CHAPTER EIGHT
SWITZERLAND
The Swiss love their health care system. They can choose any doctor and any hospital in the country. There are no wait times. And there is a sense that the system delivers “Swiss quality.” Yet over and over, in side comments and undertones, everyone—from physicians to health policy experts to government officials to average citizens—expressed an uneasy feeling best summarized by one health expert this way:
[Every year] the canton has to pay more and more and more. Somehow, sometime, the system will crack because nobody will be able to pay the premiums and costs anymore.… Sooner or later the system will crack, but nobody cares as usual. We are on a comfortable train running fast toward the wall, and nobody cares because everything is running fine—now.
The Swiss health care system is often lauded as one of “the best” in the world. Its universal health insurance mandate satisfies liberal goals of universal coverage, while its reliance on private insurance, decentralized regulation through cantons (akin to states or provinces), and extensive patient choice appeal to more conservative beliefs. Patient satisfaction is impressively high, and the system performs well on various public health and quality metrics.
However, the system’s most appealing characteristics—including the requirement for insurance, the canton-level regulation of most activities, and extensive choice with limited gatekeeping and care management—are also responsible for its most serious problems: high costs, complexity, lack of focus on chronic care coordination, and impediments to systemic reform.
Everyone I interviewed in Switzerland agreed that Swiss health care is too expensive, but no key player—insurers, physicians, or patients—seems willing to give up their advantage or access in order to reduce costs. Additionally, the system’s complexity is also becoming its most well-known attribute. As one physician explained, “Every time I speak about the Swiss system, everyone says, ‘Oh my god, it’s so complicated. How can you work with that?’”
Even though these challenges are all known, reform is still proving hard to achieve. In its Health 2020 report the Swiss federal government acknowledges that “in the coming years, our health system will be confronted with numerous challenges which could call into question what has been achieved so far.”
HISTORY
The history of the Swiss health care system is one of progressive federalization. Until the late 19th century, regulation of what few health care services existed rested almost entirely with the 26 cantons. The first Federal Constitution of 1848 mentioned only sanitary measures during epidemics as a federal—or Confederation—responsibility; all other services fell under the jurisdiction of each canton.
After a cholera pandemic in the mid-19th century, the federal government decided that something more had to be done. In rapid succession a myriad of federal laws was passed to begin improving health care services. In 1877, a federal law standardized the qualifying examinations for doctors, pharmacists, and veterinarians. In 1893, the predecessor to the Federal Office of Public Health (FOPH) was founded. And in 1890, the Confederation was given a constitutional mandate to create sickness and accident insurance. However, the first attempt to do so in 1900 failed, when a popular referendum rejected a draft law.
At the turn of the 20th century fewer than 15% of the population was insured. The existing insurance was based on trade union membership, employer, or religious affiliation. Most insurers were very small, with fewer than 100 members, and half operated in just one municipality. These insurance schemes were less health insurance than mechanisms to provide financial support for lost wages due to illnesses, occupational accidents, or death. Given most insurers’ small and selective nature, there existed little coordination between groups and practically no consistent method for establishing premiums.
In 1911, the Swiss Confederation successfully passed the first Federal Law on Sickness and Accident Insurance (KUVG/LAMA). The law required health insurance funds that wished to receive federal subsidies to: (1) register with the Federal Office for Social Insurance, (2) be not for profit, (3) provide a standardized benefit package, and 4) calculate individual premiums based on members’ age of entry and sex. Cantons were empowered with the responsibility to mandate insurance.
LAMA did not standardize premiums across the cantons, nor did it prohibit discrimination against preexisting conditions. Consequently, premium prices varied greatly. For instance, women paid up to 10% more than men. In addition, there was substantial adverse selection. Insurers with a higher proportion of high-risk members charged higher premiums, creating death spirals that forced many insurance companies to merge or file for bankruptcy. Health insurance could also not be carried over if a member switched their canton of residence or employment.
Beginning in the 1960s, health care costs increased significantly. All attempts by the Confederation to amend LAMA failed. Finally, in 1994, the Confederation successfully passed the new Federal Health Insurance Law (abbreviated LAMal in French and KVG in German). LAMal was then implemented in 1996 as Switzerland’s principal health insurance framework. LAMal had 4 aims: (1) achieve universal coverage, (2) ensure affordability via premium subsidies for low-income individuals, (3) curb health care costs, and (4) expand the benefit package.
In April 2014, a proposal to amend the Federal Constitution was accepted by public referendum, thereby explicitly listing health care provision as a federal co-responsibility with cantons. This was the first time the Confederation was constitutionally empowered with the responsibility of providing health care. This legislation embodied Switzerland’s increasing federalization of health policy.
Today, at the federal level, the Federal Department of Home Affairs (FDHA) is the final authority for decisions concerning the Swiss health care system’s daily functioning. Within the FDHA the Federal Office of Public Health (FOPH) is responsible for the development of health policy, insurance regulations, and mandatory health insurance supervision. The FOPH specifies which services mandatory health insurers cover, provides federal premium subsidies to cantons, and drafts laws regarding the training of health professionals. The FOPH is also involved in consumer protection, infectious disease control, and disease surveillance. The FDHA also has a role in determining reimbursement levels for services and the pricing of pharmaceuticals.
Swiss patients have an almost unrestricted choice of insurer, hospital, and physician. Oversight and decision-making power are shared in complex ways among the Confederation (federal government), cantons (states), and municipalities as well as recognized associations of insurers and providers. In addition, the Swiss public can veto health care legislation or demand reform through the public referendum process. This has created a system that is not well coordinated at any level and is slow to change and innovate. For instance, only within the last few years has Switzerland adopted DRG-type payments for hospitals, something almost every other developed country has long since instituted.
COVERAGE
Switzerland is a country of 26 cantons, with 8.4 million people, and has 99.5% health coverage through private, not-for-profit health insurance companies.
Mandatory Basic Health Insurance
Enacted in 1994, the Federal Health Insurance Law (LAMal) created an individual mandate for health insurance. Every Swiss resident and nonresident with regular income-generating activity is required to be enrolled in a health insurance plan. Individuals are free to choose any insurer operating in their canton. They can switch insurers up to twice a year. Individuals who do not select a health insurance plan or do not pay their premiums face severe repercussions. The government can withhold wages to pay the premium—and charge up to a 50% penalty. In addition, cantons can enroll individuals who do not purchase insurance in a plan and force them to pay the premiums.
