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HEALTH

EXPLAINED: How Switzerland wants to cut soaring healthcare costs

Swiss health costs have been rising in recent years, with further spikes, including in insurance premiums, seen as inevitable. The government is proposing measures to counter this upward trend.

EXPLAINED: How Switzerland wants to cut soaring healthcare costs
Switzerland wants o implement coordinated medical networks to save costs. Photo: Rodnae Productions on Pexels

Based on the information released by Santésuisse, an umbrella group for health insurance companies, an overall increase of around 4 percent for 2023 will be the norm.

Unfortunately for the consumers, who are already hard-hit by rising energy costs, premiums for compulsory health insurance will likely rise by an average of 5 percent in the fall, according to online price comparison site, Comparis.

And many people could even see their premiums soar by more than 10 percent in 2023 — the sharpest hike in premiums in 20 years.

The exact amounts of premiums for all policyholders will be released by the end of October.

The price hikes are not a new phenomenon per se: over the past 20 years, costs have risen at twice the rate of economic growth, resulting in health insurance premiums that are 90 percent higher than in 2002.

READ MORE: How spiralling costs are jeopardising Switzerland’s healthcare system

Why have these costs been increasing so much?

Part of the reason is the fact that people in Switzerland have a high life expectancy, but as they get older, they tend to suffer from chronic, cost-intensive diseases.

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

Add to that the cost (paid for by the government) of Covid tests, as well as booster shots administered in 2022, and those still to be given once Switzerland rolls out second doses in 2023.

How will the government cut these costs?

Santésuisse has been urging the Federal Council to implement a range of reforms to reduce costs and ensure that not so many are passed on to consumers. 

On Wednesday, authorities announced a package of measures aimed at controlling costs. “These measures will improve medical care and contain rising costs in the healthcare system”, the Federal Council said.

Coordinated networks

These care networks are seen as a way to reduce unnecessary medical services. 

“They bring together health professionals from several disciplines to provide ‘all-in-one’ medical care. They improve coordination throughout the treatment chain, for example when various specialists are caring for an elderly person with several chronic diseases”, Federal Council said in a statement.

Hospitals, pharmacies, and various therapists would be attached to the network, and all treatments “will be invoiced at once, as if it were a single supplier”.

Right now, all service providers invoice insurance carriers separately, which adds to administrative costs; the new system is also believed to provide a better oversight and control, and eliminate unnecessary or redundant medical treatments, Health Minister Alain Berset said during a press conference in Bern on Wednesday.

Faster and cheaper access to medicines

The government also wants to guarantee “fast and as inexpensive as possible access to expensive innovative medicines”.

To achieve this, it wants to “anchor in the law” an already widely-used practice: to conclude pricing agreements with pharmaceutical companies. It would mean that drug manufacturers would have to reimburse a portion of the price to insurers.

“This measure makes it possible to guarantee rapid access to these drugs, while limiting their price”, authorities said.

Electronic invoicing

Another measure will require all providers of inpatient and outpatient services to send their invoices to insurance companies in electronic form — seen as a quicker, more effective and cheaper way to transmit billing information.

These measures “will make it possible to curb the rise in costs,” the Federal Council said, adding that “it is not yet possible to estimate the concrete extent of these savings, which would depend on how the health system will implement the measures”.

It is now up to the MPs to debate these proposals.

READ MORE: Why Swiss health premiums are set to rise — and what you can do about it

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HEALTH INSURANCE

EXPLAINED: How the Swiss health insurance system is based on solidarity

Much has been said about Switzerland’s compulsory health insurance, most of it pertaining to its high — and continually growing — costs. But there is also another aspect of the scheme many people may not know about.

EXPLAINED: How the Swiss health insurance system is based on solidarity

For many people in Switzerland, the obligatory medical insurance is a sore point.

Premiums will likely rise by an average of 5 percent in the fall, and many people could even see their rates soar by more than 10 percent in 2023 — the sharpest hike in premiums in 20 years.

READ MORE: EXPLAINED: How Switzerland wants to cut soaring healthcare costs

While there are some ways to save money on a health plan, overall these policies are expensive, and you will hear many people grumble about this cost — even though Swiss healthcare system is known for its excellent level of care.

What you may have not known is that the whole scheme is based on the principle of solidarity, the extent of which is rare in other nations’ health insurance systems.

What exactly does this mean?

Rather than applying an individual approach to healthcare insurance, Switzerland’s system is based on the idea that all insured people form a group.

You can think of this system in terms of a huge pot to which each resident of Switzerland makes a contribution (that is, premium payments), so that in an emergency there are enough resources available to give someone the help they need when they need it.

This kind of ‘one for all’ approach takes precedence over the ‘to each his own’ attitude prevalent in many other countries.

“This means that even those who are in perfect health and never need to see a doctor pay their monthly premiums and thus indirectly provide for those who are ill and need more medical support”, according to a report by the WIRE research think tank.

In other words, all the people of the same age group living in the same canton pay the same premium, rather than different rates based on their income or other personal circumstances.

This applies only to the obligatory basic insurance (KVG / LaMal); supplemental insurances have a different rate base.

Under this system, “it is the task of the federal government, cantons, municipalities and health insurance companies to keep this group balanced<2, the report says. “That’s why decisions in the Swiss healthcare system are always taken in the interest of the group as a whole».

How did this system originate?

This principle of solidarity between the healthy and the sick has a long tradition in Switzerland and is even enshrined in the health insurance law.

“In practice, this also results in solidarity between young and old, because young people on average have little need of medical care, but the risk of illness increases with age”, the WIRE report points out.

“Uniform premiums also mean that there is solidarity between men and women, as the latter generally claim more medical benefits due to pregnancies and births and longer life expectancy,” it added.

How does this system compare with health policies in other countries?

According to the report, in an international comparison, the Swiss health system “displays greater solidarity than the US health system”, where anyone who is not insured has to pay for medical treatment out of their own pocket, “which is why many people get into debt”.

Switzerland’s approach is “also more liberal than Germany’s where health insurance premiums depend on a person’s income”.

Likewise, it is also more liberal than the health systems in France and the UK, “which rely more on fiscal contributions from the state”.

As for the question whether those countries’ health system are superior to Switzerland’s, the report notes that “this is doubtful because state healthcare systems financed by taxes are also forced to compensate for dwindling tax revenues, for example by increasing deductibles, which reduced the solidarity between the insured in different income bracket”.

READ MORE: How is Swiss healthcare system different from the rest of Europe?

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