Is there an answer to Switzerland’s spiralling healthcare cost misery?

Rapidly rising health insurance prmiums have been a bitter pill to swallow. Keystone / Gaetan Bally

People living in Switzerland must swallow a bitter pill next year: health insurance premiums will rise by an average 8.7%. For many years, basic healthcare costs have risen above inflation. Why is this? And is there a way out of this vicious circle?

Switzerland is not alone in suffering a health hangover from the Covid-19 pandemic whilst grappling with the cost impact of an ageing population.

But the Swiss healthcare system also has unique home-grown issues that have given successive health ministers headaches.

Why the huge increase in 2024?

The 8.7% health insurance leap is particularly harsh even by recent standards. It is the highest annual jump since the 10.8% rise in 2010 – despite general inflation forecasts of just 2.2% this year and next.

Health insurance premiums will not cover the CHF35 billion ($38 billion) in healthcare costs this year, just as income fell short of expenses last year. In addition, badly performing financial markets have eaten a hole in the reserves of health insurance companies.

The cost of medicaments has risen 5.5% this year, the health ministry said. Bills from doctors and hospitals for treatment have also increased, thanks in part to a change to the tariff structure for hospital treatment in 2022 that caused in a delay in the issuance of many bills to this year.    

On top of this is an increase in outpatient treatments, such as physiotherapy and psychological support.

Can the health industry and government make savings?

The health ministry says it has “reduced drug prices by more than a billion [CHF] since 2012 and laboratory tariffs by 10%”, along with other savings.

Outgoing health Minister Alain Berset lamented parliament blocking or watering down some of his more ambitious savings proposals, such as referencing the price of drugs in Switzerland to other countries where they cost less. Powerful lobby groups, such as the pharmaceutical industry, are believed to have played a part in spiking health reforms.

He also aimed a parting shot at patients: “We must all consider whether a visit to the doctor is really necessary, and whether we can go to the family doctor first instead of immediately consulting an expensive specialist.”

There are a range of other cost saving suggestions from other sources than the health minister.

For example, the consumer price watchdog, Stefan Meierhans, believes Swiss health insurance should reimburse people who buy cheaper drugs abroad.

Martin Landolt, chair of the health insurance association SantéSuisse, told the Tages-Anzeiger newspaper that there are too many ineffective treatments being carried out in the health sector.

This has been a recurring theme in the Swiss media and parliament, along with complaints of some doctors being paid too much.  

Is the system broken?

Politicians, hospitals and insurers are voicing concerns about inefficiencies and wasted money – although they don’t all agree on how to fix these problems.

In the Blick newspaper, Anne-Geneviève Bütikor, Director of the hospital group H+, spoke of a handful of hospitals having to close down due to lack of funding. “If there are no overarching plans to adapt the system in the medium term, more will follow,” she warned.

Part of the problem is that cantons run and control state hospitals, according to Thomas Boyer, Director of health insurer Groupe Mutuel.

“They are in a position that smacks of a conflict of interest: they own hospitals, therefore they have a vested interest in ensuring their profitability. At the same time, they define the rate of reimbursement from bills issued to patients],” he told Swiss public television RTS earlier this year.

SantéSuisse chair Landolt suggests that the federal government should run the hospital system, rather than cantons.

The issue is a hot potato during general election year, with different parties presenting plans to reform the healthcare system and bring down insurance costs.

But health minister Berset is adamant that the “very good health system” does not need a radical overhaul. “With the exception of 1848 [a year of radical political reform in Switzerland], I have never been a supporter of revolutions,” he said. “There is no need for one now.”

How does the Swiss health system compare internationally?

Switzerland has the most expensive healthcare of the 38 Organisation for Economic Co-operation and Development (OECD) member states, according to the latest comparative figures published in the “Health at a Glance 2021” comparative study.

“On average, the same basket of [healthcare] goods and services would cost 72% more than the OECD average in Switzerland,” the report states. Running a hospital in Switzerland is more than twice as expensive than the OECD average.

The report also notes that Switzerland spends the third largest share of GDP (11.3%) on health than any OECD country, behind the US and Germany (OECD average 8.8%).

The Swiss population is more than satisfied with the “availability of quality healthcare where they live” compared to the majority of OECD countries. Some 91% of Swiss respondents are satisfied compared to an OECD average of 71%.

However, the Swiss Moneyland.ch price comparison website offers a caveat to this satisfaction in its own survey published in July. On a scale of one to ten, the 1,538 survey respondents gave health insurers a general mark of 7.9, which fell to 7.4 when assessing value for money.

Healthcare costs are often found among the top issues that Swiss people report to several media “Worry Barometers” surveys each year.

Will health premiums continue to outstrip inflation?

That’s one of the hardest questions to answer with any degree of accuracy but given the wide array of problems reported by professionals within the healthcare system, it remains a possibility.

“We need to deal with the problems of rising healthcare costs. It’s a real emergency,” Groupe Mutuel’s Thomas Boyer told RTS in the summer.

However, the FMH Association of Swiss Doctors insists that overall healthcare costs have only risen at a modest annual rate of 2.6% over the last 15 years. Health insurance premiums have risen at a far greater rate because the “antiquated” health insurance model is out of step with costs and the changing nature of treatments, which allow for more outpatient treatment, FMH says.

FMH has been holding talks with the health ministry and health insurers to thrash out a new model for funding healthcare costs and a new system to regulate billing by hospitals and doctors. FMH says this would better align healthcare costs with funding, taking some of the sting out of rising insurance premiums.

But the reform plans, which have been ongoing for some 14 years, have yet to bear fruit.