Figure 1. Health Care Coverage (Switzerland)
Recently, however, Switzerland has mitigated the financial stress that mandatory enrollment might cause. In 2010, cantons began paying 85% of unpaid premiums and other debts to insurers on behalf of their beneficiaries. Individuals who forgo paying their insurance bills are asked to refund insurers as soon as possible, but they do not need to give up their health care services.
When the Swiss choose a health insurance plan, they have 4 options. They can choose a basic plan, which typically has low deductibles and co-pays but higher premiums. Just over 20% of the insured opt for this. Alternatively, they can choose a managed care plan, in which they will receive a reduced premium in exchange for restrictions on their choice of providers. Managed care plans now dominate the insurance market, with more than 60% of the insured opting for them. Third, they may choose a high-deductible plan for a lower premium. High-deductible plans cover just over 15% of the insured. Finally, the Swiss can choose a bonus insurance plan that allows individuals who do not make a claim in a particular year to obtain a premium reduction the following year. Bonus insurance plans represent a negligible percentage of the market.
By law cantons must subsidize low-income individuals to buy insurance. All cantons pay the subsidies directly to mandatory health insurance companies. In addition, cantons must subsidize by at least 50% of the premiums for all children under 18 and young adults aged 18 to 25 of low- and middle-income families. However, cantons have the authority to determine the income thresholds for which households qualify as low or middle income. The sum of a family’s out-of-pocket payments for their children must not exceed the cap set for an adult’s deductible and cost sharing of $1,020 USD (CHF 1,000).
Since 2001, the federal government has allocated its funds based on the level of subsidies paid by the canton. It makes 7.5% of estimated mandatory health insurance costs in a given year available to each canton to be used to finance the premium subsidies for children and young adults.
All mandatory health insurers are required to cover all services included in the health insurance benefit package. This package covers most primary and specialist services as well as inpatient care and any physician-prescribed services unless explicitly excluded from the benefit package. With respect to hospital services, the benefit package covers the cost of treatment received in a shared ward. Drugs and devices must first be added to a “positive” list to qualify for payment by insurers. Some preventive measures, such as vaccinations for children and mammograms for women over 50, are covered free of cost. As is typical in many countries, dental care, eyeglasses, and prosthetics are not covered as part of the basic benefits package.
Several different government bodies decide which services are included in the benefit package, though final decisions rest with the FDHA. First, the Federal Commission for Medical Benefits and Basic Principles establishes criteria for the inclusion of benefits. The Federal Drug Commission advises the FDHA on pharmaceutical services to be included, and the Federal Commission for Analyses, Products, and Devices advises the FDHA on inclusion of medical devices. Finally, the FDHA decides the actual contents on the mandatory health insurance benefit package.
Although all services LAMal covers are expected to meet criteria of effectiveness, appropriateness, and efficacy, most (excluding drugs and devices) are not formally assessed. This has resulted in some services being included in the LAMal benefit package that have little scientifically proven value. For example, homeopathy and herbalism are covered only if qualified doctors perform them. Claudine Burton-Jeangros, a professor at the University of Geneva, argues that inclusion in the benefit package is more based on political influence than scientific evidence. She cites the inclusion, then removal of alternative medicine as an example, noting that when the lobbying winds shifted against alternative medicine, it was quickly dropped as a covered benefit.
Voluntary, Private Supplemental Insurance
Since 1996, insurers have supplemented their mandatory basic plans with voluntary, private supplemental products. By 2011, over 1,000 different supplementary health insurance products existed. Private insurance companies offered three-quarters of them, and mandatory health insurance companies offered the rest. The last available data (2012) suggests that nearly 55% of the Swiss population had a voluntary, private supplemental insurance plan.
There are 2 main types of voluntary supplemental health insurance: daily cash-benefit insurance and supplementary health insurance. Employers purchase daily cash-benefit insurance on behalf of employees to help them pay their employees’ wages during an illness or accident for a limited period of time. Supplementary health insurance, meanwhile, is usually purchased by individuals seeking enhanced benefits, such as private hospital rooms, dental care, or eyeglasses. Beginning in 2001, private voluntary health insurance plans have been prohibited from helping to cover the cost-sharing obligations of the mandatory basic insurance plans.
Insurers
There are about 90 insurers in the 26 Swiss cantons offering mandatory health insurance plans. These health insurers must be not for profit—that is, they cannot profit from the sale of their mandatory basic plans. However, these companies can be financially and legally affiliated with a for-profit insurer, and these “sister” companies can offer—for a profit—private supplementary health insurance policies that cover single rooms, choice of specialist, vision care, and the like. Thus, the public and private health insurance marketplaces frequently comingle.
All mandatory health insurers are members of at least one of the following 3 associations: Santesuisse, Curafutura, and RVK. Of the 3, Santesuisse is the largest organization and represents all mandatory health insurers’ political interests. It has significant clout, as it is a shareholder of Swiss DRG SA, the company responsible for developing the hospital reimbursement system. It is also a partner with TARMED Suisse, a company responsible for developing the ambulatory physician fee schedule. Curafutura was founded in 2013, when 4 large mandatory health insurers left Santesuisse and banded together to create a new organization. Finally, RVK represents small and medium insurers; members of RVK are usually also members of Santesuisse.
In 2014, the Federal Law on the Supervision of Mandatory Health Insurance (KVAG/LSAMal) gave the FOPH the power to oversee insurers and intervene on premium pricing. However, in a country known for its financial secrecy, little transparency is actually required of insurers. Hence, neither the government nor the citizenry know much about the flow of resources, which services are turning a profit, the extent of insurers’ financial reserves, or whether margins come from the nonprofit or for-profit arms of insurance companies. There is little political will to force insurers to be more transparent in their finances, as over 35% of politicians also serve on the boards of the health insurance companies.
Switzerland’s LAMal coordinates with 3 other social insurance schemes: accident insurance, disability insurance, and military insurance. All workers receive employer-sponsored accident insurance under the Federal Law on Accident Insurance (LAA). Disability insurance is provided under the Law on Disability Insurance (LAI). Cantons administer benefits for the elderly and the disabled. Military insurance was established in 1852 and covers all individuals employed in defense or security positions. These plans cover disability insurance, compensation for loss of income due to accidents or illness, and retirement accommodations.
