The Irish Independent reports that disgraced former banker Sean FitzPatrick has failed to meet interest payments of almost €400,000 a month on loans of more than €100m.

The multi-millionaire banker defaulted on the loans following a series of major business setbacks, the Irish Independent has learned.

However, the money cannot be recovered from Mr Fitz- Patrick’s once valuable shareholding in Anglo Irish Bank, which is now worthless.

And Finance Minister Brian Lenihan may face the prospect of having to apply to the Commercial Court to seize Mr FitzPatrick’s extensive property portfolio.

However, it is unlikely the minister will be able to recoup money from Mr FitzPatrick’s personal assets. The former Anglo boss now finds himself on a collision course with Mr Lenihan, who has control over dealings between the nationalised bank and its former chairman.

An interim report from Anglo Irish Bank on March 31 this year revealed Mr FitzPatrick had loans of €106.8m, incurring interest charges of €397,500 a month.

Those figures are calculated on an interest rate of 4.5pc, which banking sources say is the lowest he could have negotiated for borrowing more than €100m.

In 2005, his annual salary of €2.6m made him the highestpaid executive in the country. In 2007, his personal wealth was estimated at €55m.

Mr FitzPatrick held some 4.5 million shares in Anglo at the time, valued at €80m, but these are now worthless. His total borrowings from Anglo in 2007 amounted to €122m, but these were reduced over the following year.

At the time of his retirement from Anglo Irish Bank last December, Mr FitzPatrick was reported to have a pension worth €25m.

However, sources said the value of his pension – like so many others – shrunk dramatically in the slump. Mr Lenihan will come under severe public pressure to ensure Mr FitzPatrick repays his massive loans to the nationalised bank.

Last December, he said the former Anglo chairman would have to repay the bank “every cent” of his borrowings. Mr FitzPatrick would not comment last night. “I’m not talking to the media,” he said.

Mr FitzPatrick’s fortunes have been badly rocked after a failed oil venture in Africa and a stake in a casino in Asia stalled. His property investments in Ireland and overseas were also hit by the international slump.

Mr Lenihan is said to be growing increasingly frustrated at delays in separate investigations into Anglo. Speaking on RTE’s ‘Prime Time’ on Tuesday night, he insisted he “wanted to see bankers in prison”.

Mr Lenihan would have to approve any attempt by Mr Fitz- Patrick to reschedule or renegotiate his loan repayments. The minister can take personal control of dealings between Mr FitzPatrick and Anglo following a “relationship framework” accord agreed with the bank in July.

The agreement gives the minister ultimate authority if the bank is “entering into or varying any transaction or agreement between a director or former director”.

Concealed Gardai and the Office of Corporate Enforcement are investigating the circumstances of how the loans made to Mr FitzPatrick and other directors were concealed.

The Irish Independent has learned Mr FitzPatrick has yet to be formally questioned by the Garda Bureau of Fraud Investigation.

He is likely to be among the last people interviewed as part of the inquiry, which will stretch into next year. In a letter to an Oireachtas Committee, Paul Appleby, the Director of the Office of Corporate Enforcement, said the circumstances surrounding the concealment of directors’ loans suggest “illegality”.

A spokesman for Anglo Irish Bank refused to comment on the revelation last night. He said the bank would not discuss its business arrangements with individual customers. “The bank is bound by obligations of customer confidentiality,” he added.

The Irish Independent also reports that banks worldwide have so far recognised less than half of their anticipated losses, and this poses a continuing threat to economic recovery, the International Monetary Fund (IMF) says in its latest World Economic Outlook.

The report came as credit rating agency Standard & Poor's put both AIB and Bank of Ireland on credit watch, saying the Irish economy is expected to remain weak next year and unsupportive of bank profits.

S&P analysts said they expect the Government to continue to support the two big banks but, even with the National Asset Management Agency, the banks' financial profiles, capitalisation and earnings prospects may not be sufficiently bolstered.

The ratings agency is looking to some reduction of Government guarantees in a year's time and on this basis expect one more credit downgrade "at most" for the two banks.

In its twice-yearly report, the IMF says it would be reasonable for governments to unwind guarantees on bank debt earlier, than disposing of impaired assets acquired by the public sector. "The most important task is to earn the highest possible return on such assets by managing them well," it says.

