Exploding healthcare costs: What can and must Switzerland afford?

On 24 November 2024, the Swiss people will vote on the uniform financing of outpatient and inpatient care (EFAS). Opinions regarding a premium increase or decrease vary widely. The only certainty is that health insurance premiums will rise by an average of 6 % next year. In an interview with the NZZ am Sonntag, Felix Schneuwly from Comparis spoke of a significant potential for savings, particularly for large funds. The National Council’s health committee plans to limit managers‘ salaries.

thebroker talks to health expert and president of the Alliance for a Free Health System, Felix Schneuwly, about which measures would bring effective savings.

What potential advantages and disadvantages do you see in the uniform financing of outpatient and inpatient care?

The advantage is that the trend towards more outpatient treatment would no longer be financed one-sidedly with premiums. The disadvantage is that the cantons are calling for even more state planning, although in recent years this has merely inflated bureaucracy and exacerbated the shortage of skilled workers, medicines and medical products.

How do you think premiums will develop if uniform financing is introduced?

First of all, it should be noted that the last three premium shocks of 6.6 % (2022/23), 8.7 % (2023/24) and 6 % (2024/25) had nothing to do with rising costs, but with the politically enforced reduction in reserves, because every massive reduction in reserves and too low premiums are followed by premium shocks. Before Alain Berset, Pascal Couchepin and Ruth Dreifuss had already made this mistake. It is scandalous that politicians do not learn from their mistakes and that the media do not look more closely.

Without these avoidable premium shocks, premiums would have risen by just under 3 % per year in recent years. With EFAS, 2.5 % is realistic. EFAS is necessary but it is not a miracle cure. Two things are important for effective cost containment without rationing: firstly, the tariff agreements must stipulate precisely how the funds must control invoices so that they only pay for effective, appropriate and economical medicine, as required by the Federal Health Insurance Act (KVG) since it came into force in 1996. Secondly, for appropriate tariffs – the KVG has also required this since 1996 – the quality of the indication and the therapy goals achieved must also play a role alongside the ‘chargeable costs’, so that there is no more money for superfluous and poor-quality medicine.

In your opinion, are the high advertising and marketing costs of health insurers justified? What alternatives are there?

Capping is fundamentally problematic. This applies equally to capped CEO and doctor salaries and to the funds spent by the health insurance companies on acquiring customers. No sooner have the funds capped the agent commissions, in a cartel that has now been legalised by the Federal Council (Bundesrat), than the capping of advertising expenditure, or even an advertising advance, is being demanded. According to the Supervision Act, the administrative costs as a whole must be ‘economical’. Every insurer must have the freedom to decide for itself where it invests in order to be competitive. Thanks to their freedom of choice, the insured decide which insurers are successful and which are not. No insured person has to stay with a fund that pays the CEO too much or spends too much money on new customers. All the well-intentioned caps are micromanagement that merely inflates the costs of bureaucracy and shifts spending to areas that are not capped.

Incidentally, the Federal Financial Market Supervisory Authority FINMA’s regulation of brokers is also harmful. This is collective punishment for all insurance brokers. It would be more effective and less bureaucratic if FINMA were to withdraw the accreditation of brokers who do not comply with the law and rip people off. That’s exactly what FINMA has never done.

How effective are the legal measures for limiting administrative costs and management salaries in reality?

Thanks to their freedom of choice, the insured decide which insurers are successful and which are not. No insured person has to stay with an insurer that pays the CEO too much or spends too much money on new customers. All the well-intentioned caps are micromanagement that merely inflates the costs of bureaucracy and shifts spending to areas that are not capped. Google, Facebook and other corporations benefit from this, not the insured.

Do you believe that a single health insurer would really lead to a significant reduction in administrative costs?

I don’t believe anything, I base my decisions on facts. Comparis surveyed the insured in spring. Over 70 % want a single health insurer and thus save at least 10 % on premiums. That is not realistic in view of the administrative costs of 4.9 % of the premiums. That is why more than 70 % of those surveyed want to test the single health insurer in one canton and compare it with the competition in the rest of Switzerland. With these test results, I would be quite relaxed about a fifth vote on a single health insurer.

Which specific measures to contain costs in the healthcare system do you consider to be most effective?

For years, everyone from left to right has been talking about the wrong incentives that need to be eliminated. Since 2012, however, the opposite has been done under Health Minister Alain Berset. The only exception is the improved risk equalisation. As I said before, we need clear provisions in the tariff agreements regarding the WZW-compliant admission to the catalogue of compulsory services, as well as invoice controls and the remuneration of treatment successes, so that efficiency and quality are finally more worthwhile than quantity. The alternative insurance models (AVM), which now cover almost 80 % of the insured, already provide a good basis for this. A little more leeway for the AVM contractual partners would be helpful, for example, for the insured, voluntarily selectable multi-year contracts, more leeway and less diploma fetishism in the deployment of healthcare professionals, as well as in the compulsory services and in the calculation of premiums.

