“The MHI [Mandatory Health Insurance] system as outlined by KVG/LAMal [Swiss Federal Health Insurance Law] is – at least to a certain extent – based on the concept of regulated competition (Enthoven, 1988). MHI companies compete in a highly regulated market by offering different MHI policies for a standard benefits package (section 3.3.1), which all residents have to purchase. MHI companies are not allowed to turn down applications from persons who want to purchase insurance and they may not make profits (nor losses) from providing MHI. Excess earnings have to be reinvested in the company and must benefit the insured.
“Resources are raised not only through MHI premiums but also through federal and cantonal taxes (see section 3.3.2). The Confederation plays a strong regulatory role (see section 2.8.1) in monitoring MHI activities and premium levels, in setting the framework for cantonal premium subsidies to low-income households (see section 3.3.3), and in determining the risk-adjustment mechanism (see section 3.3.3). Interactions between purchasers and providers (see section 3.3.4) are shaped by the corporatist tradition of collective contracts, and all providers that have been authorized by cantons (see section 2.8.2) are allowed to provide services reimbursable by MHI.”
Source: De Pietro C, Camenzind P, Sturny I, Crivelli L, Edwards-Garavoglia S, Spranger A, Wittenbecher F, Quentin W. Switzerland: Health system review. Health Systems in Transition, 2015; 17(4):1–288.
“Public expenditures on health stem from two main sources in Switzerland (see left-hand side of Fig. 3.5):
“1) General taxes raised by federal, cantonal or municipal governments (32.4% of THE); and
“2) Premiums paid either by MHI policy-holders (30.0% of THE) or by holders of other social health-related insurances (6.2% of THE, see section 3.6).
“Federal, cantonal and municipal taxes
“According to the Federal Constitution, each level of government, i.e. the Confederation, the canton and the municipality, is entitled to levy taxes on individuals and corporations living or operating in their territory. In addition, each level is free to set the rate of tax and to decide on its use, which implies that tax rates and spending differ considerably across Switzerland. For the federal level, VAT and the direct federal tax (a combination of income and corporate tax) are the two most important sources of revenue. For the cantons and municipalities, income tax and property tax on individuals and corporations make up the largest share of their revenues. The direct federal tax as well as income and property tax in most cantons are progressive, implying that a higher tax rate applies to individuals with higher income or more property. However, large differences exist concerning the level of progressivity in each canton.
“MHI premiums
“MHI companies collect the bulk of their resources through community-rated premiums from their insured individuals. Community rating implies that premiums have to be the same for each person taking out insurance with a particular MHI company within a canton or subregion2 of a canton independent of gender or health status of the insured person. Premiums are allowed to vary only by three age categories, with progressively higher premiums, for children (0–18 years), young adults (19–25) and adults (26 years and above). In addition, premiums are allowed to vary depending on the size of the deductible and for special managed care insurance models. Finally, individuals covered by mandatory accident insurance (see section 3.6) can receive a premium reduction. Premiums can be up to 50% lower in higher deductible plans, 50% being the legally defined upper limit for all deductible levels since 2010.”
Source: De Pietro C, Camenzind P, Sturny I, Crivelli L, Edwards-Garavoglia S, Spranger A, Wittenbecher F, Quentin W. Switzerland: Health system review. Health Systems in Transition, 2015; 17(4):1–288.
“For 2015, the FOPH has estimated that the median monthly premium in Switzerland for adults with minimum deductible (Sw.fr.300), standard insurance model, and accident coverage, was Sw.fr.406, with 5% of adults paying more than Sw.fr.529 and 5% paying less than Sw.fr.328 per month (FOPH, 2014k). Premiums often vary significantly between different MHI companies within one premium region. Insured persons may change MHI companies and policies in order to pay lower premiums or to obtain better conditions (more choice, better coordination, lower deductibles, etc.).