Conditions

The IMF said improved economic conditions had led it to reduce its estimates for the ultimate losses in the global financial system to $3,400bn ($3.4 trillion) between 2007 and 2010, from the $4 trillion published in April.

"We are on the road to recovery, but this does not mean that risks have disappeared," José Vinals, Director of the IMF's Monetary and Capital Markets Department, said.

"If we fail to meet the challenges still being faced by the financial system in the present crisis, we risk re-igniting systemic risks, and even derailing the economic recovery now in train. As you know, that is something we simply cannot afford," Mr Vinals told a press briefing in Istanbul.

The report says banks have so far recognised less than half of these anticipated losses, with US banks having taken 60pc of them on board, while euro area and UK banks have recognised about 40pc. The IMF warns of the dangers to the global recovery as these losses are written down and banks seek more capital to maintain their ability to lend.

The report was published as the latest figures from the Central Bank showed that bank lending in August was 3pc down on the same period last year.

The Irish Times reports that the Government is facing an increasing prospect of industrial relations unrest in the weeks ahead over spending cuts, budgetary strategy and proposed reductions in public sector pay that have been hinted at by Ministers.

The Irish Congress of Trade Unions (Ictu) is seeking to bring tens of thousands of workers from both the public and private sectors on to the streets of Dublin and six other locations on Friday, November 6th, in a bid to influence the Government’s decisions in the forthcoming budget.

Ictu is also to launch a major advocacy campaign for its 10-point plan on dealing with the economic crisis in a fairer way.

Sources said the budget for the Ictu initiative could be about €1.3 million. Ictu disagrees with Government plans to cut public spending by €3-€ 4 billion this year and believes that the problems in the public finances should be tackled over a longer period.

The move comes as the prospect of a clash between the Government and unions over public sector pay appears to be increasing.

Siptu president Jack O’Connor said that in the absence of an alternative national agreement, he would not stop members of his union in the health sector taking industrial action in pursuit of a 3.5 per cent increase. This rise was due under the national pay deal reached a year ago, which the Government has effectively frozen.

He said there was no new national agreement in place and he had no basis to tell members not to proceed with action.

“In fact the opposite is the case. I have a declared position by the Minister for Finance that amounts to nothing other that a statement to the effect that the burden of the adjustment for 2010 will be borne exclusively by working people and the less well-off. So the gloves are off,” he said.

However, Minister for Social and Family Affairs Mary Hanafin said the money was not there to pay the 3.5 per cent increase to health workers. She said that since the pay deal was reached, the financial and economic situation had changed considerably.

The country’s largest public sector union, Impact, is balloting 55,000 members for a mandate for strike action in the event of the Government introducing pay cuts.

Last night in Cork more than 1,000 frontline public sector workers, including gardaí, nurses and prison officers, attended a second regional meeting of the 24/7 Frontline Services Alliance, aimed at protesting against cuts in allowances and payments proposed in the McCarthy report. PDforra, the body representing Defence Forces personnel, said it had been ordered to break off contact with this alliance.

Sources said that the representative body had been “reminded” by Department of Defence and senior military figures of the provisions of the Defence Act.

Minister for Defence Willie O’Dea said PDforra had to operate within the “already agreed processes”.

The Irish Times also reports that Leslie Buckley, one of Denis O’Brien’s representatives on the board of Independent News & Media (INM), has said it is “very difficult to effect change” in a company as a minority shareholder and those with minority shareholdings are “bystanders” who remain “on the sidelines”.

Although he refused to comment specifically on INM, he said there would be “plenty of news about INM over the next few days”.

Speaking yesterday at a public lecture organised by the National College of Ireland, Mr Buckley warned against investing in companies as a minority shareholder, saying he had learned from past investments.

“About seven or eight years ago, Denis and I invested in quite a number of companies which went to the wall. One thing I learned from that, and I’m sure Denis did too, was that unless you have a majority shareholding and you can actually control your own destiny then there isn’t too much you can do about things.”

He continued: “It’s very difficult to effect change if you’re a minority shareholder. If you own 51 per cent of the business and it’s a failure, then you can blame yourself.

“Going back to 2000, myself and Denis invested in quite a number of things as small shareholders: where are they today?”