FINANCING
In 2016, the last year with reliable data, Switzerland spent over $82 billion (CHF 80 billion) on health care, or 12.2% of GDP. This translates to about $9,700 USD (CHF 9,500) per capita. Importantly, per capita spending varies twofold from canton to canton. Switzerland has one of the highest levels of out-of-pocket health care spending in the world.
Figure 2. Financing Health Care: Statutory Health Insurance (Switzerland)
Mandatory Basic Health Insurance
Funding for mandatory health insurance in Switzerland comes from 3 sources: (1) individual insurance premiums, (2) canton subsidies for individuals, and (3) individual out-of-pocket costs.
All individuals must purchase mandatory basic health insurance. The premiums for these plans are community rated with age banding. Progressively higher premiums apply to the following 3 age cohorts: 0–19, 19–26, and 26-plus. Although all mandatory health insurers must offer the exact same benefit package, there exist large variations in premiums between cantons and between insurers within cantons. Insurers collect premiums. To minimize cherry-picking, there is a mandatory risk-equalization mechanism among all insurers within a given canton that considers the age, gender, prior hospitalizations, and pharmaceutical expenditures of each insurer’s beneficiaries.
In 2012, $4.05 billion USD (CHF 4.00 billion) was paid in premium subsidies for children and low- and middle-income individuals. Fully 54.2% of the subsidies were financed by the Confederation’s budget and 45.8% by cantonal budgets. This was then distributed to 2.3 million (27% of the country) subsidy-eligible beneficiaries, about 0.6 million of whom are estimated to have paid no premiums at all. Several factors—such as the subsidy amount, eligibility, income thresholds to receive subsidies, and the process for applying for subsidies—vary by canton.
All government funding of health insurance subsidies and health care services comes from general taxes. There are no specific taxes earmarked for health care. Individuals do not receive any tax benefits—analogous to the US tax exclusion—to offset the purchase of health insurance. Thus, health care financing overall remains regressive: the middle class and low-income individuals pay the same premiums, deductibles, and co-pays as high-income individuals, despite their different incomes.
Even with subsidies, many low-income individuals contribute a greater percentage of their income to health care than higher-income individuals. Since 2000, premiums have doubled, but Swiss salaries have increased by only 22%. Estimates suggest that by 2030 the average Swiss household may spend 11% of its monthly income on health insurance, compared to just 6% today. Over one-quarter of the population needs governmental assistance to pay their premiums. In 2016, nearly $860 million USD (CHF 843 million), or 1%, in premiums was not paid. In 2016, 22% of all Swiss residents went without needed care because of costs; this rate increased to 31% among low-income people. This has become an increasingly serious barrier to accessing care.
Voluntary, Private Supplemental Insurance
Individuals pay for voluntary supplementary health insurance themselves, with no subsidies or tax incentives. Voluntary health insurance represents 7.2% of total health care expenditures.
Cost Sharing
Besides premiums, individuals pay directly for services not included in the basic benefits package, such as vision and dental care. This amounts to nearly two-thirds of all private expenditures on health care. In addition, cost-sharing payments—deductibles and co-pays—contribute to 5.5% of total health expenditures.
For basic plans of mandatory health insurance, beneficiaries must pay the full cost of their health care until they reach their deductible, which varies from $306 USD (CHF 300) for the basic plan with greatest choice to $2,550 USD (CHF 2,500) for the high-deductible plan. Beyond deductibles, beneficiaries pay 10% of costs up to an annual cap of $357 USD (CHF 350) for children and $714 USD (CHF 700) for adults. They must also pay a fixed co-payment of $15 USD (CHF 15) for each day of inpatient care to cover meals, which one physician described as “a ridiculously small amount compared to what you really eat.” They are also responsible for a 10% coinsurance for all other services. Total out-of-pocket payments are capped at $1,020 USD (CHF 1,000) for the basic mandatory plans or $3,264 USD (CHF 3200) for high-deductible plans.
By international standards out of pocket payments in Switzerland are high, at $2,300 USD per capita and 28% of total health care expenditures. This is significantly higher than the average per capita out-of-pocket payment of $860 USD (CHF 840) in other developed countries.
Long-Term Care
Unlike the Netherlands and Germany, Switzerland has no mandatory long-term care insurance; rather, custodial care for the elderly is viewed primarily as a familial or individual responsibility. Municipalities, with some cantonal contribution, are primarily responsible for the public financing of long-term care. Overall, either public financing or social insurance covers about 40% of long-term care, with households paying for the remaining 60%.
The mandatory health insurance plan pays for nursing-home care at $9.14 USD (CHF 9) per day, with additional payments depending on the degree of care dependency. The maximum daily mandatory health insurance payment, for the highest degree of dependency, is $110 USD (CHF 108). If this does not cover the total costs, the patient pays up to 20% of the mandatory health insurer’s fixed daily contribution. The individual’s canton usually pays for any remainder.
Long-term care benefits may also be paid for by the federal law on Old Age and Survivors Insurance (AVS) or the federal law on Disability Insurance (AI) for the disabled elderly. Cash benefits are calculated based on prior salary level and cover the costs of rehabilitation, medical, and nursing services.
Nevertheless, because LAMal is a universal plan, it does cover some of the costs associated with long-term care. The insurance plan pays for medical costs incurred in nursing homes as well as some home health care expenses, though it does not pay for care with activities of daily living, such as assistance bathing, dressing, or eating. Reimbursement depends on the intensity of care and the out-of-pocket contributions of the individual.
Finally, living expenses provided to the elderly and the disabled under federal law may be used to subsidize the medical costs of care. These prestations complémentaires are means-tested benefits that correspond to living expenses, such as nursing homes and some home care costs, that are considered unaffordable for the individual. The monthly amount per individual is fixed by cantons for local nursing homes.
Public Health
As of 2012, 2.1% of all public expenditures on health went toward public health and prevention, a proportion that has declined recently. The responsibilities to oversee public health initiatives are split between the federal government and cantons. The FOPH develops national public health policy. At the cantonal level the Conference of the Cantonal Ministers of Public Health (GDK/CDS) coordinates the public health officials representing all 26 cantons.
