Explainer: Swiss to vote on healthcare ‘cost brake’

As in many developed countries, an ageing population as well as (expensive) advances in medical technology partly explain the rise in health costs in Switzerland. Keystone / Christian Beutler

The Centre Party wants to curb spiralling healthcare spending with a proposed mechanism to limit cost increases – citizens will vote on June 9.

The Swiss healthcare system is one of the most expensive in the world. Spending in the sector has risen steadily since the 1990s; it now accounts for 11.8% of GDP.

The spiralling costs have invariably led to significant annual hikes in the cost of health insurance premiums, putting a heavy strain on lower-income households. Surveys have shown that health costs are the biggest issue of concern for the Swiss population.

To address the problem, the Centre’s External linkinitiative, which comes to vote along with three other issues on June 9, wants to introduce a mechanism to curb the rise in compulsory health insurance costs.

Why do costs keep going up?

Like in many developed countries, an ageing population as well as (expensive) advances in medical technology partly explain the rise in health costs in Switzerland.

But certain features of the Swiss system exacerbate the problem. The duplication of medical procedures, wrongheaded incentives and inefficient structures can often result in treatments which are not medically justified, according to the Federal Office of Public Health (FOPH)External link.

Making the system more efficient would enable spending cuts of CHF7 to CHF8 billion ($7.7 billion to $8.8 billion), a study by the Zurich University of Applied Sciences (ZHAW) has found.

What does the initiative call for?

Over the past decade, the cost of compulsory health insurance has risen by 31%, while wages have increased by around 6% over the same period. The Centre wants to narrow this gap.

To do so, the party’s initiative – tabled in spring 2020 – proposes a cap on costs, which it says should not be allowed to increase significantly faster than the economy and wages.

The text calls on government to activate a mechanism whenever healthcare spending increases by 20% more than wages in a year. So, if wages wages rise by 1%, medical costs should not go up by more than 1.2%.

If expenditure increases more than this in any one year, the federal government would be obliged to step in to bring costs down, in cooperation with cantons, insurance companies and healthcare providers.

However, the initiative does not specify what type of measures the authorities should take to control costs. Should the idea be accepted by voters, the details would be decided by parliament in the implementing legislation.

What does the counter-proposal say?

The Swiss government and parliament are opposed to the Centre’s text and have drawn up a so-called indirect counter-proposal. This will come into force if the initiative is rejected by voters, provided it is not challenged in another referendum.

Instead of a cost brake, the government suggests defining targets to control the cost of compulsory health insurance. Under this system, federal and cantonal authorities would set goals for the maximum growth in spending each year.

If these goals were exceeded, the authorities would then have to decide on the necessary measures, working together with the various partners involved. Such measures could involve an adjustment of premiums or the authorisation of service providers.

Both government and parliament believe that the counter-proposal would enable a systematic reflection on cost increases. “All players would have to do their bit to reduce services which are not medically necessary,” they reckon.

What are the arguments for the initiative?

The Centre is presenting its text as the answer to rein in ballooning health costs and ever-pricier premium payments.

The party believes a cost brake would force all players in the healthcare system to work together to implement measures that have already been on the table for a long time: for example, encouraging more outpatient procedures, favouring generic drugs and digitalising patient files. 

The Centre is convinced that its initiative will help solve the problem without reducing services or jeopardising the quality of the Swiss health-care system.

And the arguments against?

An opposition committee made up of several organisations from the sector says it is absurd and dangerous to link health spending to the country’s economic situation. As it points out, public health tends to suffer precisely at times of an economic downturn.

The initiative’s detractors also fear that, in order to drive down costs, authorities will cut back on services covered by the basic insurance. Policy-holders would thus not pay less for their health insurance, but the kinds of treatment covered would be reduced and long waiting times would result, they claim.

The committee warns that the initiative could lead to a two-tier system of health coverage, leaving those unable to afford good medical treatment out in the cold.

Who is for and who against?

Neither left- nor right-wing parties have been won over by the Centre’s initiative. The Social Democrats and the Greens are against it, as are the Swiss People’s Party and the Radical-Liberals.

Edited by Samuel Jaberg. Adapted from French by Julia Bassam/dos

>> On June 9, Swiss voters will also decide on a left-wing idea to ease the healthcare cost burden; read more below.