Mr Buckley, who was appointed to the board of Aer Lingus in May this year, said yesterday the airline was going to take “radical action” to reduce costs.

“If you look internationally, the airline business is in chaos. Aer Lingus had, a year ago, €800 million in cash; now it has only €440 million.”

He said Aer Lingus needed to save “at least €120 million” and radical cuts were necessary.

An announcement on the details of a cost-cutting plan would be announced “sooner rather than later”, Mr Buckley added. He dismissed the possibility of Ryanair buying the former State airline, saying it would lead to a monopoly that would have an adverse effect on price.

Mr Buckley, who in the past has been heavily involved in the restructuring of companies such as Waterford Crystal and Irish Steel, said the board of Aer Lingus was being “kept very up to date” with discussions on restructuring.

Reiterating that there would be an announcement “sooner rather than later” on the costcutting plan, Mr Buckley said a board meeting was scheduled for tomorrow.

The Irish Examiner reports that the Revenue Commissioners are monitoring the sale of greenhouse gas permits as it has become part of the latest tax evasion scam in a number of EU countries.

Britain, France and the Netherlands suspect they have lost millions of euro in VAT on the sale of carbon permits in a carousel fraud.

A spokesperson for the Revenue Commissioners said: "We were aware that this was an issue and as a result we have begun to monitor the risk, but there is no indication of any fraud as yet."

The European Commission announced a proposal to allow countries change the way they collect VAT for a number of goods and services, including carbon permits, computer chips and perfumes.

The reverse charge mechanism on these goods would see the final customer pay the VAT. This currently happens in Ireland in relation to construction and the work of foreign artists.

No decision has yet been made on whether to extend this to carbon permits. Ireland has just 40 carbon permit brokers. The country with the biggest number of brokers is Denmark with 1092 followed by Britain with 521, Germany with 420, France with 326 and the Netherlands with 264.

The Environmental Protection Agency controls the Emissions Trading Scheme registry in Ireland that has some 20 account holders that include large banks and private individuals.

Emission allowances can be bought and sold through exchanges in Britain, France, Germany, Austria and the Netherlands. The market is worth an estimated $1trillion worldwide with the EU having about three-quarters of that.

French investigators recently discovered that up to 80% of those registered as brokers had been involved in intra-community fraud previously and that large numbers of French residents that had registered on the Danish registry were equally suspect.

They closed down the BlueNext Exchange that deals in the permits for two days to allow it change its systems and when they reopened the daily average trade fell from over 9 million credits to just over 2 million a day.

The Financial Times reports that London’s position as the world’s number two city for hedge funds is beginning to slip after almost a decade of gaining ground.

New York, meanwhile, is reasserting itself in spite of the Madoff scandal, the fall of Lehman Brothers and a series of high-profile fund liquidations.

According to a report from International Financial Services London – a promotional body run in conjunction with the City of London and the UK government – London’s share of the world’s hedge fund assets fell 2 percentage points in 2008, while New York’s portion grew the same amount.

The numbers are an almost complete reversal of a trend that since the turn of the millennium has seen London rise to put itself on a par with New York and the leafy environs of Greenwich, Connecticut, as one of the world’s main centres for the hedge fund industry.

Between 2002 and 2007, London’s share of the assets managed by hedge funds more than doubled to 20 per cent – mirroring a decline in New York’s position, which has been steadily falling from a height of 52 per cent in 2001.

“The decline in assets during 2008 was split between negative performance and asset outflows,” the IFSL said.

The fall in assets managed from London was primarily down to larger client redemptions in funds compared to those experienced by US funds, the report said.

London-based managers say a changed regulatory outlook will stymie any prospects for a recovery of the UK’s position, however.

Higher tax rates for top earners in the UK and unease over controversial new rules to regulate the alternative asset management industry from the European Union are already having a chilling effect on the industry, several managers told the Financial Times.

The EU’s draft alternative investment manager directive, which has raised the ire of several of the UK’s largest funds, is a cause for particular concern.

A survey of the European fund management industry by the think-tank Open Europe found that nearly half the UK’s fund managers would be “more likely than not” to move abroad if the directive were implemented as it stands.

Brevan Howard, Europe’s largest hedge fund, became the latest fund to signal the seriousness of its intent last week when details emerged of plans to set up a large office in Switzerland.