Some public health and screening measures are covered under the mandatory health insurance benefits package. These include Pap smears, HIV tests, colonoscopies, mammograms, genetic counseling, and certain vaccines.
In 1989, the Conference of Cantonal Ministers of Public Health and the federal government created Health Promotion Switzerland, a foundation to run and evaluate health-promotion activities. It is financed through a mandatory annual deduction of $2.45 USD (CHF 2.40) from each insured person’s insurance contribution. In addition, public health services are often performed by nonprofit organizations contracted by cantons.
Mental Health
Because mental health services are provided by psychiatrists, psychotherapists, psychiatric day care units, specialized psychiatric hospitals, and psychosocial treatment centers, the data is relatively fragmented. Mandatory basic health insurance finances ambulatory psychiatric care, which is defined as psychiatric care provided by independent physicians. Ambulatory psychiatrists can provide care without a primary care physician referral, and mandatory health insurance reimburses them. However, a patient can only see a psychotherapist if a physician first refers them to a psychotherapist who practices in the same organization as the physician.
Cantons organize mental health care services and are responsible for funding about 50% of inpatient psychiatric care costs as well as most costs of long-term psychotherapy institutions.
PAYMENT
Payment for hospital inpatient care accounts for 32.9% of all health expenditures. The next largest spending area is for independent physician practices, at 22.0% of total expenditures, followed by long-term care (13.3%), retail medical drugs and devices (11.0%), hospital outpatient care (8.6%), prevention and administration (6.5%), and dental care (5.7%).
Hospitals
Hospital payment was reformed in 2012. Under mandatory basic health insurance, cantons must cover at least 55% of the cost of each inpatient case, with insurers providing a maximum of 45%. Hospital payment for mandatory health insurance is based on DRGs. The DRG rates are the result of a step-by-step process. First, the Swiss DRG—a joint institution of providers, insurers, and cantonal representatives—develops national recommendations for DRG reimbursements based on the data from 42 Swiss hospitals. These recommendations are then used as a starting framework in negotiations between hospitals and insurers within cantons to determine canton-based reimbursement rates. Finally, cantonal governments approve these rates.
Figure 3. Payment to Hospitals (Switzerland)
For private hospitals the government does not provide any funding. Instead, the mandatory health insurance pays the cantonal DRG for a patient’s care, and private, supplementary insurance pays all additional fees for the room, the surgeon, the food, and so on. Consequently, the majority of private hospitals’ revenue comes from supplementary health insurance.
Since 2012, patients can now choose any hospital outside their home canton so long as that hospital is included in the list of hospitals covered in the canton of treatment. Complicating the issue, reimbursement for the cost of treatment must not exceed the cost expected in the canton of residence. Thus, if a patient from a low-cost canton, such as Uri, receives treatment in a hospital in a high-cost canton, such as Geneva, the Geneva hospital gets paid a low amount.
There are no hospital budgets or limits on how many services a hospital can provide and, thus, how much revenue a hospital can generate.
Cantons are the owners of most public hospitals and determine hospitals’ capital costs for new buildings and equipment. Consequently, many cantons have a dedicated portion of their budget set aside for hospital infrastructure and equipment.
In 2018, the Swiss government introduced TARPSY (for “tarif” and “psychiatrique”), a new reimbursement scheme, known as a tariff structure, for inpatient mental health care. TARPSY is based on DRG and condition complexity is an attempt to increase comparability of services.
Ambulatory Physician Payment
As of 2012, approximately 22% of total health expenditures were for ambulatory care either in office-based practices or in physician offices affiliated with hospitals.
For all but managed care plans, insurers operate within their canton and are required by law to contract with “all willing providers” in that canton. This precludes creating any kind of network of providers based on lower negotiated fees or higher quality except for managed care plans, where the beneficiaries agree to only use insurer-designated providers.
Since 2004, within mandatory health insurance plans, physicians have a nationally agreed-upon payment level—called a tariff structure—that determines the insurance payment for services provided. Analogous to RVUs in the United States, this unified tariff system, known as TARMED (Tarif Médical), specifies a number of points for each type of service. The number of points is based on the resources that the service is expected to consume. For mandatory health insurers the monetary value of each point—namely, how many Swiss francs each point is worth—is negotiated at the canton level between associations of insurers and associations of physicians. In 2010, Tarifsuisse SA was created; it represents 75% of mandatory health insurers in these insurer-physician negotiations. For instance, under TARMED the rate for a primary care physician visit is $15.30 USD (CHF 15.00) per 5 minutes, not including any procedures or medications.
Figure 4. Payment to Ambulatory Physicians (Switzerland)
Because of rapid cost increases, the Swiss government announced in 2017 that it would change the ambulatory care payment structure. Payments for specific high-volume specialty procedures—such as cataract operations, colonoscopies, and radiotherapy—will be reduced by 10%. This is projected to save over $408 million USD (CHF 400 million).
Hospital-based providers represent about 45% of Swiss physicians. They are salaried; their hospital determines their pay. Pharmacists and other providers, such as nurses, dentists, and midwives, are paid on a fee-for-service basis by both mandatory health insurers and voluntary supplemental health insurers.
Physicians and other providers freely set their fees for private insurers. However, most usually use the TARMED structure.
Individuals usually pay both non-hospital-based primary care providers and specialist physicians directly, and their insurance company later reimburses them.
Long-Term Care
Long-term care institutions receive 13.3% of total health expenditures. A sixth of this funding comes from mandatory health insurance; another sixth comes from the Swiss Confederation. The mandatory health insurance pays nursing homes a flat per-day rate of $9.15 USD (CHF 9), though this payment can increase up to $110 USD (CHF 108) per day depending on the intensity of care needed and the degree of dependency. In 2017, some 149,000 people were residents in long-term institutions.
Long-term home care, meanwhile, is provided by Spitex, a nonprofit organization that sends nursing and caregiving staff to care for the elderly and disabled in their homes. In 2017, nearly 350,000 people used Spitex services. Spitex spends approximately $608 USD (CHF 600) per patient per month. In 2016, the public sector covered 42% of Spitex expenditures, mandatory health insurance covered 39%, and patients themselves paid for the remaining 19%.
