal in the present system. ...

But you have government regulation, what we might call regulated competition. Does that work?

It is regulated competition. It is in order, but I think, as a Democrat, ... it could be not bad that once a year they [the company managers] have to go in front of a public assembly to answer questions about their salaries, about the way they see the future, about improvement in the quality of the services. It would be, my opinion, not so bad. And it could be possible through a system of shareholders, but not for profit, more for control.

So you're now the home affairs minister; you're in charge of the system. How would you say LAMal is working?

Well, if you look [at] the output, it is working well.

Output meaning the quality of care?

The quality. ... Somebody who lives in France, and who is very well-acquainted with the system, told me, "If I get ill, I would prefer to be in Switzerland rather than in France." Although France is a very good system, but probably the comfort is better in Switzerland. France was ahead of us not because of the quality of the services but because of the way premium[s] are paid.

The fairness?

The fairness notion. [We] consider that it is fair as we do it, but according to these criteria, this French public health system, [which] is paid through taxes, is more fair than the Swiss system, [in which] premiums are paid per head. You are rich or not rich, you pay the same premium according to your age, not according to your wealth. I think [this] system is very good, good quality. Most of the people are satisfied. It is one of the only systems in Europe which is not near bankrupt.

In other words, the premiums are paying the bills.

Yes. And if the costs increase, you increase the premiums. In countries [such] as France, where the financing of the system is through the public taxes, you have political decisions to take, and you wait from time to time, and so they have great deficits. In Switzerland, the system not only [has] no deficit, they have even reserves, provisions --

Making a surplus.

Making a surplus. And it is compulsory that they have a surplus to be able to answer to changes. ... So the system is good in itself, but the problem is [in] the long term, the increase of the costs will endanger the system. ...

... One of the problems we have in America is that many people -- it's a huge number of people -- go bankrupt because of medical bills; some studies say 700,000 people a year. How many people in Switzerland go bankrupt because of medical bills?

Nobody. Doesn't happen. It would be a huge scandal if it happens.

Even to one?

... You [can] go bankrupt because you're not [able to] pay your premium, 2,000 or 3,000 Swiss francs, but it is not because of that but because of your general situation. But that the normal situation [is to] become bankrupt of health costs, it would be for us something absolutely unbelievable. ...

Do you have a good enough supply of doctors? Is there a shortage of doctors, as in some countries?

If you look at figures, we have a good supply of doctors. They always say that in the future we shall have a lack of home doctors, family doctors. I'm not sure of that, but we have a problem of formation. ... Every year there [are] about 1,000 students beginning medical studies, and at the end of the formation there are only 600 young people getting the diploma. It means that about 40 percent of the students fail during the studies, although there is a selection at the beginning. ... Forty percent is too much as failure, so probably there is a problem in the formation, education.

But 600 graduates per year, that's enough to keep up the --

No, it is not enough. We need about 1,000 to 1,200. ... The difference is covered by immigration of medical people, first of all from Germany. And to Germany there is immigration [of] people from Eastern Europe. So there is a kind of migration of medical people from Eastern Europe to Germany, from Germany to Switzerland, and Switzerland to nowhere; they stay in Switzerland.

Well, once you're here, why not [leave]?

Because they are the best paid doctors in Europe. ... [It is] also true that they [have] taxes, but at the end of the day, they are in a very good situation, the doctors in Switzerland. ...

... This year, there was an effort to change the health care system.

Not completely. There was a ... public referendum, and the idea was to have only one health company in Switzerland, which would be controlled very narrowly by the state.

This is what we call "single payer" in America.

Single payer, yes. ... We rejected it because we think if you have a single payer, which is also the only [party] who makes contracts with ... all the providers, it will be dangerous, because there is too much power in the hands of the health insurance system. We think that if there is competition between the health insurance companies, there will be a certain control among themselves; they will denounce the excesses of the others, ... and also they will try to provide better services, and so you can compare.

