Background Brief
(Click here for Resources)
Unlike many of its neighbors in Europe, Switzerland did not have universal coverage until recently. For most of the 20th century, Swiss citizens received health coverage through employer sponsored plans with nonprofit insurers. By the 1980s, however, consolidation in the health insurance industry led to less competition and fewer nonprofit insurers. As a result, insurance costs increased, leaving 5% of Swiss citizens without health coverage by 1993. [1]
In 1993 the Swiss government established a commission to examine the problem of rising health care costs and inadequate coverage. The Federal Health Insurance Act of 1999, or Loi Federale sur L’Assurance Maladies (LAMal), was the result of this commission. The commission recommended a transition to a Bismarckian system like those in Germany and France relying on private nonprofit health insurance plans. [2]
The new insurance law called for compulsory health insurance for all Swiss, an individual health insurance mandate, with standardized benefits administered by private insurers and divorced from employment status. Furthermore, the law required that these plans be nonprofit. LAMal passed in 1996 and today covers more than 99% of Swiss citizens. [3]
LAMal is structurally similar to German health care where universal coverage is achieved through a multipayer, private, nonprofit insurance system. Switzerland, however, takes a more market oriented approach of managed competition that leaves the provision of health care and insurance in private hands but creates a regulated framework for the marketplace. Citizens of Switzerland can choose among over 70 different standardized insurance plans and are also able to switch between them. As a result, Swiss insurers compete over customers in order to expand their risk pool. Those who do not enroll in a plan are assigned to one but coverage can be suspended if premiums are unpaid. Low-income individuals receive subsidies from the government to purchase health care. [4]
The Swiss health system is uniquely decentralized. Insurance plans are offered on a regional basis—each canton (Swiss state) has their own insurance plans. Although citizens are able to enroll in any plan they choose, location and convenience have arisen as limiting factors; most individuals choose a local insurance plan.
Switzerland compares favorably to OECD countries with regards to the availability to health care. There are 3.8 physicians, 3.5 hospital beds, and 14.1 nurses (most in the OECD) per 1,000 people in Switzerland. Switzerland ranks second only to the U.S. in terms of waiting times and the ability of patients to choose their physicians. [5] Additionally, insurers in Switzerland are not permitted to deny insurance applicants.
The standard, compulsory benefits package does not cover some forms of care, most notably dentistry. To receive coverage for dentistry and other services not provided in the compulsory package, individuals must enroll in supplemental plans on which insurers can profit, [6] as many as 40% of Swiss citizens have supplemental health insurance. [7]
Among developed countries, Switzerland spends one of the largest portions of GDP on health care at 11.5%. [8] Government expenditure accounts for 59.3% of the total while private expenditure makes up the rest. [9] Switzerland also has the highest out-of-pocket cost of health care of all OECD countries at $1,305 per capita, 50% more than America, the country with the next highest out-of-pocket costs. [10]
Copayments and deductibles are highly variable in LAMal. Patients have the option of enrolling in expensive policies with low deductibles and copayments or inexpensive policies with high deductibles and copayments. [11] Many Swiss opt for inexpensive policies; the main reason out-of-pocket pay is so high.
Similar to Germany, medical fees are negotiated between health care providers and insurers. Unlike Germany, however, Swiss employers rarely contribute to health care costs. Individuals are required to enroll in and finance their own healthcare while the government subsidizes additional expenditure needed for those who are unable to afford health care premiums. [12] More than a third of the population, low-income individuals, receives government subsidies to enroll in health care. The subsidies are designed so that no individual has to pay more than 10% of income in premiums and coverage the average premium cost in the individual’s canton. Health care premiums for children are generally a third of those for adults. [13]
Health insurance premiums are set by the insurers, a significant break from the German system. Additionally, insurers are legally permitted to charge different premiums on the basis of region and age. In other words, health insurance plans in certain cantons are more expensive. In 2009, the Commonwealth Fund found that the difference between premiums was as great as 89% between the cheapest and most expensive cantons. [14] Nonetheless, basic insurance providers must be nonprofit although the same regulation does not hold for supplemental insurance providers.
To mitigate financial stress on the cheaper insurance policy providers the Swiss government established a risk equalization system. The risk equalization system redistributes a portion of the total premium revenue among insurers according to age and gender mixes. This has the intended effect of providing financial protection for insurers who cover those portions of the population at greater medical risk. [15]
LAMal provides universal health coverage for every citizen of Switzerland. On average, patients stay in the hospital for 8.2 days compared with just 5.6 in the United States. The Swiss also spend the largest portion of health care expenditure on long-term care of any OECD country. [16] Most hospitals in Switzerland are public but there are some private hospitals which are covered through supplemental insurance policies.