Mental Health
It is estimated that Switzerland spends $6.5 billion USD (CHF 6.3 billion) annually on mental health care. More than half of this goes to acute psychiatric inpatient care and long-term institutional psychiatric care. Payments for outpatient behavioral health services are determined using TARMED. TARMED rates differ based on the provider’s profession—physicians are paid more than mental health social workers—and the services provided. Patients have a 10% coinsurance for outpatient mental health services, which is capped at $714 USD (CHF 700) per year.
Inpatient mental health care is paid using a per-diem rather than a DRG rate. Importantly, the inpatient rates decline with length of stay, incentivizing shorter hospitalizations. The canton and mandatory health insurance share the cost of mental health hospitalizations, with the amount paid by the federal government varying by canton. The patient has a 15% co-pay for psychiatric hospitalizations, without caps for food and other services.
DELIVERY OF HEALTH CARE SERVICES
Hospital Care
Currently there are 293 hospitals in Switzerland, which vary in size from 2 to over 2,000 beds. Switzerland has 2.9 acute care beds per 1,000 population, compared to the EU average of 3.6 beds per 1,000. Since 2000, the number of acute care hospitals has fallen by 50% and the number of acute care beds by 20%. Of the 293 hospitals, 21% are publicly owned and managed, either by the cantons or by public companies, and nonprofit companies run 25%. Cumulatively, public or nonprofit hospitals operate nearly 65% of all hospital beds. More than half of all Swiss hospitals are privately owned and tend to be smaller-specialty hospitals for ophthalmology or psychiatry. In Switzerland 5 hospitals are university affiliated. Unusually, public hospitals in Switzerland are expected to generate a positive margin, which, as Jacques-Andres Romand, chief medical officer for the Canton of Geneva, notes, “is totally ridiculous, because it’s a public service, but we ask them to be for profit.” Yet to generate revenue, even public hospitals may require patients to dip into their private insurance to get the best room or specialist, generating additional revenue.
A patient is free to access care in any hospital they wish, even if it is outside the canton in which they live or work—so long as that hospital is on a list of partner hospitals with their own canton. The hospital would then be reimbursed according to their cantonal rates.
To coordinate their health care activities, the cantons work together in the Conference of the Cantonal Ministers of Public Health (GDK/CDS). This organization also makes decisions regarding specialized care. For instance, it works to determine which hospitals will deliver the 39 highly specialized medical services, such as stroke, neurosurgery, severe trauma, and organ transplantation. A board consisting of 10 cantonal ministers of health makes all decisions regarding these fields, and those decisions are binding for all cantons. For instance, only 6 hospitals—the university hospitals of Geneva, Lausanne, Bern, Basel, and Zurich as well as the Cantonal hospital of St. Gallen—have been designated to provide liver transplantation.
Ambulatory Care
Independent primary care physicians and specialists working in solo or group practices are the primary providers of ambulatory care. Approximately 53% of physicians work in ambulatory care settings. Cantons license independent physicians to practice in their canton. Unless patients are enrolled in a managed care plan, they are free to choose any licensed ambulatory provider in their canton—whether primary care physician or specialist. There is no real gatekeeper model, as referrals to specialists are typically not required. Physicians are paid on a fee-for-service basis. There are currently no monetary incentives for care coordination or chronic care management.
Interestingly, acute care hospitals are beginning to encroach on private practices’ ambulatory care services. Specialists at acute care hospitals are now seeing more patients who previously would have gone to private practitioners.
There are no real waiting times in Switzerland. Approximately 68% of adults can see a physician the same day when they are sick, and over 80% of Swiss patients wait less than a month to see a specialist.
Mental Health
Cantons are responsible for organizing mental health care, which is covered by mandatory insurance if it is provided by physicians. Few primary care physicians provide substantive mental health care. Instead, most behavioral health services are provided by psychiatrists, the vast majority of whom work in private practice. Nonphysician behavioral health services, such as psychotherapy, may be covered if it is prescribed by a physician and provided in his or her practice. Public hospitals, public and private psychiatric hospitals, and residential facilities provide inpatient behavioral health services.
Long-Term Care
Formal long-term care is provided in old-age homes, medical nursing homes, and in patients’ homes. The cantons generally subsidize the construction, maintenance, and operational costs of public nursing and old-age homes, which constitute two-thirds of all long-term care institutions. Total occupancy of these facilities is 95% to 97%, resulting in waiting lists for many nursing homes. There is currently no standard for assessing need; different institutions use different metrics for deciding which patients to accept.
Home health care is primarily provided by the Swiss Association of Home Care Services, also known as Spitex. This is an umbrella organization for 24 cantonal Spitex associations that provide domestic aid and care services, primarily for the disabled and elderly living at home. About half the costs of Spitex are covered through public funding. Outside of Spitex, informal caretakers, such as family members, perform most of the custodial care at home, and this represents a significant part of the total burden of care.
As the population ages, experts predict that needs will go unmet. As Burton-Jeangros explains, “It is impossible to imagine that we will provide enough places in nursing homes for the aging population.”
Preventive Care
Some preventive services—including vaccinations, general health exams, and cancer screenings for at-risk populations—are delivered by primary care physicians and specialists. These are paid for under mandatory health insurance.
Since the 1980s the Confederation has introduced population-based prevention programs for AIDS, drug abuse, tobacco, and alcohol. Cantons, however, are responsible for implementing these prevention efforts. This decentralized and diffuse responsibility, characteristic of the Swiss health care system, has limited the effectiveness of national prevention strategies.
Quality Controls
The Confederation’s Health 2020 strategy has made expanding the measurement and quality of care a top priority. In 2008, the Swiss Inpatient Quality Indicators were introduced to monitor and evaluate the quality of acute care hospitals. In 2012, the FOPH and the Foundation for Patient Safety initiated 2 national quality programs to reduce surgical and medication errors. The National Association for Quality Improvement in Hospitals and Clinics (ANQ) publishes quality indicators for inpatient, psychiatric, rehabilitative, and geriatric facilities. In 2011, ANQ members signed a national quality contract that created financial incentives for adhering to ANQ quality initiatives. Hospitals that join the contract must provide data to an ANQ database for performance evaluation. By 2013, almost all hospitals in Switzerland had joined the contract and were participating in quality initiatives.