The canton of Geneva became the latest Swiss authority to send representatives to London to woo hedge fund managers this week, following on from seminars this month held in Mayfair by Zurich and Zug.

While few London funds are likely to make wholesale moves abroad, several are said to be exploring options to relocate employees or change the technical domicile of their headquarters.

“The real danger is not that new regulation kills existing funds but that it simply discourages new ones from setting up,” said one large London-based institutional investor.

“For an industry that is built around and driven by entrepreneurial spirit and independence, that has some big longer-term consequences for London.”

The FT also reports that a recovery in the world economy is now in place, the International Monetary Fund said on Thursday, but it warned there were many obstacles to sustained rapid growth.

Publishing its twice-yearly World Economic Outlook, the Fund rejected forecasts for either a rapid V-shaped recovery or a double-dip recession, saying the recovery will most likely be “weak by historical standards”.

The IMF is no more optimistic about the medium-term outlook, insisting that growth prospects depend on resolving two difficult challenges: the weaknesses in the global banking system; and the persistent unwillingness of countries with large trade surpluses to boost domestic demand and become motors of world growth.

The economic crisis, which resulted in the deepest global recession since the Second World War, has led to a permanent loss of output, the IMF said. Most economies now have a large amount of spare capacity which is likely to keep inflation low, despite the extraordinarily expansionary monetary and fiscal policies undertaken by central banks and governments around the world.

But for the first time in over a year, the IMF’s premier economic publications has not become more gloomy. It has revised higher its forecasts for world growth, reflecting its view that there was now a much lower risk of the recession turning into something even nastier. “Strong public policies across advanced and many emerging economies have supported demand and all but eliminated fears of a global depression,” the world economic outlook said.

The IMF forecast that world economic output will rise by 3.1 per cent in 2010 after contracting by 1.1 per cent in 2009, an upward revision of 0.6 percentage points for 2010 from its most recent forecast in July.

Emerging economies will grow much more quickly than advanced economies, the Fund thinks, with growth averaging 5.1 per cent in the emerging world, even including the troubled Central and Eastern European region, and only 1.3 per cent in rich countries. Central banks of rapidly growing emerging markets might have to raise interest rates soon.

In the short-run, the Fund believes the recovery will be sluggish because “the policy forces that are driving the current rebound will gradually lose strength, and the real and financial forces remain weak”.

Unemployment is forecast to keep rising across developed economies, so the recovery will feel “jobless” in most countries. And because companies have clung on to workers during this recession more than in the past, the chances of a rapid pick-up in employment are minimal, the IMF believes.

Governments are currently running out of room due to surging budget deficits, but the Fund warns against any sudden reversal of ultra-low interest rates, tax cuts and public spending increases in rich countries. “Premature exit from accommodative monetary and fiscal policies is a particular concern because the policy-induced rebound might be mistaken for the beginning of a strong recovery,” the report said.

For the medium term, the IMF has taken an aggressive stance on global trade imbalances, warning that the recent reduction in the US trade deficit and associated surpluses in China, Japan, Germany and oil exporters is temporary. It said: “Many economies that have followed export-led growth strategies and have run current account surpluses will need to rely more on domestic demand—notably emerging economies in Asia and elsewhere and Germany and Japan”.

Such language will not be popular in surplus countries, which argue they are not to blame for producing goods others want to buy. Axel Weber, the Bundesbank president, insisted on Tuesday that recommendations for Germany to reduce its surplus have no place in international discussions. “This is not something policy should target or can target. It would mean intervening against optimal structures that have developed in a free market environment,” he told reporters during an economic seminar in Sweden.

The New York Times reports that less than a year ago, Bank of America’s chief executive, Kenneth D. Lewis, celebrated his daring takeover of Merrill Lynch as the crowning triumph of a long career. On Wednesday, that conquest proved to be his downfall, as he announced his resignation after months of legal and political scrutiny over the star-crossed merger.

Mr. Lewis, who started at the bank in 1969 as a low-level loan officer and rose through the ranks to build it into a financial powerhouse, told board members in a 5 p.m. conference call that he had decided to take early retirement, said four people briefed on the discussion.

