This week’s edition of Frontline covered a topic that you’d think we’d be hearing more about, in this election year: what the United States could learn from other countries that are able to provide health coverage for all while respecting the power of markets. (You can watch the documentary here. Below is an interview with Frontline correspondent T.R. Reid.)

In our book The Missing Class, Katherine Newman and I talk about the financial hardships that families face when they don’t have health insurance — or their insurance offers substandard coverage. Hundreds of thousands (some say millions) of Americans go bankrupt every year at least in part because of medical bills. Whenever we talk about the need to reform the health care system in this country, the typical response is that Americans don’t want "socialized medicine." To critics of reform, it’s a sad, but inevitable, fact that a free-market healthcare system like America’s will leave some people out in the cold.

Yet in four of the five countries examined in the Frontline report, the private sector plays a major role in health care — which might come as a surprise to some Americans who have been told that the only options are our current Wild West free-market system and the bureaucratic nightmare of socialized medicine (which is actually not so much of a nightmare, according to the report). In fact, in Germany, Japan, and Switzerland, there are private insurers akin to the HMOs in our country.

The difference is that private insurers in these countries cannot, by law, make a profit — any profits they make have to be plowed back into the firm or used to lower healthcare premiums. Also, the insurers cannot reject anyone for already being sick, and they have to pay their members’ bills in full — behavior that goes hand in hand with their not-for-profit status, since for-profit HMOs inevitably face pressures to weed out unhealthy members and deny payment. 

Another good idea from abroad is allowing people to choose their insurer from among all HMOs. Germany, for example, gives people the option of more than 200 private insurers. This creates competition that drives down healthcare costs. Allowing people to choose the government as their insurer — for example, changing Medicare from an exclusive program for the elderly into an insurance option, alongside private HMOs, for all Americans — would immediately drive down costs as private firms slash their prices to compete with the government. (Surprisingly, even when private insurers can’t make profits, there is still a healthy competition between them, though the rivalry is over membership growth and company survival rather than shareholder dividends.)

Rampant malpractice lawsuits exact huge insurance fees from doctors practicing in the United States, while they are almost unheard of in many countries with comparable or superior healthcare systems. Reform is needed here, too, or else those exorbitant insurance costs will continue to pad the cost of care.

Finally, making insurance mandatory for all is crucial. Government can help the poor to pay premiums, but the important thing is making sure that everyone is covered, so that the insurance mechanism — which relies on having a large pool of healthy people to balance out the costs of the unhealthy — can work. In Britain, Germany, Japan, Switzerland, and Taiwan — in virtually all advanced industrialized nations except the U.S., for that matter — insurance is mandatory or health care for all is paid through taxes. (In America, people without coverage turn to emergency rooms, the costliest kind of care possible.)

The results of these policies are healthcare systems abroad that cost their countries much less — as little as six percent of Taiwan’s economy, compared to 16 percent of America’s — and insurers with administrative overheads in the range of 17 percent, rather than the 25 percent common among U.S. HMOs. Meanwhile, the quality of care is just as good, according to national surveys, and surgical procedures in some of these countries actually happen faster than they do in America — contrary to the myth of long lines at the socialized clinic. Bankruptcy because of medical bills is virtually unheard of.

One defense of America’s unfettered free-market system is that it promotes innovation. The belief is that pharmaceutical companies, for example, won’t invest in research without hefty profits to be made. But the large pharmaceutical industry in Switzerland did no such thing in spite of healthcare overhaul in the 1990s: They cut their marketing budgets and maintained their levels of R&D. (The irony is that America is in effect subsidizing innovation in other countries: Swiss pharmaceutical firms make a third of their profits in the less regulated U.S. market. Swiss patients benefit from the same state-of-the-art drugs, while American patients carry the financial burdens of coverage that the drug companies would rather not take on.)

According to Frontline, none of the three major party candidates for U.S. president have offered policies that wholeheartedly embrace the good ideas already tried and tested in our fellow capitalist democracies. John McCain has talked about allowing people to buy insurance across state lines. Hillary Clinton has called for making insurance mandatory for all, while Barack Obama wants a mandate that covers children. But overall their plans are tepid, says Reid, and won’t do much to dent rising healthcare costs or help the hundreds of thousands of Americans who go bankrupt every year because of medical bills.

It is baffling to our counterparts overseas that our citizens without jobs — the people most likely to get sick — go without health care, or that we provide education and legal counsel to all but not the right to see your own doctor. Surely we can learn something from what has worked elsewhere in the world. The recent experience of Switzerland, which had a healthcare system much like America’s until it underwent dramatic reform in 1994, is especially instructive. Today, both conservatives and liberals there support the reforms. With enough political will and imagination, we could fix our broken system, too.

Victor Tan Chen Victor Tan Chen is In The Fray's editor in chief and the author of Cut Loose: Jobless and Hopeless in an Unfair Economy. Site: victortanchen.com | Facebook | Twitter: @victortanchen