Physicians are not routinely evaluated on their quality of care. The fact that many physicians have no electronic records for data collection further challenges evaluations. For instance, in Geneva 30% of physicians keep only handwritten records. However, an ongoing project called BAGSAN is exploring the possibility of using routine ambulatory care data to develop quality indicators for providers.
One grassroots initiative to improve the quality of care is Smarter Medicine, a program based on the Choosing Wisely campaign in the United States. Because the current fee-for-service payment system for physicians incentivizes high-volume care, nearly 25% of all care is deemed inappropriate. Choosing Wisely has begun listing interventions that should be avoided, primarily for ambulatory and hospital care. The organization also helps educate physicians, though there are no penalties or rewards to bind physicians to providing high-value care.
Patient Satisfaction
Switzerland has comparatively high rates of patient satisfaction with the health care system. Even for the majority of Swiss enrolled in managed care plans, access and choice are considered plentiful. Fully 54% of Swiss interviewees in a Commonwealth Fund survey believed the system was working well. The fact that only 3% to 5% of individuals switch insurers each year seems to confirm a high satisfaction rate. As one expert explains, “I still say most people are happy with the system because you get access to a lot of things. People complain about their premiums, but that makes sense, because all their care is expensive. No, on average, I think people are still happy.”
PHARMACEUTICAL COVERAGE AND PRICE CONTROLS
Pharmaceutical Market
Switzerland is home to 2 major pharmaceutical companies: Novartis and Roche. Yet the Swiss pharmaceutical market is tiny, totaling approximately $5.7 billion USD (CHF 5.6 billion) in 2016. However, Switzerland has the world’s 2nd-highest drug expenditures per capita, at $939 USD (CHF 919).
Mandatory health insurers reimburse drugs included in the mandatory health insurance basket. Drugs excluded from the basket are paid for either by private supplemental health insurance or by patients out of pocket.
Market Access and Coverage Determination
The 2002 Federal Law on Therapeutic Products (HMG/LPTh) transferred responsibility for drug and device market authorization from the cantons to the Confederation and created the Swiss Agency for Therapeutic Products (Swissmedic), a public institution affiliated with the Federal Department of Home Affairs (FDHA). Fees paid by companies applying for market authorization, payments from the federal government, and services rendered to 3rd parties finance Swissmedic. It approves market entry for new pharmaceuticals based on quality, safety, and effectiveness. Applicant drugs must have information on purported benefits and potential side effects, laboratory tests, and clinical trials. Although normal assessments can take over a year, companies can pay a fee to fast-track their assessment, which can cut the review time in half. Drugs that have been approved for the first time are granted protection from competitors for 10 years; after that, market authorization lasts for 5-year periods.
After Swissmedic approves a new drug for market entry, it must then go to the Federal Office of Public Health (FOPH), which determines its efficacy and appropriateness. These 2 qualities are assessed using material provided by the drug manufacturer as part of their original application to Swissmedic. Next the Federal Drug Commission (FDC) reviews the information collected by the FOPH and provides recommendations on the drug’s effectiveness, appropriateness, and cost effectiveness.
Figure 5. Regulation of Pharmaceutical Prices (Switzerland)
FOPH decides whether a drug should be included on the positive drug lists. Only pharmaceuticals explicitly included on the positive lists are reimbursable by mandatory health insurance. The FOPH will also determine the drug’s cost based on the manufacturers’ prices in 9 reference countries: Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands, Sweden, and the UK. If the drug is not yet sold in any reference country, its price is determined by that of therapeutically equivalent drugs. If the drug is the first or 2nd entrant in a new treatment class or adds therapeutic value, it may be awarded an innovation premium of 10% to 20%.
The FOPH decision on a drug’s qualification for mandatory health insurance reimbursement is reevaluated every 3 years. At the 3-year mark, FOPH must reaffirm that the drug still fulfills its conditions for inclusion in the mandatory health insurance benefit basket and whether the price of the drug is still cost effective. If the price is 3% higher than the expected cost-effective price and if this has led to greater than $20,400 USD (CHF 20,000) in surplus earnings for pharmaceutical companies, then FOPH can mandate the companies to pay back those earnings to insurers.
Generic Pricing
Switzerland uses significantly fewer generic drugs than other European countries. Generics represent just 23% of the total drug purchases, compared to 85% in the UK. The prices for generics are much more expensive in Switzerland than in other countries. For example, the cheapest generic drug in the Netherlands costs just 15% of what that same drug costs in Switzerland.
Physician Prescribing Controls
Physicians can prescribe any drug that has received marketing approval—there are no limits on what drugs physicians can prescribe. Drugs can be prescribed off label—that is, for indications the drug was not approved for. If the drug is not on the specialty list covered by mandatory health insurance, however, then patients need to pay out of pocket.
Importantly, Switzerland has few pharmacists compared to other developed countries, just 0.54 pharmacists per 1,000 people, compared to the EU average 0.82 per 1,000 people. To compensate, some cantons rely on self-dispensing physicians, who can both prescribe and distribute pharmaceuticals. In 2017, about 15% of all physicians were self-dispensing. Clearly these physicians have a conflict of interest because they earn profits from the very drugs they prescribe. Such self-dispensing physicians are responsible for nearly 25% of all pharmaceutical sales in Switzerland, and some people believe these physicians are contributing to the high rates of national spending on drugs. The persistence of these self-dispensing physicians, despite their role in high pharmaceutical spending, is indicative of the slow nature of health care reform in Switzerland.
Prices Paid by Patients
Typically, patients must pay for prescription drugs out of pocket at the time of purchase; their health insurer then reimburses them. For certain high-cost drugs, however, the insurer may be able to pay directly. There is also a 10% coinsurance rate for pharmaceuticals. This increases to 20% if the patient chooses a brand-name drug when a generic is already available. Pharmaceutical cost sharing is included under the annual coinsurance cap of $357 USD (CHF 350) for children and $714 USD (CHF 700) for adults. Maternal health care is exempt from deductibles, co-payments, and coinsurance, which includes coinsurance for drugs.
HUMAN RESOURCES
Physicians
In 2016, there were 35,592 total physicians practicing in Switzerland. This amounts to 4.2 physicians per 1,000 Swiss residents. By comparison, France has 3.2 physicians per 1,000 people, the UK has 2.8 per 1,000, and the United States has 2.6 per 1,000. Of all physicians, nearly 60%—about 21,000—are specialists.