The board appeared caught off-guard by the timing of his announcement but accepted it even though members were not immediately prepared to name a successor. He had already discussed the matter with the chairman and a small group of directors, the people said.

Mr. Lewis leaves as Congress, the attorney general of New York and investors turn up pressure on both him and the bank over not disclosing Merrill’s losses and bonuses to shareholders. A federal judge recently refused to accept a settlement that had been brokered between Bank of America and the Securities and Exchange Commission, saying the bank and the commission never fully explained how the decisions had been made.

The controversy is likely to occupy the bank even after the departure of Mr. Lewis, who has already had to testify to Congress on the matter.

“This was a necessary and overdue change,” said Michael Garland, a spokesman for Change to Win, an investment group that has been pressing for Mr. Lewis’s ouster for months. “The onus is now on the board to engage with shareholders to name a successor who can quickly restore Bank of America’s credibility with regulators and investors.”

Federal officials did not call on Mr. Lewis to step down and were notified of his decision late in the afternoon, according to two people briefed on the situation. However, regulators have urged other management and board level changes at Bank of America, Citigroup and other financial firms that have received taxpayer lifelines.

Mr. Lewis is not entitled to severance pay but stands to collect pension benefits worth $53.2 million, largely from a retirement program that was frozen in 2003, according to an analysis of corporate filings by James F. Reda & Associates, an independent consulting firm. Mr. Lewis also will walk away with $81.8 million in stock and other compensation that he accumulated over his career, the analysis found.

The government-appointed compensation czar, Kenneth R. Feinberg, does not have authority over any pay that was legally binding as of last February, so much of Mr. Lewis’s compensation package may go untouched. However, Mr. Feinberg is likely to examine whether all of Mr. Lewis’s exit compensation is beyond his office’s reach.

Mr. Lewis is the latest of more than half a dozen Wall Street chiefs to be unseated by the credit crisis. Charles O. Prince III of Citigroup, Richard S. Fuld Jr. of Lehman Brothers, G. Kennedy Thompson of Wachovia Corporation, and John A. Thain, the Merrill Lynch chief executive whom Mr. Lewis forced out after the merger, lost their jobs in the fray.

There are no immediate successors to replace Mr. Lewis. The board plans to interview a number of his current deputies, but will seriously consider outsiders, according to people who have spoken with board members. Robert K. Steel, a former Treasury official who briefly ran Wachovia before its collapse, is one possible contender.

In Mr. Lewis’s tenure as chief executive, shares soared to a high of $54.85 in the fall of 2006, from around $25 in April 2001. But after the Merrill Lynch deal, its stock price plummeted. Bank of America shares, which were trading around $33.74 right before the deal was announced, fell to a mere $3.14 a share, although they have since rebounded. On Wednesday, they closed at $16.92.

Mr. Lewis approached a group of about five Bank of America directors on Monday with his plans to retire, according to a person briefed on the discussions. They praised his work and tried to persuade him to stay, this person added, but he remained steadfast in his decision to retire.

Charles K. Gifford, a board member at Bank of America, said in an interview that Mr. Lewis’s decision came as a surprise to many directors.

In the conference call, Mr. Lewis, speaking in a measured voice, told the 15 directors that he knew it was time for him to retire, Mr. Gifford said.

“He said he felt it was the time, and that he was the only one who could understand that,” Mr. Gifford said. “The guy just cares so much about the institution. I mean, that’s what he told us.”

Mr. Gifford said the board had never discussed asking Mr. Lewis to resign and that several members expressed respect for him on the phone call. However, no one asked him not to resign, Mr. Gifford said, adding that Mr. Lewis sounded as though he had fully made up his mind.

Mr. Lewis, 62, has been under immense pressure since the bank merged with Merrill Lynch at the height of the financial crisis. The deal capped a string of bold acquisitions — including the mortgage lender Countrywide, the credit card lender MBNA and FleetBoston Financial — that transformed Bank of America into the nation’s largest consumer bank. But Merrill quickly turned into one headache after another, though Merrill’s units are performing well now.

Some have defended Mr. Lewis, saying that while he was initially eager to snap up Merrill, he was given little choice by federal regulators when they urged him to move forward with the deal even when Merrill’s losses turned out to be larger than first thought. Mr. Lewis has defended the merger as strategically important to the long-term prospects of Bank of America and has said the deal is already paying off in improved operating profit.

