Health insurance costs have been rising for many years. The resulting increase in premiums is causing discontent among insured persons, but also among health insurers, who are seeing their business undermined by somewhat inappropriate measures. Health insurers are campaigning for affordable premiums for their policyholders and are committed to curbing rising costs.
Health insurers have been hard hit by the unfavourable trend in costs and, consequently, in premiums, which has led to a loss of trust among their insured persons. Insureds are sometimes inclined to blame health insurers for the situation. In reality, health insurers have every interest in offering the lowest possible premiums for the best possible benefits, thanks to the system of regulated competition provided for in the AOS/OKP basic health insurance system. Otherwise, it will be difficult for insurers to grow their business or even maintain the number of insured persons.
Premium increases are a matter of costs, which evolve according to the following factors in particular:
- Growing demand for benefits and ageing of the population: The number of insured persons has increased (in 1996, the population in Switzerland was around 7 million, whereas it is around 9 million in 2023). The ageing of the population, the increase in chronic illnesses and the development of medicine have led to a greater demand for medical care and an expansion of the range of basic health insurance benefits.
- Increase in the number of healthcare providers authorised to bill the AOS/OKP basic insurance: Year after year, new healthcare providers have been authorised to bill under the LAMal/KVG compulsory health insurance. Since then, costs have risen steadily, which has resulted in high premiums. Today, 36% of people in Switzerland have their health insurance premiums subsidised by their canton of residence.
This upward spiral in costs is having a negative impact on the insurance market for several reasons:
- Insured persons are conditioned to choose insurance policies with more restrictive models: The standard health insurance model is now chosen by only a quarter of the population. High premiums have prompted policyholders to turn to alternative models, which are more affordable.
- Supplemental health insurance products are no longer accessible: High AOS/OKP basic health insurance premiums prevent policyholders from enjoying the enhanced coverage offered by supplemental health insurance.
The measures affecting the LAMal/KVG system are ineffective and counter-productive
High insurance premiums have led the legislator and the Swiss authorities to introduce corrective measures. However, some of these measures call the system into question and are damaging for both health insurers and policyholders. For example, the pressure put on insurers to reduce financial reserves has proved particularly inappropriate, since lowering reserves has reduced insurers' ability to make up for financial losses due to rising costs, and therefore to reduce premium increases by using financial reserves.
From now on, the supervisory authority will tolerate the setting of premiums based on a more optimistic estimate of future costs than in the past, with an increased risk that premiums will prove insufficient to cover actual costs. If this happens, health insurers will be obliged to increase the following year's premiums to cover the funding shortfall, if they cannot fund the difference by using their financial reserves.
State-run premiums managed by cantonal health insurance funds have no effect on health costs
On several occasions, it has been proposed that cantonal health insurance funds should be set up to take over the role of health insurers. This solution would eliminate the benefits of competition in a liberal healthcare system, such as a constant improvement in the services offered, without curbing costs. To date, these proposals have always been rejected.
Focus on preventive measures in healthcare
A global approach that incorporates prevention, rather than focussing on curative treatments, should make it possible to curb the unfavourable evolution of noncommunicable diseases (also known as chronic diseases). Several concepts are becoming reality. The patient is now at the centre of the care process.
In this context, insurers are becoming health partners, able to offer their insured persons support in terms of prevention. This new role could be supported by specific contracts lasting for more than one year.
Quality is becoming the norm, but more needs to be done
Since April 2021, insurers and healthcare providers have been signing high-quality contracts that oblige providers to deliver insured benefits of the required quality, in an efficient and cost-effective manner.
Unfortunately, over-medicalisation is still all too common and leads to unnecessary costs. Groupe Mutuel is therefore advocating for the introduction into the Swiss health system of the “Value-Based Health Care” reimbursement model, which has proved its worth in other countries.
The question of reducing the catalogue of benefits is a taboo subject that is beginning to be addressed timidly. This could be a promising way forward, but it will be very difficult to achieve because of the consensus that needs to be reached when it comes to redefining the scope of minimum healthcare coverage.
High AOS/OKP costs benefit no one. They lead to inappropriate measures that undermine the health insurance system, to the detriment of insured persons.
Only cost containment measures can have an impact on the level of health insurance premiums. Efforts are no longer focused solely on managing illnesses, but are being extended to managing health as a whole, by promoting preventive measures and improving the quality of benefits.