Why there are 250,000 different prices for one health insurance

Premiums have soared ever since compulsory basic health insurance was introduced in Switzerland in 1996. Rates have more than doubled while salaries have only gone up by 25% on average in the same time. Payments will rise once again for 2018 by around 4%.

Although the services provided by basic insurance are the same across Switzerland, the graphic below shows the disparities in the amount people are paying, depending on the canton where they live and the different insurers.

The graphic only shows a small section of the premiums on offer. When you take into account customer age and place of residence, and the different deductibles and insurance models, the Federal Health Office counts more than 250,000 different rates for basic insurance for 2018.

As basic insurance cover is identical among all insurers, the Swiss should in theory be choosing the cheapest. But that’s not the case. The number of customers changing insurers each year is relatively low, around 10%. 

According to the law, firms are not allowed to make a profit from basic health insurance. It’s not in insurers’ interest then to offer premiums much lower than the competition. The cheapest insurer, Assura, registered around 300,000 new customers in 2014 and 2015. It ended the 2015 reporting year with a loss of CHF258 million ($255 million) and felt the pressure to significantly increase its premiums in 2016.

Leftwing politicians regularly denounce the ‘pseudo competition’ in premiums. Voters also were called on to decide whether basic insurance should be managed by public organisations or a single insurer. All such initiatives were rejected, most recently in 2014, when a proposal to have one insurer per canton was turned down by 61% of Swiss voters.

Basic health insurance in compulsory for every resident of Switzerland. Premiums vary depending on the insurer, age and place of residence. Customers can pay a lower rate by choosing a higher excess or by limiting their choice of doctor. Those on welfare can pay a lower rate, supported by the state and fixed by their canton.

 

Translated from French by Jessica Dacey