|Contracting freedom for health insurers|
|Waiting for stronger integrated networks of care|
|Implemented in this survey?|
In June 2008, Swiss Parliament decided to prolong the moratorium on the opening of new medical surgeries for a second time; it was first introduced for a period of three years in July 2002 and extended for a further three years in 2005. The new decree will expire at the end of 2009. At this point a lasting solution must be reached. At least two alternative models appear on the horizon; a strenuous battle in Parliament is to be expected.
The outpatient sector in Switzerland has three main features:
From the point of view of economic theory the combination of these three factors, or degrees of freedom, represents an explosive mixture. Put this way, the system is without doubt excellent for patients, who receive all the treatment they require when sick, without being put on waiting lists, and it is also interesting for the medical body, who do not have to excessively fear the problem of plethora. However, the outcome is rather problematic as far as the evolution of the social health insurance expenditure is concerned. In fact, the system works on condition that everyone does their bit, in terms of individual responsibility, paying attention to common good and professional ethics. If a significant number of patients and/or professionals indulged in self-interested behaviour, acting as free-riders, and abused the solidarity among the insured by asking for unnecessary medical services or inducing request for care of dubious usefulness (supply-induced demand), the costs could not be kept under control and would be destined to explode. As witness to this fact we can find a strong correlation between the cost of the universal benefit basket guaranteed by the health insurance and the density of medical surgeries [see references 1 and 2 for a multiple regression analysis performed on cantonal panel data; see figure "Relationship between phisician density and per capita health expenditure of the 26 cantons (2005)" for simple correlation].
In most industrialized countries at least one of these three degrees of freedom has been removed, often even two.
All these solutions certainly present advantages, but also some disadvantages.
Last June [see 3] Swiss Parliament decided to prolong the moratorium until the end of 2009; the only objective of this move is to take time to come to an agreement on a lasting solution to the problem.
After moratorium: abolishment of mandatory contracting or introduction of formal planning?
It is the second time this moratorium has been extended; it was first intended to have a time limit of three years, but on 18 October 2004 it was already procrastinated for a further three years, until the end of June 2008 [see 4]. One fact cannot be denied: if Switzerland is not prepared to give up the other two degrees of freedom (fee-for-service payment and direct access to specialists) and if it intends to respect the bilateral agreements with the EU, the reimbursement of health care services by the mandatory health insurance must be subordinated either to the obtaining of a contract with the health insurers (selective contracting) by means of the abolition of mandatory contracting, or be regulated by a formal planning of outpatient supply, so as to establish the number and identity of physicians entitled to invoice their services to the social insurance system; we must remember that today there are no constraints preventing access to private practice and eligibility for social health insurance reimbursement.
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
|Implemented in this survey?|
The solution which theoretically can be seen on the horizon should be chosen from these three possible variants:
Option 1: Abolition of mandatory contracting
The first solution, formulated by the Federal Council in 2004 in a specific legislative draft bill (see 5), has been
formally on Parliament's agenda for four years (see 6) without a parliamentary debate actually taking
In the light of the popular ballot of 1 June 2008, the generalized suppression of mandatory contracting, supported by santésuisse (see 7) and by the political groups close to the Swiss health insurers, would no longer seem to enjoy enough political support to put through a legislative reform in such radical terms. The clear rejection of the constitutional article by the Swiss people (see report "Swiss deny more competition in health insurance"), in fact, changed into a show of no confidence toward santésuisse; it is important to emphasize how the campaign by the reform opponents was focalized right on the abolition of mandatory contracting. Not even the idea of abolishing mandatory contracting for specialists, while keeping it in force for GPs, enjoys great support; the reason behind this partial abolishing proposal was the forecast of the shortage of GPs in the near future in Switzerland; the problem has been made more acute by the fact that seven years' moratorium have forced young doctors, who at first were prepared to practice as GPs, to stay in hospitals and train as specialists.
Will selective contracting really lead to high quality at adequate prices?
The principle according to which the function of regulating access of the professionals to the outpatient medical sector should be entrusted to the health insurers, by means of selective contracting, no longer seems to hold today from a political point of view. The classic models of managed competition and consumer driver health insurance have often sustained that competition among sickness funds should be able to guarantee that the physicians who offer the best quality/price ratio obtain a contract, while those offering low quality or inappropriate services are excluded from the market. The system in force today in Switzerland does not offer all the guarantees for this outcome, desirable in itself, to really be achieved. The choice of physician, in fact, represents an instrument able to influence other competitive factors from the sickness funds' point of view. By selecting highly skilled physicians, a sickness fund would risk attracting severely ill people into the insurance and this would impact on the portfolio composition and finally on the community rating premium of the fund. So it is not a foregone conclusion that a contract will be granted to honest physicians who are especially well-prepared from a professional point of view. And this lack of reliability is the point at issue. There are two countries which have a similar system to the Swiss one, with private sickness funds in competition among themselves, and which have abolished mandatory contracting: the Netherlands and Israel. But these countries have taken steps to limit this adverse outcome (a very effective risk equalization scheme in the Netherlands; the suppression of premium differences among sickness funds in Israel).