How do you assess the decision of the health insurance funds (CSS and Helsana) to participate in specialised Spitex organisations through subsidiaries?

You can’t criticise the role conflicts of the cantons and then get involved in similar role conflicts yourself as an insurer with holdings in service provider companies. In AVM with quality and cost responsibility, it makes sense for the funds to participate in medical care networks.

Could the rising costs of caring for relatives really lead to a significant increase in health insurance premiums?

The main problem is not the costs and premiums, but the role conflicts of relatives. I wouldn’t want to get paid for caring for my wife, because as a couple we shouldn’t let third parties pay for our mutual support, because whoever pays also calls the shots.

Do you see any alternative models that fairly remunerate family care without placing a heavy burden on health insurance premiums?

Yes, those who care for relatives should receive care credits in order to be able to cover all or part of their own care needs later on. I also think tax relief is worth considering.

What do you think of closing unprofitable hospitals and focusing more on centres of excellence?

That was the idea behind the new hospital financing system that came into force in 2012. Unfortunately, the cantons have covered the deficits of inefficient hospitals. However, anyone who thinks that the hospital crisis can be ended with even more planning and subsidies is mistaken, because the shortage of skilled workers has now become the limiting factor, rather than the tax money that is still flowing in abundance to loss-making hospitals. And we all have to take a good look at ourselves, because we keep supporting this system when we vote and go to the polls. We need transparency in terms of costs and quality, because nothing is more expensive than bad and unnecessary medicine. On the basis of this transparency, the cantons should at least put their service contracts out to tender nationally, or even better internationally, so that the best hospitals actually get the contracts. If, under these conditions, care is jeopardised in a remote area, the canton should use taxpayers‘ money to ensure that the population receives the care they want, according to the principle of “he who pays the piper calls the tune”.

Countries such as Sweden, Japan and Singapore are said to provide the best medical care in the world. Which aspects of these countries, if any, could Swiss health insurance companies learn from?

The legal frameworks of these countries are very different. Medical care is cheaper in industrialised countries where individual preferences are given less consideration and waiting times are longer than in Switzerland. The population of Horgen has so far rejected every system change towards more state or more market, including on 9 June. Only the strengthening of complementary and family medicine as well as nursing care was approved by a clear majority. So if we respect the will of the people, we have to strengthen regulated competition under the KVG and strengthen incentives for individual financing of care in old age. In the areas of old-age pensions and health, too many politicians are promising us security of provision with other people’s money. The younger generations have not yet grasped that they will be footing the bill.

The topic of personal responsibility is very popular. What do you think of the Sanitas CEO’s idea of applying the Singapore system, where citizens save for themselves to finance medical care and get money back if they lead a healthy lifestyle?

In our system, this would mean a lifetime deductible in place of the annual deductible. Like all ideas that promote a balance between personal responsibility and solidarity, it is worth considering. Because the deductibles have not been adjusted to the cost and premium growth in recent years, they have lost their effect and upset the balance.

A hypothetical question to conclude: if you could decide and rebuild the entire healthcare system from scratch according to your ideas, what would you do?

I would scrap the harmful, planned-economy KVG reforms of the last 12 years, go back to regulated competition, demand clear contractual solutions from the collective bargaining partners in the areas of WZW and quality transparency, and give the AVM contractual partners more entrepreneurial freedom so that the efficiency and quality of the insured medical services are more worthwhile than quantity. Then people who voluntarily opt for standard basic insurance with direct access to specialists, emergency hospital treatment and multiple examinations would have to pay significantly higher premiums.

Felix Schneuwly, 64, lic. phil I / Executive MBA, studied psychology, career counselling and journalism at the University of Fribourg after completing an apprenticeship as a plumber in Courtaman (Canton Fribourg) and graduating from high school in Bern. He then worked in Bern as managing director of the Federation ation of Swiss Psychologists (FSP) and the Swiss Federation of the Blind and Partially Sighted (SBV) with an extra-occupational further education to gain an Executive MBA. He then worked in Solothurn and Bern as Head of Politics and Communication for the Association of Swiss Health Insurers santésuisse. Since 2011, he has been Head of Public Affairs and Health Insurance Expert at the internet comparison service comparis.ch AG in Zurich.

Also read: EFAS-Vorlage: Bessere Versorgungsqualität und Kosteneinsparung?