On the other side, the Social Democrats who wanted that ... thought that you could [have an] economy of scale if you only had one company. It is true, ... but if you compare with the disadvantages of one provider of health insurance, probably there [are] more benefits to keep the present system with competition. And perhaps we have too many health companies, it's true, but through competition the number will be reduced.

How many companies [are there] now?

Now, 90. Ten years ago there was almost 1,000.

So 90 for a country of 7.5 million people. It's a big number, I think.

It is a big number. But you must say that among these 90 companies, many belong to the same group, and for historical reasons they have kept various names or various companies with various systems. And there are what we call niche companies. ... There is a company for the sisters, the Catholic nuns of Ingenbohl. ... So there are many companies like that in a small village, mountain people who are accustomed to know each other and to help each other.

And it's tradition. That really matters.

Yes. People like the state. ... [The] state must care about regulation, about the school, about the railway, but not about everything.

You know, we have a lot of health insurance companies in America, but I don't think there's any that limits its sales only to nuns from a particular [order]. That's really striking.

Legally it is forbidden. They can't reject --

Oh, I see. ... So if I come to the insurance company and say, "Well, I have diabetes, and my child has --"

... They are obliged to take everybody, and they are not allowed to ask questions about the health situation of the people.

So you're not sure now that you would support LAMal if it came up today, but basically the system has worked.

Yes.

On the other hand, although ... the cost of it looks like a bargain to Americans, it's the most expensive system in Europe. Does this bother you?

Yes, ... but it is the cost of a high-quality system with high access for everybody, and probably the best quality for everybody. ... We want to pay that; I don't know how long. Every year is a protest. It's the same when you get to pay taxes. ... I always say, in Switzerland there was a kind of a liturgical year. In October, [when] you know the new premiums for next year, there is a huge wave of protests.

Every year you say, "Here's what you're going to pay next year"?

Yes. Huge wave of protests, and in November starts a huge wave of protest against limitation of services in the health service. And during the next 11 months, every[one] protests and say[s], "We want the new vaccines; we want improvement of that; we want these new drugs." And one month in the year, they protest against the consequences of the rest of the year.

So you're saying they spend 11 months demanding more service, and then one month they complain about paying more for it. That sounds like the United States.

Yes. It is human nature. ...

You have some of the world's greatest pharmaceutical companies. Do you have a problem controlling [drug costs]?

Yes. The cost of drugs are controlled, and the prices of drugs are fixed by the government. ... [But] if we compare the prices of drugs in Switzerland and the neighboring countries, it is higher in Switzerland.

You pay more for the same pill?

Yes. And ... we wanted to discuss the problem, and we took some measures to reduce the prices. First of all, we decided that where it is possible to have generics, people have to take generics, or if they do not take generics, they have to pay part of the price [on] their own. ... And after that, we systematically compare the price of the most-used drugs with the cost of the most-used drugs in the neighboring countries, and we reduce the prices of the drugs in Switzerland.

You reduce the prices. And then what does this big Swiss pharmaceutical industry say?

Two things. First of all, they accepted generics, ... and they also accepted to reduce the prices of the original drugs, which were more expensive in Switzerland. ... What they want is that we pay much more for the new drugs with a great value added, and we accept that. For cancer [drugs], perhaps we pay a little too much, in my opinion; we can still have a discussion about that. But we are very open for new drugs with huge therapeutic advantage. ... We try to support innovation and not to support profits in [and of themselves]. ...

... We have big drug companies in America, and they say, "Americans should pay high prices because that's the price of innovation." ... Do you buy that argument? Is it legitimate?

Partially. But if you look at the expenses of a great pharmaceutical company, ... they pay between about 10 to 15 percent of their expenses for research, but they use 30 to 40 percent of their incomes for marketing and promotion. ... It is not completely wrong that they spend so much, but it is not correct to say that there is a direct connection between the price of drugs and the cost of research. It could be more between the cost of marketing and the cost of the drugs.

Are you trying to limit the treatment or put some limits on doctors to keep the costs down?

