Premium Relief Initiative

What is at issue?

The Premium Relief Initiative calls for insured persons in Switzerland to expend a maximum of 10% of their income on health insurance premiums. Any remaining portion of the premium costs should be financed through individual premium reductions (IPR). The initiative furthermore proposes that at least two-thirds of this amount to be funded by the Federal Government, with the remainder being covered by the Cantons.

The Federal Council and Parliament reject the initiative, but recognize that rising health insurance premiums are intensifying the burden on Swiss households. An Indirect Counterproposal to the initiative has been submitted 1) to address this problem, and 2) because Cantons have increasingly been withdrawing financing from IPR in recent years. The Counterproposal drafted by Parliament would require Cantons to allocate more funds for IPR and to specify the maximum percentage of insured persons’ disposable income that may be spent on basic health insurance (BHI). This calculation would be based on BHI premiums and the salaries of the 40% lowest income insured persons. Each Canton then sets the IPR to correspond with a minimum share of insured persons’ gross BHI premiums in that Canton. The higher the share of BHI premiums relative to income, the higher the minimum contribution; which is set at 3.5%-7.5%. The Counterproposal’s model would not increase the financial burden on the Federal Government.

Our Position

Rising basic health insurance premiums place a heavy burden on large sectors of the population. In principle, Swiss Medtech supports measures that help reduce rising healthcare costs. However, the emphasis should not be limited solely to cost factors, but must primarily address the quality of healthcare services and tackle existing problems at their roots.

The Premium Relief Initiative may seem appealing, but is not the correct strategy to eliminate disincentives in the system. Swiss Medtech is opposed to the initiative. It is simply a reallocation of resources and completely ignores effective cost-cutting measures. It merely addresses the symptoms. We are also concerned that the Federal Government would be responsible for financing the premium reduction although key cost-control elements of the healthcare system, such as hospital planning, are under cantonal jurisdiction. This approach creates no incentives for cost control.

Parliament’s Counterproposal offers a balanced alternative that does not place additional burden on the Federal Government and at the same time – though increased IPR from the Cantons – eases pressure on insured persons with lower incomes. This targeted measure is clearly preferable to the Premium Relief Initiative.

Arguments

Retain the tried and tested financing model
deductibles, and co-payments, and on the other hand from tax revenues. This system has proven its effectiveness. Progressive taxes together with IPR create a welcome social balance and generally result in affordable premiums for all households. Swiss Medtech therefore considers the Counterproposal’s expansion of premium reductions a sensible move. Currently, Cantons have far-reaching powers to determine their respective premium reductions. The initiative would change this and significantly curtail the autonomy of the Cantons. The initiators justify this in light of declining contributions to the IPR by some Cantons, a situation that would be addressed by the targeted solution of the Counterproposal.

Promote effective reforms
According to the initiative, a large portion of IPR funding would be borne by the Federal Government, while Cantons continue to be responsible for important cost-effective adjustments in healthcare. Under this distribution of roles, the Cantons would have little incentive to explore new approaches (for example, inter-cantonal hospital planning) which could slow the rise in costs. Swiss Medtech believes that rather than simply combating symptoms – as is the aim of the Premium Relief Initiative – targeted reforms are needed to eliminate disincentives in the Swiss healthcare system. Examples of such measures could include the uniform financing of outpatient and inpatient services (EFAS), adjustment of outdated tariffs, or digitalisation of the healthcare system; which must be advanced and accelerated.

Do not increase pressure on the federal budget
Acceptance of the initiative would lead to billions in additional annual expenditure (approx. CHF 4.5 billion) for the Federal Government and the Cantons. The resulting deficit in state finances (Confederation and Cantons) would consequently require compensation through tax increases or other levies. The reduction of basic healthcare premiums would either transfer the burden elsewhere, or generate more debt. This burden on public finances is not justifiable, especially as the initiative has no cost-reducing effect. Finally, the Initiative would also trigger more than double the expenditure for the Cantons than the targeted Counterproposal.