The basic insurance benefits package covers diagnostic services, treatment for illness, accidents, physician services, maternity care, some alternative medicine, and some medication. Covered services must meet three standards as applied by the Commission on General Health, effectiveness, appropriateness, and cost-benefit efficiency. Dental care and long-term care are among the common, non-covered practices. [17]
[1] Reid, T. R. (2009). The Healing of America: a Global Quest for Better, Cheaper, Fairer Health Care.
[2] ibid.
[3] ibid.
[4] ibid.
[5] Anderson, G. F. and P. Markovich. (2008). Multinational Comparisons of Health Systems Data, 2008.
[6] Leu, R. E. et al. (January 2009). The Swiss and Dutch Health Insurance Systems: Universal Coverage and Regulated Competitive Insurance Markets.
[7] Tanner, M. (March 2008). The Grass is Not Always Greener: A Look at National Health Care Systems around the World.
[8] ibid.
[9] World Health Organization. World Health Statistics 2010.
[10] Anderson, G. F. and P. Markovich. (2008). Multinational Comparisons of Health Systems Data, 2008.
[11] Tanner, M. (March 2008). The Grass is Not Always Greener: A Look at National Health Care Systems around the World.
[12] Leu, R. E. et al. (January 2009). The Swiss and Dutch Health Insurance Systems: Universal Coverage and Regulated Competitive Insurance Markets.
[13] Rovener, J. (July 2008). In Switzerland, A Health Care Model for America?
[14] ibid.
[15] Leu, R. E. et al. (January 2009). The Swiss and Dutch Health Insurance Systems: Universal Coverage and Regulated Competitive Insurance Markets.
[16] Anderson, G. F. and P. Markovich. (2008). Multinational Comparisons of Health Systems Data, 2008.
[17] Tanner, M. (March 2008). The Grass is Not Always Greener: A Look at National Health Care Systems around the World.
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Resources
Anderson, G. F. and B. K. Frogner. (2008). Health Spending in OECD Countries: Obtaining Value Per Dollar. Health Affairs, 27.6: 1718-1727.
This article compares health expenditure among all the OECD countries.
Anderson, G. F. and P. Markovich. (2008). Multinational Comparisons of Health Systems Data, 2008. The Commonwealth Fund.
This Commonwealth Fund reports provides statistical comparisons of various health care systems on health care spending and access to care.
Leu, R. E. et al. (January 2009). The Swiss and Dutch Health Insurance Systems: Universal Coverage and Regulated Competitive Insurance Markets. The Commonwealth Fund.
This report provides a detailed description of the Swiss and Dutch health insurance systems.
Organisation for Economic Co-operation and Development. (October 2006). OECD Reviews of Health Systems-Switzerland.
This report analyzes the strengths and weaknesses of the Swiss health system and weighs them against key policy objectives.
Organisation for Economic Co-operation and Development. (October 2006). OECD and WHO Survey of Switzerland’s Health System.
This survey examines the high quality of health outcomes in Switzerland and their related cost.
Organisation for Economic Co-operation and Development. (July 2006). Sickness, Disability and Work (Vol.1): Norway, Poland, and Switzerland.
This comparative reports details sickness and disability policies in Norway, Poland, and Switzerland.
Paris, V. and E. Docteur. (June 2007). Pharmaceutical Pricing and Reimbursement Policies in Switzerland. Organisation for Economic Co-operation and Development.
This paper examines aspects of the policy environment and market characteristics of the Swiss pharmaceutical sector, and assesses the degree to which Switzerland has achieved certain policy goals.
Reid, T. R. (2009). The Healing of America: a Global Quest for Better, Cheaper, Fairer Health Care. New York: Penguin.
This book analyzes several international health systems and compares them with the American health care system in an effort to see where reform can be most effective.
Rovener, J. (July 2008). In Switzerland, A Health Care Model for America? National Public Radio.
This broadcast offers a first-hand perspective on the benefits of the Swiss health care system.
Tanner, M. (March 2008). The Grass is Not Always Greener: A Look at National Health Care Systems around the World. The CATO Institute, Policy Analysis, 613: 1-48.
This paper provides a comparative analysis and critique of several national health care systems around the world from the perspective a proponent of a market based approach.
Thorpe, K. E., D. H. Howard, and K. Galactinova. (October 2007). Differences in Disease Prevalence as a Source of the U.S.-European Health Care Spending Gap. Health Affairs, 26.6: 678-686.
This paper discusses differences in disease prevalence in the U.S. and European countries and how they may be a determining factor in the different levels of expenditure in these countries.
Woolhandler, S. and D. Himmelstein. (July/August 2002). Paying for National Health Insurance—And Not Getting It. Health Affairs, 21.4: 89-98.
This article examines tax-financed costs for health care in America and the cost of health care in Switzerland.
World Health Organization. World Health Statistics 2010.
This report provides extensive data on comparative health statistics for all 193 countries in the World Health Organization.
World Health Organization. (2006). Country Profiles-Switzerland.
This website provides data and statistics on various health indicators for the Swiss health system.
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