“MHI companies calculate their premiums based on estimates of effective (i.e. after correction of risk adjustment payments) average health care expenditure of people insured with a particular MHI policy in a particular canton or subregion of a canton. This means that cross-subsidization (or pooling) across cantons and across MHI policies is prevented. Premiums proposed by MHI companies are monitored by the FOPH and companies may have to change their premiums if they are found to be either too high or too low (see section 2.8.1).”
Source: De Pietro C, Camenzind P, Sturny I, Crivelli L, Edwards-Garavoglia S, Spranger A, Wittenbecher F, Quentin W. Switzerland: Health system review. Health Systems in Transition, 2015; 17(4):1–288.
“In 2012, a total amount of almost Sw.fr.4 billion was paid by cantons (with co-financing from the Confederation) for premium subsidies. The size of the federal contribution for premium subsidies is fixed at 7.5% of the estimated MHI (gross) costs in a given year, i.e. the sum of total MHI premiums and the cost-sharing payments of the insured. The federal contribution is distributed to individual cantons on the basis of population size. In order to receive federal subsidies, cantons must themselves pay a minimum amount. However, beyond this minimum amount, cantons are relatively free to choose the size of the cantonal budget available for premium subsidies. In 2012, premium subsidies amounted to SW.fr.3968 million (or 16.3% of total MHI revenues, see Table 3.4), which were co-financed by the Confederation’s budget (54.2% of total subsidies) and by cantonal budgets (45.8%) but with large variation across cantons.
“The number of individuals receiving premium subsidies and paying only a reduced premium or no premium at all has remained relatively stable at around 2.3 million, corresponding to 29.0% of the Swiss population in 2012 (see Table 3.4). About 0.5 to 0.6 million people are estimated to pay no premium at all, although the exact number of persons or households is unknown.”
Source: De Pietro C, Camenzind P, Sturny I, Crivelli L, Edwards-Garavoglia S, Spranger A, Wittenbecher F, Quentin W. Switzerland: Health system review. Health Systems in Transition, 2015; 17(4):1–288.
“Since 2011, premium subsidies are paid by all cantons directly to MHI companies. Eligibility criteria for subsidies can differ substantially between cantons, contributing to horizontal inequities in financing (see section 7.2.2). Some cantons fix the maximum contribution for individuals as a percentage of taxable income (for example, 10%), while other cantons define income classes with different fixed amounts of subsidies. Still other cantons apply a mix of these models or something else (for an overview of the 2012 cantonal systems, see Bieri and Köchli (2013)). For people on very low incomes, the entire premium or a cantonal reference premium, whichever is smaller, is paid directly by the municipal or cantonal authorities.
“Only for children (≤18) and young adults (≤25) in training, premium subsidies have been somewhat standardized: cantons are mandated by law to reduce premiums for both groups by 50% for lower- and middle-income households. However, cantons can still determine the thresholds used to define lower- and middle-income. According to an impact evaluation of the subsidy policy, the remaining premiums paid by eligible individuals in 2010 amounted to between 5% and 14% of their income, depending on the canton and its eligibility criteria (Kägi et al., 2012).”
Source: De Pietro C, Camenzind P, Sturny I, Crivelli L, Edwards-Garavoglia S, Spranger A, Wittenbecher F, Quentin W. Switzerland: Health system review. Health Systems in Transition, 2015; 17(4):1–288.
“In 2014, public spending covered 66% of total spending on health, while OOP payments and VHI accounted for 26.8 and 7.4%, respectively (WHO, 2016). Public spending includes mandatory private health insurance under the Health Insurance Act (Krankenversicherungsgesetz), which is regarded by the authorities as a social insurance system (Federal Statistical Office, 2015).”
Source: Viktor von Wyl and Konstantin Beck. “Switzerland.” In Voluntary health insurance in Europe: Country experience [Internet]. Sagan A, Thomson S, editors. Copenhagen (Denmark): European Observatory on Health Systems and Policies; 2016. Observatory Studies Series, No. 42.
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Page last updated October 7, 2023 by Doug McVay, Editor.
