A unified health insurance fund: yes or no? We take a closer look at the arguments
Healthcare costs and premiums have been rising steadily in Switzerland for years, making a unified health insurance scheme sound like an appealing proposition. The Swiss electorate has already voted on the idea four times – but each time it has been clearly rejected. Now the demand is back on the table. Have the facts and figures changed? What would be the benefits of a unified health insurance fund? We sort through the facts.
What is a unified health insurance scheme?
In Switzerland, a number of insurance companies currently offer compulsory basic insurance. All offer the same benefits but different premiums, service and alternative insurance models (savings models).
A state unified health insurance scheme would replace the current system of multiple health insurers with one single health insurance fund. Advocates argue that a unified fund could reduce administrative costs and improve efficiency in the healthcare system. Opponents, on the other hand, fear increased red tape, longer waiting times and restrictions on policyholders’ freedom of choice.
Questions and answers about the unified insurance fund
Probably not. Healthcare costs account for 95% of health insurance premiums. These would still have to be covered by a unified health insurance fund – and a unified fund would not slow down the rise in healthcare costs. The remaining 5% are administrative costs incurred by health insurers. These would also apply to a unified fund – after all, this fund would still have to pay salaries, rents, IT costs, etc. As a result, a unified fund would only enable savings in the low single-digit percentage range, at the most.
Yes, but management salaries (executive board and board of directors) only account for around 0.85% of total premiums in Switzerland (Financial accounts and balance sheets Health insurers 2022). A unified fund with around 8.8 million policyholders would also need a very large number of employees, because the divisions with the most staff – customer service, benefits and IT – would still be needed. (In 2013, the Zurich University of Applied Sciences ZHAW estimated that the number of people who would be employed by a national unified health insurance fund would be roughly the same as under the current multi-insurance fund system.) Although the executive board of a unified health insurance fund would be smaller than that of all Swiss health insurers combined, it would have greater responsibility with so many policyholders, which would be reflected in executive salaries.
In addition, the salaries of health insurance bosses that are scrutinised by the media every year are paid not only from basic insurance premiums, but also from voluntary supplementary insurance.
What about advertising costs and commissions for intermediaries? These are also partly covered by supplementary insurance. The share from basic insurance accounts for around 0.3% of premiums on average (health insurers’ balance sheets and income statements, 2022). In addition, commissions are strictly regulated and capped in the industry agreement on intermediaries (“Branchenvereinbarung Vermittler”).
In return, you have freedom of choice and can switch if you are dissatisfied with the premium or service provided by your health insurance company. With a unified health insurance fund, this would only be possible if you moved to another canton (the 2014 initiative text proposed a standard premium for each canton). Competition between health insurers also drives efficiency, quality of service and innovation, for example in the premium-saving models segment.
Unified health insurance fund: unanswered questions and questionable role allocation
Until there is a vote initiative, this question cannot be clarified. However, it was also largely unanswered during the last vote on the unified fund in 2014. There was talk of a “single national public-sector body” with “cantonal or intercantonal agencies”. This wording leaves open several possibilities:
- an institution will be established to run the national unified health insurance fund in Switzerland and manage its operating business in 26 agencies in the cantons
- there will be 26 cantonal unified funds.
For context, as of 1 January 2024, 39 health insurers offer basic insurance in Switzerland. Some of them belong to the same corporate group and do not have their own employees or infrastructure. If these providers are excluded, 29 insurance companies remain, and this number is expected to decline further in the next few years. This means that introducing cantonal unified insurance funds or agencies would not result in fewer providers.
Health insurers are not interested in high premiums; they are not allowed to make any profit on basic insurance. Lobbyists, such as our industry association santésuisse, are even campaigning for lower costs and premiums. However, the different roles played by the cantons are already leading to conflicts of interest – see Misguided financial incentives and undesirable developments > Conflicts of interests for cantons. If the cantons were also appointed to operate the unified health insurance fund, it is likely that these conflicts would worsen, for example in the case of collective bargaining negotiations with cantonal hospitals: should tariffs increase so that the hospitals earn more money, or decrease so that the unified insurance fund has less to pay and premiums do not continue to rise? It is also important to realise that, while it is not permitted for basic insurance to generate profits, there is no restriction on hospitals doing so.
Large bureaucratic organisations are not particularly known for their speed and efficiency. For policyholders, this means that they would probably wait longer for their benefit statement. This is why many sectors – such as telecommunications – have been privatised. Would you like to see a state-owned mobile service provider that offers only a small number of tariffs and has no incentive to be the cheapest or most customer-friendly? Mobile phone tariffs would be comparable to insurance models here – such as the telmed, family doctor or HMO model.
In terms of prices, health insurance companies currently negotiate tariffs with hospitals and other service providers. They negotiate on how much a particular benefit may cost. This has a direct impact on your premium – because every health insurer wants to offer as much as possible while keeping premiums as low as possible, and therefore remain competitive. A unified insurance fund would not have this incentive.
The example of other countries shows that public health insurance systems are not necessarily better. In the UK, for example, treatment waiting times are very long, but spending is the same as in Switzerland (2022: 11.3% of gross domestic product, Statista: Health expenditure as a proportion of gross domestic product (GDP) 2022, in German).
Remember:
- It is already prohibited for health insurance companies to make any profits on basic insurance. Premiums are reviewed and approved annually by the Federal Office of Public Health (FOPH) and cannot be set arbitrarily by the health insurers. The premiums must cover the costs.
- Introducing a unified health insurance fund would initially cost a lot of money. In 2013, the ZHAW estimated this would amount to CHF 1.75 billion (Zürcher Hochschule für Angewandte Wissenschaften: Transition to a single health insurance fund: estimation of system change costs, in German). The roll-out would take a long time, and until its completion the two systems would run in parallel, resulting in double financing. This means that it would take a long time for the (marginal) savings effect of a unified fund to materialise. There are also legal issues that would need to be clarified in terms of further cost implications, such as expropriation and compensation for private health insurers.