But shortly after the merger was sealed, shareholders began questioning whether Mr. Lewis paid too much for Merrill. Investment bankers left as the cultures clashed. And the merger pushed the bank toward a second bailout from the government soon after its completion, upsetting many investors who worried about the $45 billion taxpayer lifeline, and who saw the value of their shares evaporate. In the spring, they voted to strip Mr. Lewis of his chairmanship.

According to people close to Mr. Lewis, he believed that accepting the second bailout was one of his biggest mistakes because it put Bank of America into the “extraordinary” bailout category, alongside Citigroup and the American International Group, and Mr. Lewis considered his bank to be much stronger than those companies.

Executives at the bank believe it has recovered sufficiently to repay its bailout money, and they have pressed their case in Washington. But even optimists at the bank concede that the bank’s immediate prospects are uncertain given the fragile state of the economy.

Mr. Lewis also disliked the added attention that came with the bailout, these people said, and he said that he hoped to return the bailout funds or a portion of them before he left the company. Adding to the pressure was the firestorm that erupted over whether he adequately disclosed the risks of the acquisition to his shareholders. After Mr. Lewis clinched his deal, Merrill lost a staggering $15.3 billion during the fourth quarter, but paid out billions of dollars in bonuses that Bank of America shareholders were unaware of when they voted to approve the deal. He has since hired his own legal counsel.

Mr. Lewis began thinking about retiring while he was on vacation in Aspen, Colo., in late August, according to the sources briefed on his decision. He surprised colleagues when he returned to work sporting a beard, something no one could remember him doing in decades.

The bank chief was visiting New York on Wednesday when he told the board of his decision. He ended the call by saying, “I remain sure of what I am doing,” said two people who were listening to the call. Soon afterward, he boarded a plane and flew home to Charlotte, N.C.

The NYT also reports that like every other country in Europe, Switzerland guarantees health care for all its citizens. But the system here does not remotely resemble the model of bureaucratic, socialized medicine often cited by opponents of universal coverage in the United States.

Swiss private insurers are required to offer coverage to all citizens, regardless of age or medical history. And those people, in turn, are obligated to buy health insurance.

That is why many academics who have studied the Swiss health care system have pointed to this Alpine nation of about 7.5 million as a model that delivers much of what Washington is aiming to accomplish — without the contentious option of a government-run health insurance plan.

In Congress, the Senate Finance Committee is dealing with legislation proposed by its chairman, Max Baucus, Democrat of Montana, which would require nearly all Americans to buy health insurance, but stops short of the government-run insurance option that is still strongly supported by liberal Democrats.

Two amendments that would have added a public option to the Baucus bill were voted down on Tuesday. But another Senate bill, like the House versions, calls for a public insurance option.

By many measures, the Swiss are healthier than Americans, and surveys indicate that Swiss people are generally happy with their system. Switzerland, moreover, provides high-quality care at costs well below what the United States spends per person. Swiss insurance companies offer the mandatory basic plan on a not-for-profit basis, although they are permitted to earn a profit on supplemental plans.

And yet, as a potential model for the United States, the Swiss health care system involves some important trade-offs that American consumers, insurers and health care providers might find hard to swallow.

The Swiss government does not “ration care” — that populist bogeyman in the American debate — but it does keep down overall spending by regulating drug prices and fees for lab tests and medical devices. It also requires patients to share some costs — at a higher level than in the United States — so they have an incentive to avoid unnecessary treatments. And some doctors grumble that cost controls are making it harder these days for a physician to make a franc.

The Swiss government also provides direct cash subsidies to people if health insurance equals more than 8 percent of personal income, and about 35 to 40 percent of households get some form of subsidy. In some cases, employers contribute part of the insurance premium, but, unlike in the United States, they do not receive a tax break for it. (All the health care proposals in Congress would provide a subsidy to moderate-income Americans.)

Unlike the United States, where the Medicare program for the elderly costs taxpayers about $500 billion a year, Switzerland has no special break for older Swiss people beyond the general subsidy.

“Switzerland’s health care system is different from virtually every other country in the world,” said Regina Herzlinger, a Harvard Business School professor who has studied the Swiss approach extensively.

