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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.

Published: 12 September 2022 14:21 CEST
Updated: 15 February 2024 10:19 CET
EXPLAINED: How the Swiss health insurance system is based on solidarity
Everyone contributes equally to Swiss health insurance. Image by Simon from Pixabay

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

Premiums keep rising — by 8.7 on average in 2024 — and relief is not on the horizon in the near future.

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” 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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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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