Premiums for health insurance are to soar by an average of 5.5 per cent next year - the biggest increase in three years. The rise is likely to fuel pressures to reduce healthcare costs.

The increase in health premiums was approved by the interior minister, Ruth Dreifuss, on Friday. The health insurance companies had wanted a bigger rise, but Dreifuss refused to push up premiums by more than 5.5 per cent.

The announcement prompted mixed reactions - ranging from sharp criticism, to renewed calls to cut either medical services, prices of medicines or hospital subsidies.

Consumer protection groups urged health policy holders to take a more active role and choose cheaper insurance companies.

Dreifuss said she regretted having to announce another increase, saying she was aware they would strain the budgets of low income families.

She said she was in favour of reducing medical services - which could include offering unbranded medicines. But the minister rejected a proposal to limit insurance to cover hospital stays only.

Next month, voters will decide on a proposal to limit mandatory insurance coverage to hospital stays only in order to lower premiums.

Under Switzerland's federalist health system, residents of rural areas are likely to be hit hardest, with their premiums increasing by as much as 10 per cent. Urban dwellers will also have bigger insurance bills but the rise will be less steep.

The government has been considering measures to bring down spiralling health costs. Proposals on the table include limiting licences and standardised fees for doctors, or spending cuts and restrictions on health services.

Switzerland's healthcare system is known for its high standards, but is also one of the most expensive in the world. Last year, the country spent nearly SFr40 billion ($23.5 billion) on healthcare.

swissinfo with agencies

In compliance with the JTI standards

More: SWI swissinfo.ch certified by the Journalism Trust Initiative