“What I like about it is that it’s got universal coverage, it’s customer driven, and there are no intermediaries shopping on people’s behalf,” she added. “And there’s no waiting lists or rationing.”

Since being made mandatory in 1996, the Swiss system has become a popular model for experts seeking alternatives to government-run health care. Indeed, it has attracted some unlikely American admirers, like Bill O’Reilly, the Fox News talk show host. And it has lured some members of Congress on fact-finding trips here to seek ideas for overhauling the United States system.

The Swiss approach is also popular with patients like Frieda Burgstaller, 72, who says she likes the freedom of choice and access that the private system provides. “If the doctor says it has to be done, it’s done,” said Mrs. Burgstaller. “You don’t wait. And it’s covered.”

While many patients seem content, the burdens fall more heavily on doctors, especially general practitioners and pediatricians.

Dr. Gerlinde Schurter, Mrs. Burgstaller’s physician, says she feels squeezed by government regulators and insurance companies that have fought to hold down costs — most recently with a 15 percent cut in lab fees that forced her five-member group to lay off its principal technician.

Dr. Schurter also fears a so-called blue letter, a warning from an insurance company that she is prescribing too many drugs or expensive procedures.

If doctors cannot justify their treatments, they can be forced to repay insurers for a portion of the medical services prescribed. And while prescriptions are covered, the government has insisted that consumers fork over a 20 percent co-payment if they want brand-name drugs, rather than 10 percent for generics.

Similarly, the government health office also lowered reimbursements across the board for medical devices in 2006.

These are among the reasons health care costs consume 10.8 percent of gross domestic product in Switzerland, compared with 16 percent in the United States, the highest level of spending among industrial countries, according to the Organization for Economic Cooperation and Development.

Still, along with lower costs and the freedom to choose doctors come bigger bills for individual patients. On average, out-of-pocket payments come to $1,350 annually. That is the highest among the 30 countries tracked by the O.E.C.D. and well above the $890 average for the United States, which comes in second.

Then there are the hefty prices of the insurance policies themselves, which can top 14,000 Swiss francs a year for a family of four in Zurich, or about $13,600. That is roughly comparable to the national average annual premium for a family policy under employer-sponsored group plans in the United States, but in high-cost American cities the figure can be much higher.

Direct comparisons are hard to make, however, because in the American system, employers and employees share the cost of premiums, which are also exempt from individual and corporate income taxes.

Nevertheless, Swiss citizens relish the lack of bureaucracy, especially compared with systems in Britain and Germany, even if their doctors grumble.

As in the United States, practitioners typically are paid on a fee-for-service basis, rather than on salary. But they make less than their American counterparts. According to the O.E.C.D., specialists in Switzerland earn three times more than the nation’s average wage, compared with 5.6 times for American specialists. General practitioners in Switzerland make 2.7 times more than the average wage, versus 3.7 in the United States.

That is partly because the Swiss health insurers are not shy about using their muscle with physicians.

Pius Gyger, director of health economics and health policy at Helsana, the country’s biggest insurer, cannot suppress a smile when asked about the effectiveness of the so-called blue letters.

“If there’s something strange, we knock at the doctor’s door,” he said. “For doctors, it’s an incentive to treat economically, but often perceived as a threat.”

He estimates that only about 3 percent of doctors get the letters and that fewer than 1 percent actually have to return money. Still, Mr. Gyger said, “it’s an easy exercise for us and it has an effect.”

Despite pressure on general practitioners, hospital physicians like Edouard Battegay at the University of Zurich say universal coverage also lowers costs by reducing emergency room visits.

Indeed, his E.R. is as quiet and efficient as a Swiss watch, and he still expresses amazement at what he saw when he worked briefly in Seattle.

“I’ve seen things in the U.S. that I’ve never seen here; it was a state of disaster,” he said. “Chronic disease management is better here. If you don’t treat hypertension, you treat strokes. Not treating patients is expensive.”

And even Dr. Schurter — who says her income has been flat for the last five years — praises the virtues of the Swiss system for patients struck by catastrophe.

When her daughter was found to have leukemia seven years ago, “I never worried for a second how and if she’d get treatment and if it would be paid for,” she said. “All was granted as naturally as the air we breathe.”