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September 28 vote Political cures to stem health insurance costs

The Swiss health system is based on competition between insurance companies but critics say it does not work properly   

(Peter Lauth/Ex-Press)

Centre-left parties and consumer groups are seeking to introduce a single public health insurance company to rein in the cost of premiums. Voters have the final say on the proposal on September 28. 

Opponents, including the government and a majority in parliament as well as the business community, argue the initiative is the wrong cure. 

Health insurance coverage is mandatory for residents in Switzerland. They can choose from more than 60 companies and their offers for basic coverage. The insurers must not aim to make a profit but grant everybody access to a quality health service. 

Premiums vary a fair bit from one client to another but do not depend on their income. Key factors are the age group, the insurance company and the place of residence. 

It is also possible for insurance takers to opt for lower premiums if they agree to pay higher excess payments per year or to limit free access to any doctor of choice. Those clients who can’t afford to pay the premiums are granted reduced rates and the remainder is paid for by the state according to the terms set by the country’s 26 cantonal authorities. 

The costs of the Swiss healthcare system have been increasing steadily and no end appears to be in sight. Expenditure reached a total of CHF68 billion ($75.7 billion), with just over a third of it going towards the basic insurance coverage. 

With health costs having become a financial burden for many household budgets, the political left together with patients’ pressure groups and consumer protection organisations and trade unions have accused health insurance companies of thriving at the expense of their clients. 

Third strike

It is the third attempt by the political left in the past ten years to reform the healthcare insurance system. The two previous initiatives were rejected overwhelmingly in 2004 and 2007. They both sought to link the premiums to the income of an insurance taker either through a public or through a single insurance company.

Opinion health2

The Swiss health care system is a success story, says Thomas Zeltner, former director of the Federal Health Office.

The latest initiative foresees the creation of a national insurance institution with cantonal and inter-cantonal subsidiaries. Premiums are to be set by the cantons based on the costs of the insurance scheme. 

However, the majority of rightwing and centre-right parties in parliament as well as the cabinet argue the initiative will trigger additional costs and cause difficulties implementing the new rules. 

“People should have a free choice among the insurance companies and have the right to quit if they are not satisfied with the service. The competition is an incentive to keep costs down. All that would not apply with a single insurer holding a monopoly,” says Barbara Schmid-Federer from the centre-right Christian Democratic Party and a leading member of the committee campaigning against the initiative. 


Stéphane Rossini from the centre-left Social Democratic Party, a member of the initiative committee, roundly rejects her arguments. 

He says there is no real competition among health insurers under the current system and the companies have never made the slightest effort to keep costs under control, nor to lower premiums and save money. 

“Only between 5% and 15% of clients change from one company to another every year,” says Rossini. 

Opinion health3

If the initiative “For a single public health insurer” is adopted in the upcoming nationwide vote on September 28, Switzerland’s health insurance system will become less costly and more transparent, says Franco Cavalli, a doctor, university professor and former Social Democratic parliamentarian.


The Swiss health system is of high quality, and in general consumers are satisfied. However, there is one aspect of it which dissatisfies the vast majority of Swiss: the premiums we pay for health coverage, which are too high and are continually rising.

These creeping increases are largely due to defects inherent in the legislation on health insurance, which forms the basis for funding the health insurance companies. The first problem is that for stationary care [in hospitals and clinics] half the costs are paid by the government, whereas ambulatory care [independent medical practice and ambulatory care in hospitals] has to be covered solely by the health insurance companies.

This gives rise to an often unjustified shifting of services from the stationary sector to the ambulatory, which explains why health insurance premiums keep increasing more than health costs in general.

Franco Cavalli

Franco Cavalli is scientific director of the Oncology Institute of Italian Switzerland, visiting professor at the Faculty of Medicine of the University of Bern and chairman of the scientific committee of the European School of Oncology.

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The other factor is that in Switzerland – almost unique among Western European countries – health insurance premiums are the same for all, rich or poor. And because the rich pay a lot less here than in other countries, this automatically leads to increases in premiums, which especially burden families with low and middle incomes.

Too many cooks

These problems are further accentuated by the existence of so many health insurance companies – up until recently there were about 100 of them [currently there are 61] – which makes the whole system anything but transparent, and also needlessly expensive.

Every so often a cantonal government or some other public body has called for an explanation for a particular increase in premiums or the structure of particular costs covered by the health insurance companies, but in the end they have had to give up, because the sheer complexity of the system makes it impossible to get a reasonable answer.

I can recall, for example, the absurd situation we had in parliament about this. It had become apparent that excessively high premiums had been paid in a number of cantons, and there was an attempt to find a solution as to how to reimburse the hundreds of thousands of people affected.

If parliament had had a single health insurance company to deal with, the solution would have been simple and straightforward. Instead, due to the complexity of the system, it took months to figure out what to do. In the end, parliament came up with a “mini-solution” which satisfied nobody.

No real competition

Too many health insurance companies also means too many executives earning high salaries. This explains why the administrative overhead is upwards of CHF3 billion ($3.3 billion) a year. The main excuse offered for the existence of so many health insurance companies is that they ensure competition, which is supposed to keep down costs.