There is, first of all, a will to limit the number of doctors themselves, because with new bilateral agreements with the European Union, there is what we call the "free flow of persons"; that our borders are open to immigration. And as the Swiss doctors are better paid than others, we could have a huge increase of immigration of doctors, more than we need. So we decided some years ago to limit the numbers of doctors [coming into] Switzerland, and when somebody wants to open a new practice, they have to apply and to get an authorization from the cantonal state. It is not a very intelligent system, but it is the best one that we have found to limit immigration of doctors.

Do you limit the number of hospitals, too?

Hospitals belong normally to cities or cantons. We reduced the number of beds in hospital, and in the future we shall have to reduce the number of hospitals. But it is politically very difficult, because people don't accept the [disappearance] of hospitals in their neighborhood. But it will be necessary. We tried to make competition between the hospitals so that the hospitals who are not efficient will disappear. ...

With regards [to] the supply of care, it is a very difficult system. I know in Oregon, I think, in the States, there is a commission which discusses about --

What it will pay for, what treatments it will cover.

And when you are old, is it still necessary to make this treatment? I am, as a liberal in the European sense of the word, very, very critical about intervention of the state saying, "This person can get this treatment; this person cannot get this treatment." ... We must find the mechanism which helps the doctors and the responsible hospital to make these decisions. ...

Have you paid any attention to the United States' health care system? Do you know anything about it?

Yes. Naturally, it is another philosophy. But I read the book of -- I always forget the name; what is the name of the man in Harvard?

... Michael Porter?

Yes. I read his book, [Redefining Health Care,] and I asked my people to read this book. The idea behind this book is to say, until now we measured the health system according to unrealistic [criteria]. In the future, you must measure according to the health results, only that.

And I think we can learn very much from this kind of reflection; we can learn from the HMO-American system and of all these innovations in the health service. I don't think that we have very much to learn about the philosophical attitude ... but the practical answers, because America is a laboratory for the world also in this field.

Well, you told me that a big reason you adopted LAMal was that 5 percent of the people didn't have insurance coverage. Well, in America, it's 16 percent don't have health insurance coverage.

Yes. ... I will think it is impossible in Switzerland. We would never accept that, although we are a very capitalistic system and capitalistic country, but we can't understand that. But it is your tradition.

You have the same lobbies we do. How do you handle these lobbies?

Oh, it is terrible. It is terrible, and every day you can only expect to be criticized. Fortunately, I have good shoulders, and secondly, I am not elected by the people but through the parliament. ...

... So this gives you some independence from all this.

Yes. But it is very difficult. With the pharmaceutical companies, we find a good agreement. They say, "Let us get money from the innovative drugs, and we accept the rest," because they know that the public opinion will never accept something else.

With the doctors it is very much difficult, because they do not want any restriction in the number of doctors. They want to be paid without control. But they also know, if they go to the public ... and they lose the referendum, after that there is weakness in the situation. So they have to think twice before attacking a law. There are also the trade unions of the people working in hospitals that usually support the most socialist views, which are not extreme but more left.

It is very difficult job. You know, during the time of Stalin, ... there was a saying which said that, "To be minister of agriculture is the last step before the firing squad." And I think now that being health minister in Switzerland is the last step before the firing squad. ...

Switzerland has a health care system that covers everybody; the quality is good; the costs are lower than in America, per capita. Is it socialized medicine here?

What do you mean by socialized medicine?

Run by the government?

No, it is not considered as socialized medicine. ... The doctors are paid by the mandatory health insurance system, so it is not quite a free market. On the other side, there is a kind of competition between the health insurance companies, between the hospitals. So it is probably not a socialized system, but it is a step further into the direction than the American system. ... I don't think it is a free-market system 100 percent -- by at least, let us say, 70 percent.

Could a 100 percent free-market system work in health care?

No, I don't think so. If you do that, you will lose solidarity and equal access for everybody.

Which is what you were finding in the late '80s.

Yes. We think that is a basic value of living in our society.