In 2014, the last year with reliable data, the median wage for a GP was quite high, at $242,000 USD (CHF 237,000). Specialists earn significantly more. Swiss neurosurgeons had the highest median salary of any specialty, roughly $711,000 USD (CHF 696,555). A total of 118 Swiss physicians earned more than $1.02 million USD (CHF 1 million) in 2014.
Switzerland is expected to face a physician shortage within the next decade. In the next 10 years over 60% of practicing primary care physicians are expected to retire, leading to a shortage of 2,000 physicians. In 2016, the Federal Council announced that $102 million USD (CHF 100 million) would be allocated to increasing the number of graduating medical professionals. In the short term, Switzerland has attempted to augment its workforce by recruiting foreign physicians, and nearly 30% of physicians in Switzerland were trained in another country.
There are 6 medical schools in Switzerland. Swiss medical education is a 6-year process. The bachelor’s in medicine is obtained after 3 years and must then be followed by the master’s in medicine, which requires 2 years in university and 1 year of clinical training. Even though the federal government regulates medical curriculums’ content, medical education varies between the French- and German-speaking parts of the country. In Zurich, for example, the application process is exceptionally competitive, but once a student is enrolled in a medical training program, they are expected to complete the program. In the French-speaking parts anybody can apply for medical training, but there is a very strict paring down of students based on academic performance at the end of the first year. According to experts, only about a third of students continue to the 2nd year. After medical school, graduates enter residency, which generally lasts between 5 and 7 years, depending on the specialty. The national association of doctors determines specialty curriculums.
Following residency, physicians must decide whether to enter public practice—university practice—or private practice. As one physician explains, “Most public physicians, they like power. They like to be valued as teachers, but the income is quite low. Conversely, in private practice, most physicians do not do any research or teaching; they like to earn money.” Most physicians tend to prefer working in private urban hospitals, where the pay and volume of patients are both high. Indeed, physicians have tended to cluster in urban areas so much that cantonal governments started regulating the creation of new private practices. Although primary care practices may open as usual, specialty practices need to be approved by the government of the canton in which they wish to operate before they can open. This will be particularly relevant in big cities such as Geneva.
Nurses
In 2015, there were about 9 nurses per 1,000 people in Switzerland. This is much higher than in the United States but lower than the Netherlands, at 10.5 per 1,000 population, and Germany, at 13.8 per 1,000. Switzerland has also seen one of the fastest increases in the number of nurses since 2000.
For nurses, training has become more formalized in the past 20 years. Today a bachelor’s or master’s degree in nursing may be obtained from a professional school.
CHALLENGES
Many conservative commentators highly praise the Swiss health care system. Swiss citizens and residents have totally free choice of health insurer, the type of plan they can enroll in, and their physicians and hospitals. Almost all parts are private and nongovernmental. All insurers, all physicians, and the vast majority of hospitals are private. And even public hospitals are managed like private institutions that generate a margin.
However, there are distinctly non-free-market elements to Switzerland’s health care system. Getting health insurance is not a free choice that individuals can refuse. Switzerland has an individual mandate to purchase private health insurance, and it is scrupulously enforced. The government can—and does—enroll people in an insurance plan and require them to pay the premium as well as penalties. In addition, the Confederation regulates mandatory insurance plans, the standard benefit package, and drug pricing through inclusion in the specialty list and set reimbursed prices. Insurance products are standardized, and costs—at least for those services and treatments included in the basic benefits package—are controlled.
Overall, the Swiss are very satisfied with the service they receive from their system. The dominant recurring complaint is about the high—and increasing—costs. There are 6 challenges in the Swiss system: quality of care, regressive cost distribution, chronic care coordination, mental health services, payment reform, and data collection.
The first challenge relates to quality. Traditionally the cantons are delegated responsibility for assuring quality of reimbursable medical services. However, the existing lack of quality metrics and the paucity of routine and rigorous measurement as well as public disclosure of quality data are serious problems. Swiss hospitals perform well on avoidable hospital admissions, which account for only 3.1% of all inpatient stays, and on 30-day mortality rates for acute myocardial infarctions (5.9%) and ischemic heart disease (7.0%). However, Swiss hospitals have higher rates of 30-day mortality for strokes compared to peer countries, with a 16.5% mortality rate. Hospital stays are also longer than the OECD average.
The availability of data on the quality of services and interventions is especially poor. One problem seems to be cultural. The Swiss have a long tradition of privacy and nontransparency, symbolized in the Swiss banking system but pervading its culture. This inhibits data collection. Another problem is the system’s structure: so much is organized at the canton level, and there is no centralized data collection. Yet another barrier to the availability of data is the lack of EHRs that would make data collection from physicians more systematic and routine. Seemingly, few physicians know the value of different procedures—or the costs. Insurers hold tightly to most quality data, leaving providers to make poorly substantiated judgment calls when deciding how to treat their patients. As a physician explains,
We do not have any data—none. It’s very, very difficult to gather data and to do some good, real, evidence-based studies. What we would like to know is very difficult to find out… sometimes we’re in the gray [areas]. We don’t know if an intervention is useful, but the patient wants to do it. So I don’t want to tell the physician, “Don’t do that.”
I ran into similar messages often in my interviews. Professor Burton-Jeangros said that “people believe the system delivers high-quality care… there is no data [proving this]. It’s an impression, because people think access or choice equals quality.”
Given that insurance coverage is mandatory, patients’ feelings of deserving any care they desire exacerbates this issue. Having been forced to pay high premiums, many patients think that they should “get their money’s worth.” If a doctor does not provide them with a treatment they want, the patient can easily switch providers, so few physicians are willing to deny patients services, even if the services are unnecessary or the benefits unproven.
A 2nd challenge relates to high costs that disproportionately burden low-income individuals. Switzerland spends 12.2% of its GDP on health care, one of the highest rates of spending worldwide. Health insurance premiums are the same regardless of income. Although there are subsidies for lower-income adults, it varies by canton and does not cover the middle class. Because neither premiums nor deductibles and co-pays are adjusted for income, the burden of both premiums and out-of-pocket payments is much larger for middle- and lower-income households. Thus, as one Swiss physician noted, “My premium is the same as the guy who takes care of my car… don’t ask me why.” Furthermore, out-of-pocket spending is especially high, at 28% of health care expenditures. The bottom income quintile pays 22% of their disposable household income for health care. Many experts noted that low-income households pay essentially as much on health care as they do on rent.