However, in a system where the cost of any particular service is fixed by the government, the only competition health insurance companies can engage in is increasing their own revenue, refusing to pay for certain services provided to their customers, or weeding out the bad risks (by fair means or foul), and on the other hand making every effort (including very expensive advertising campaigns) to sign up young people with a low risk of ill health.

Comparison with other kinds of social insurance

Most of these problems would disappear with a single public health insurer, which is what the initiative proposes. To understand this, it is enough to look at SUVA [the national workers’ accident insurance body], which is nothing but a single health insurer for accidents. Not only does SUVA manage to have transparent, understandable accounting, but its services are getting better year by year, while the premiums paid by the clients are going down – the opposite of what is happening in the health insurance sector.

What is more, being a single, efficiently functioning organisation, SUVA can hire well-trained examining physicians who can engage in ongoing dialogue with the doctor treating the patient so as to find the best solution together. The opposite is the case with the health insurance companies, where we doctors are used to filling out endless forms without being able to interact with an expert.

Often our requests are not adequately responded to, because, especially with the smaller health insurance companies, the independent examining physicians who decide on the patient’s treatment are often not very knowledgeable.

A single public health insurer would have a structure also very similar to that of the national old-age pension fund [contributions are set at a percentage of salary and paid in equal parts by the employee and the employer], which is highly regarded by all: there would be a logistical organisation at cantonal level with a three-pronged leadership at national level – like SUVA, managed by representatives of doctors, patients and the federal administration.

A more democratic system

This is not a matter of nationalisation but of democratisation of the system, which would thus become less costly and more transparent.

Being rational and logical about it, it is hard to think of an objective reason not to accept what is clearly an improvement in the way we fund our health care system – unless of course you happen to be an executive of one of the many health insurance companies currently in business.

Franco Cavalli

Franco Cavalli is scientific director of the Oncology Institute of Italian Switzerland, visiting professor at the Faculty of Medicine of the University of Bern and chairman of the scientific committee of the European School of Oncology, besides being a medical researcher of international reputation. He has also been politically active for many years.

Born in Ticino in 1942, he was a member of his canton’s parliament for the centre-left Social Democratic Party from 1987 to 1995, and of the Swiss parliament from 1995 to 2007. During his time in Bern he also chaired the Social Democratic group in parliament.

He has now retired from parliament but continues his political involvement, regularly taking part in political debates, such as the campaign on the initiative “For a single public health insurer”, to be voted on by the public on September 28.

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Opinion series publishes op-ed articles by contributors writing on a wide range of topics Swiss issues or those that impact Switzerland. Over time, the selection of articles will present a diversity of opinions designed to enrich the debate on the issues discussed.

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This costs up to CHF500 million for the system and creates a kind of fake competition. Insurers are trying to attract young and healthy customers, spending millions on advertising, marketing and bonuses, according to Rossini. 

“This would all come to an end with a single public insurance company,” he adds. 

Parliament or voters

Schmid-Federer shares some of Rossini’s concerns, but she wants to improve the current system with mandatory basic insurances and separate individual complementary coverage and also to strengthen parliamentary control over the health insurance market. 

“There are problems, even though Switzerland has a high-quality health system,” she says. “More transparency is needed, but no extreme changes like the ones demanded by the initiative are called for.” 

She prefers to leave it to parliament to tackle the reforms. 

For his part, Rossini has little hope in parliament’s ability to bring about changes for the better. 

“There is no majority in parliament to eliminate the flaws in the present system. Therefore we want voters to decide,” he says. 

Hospitals, doctors

The initiative focuses on cost-cutting measures, notably in the administration of the insurance companies. But Schmid-Federer says the campaigners are mistaken because the management and organisation make up just 5.6% of the total expenditure for the basic health insurance. 

This compares with 11.3% for the national accident insurance company and 9.2% for the unemployment insurance scheme. 

Schmid-Federer says costs for hospitals and doctors are the main drivers of the increasing health expenditure, the reason being new medical treatments and the ageing population. 

“A single health insurance company would not do anything about this,” she says. 

Prevention and coordination

“A single insurer would lead to better coordination and boost prevention efforts,” counters Rossini. 

He believes it could help promote alternative healthcare systems with family doctors or sustainable integrated care, bringing in line diagnosis, treatment, care and rehabilitation. 

“The aim is improved care quality. Chronically ill patients would benefit in particular and it would help reduce costs for them,” says Rossini. 

He dismisses concerns that an overhaul of the health insurance sector would lead to job cuts. The employees of the 61 insurers could be taken over by the new public company, he adds, although some might have to move office.

Health and tax

In addition to the proposal for a public health insurance company, voters will also decide on the introduction of a standard rate for value added tax in the restaurant sector. The September 28 vote is the third of four nationwide ballots this year. At the same time, votes and elections are taking place in many of the country’s 26 cantons and at a local level.

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Early campaigning has been marked by accusations of allegedly one-sided information by insurance companies about the initiative.

Another debate focuses on the costs and benefits of the transformation to a public insurer. Opponents say it could cost up to CHF2.2 billion. Initiative promoters argue that up to CHF350 million could be saved on administration, and total health expenditure could be reduced by about 10% over the next few years.

The single insurance would exclude lower premiums for children as well as higher excess rates and alternative healthcare models, according to opponents. However, the allegations have been rejected by the promoters of the initiative.

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(Adapted from Italian by Urs Geiser),

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