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HEALTH INSURANCE

EXPLAINED: Why Swiss healthcare costs are rising and how you can save

After premiums on Switzerland’s compulsory health insurance fell last year, new increases are expected in 2023. There are, however, some ways to cut your costs.

EXPLAINED: Why Swiss healthcare costs are rising and how you can save
Will his vet bills go up as much as your health insurance premiums? Photo by Pixabay

Swiss health insurance organisation Santésuisse has recently warned of a “worrying” increase in 2023 of the already expensive health insurance premiums.

They could go up as much as 10 percent over the current rates — the sharpest hike in premiums in 20 years.

READ MORE: ‘Worrying’: Swiss health insurers warn of significant price increases

The reason are higher medical costs incurred during the two years of coronavirus pandemic, estimated to cost insurers one billion francs so far, not even taking into account about 265 million spent for Covid vaccinations in 2021.

Santésuisse and MPs are now calling for measures to stop costs from soaring further.

“If you do nothing, there is a risk of double-digit premium increases”, Santésuisse’s director Verena Nold said in an interview on Friday.

On the political front, the initiative launched by the Centre / Mitte party demands that the Federal Council and the cantons intervene if healthcare costs rise sharply in relation to wages.

A similar initiative by the Social Democratic party wants a ruling that no household has to spend more than 10 percent of its disposable income on premiums.

Santésuisse is also urging the government to implement a range of reforms to reduce costs and ensure that not so many are passed on to consumers. 

One is to establish a system which rewards efficiency and cost-effectiveness in service delivery, encouraging doctors, hospitals and pharmacies to be more expedient. 

“We could also, for example, lower the laboratory prices, as we pay up to three times as much as abroad”, Nold said, adding that a reduction in drug prices to European levels is also an option.

“With regular comparisons of drug prices and an adjustment to the price level in European comparison countries, taking into account all discounts, a large savings potential could be exploited”, Santésuisse said.

While the insurance industry and politicians are debating cost-cutting measures, what steps can individuals take to lower their healthcare premiums?

As outlined in our article from November 2020, there are several ways to lower the cost of premiums, even if slightly:

Health maintenance organisation (HMO)

Under this model, policyholders are required to consult a particular HMO practice. Two disadvantages of this alternative is a limited choice of doctors and you also need a referral to see a specialist.

However, the benefit is a premium reduction of up to 25 percent compared to the conventional insurance.

Family doctor model

Your family doctor, a general practitioner, will be designated by your insurance company and will be in charge of all your medical treatment.

He or she will refer you to a specialist if necessary. 

If you opt for this option, you could save 20 percent on your insurance.

READ MORE: Five tips for getting cheaper health insurance in Switzerland

The Telmed alternative

If you choose this option, you have to call a telephone service and get a referral to a doctor or hospital.

This does not apply to medical emergencies and other exceptions, such as eye exams and annual gynaecological check-ups.

Total savings could range between 15 and 20 percent. 

For both HMO and Telmed you can calculate your premiums here

Increase your deductible

In Switzerland, the deductible (franchise) ranges from 300 to 2,500 francs.

The lower your deductible, the higher your premiums, and vice-versa.

If you are young, healthy, hardly ever get ill, and don’t take any expensive medications, then you can save substantially with the highest franchise.

Keep in mind, however, that if you choose the highest deductible and end up needing medical care, you will have to pay a greater proportion of the costs.

Pay the premiums in one lump sum

Most insurance carriers will give you a 2-percent reduction if you pay your premiums upfront rather than on monthly basis.

If you want to want to cancel your current insurance and switch to a cheaper one — your carrier must notify you of the new rates by October 31st — you have to do so by registered letter before November 30th.

READ MORE: EXPLAINED: How to change your health insurance carrier in Switzerland and save money

What if you want to really save on premiums and don’t take out an insurance policy at all?

Nice try, but no.

Even if you are healthy, you still need to have basic health coverage, called KVG in German and LaMal in French and Italian .

If you don’t purchase a policy within three months of your arrival in Switzerland, authorities will send you a letter reminding you of your obligation to do so.

