Opponents of a proposal to introduce a single health insurance company have warned of higher premiums and a two-tier health system.
Voters will decide on the plan supported by centre-left political parties in a nationwide ballot next March.
A cross-party committee of parliamentarians said the initiative created more problems than it was able to resolve.
They said a single health insurance company would trigger higher premiums and also lead to dramatic tax increases.
The people's initiative wants to do away with the free choice of health insurers and link premiums to income and personal wealth.
The committee, which is made up of parliamentarians from the centre-right Radicals and Christian Democrats, as well as the rightwing Swiss People's Party, also warned that the standard of the health service might decline.
"The health of our citizens is in danger," the committee said on Tuesday.
The initiative is going to create a two-tier system, where only well-off people can afford to pay for extra health coverage, according to the committee.
However, the proponents of the state-run single health insurance company argue the system would be leaner, more transparent and cheaper.
They point out that the current system, with more than 80 insurers, has created an administrative overhead which has contributed to spiralling healthcare costs in Switzerland.
Three years ago, a proposal by the Social Democrats to introduce income and wealth-related health premiums, was thrown out by voters by a three-to-one majority.
Health costs in Switzerland have been on the rise in recent years. In 2003, they represented 11.5 per cent of Gross Domestic Product, according to the Organisation for Economic Cooperation and Development (OECD) and the World Health Organization (WHO).
In a report published in October, they called for a shake-up of the Swiss health system. Both organisations said the Swiss were not getting value-for-money and the cost of treatment was substantially higher than in other OECD countries.
The organisations also called for more spending on prevention work, greater efforts to cut costs, the use of different billing methods and greater utilisation of generic medicines.
The interior ministry, which commissioned the report, said some of the proposed reforms were already underway, including increased competition and improved cooperation.
swissinfo with agencies
The initiative was launched by a family association from western Switzerland. It has the support of centre-left and leftwing political parties, notably the Social Democrats.
The association collected just over 110,000 signatures to force a nationwide vote on a constitutional amendment. It is calling for a single state-run health insurance company funded by premiums which are based on health and personal wealth.
The government and parliament have come out against the proposal.
The vote is scheduled for March 11, 2007.