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HEALTH INSURANCE

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

Health insurance is a constant topic of discussion— and worry — in Switzerland. Unfortunately, premiums look set to rise significantly in 2023.

Published: 6 May 2022 12:12 CEST
Why Swiss health premiums are set to rise — and what you can do about it
Health insurance is mandatory for everyone living in Austria, which covers check-ups and treatments. Photo by Pixabay

Premiums for compulsory health insurance will rise by an average of 5 percent in the fall, according to online price comparison site, Comparis.ch.

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

One of the reasons for the drastic increase of the already expensive premiums are lower cash reserves held by insurance carriers. 

Here’s what you need to know. 

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

What is a reserve and why is it important?

A ‘reserve’ is a sum of money that insurers are obligated to set aside to fulfil the policyholders’ claims. This is strictly regulated by the Federal Office of Public Health (FOPH).

According to Comparis, in 2021, “the reserves held by health insurers amounted to 12.4 billion francs, with the annual premium volume totalling some 34 billion francs”.

However, in the summer of that year, the Federal Council introduced a range of measures to actively encourage insurers to reduce their reserves, resulting in the announced hike in premiums.

“This happens because, once the reserves are used up after they have been reduced, premiums must be raised in order to compensate for increased costs during the period of reserve reduction. In other words, if reserves are reduced too quickly, premiums could rise sharply again”, Comparis explains.

However, the need for such a premium hike could have been avoided had there not been political intervention in the management of the reserves, Comparis said.

The government “has forced the health insurance companies to reduce their reserves. This is why many of them now lack the necessary financial cushion to absorb current cost fluctuations”, according to Felix Schneuwly, Comparis’ health insurance expert.

“Last year the Federal Council increased the pressure on insurers to draw on their reserves, even though an exceptional increase in costs was looming”, he added. “As a result, many funds have reduced their reserves excessively by setting premiums well below costs”.

The “exceptional increase” that Schneuwly referred to was the reason why health care costs skyrocketed in the first place: a significant rise in 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.

On the whole, Santésuisse,  an umbrella organisation for health insurance companies, estimated that the pandemic cost Swiss insurers 1 billion francs so far. 

Drug prices are also an issue in Switzerland, where patients often pay much more than their counterparts in neighbouring European countries.

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

When will you be notified of your premiums for 2023?

By law, you must receive a letter from your insurance company, notifying you of the premium for the following year, no later than October 31st.

If you then decide to cancel your current plan and switch to a cheaper one, you must notify your carrier, by registered post, by November 30th at the latest.

What cheaper insurance policies are there?

There are a number of ‘low-cost’ options for basic insurance, including the HMO, Telmed and bonus insurance programs.

With the HMO (Health Maintenance Organisation) model, you are not free to choose your doctor or hospital. Instead, your first point of contact will be with a doctor from an HMO, or group practice, who will coordinate your treatment. In exchange, you get a cheaper premium.

You can also take out a Telmed policy, where (in most cases) you receive medical advice in a first consultation over the phone before a referral to a doctor or hospital.

Some providers also offer a bonus insurance program where you start with a higher premium which then drops for every year that you do not submit an invoice to your provider.

This link provides more information about how you can save on health insurance premiums:

Five tips for getting cheaper health insurance in Switzerland

Good news, if there is any to be had, is that supplemental health insurance is not set to increase.

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For members

HEALTH INSURANCE

How Switzerland’s two crucial health insurance referendums could impact you

The price of Swiss health insurance premiums has been rising significantly in the past few years, prompting political parties to launch two cost-cutting initiatives. The votes will take place in June and there's a lot at stake.

Published: 24 April 2024 15:33 CEST
How Switzerland's two crucial health insurance referendums could impact you

On June 9th, the Swiss will cast their votes on two issues aiming, though in different ways, to curb the continually increasing cost of the obligatory health insurance (KVG / LaMal).

This is what’s at stake.

The ’10-percent’ initiative

In view of the high (and rising) premiums and other costs of living, which eat up a big chunk of the budgets of low- and middle-income consumers, the Social Democratic Party has spearheaded a national vote to cap the insurance rates at 10 percent of income.

Anything over this limit should be paid for by the federal and cantonal government, the party says.

While this strategy may sound enticing to everyone tired of paying high premiums, the government warns that while this proposal looks good on paper, the ‘yes’ vote could unleash some serious consequences.

Its main argument is that this measure would cost several billion francs per year, and does not provide any incentives to control health costs.

Instead, the Federal Council and the parliament have concocted their own ‘counter initiative’ that they want voters to approve.

Under this proposal, cantons will have to increase the amount of financial help they pay toward health premiums for low-income people. 

READ ALSO: How do I apply for health insurance benefits in Switzerland?

‘For Lower Premiums’ initiative

For its part, the Centre party has come up with its own proposal to reduce health insurance costs, which will also be voted on June 9th.

It provides for a ‘brake’ on health costs, which should evolve according to the economy and wages.

This brake would work in the same way as the federal spending brake. Therefore, when healthcare costs exceed wages for a given year by 20 percent, the government must take action to bring the  costs down.

The government is asking voters to turn down the Centre’s proposal because it doesn’t take into account factors such as demography, technological progress in healthcare, as well as the dependence of salaries on economic developments.

Here too, the Federal Council and parliament have put out their own counter-project, providing for more targeted measures, including specific cost control objectives for healthcare services.

Are there any other proposals on the table aiming to curb the cost of insurance premiums?

Yes.

While they are not on the ballot, two ideas have been debated in past months.

One calls for scrapping multiple private carriers  in favour of a government-run single health insurance scheme, similar to that in the EU. 

The other idea floating around is to replace the current system where rates are determined by factors such as age and canton of residence, and base them on wages instead. 

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