If you still refuse, your canton will purchase insurance for you and send you a bill — which you will have to pay.

Also, several cantons — Aargau, Lucerne, Ticino, Thurgau, and Zug — keep blacklists of people who don’t pay their health insurance premiums. The delinquent payers can be treated for emergencies, but the insurance will not cover their other medical bills. 

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COST OF LIVING

Seven products that are becoming more expensive in Switzerland

Covid and the war in Ukraine, coupled with rising inflation, made Switzerland even more expensive than it already was before. These are some of the goods you can expect to pay more for.

Seven products that are becoming more expensive in Switzerland

The good news — if we can call it that — is that inflation rate in Switzerland, which stood at 2.6 percent in April, is significantly lower than in neighbouring France (5.4 percent) and Germany (7.8 percent), as well as throughout much of Europe.

However, Swiss consumers are already feeling the increase in prices of many common purchases.

News platform Watson has listed seven goods and services that now cost more, basing its analysis on the national index of consumer prices (LIK), which measures the inflation of consumer goods in Switzerland.

Among the products that are now more expensive are:

Raw materials

Energy prices, including petrol, oil and gas, have increased in recent weeks. “We are currently paying around 77 percent more for heating oil compared to January 2019”, according to Watson.

A litre of petrol currently costs 2.05 francs, versus 1.60 francs in August 2021.

“A recovery is currently not in sight”, Watson added.

READ MORE: How Covid, Ukraine and energy costs are changing Swiss spending habits

Wood

Wood prices started to go up already during the Covid pandemic in 2020, rising by staggering  500 percent from May 2020 to May 2021.

One of the reasons is that wood pellets can also be used for heating.

“The war has not only made the raw material more expensive, but also the production of the pellets”, according to Andreas Keel, Managing Director of Holzenergie Schweiz, who added that in October a tonne of pellets cost 280 francs, and in January it rose to 360 francs.

What certainly doesn’t help matters is that Russia is one of the world’s largest wood exporters and the sanctions currently in place against this country are exacerbating this shortage.

READ MORE: Switzerland extends sanctions on Russian assets

Furniture

If you are looking for a new sofa, table or another piece of furniture, now is not a good time to purchase them, as their cost has risen by around 15 percent. One reason, as stated above, is the higher price of wood, but there are other contributing factors as well.

“The Swedish furnishing giant Ikea increased its prices by an average of 9 percent at the end of 2021. With a market share of 11 percent, Ikea is one of the big players in Switzerland”, Watson said.

Food

While food amounts to only 6.3 percent of an average household budget, it is probably the most important, as nobody can live without it.

The main reason for the increase is that Ukraine exports foodstuffs such as grain, which affects not only prices of products like baked goods and pasta, but also the cost of animal feed — the latter being essential for the production meat and dairy.

Clothing

Clothing prices typically increase in April / May, but this year they rose more than usual.

The war and Covid-related delivery issues are main factors, but the worst is yet to come, according to Andreas Bartmann, vice-president of  the industry association of textile retailers.

“In the fall, [price hikes] will hit us massively,” he said.

READ MORE: How to protect your savings against inflation in Switzerland

Transportation

“Anyone who wants to buy a new car currently has to pay around 10 percent more than in January 2019”, Watson said.

And this increase is likely to continue, mainly due to higher costs of  raw materials and general delivery problems.

Opting for the used-car market is not a solution either, Watson noted, as “the prices there rose even more significantly than for new cars due to the excess demand”.

You could opt for a new motorcycle or bike, but there too prices are expected to climb — also due to shortage of raw materials and delivery bottlenecks.

Travel

Now that Covid restrictions have been lifted in most countries, foreign travel may remain inaccessible for many people anyway,  because it became more expensive.

One major reason is that, with fuel now costing more, airlines are increasing the price of tickets.

By the same token, the price of petrol could make driving to your holiday destination costlier as well.

Your best bet may be to just stay home. It will feel like 2020 all over again, but without the masks.

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