Premiums also vary by insurer, depending on the type of plan chosen. Although logically it would benefit patients to shop around and switch to lower-priced plans, few do so. Omar Kherad, a physician, explains, “People are very afraid of insurers because a large portion of the Swiss population has voluntary supplemental insurance. If you want to switch, insurers can decide if they will cover your supplementary insurance or not.” To keep their supplemental insurance plans, many Swiss residents choose to stick with their current plan, even if this means forgoing savings.
Because each insurer must cover the same basic benefit package, all willing providers in a canton, and all hospitals in the country, there is no real difference in access to services, specific physicians, or hospitals among the insurers. In addition, the broad range of insurance-covered services gives consumers little incentive to shop around and hospitals and providers no real motivation to control costs.
The Confederation has not implemented any budgets for care nor any legislation to ensure high-value care. Swiss economists now predict that when the basic plan premium reaches $816 USD (CHF 800) per month—which is not much more than the premium today—the whole system will collapse. Jacques-Andres Romand compared the issue to gas prices in the United States: “It’s like asking how much the price of a gallon of fuel in the United States would have to rise before the United States begins to use less.… We don’t know exactly what the premium level would have to be here for change to happen.”
Although the Swiss system’s original aim was to have many insurers offering the same services, thereby competing with each other on lower costs and higher quality, in reality the system has not achieved this. As Romand explains, “The system doesn’t work at all. Over the last 20 years we have seen a yearly increase in costs, which means a yearly increase of your premium.… In Geneva, we are heading to around $600 USD (CHF 590) [per person, per month] mean premiums, which is quite expensive.” Keeping in mind that a middle-class family of 4 in Switzerland pays roughly $1,840 USD (CHF 1,800) for health insurance and $2,040 USD (CHF 2,000) for rent, and adding in food, taxes, and transportation, there is little left at the end of the month.
Another factor complicating cost inefficiency is physicians’ salaries. Because they are much higher than in surrounding countries, an increasing number of physicians from Germany, Italy, Greece, and France have come to Switzerland to practice. Consequently, many private practices have opened, driving up costs.
Third, there is no chronic care coordination. Switzerland’s population is older than in most other OECD countries, and the rates of chronic conditions are increasing. Care coordination remains a serious deficiency. For example, although cancer organizations have pushed for national guidelines on mammography, there remains no such legislation, and approaches vary by canton. There is some interest in managed care, primarily among the younger physicians; however, the population in 2014 voted to reject a managed care initiative, with an overwhelming 75% voting against. The general sentiment was this: “I want to choose my physician, and managed care will take that away from me.” Ironically, in Geneva over 60% of residents are already enrolled in managed care systems. The messaging—not so much the actual content—of managed care seems to be scaring voters off.
Many physicians I talked to cited the lack of coordination as one of the system’s biggest issues. Pilot projects that are introduced in one canton have no hope of being rolled out nationally. Kherad noted that although managed care initiatives have been successfully implemented in the German parts of the country, they have never worked in the French parts. He posits, “We are more, you know, flexible. People in the Latin part of the country don’t want to be forced into anything. But in the German part, it works quite well, actually.”
For now, “while there has been discussion about chronic care management, that’s where it stays” as mere discussion. Until the issue becomes pressing, it seems unlikely that policymakers will initiate any new programs, payment reform to incentivize chronic care coordination, or any other changes. Until then, coordination of care will remain patients’ responsibility.
A 4th challenge is mental health care. Although mandatory insurance covers mental health care, few primary care physicians provide substantive services. Instead, psychiatrists provide most behavioral health services. There are no current efforts to integrate behavioral health services with primary care, even though integrated models have been shown to improve care coordination and patient outcomes.
The lack of mental health integration with primary care has hindered patient access. The average wait time for an appointment regarding an acute psychiatric issue is 6 days. Although in 2008 the Conference of the Cantonal Ministers of Public Health made recommendations to integrate mental health services, cantons have made almost no progress in doing so.
Fifth, Switzerland must confront its use of fee-for-service payments and the perverse incentives it creates. Switzerland is well known for its impressively high physician salaries. Various calls for reform have been met with outrage by physicians—and then stymied. An initiative has been proposed to move the current multi-insurance system to a single-payer model. Interestingly, the general populace has already voted down the reform several times at the federal level; it is now being proposed at the cantonal level.
Swiss residents seem, at best, to have mixed feelings about a single-payer system. When I asked experts whether they thought the reform was a good idea, the responses varied widely. One reason may be that, as one expert explained, “The only comparison we have of the single-payer system is France. The access is just perfect, but, my god, you have to wait so long to see a physician. I don’t want that. I like my system.” Proposals for a single-payer system will be reintroduced at the national level again in 2020. If premiums continue to rise as projected, experts predict that the Swiss may view reform more favorably.
Finally, there is a paucity of reliable data by which to benchmark and reform the system. There are currently no nationally consistent data measuring provider performance or health inequalities. As Samia Hurst, a Geneva physician, notes, “We often lack even basic data, let alone a benchmark to measure it by.”
Although certain forays into data collection and measurement at the hospital level have been made—such as the publication of hospital performance information online by the FOPH—these data do not allow for direct comparisons and are not considered completely reliable. No payments on the basis of quality for either physicians or hospitals have been implemented. Several physicians I spoke to seemed to distrust the idea of publicly reported data. One described such attempts as “very, very, very fancy, and I’m quite afraid of that.… We have to be very careful of which quality indicators you choose.”
CONCLUSION
Future reforms will need to focus on these issues. There must be nationally established standards of care as well as evaluations of providers in delivering such care. Cantons would do well to require more stringent data reporting from their hospitals and insurers. A federal budget should be created to at least begin incentivizing cost-control measures. Inevitably the federal role in health care must be strengthened. As appealing as it may be to leave health care regulation to the cantons, this decentralization has led to fragmented, inefficient care. The system’s standardization, price control, and performance measurement all lie with an increasing incorporation of the Confederation into health care.