Option 2: New planning model for outpatient supply
The second option consists of a more flexible and efficient planning model of outpatient supply than the one in force since 2002, since the present moratorium is limited till the end of 2009. It is around this proposal that a new alliance was forged between the cantonal ministers of health and the federation of Swiss physicians (FMH) (see 8 and 9). The inspiring principle of this model, drawn up initially by the Conference of Cantonal Directors of Public Health (GDK), (see 10 and 11) is rather simple. The freeze on the number of new surgeries opened is suppressed. However, in the case of excessive supply in certain parts of the country and once the opinion of the professional associations has been heard, the cantons would have the option of subordinating the concession of new authorizations to a proven need, discerning the region where the new surgery is to be opened in their assessment and the relative speciality of the physician. Moreover, the planning would have to take into account not only the number of surgeries but also the actual level of activity of the same; in fact, the feminization of the medical profession is at the origin of an increasing number of surgeries working part-time. It would also have to be applied not only to doctors working in private practices as free professionals but also to those who work under contract as employees, for example as paid staff in the outpatient sector of hospitals. Moreover, the concession of an authorization would have to be tied to a maximum limit of one year, by which time the doctor has to start the activity, otherwise the authorization will be revoked. It might also be revoked if a doctor significantly changed his/her localization or his/her speciality. Finally the canton would be able to use financial incentives to encourage the opening of surgeries in peripheral regions where medical supply is insufficient.
Option 3: Dual health insurance system...
The third variant was proposed last August by santésuisse (see 12 and 13). In fact, the insurers suggested introducing a dual health insurance system, which offers the insured the freedom to choose which is their preferred option: (1) remaining in the present system, called "basic model" or (2) opting out into a system called "cooperation model", characterized by reduced freedom of choice of physician for the insured in exchange for a premium discount. At first glance this is not greatly innovative, since the present law already provides the insured with the opportunity to sign an alternative insurance contract, linked to the managed care models, in which selective contracting and gatekeeping can be realized and the medical services reimbursed in a different way, e.g. capitation-based. But if we look more closely, we discover that there are also big differences compared to today's model.
...with deregulation of managed care contracts
The chance to offer alternative contracts is at present subject to strong regulation, the objective of which is to avoid the phenomenon of adverse selection, which might undermine the survival of the basic model. For this reason today the premium discounts for managed care products are bound by law to respect a maximum threshold (expressed in terms of maximum authorized percentage discount, compared to the basic premium); also the opportunities to save on costs are limited by the fact that selective contracting is circumscribed to the outpatient sector and cannot be extended to the hospital field for example. In this sense santésuisse's proposal, if accepted, would imply a significant deregulation of managed care contracts; it would become possible to stipulate contracts over many years, there would be more flexibility in the premium calculation and the freedom to contract would be suppressed also with regard to hospitals. Moreover, the insurers would be obliged to offer at least one contract of the "cooperation model" type in every geographical area of the country. Santésuisse's proposal also implies a generalized increase in cost-sharing from 10 to 20 percent, for both models. If this direction were taken, there might be a progressive separation of the population into two risk categories, good risks in the "cooperation model", bad risks in the "basic model"; this would be accompanied by a growing gap in the premium requested by the two types of contract. The final outcome, already demonstrated theoretically by Rothschild and Stiglitz (1976) and empirically by the Harvard Experiment, might even be the definitive disappearance of the "basic model" from the market (see 14 and 15).
Relationship between phisician density and per capita health expenditure of the 26 cantons (2005)
|Conference of Cantonal Directors of Public Health||very supportive||strongly opposed|
|Federal government||very supportive||strongly opposed|
|National Council||very supportive||strongly opposed|
|Council of States||very supportive||strongly opposed|
|Physicians (FMH)||very supportive||strongly opposed|
|Hospitals (H+)||very supportive||strongly opposed|
|santésuisse (health insurers)||very supportive||strongly opposed|
In August the Commission for Social Security and Health of the Council of States decided to support the santésuisse model, rejecting the GDK-FMH proposal, and gave the Department of Home Affairs (The Federal Office of Public Health) the task of preparing a draft bill in this direction. The bill should be presented by the end of the year.
The conventional procedure requires that, as long as a dossier is on the agenda of one of the two Houses of Parliament - in this case the upper House - the second must wait and not attempt to influence the decisional process. Now, however, there is a problem of timing. At the end of 2009, in fact, the moratorium will end and from a political point of view it is to be hoped it will not be extended further, so that the political class will not lose credibility in general. For this reason some members of the same commission, but from the National Council, aware of the fact that the premise to reach a harmonized solution between the two Houses by 2009 is not given, have suggested putting the GDH-FMH proposal back into the race, which can be considered a possible gap solution up until the time when it will be possible to plan the introduction of the dual model in every detail and harmonize it politically. These members are aware of the fact that if the people were to vote again on a bill which is not supported by physicians and cantons, the risk of a new rejection and of a final delegitimization of the health insurers as central pillar of the model of managed competition would be somewhat high.
|Conference of Cantonal Directors of Public Health||very strong||none|
|Federal government||very strong||none|
|National Council||very strong||none|
|Council of States||very strong||none|
|Physicians (FMH)||very strong||none|
|Hospitals (H+)||very strong||none|
|santésuisse (health insurers)||very strong||none|
At this time it cannot be taken for granted which of the two models will win out. If the proposal of generalized abolition of mandatory contracting would end up in a popular ballot, the likelihood of Swiss people voting against a bill which is not supported by physicians and cantons seems rather high. In this case the principle of health insurers playing a central role in the model of managed competition would not be anymore sustainable. In that case there would be no other solution than to entrust the control of health care supply to state planning, supported by a corporative governance, overcoming the present liberal concept of outpatient medicine in Switzerland. Also on this issue, therefore, there is the eternal confrontation between competition and regulation, between market and state, in which the Swiss health care system has been struggling for some years without coming a step nearer to solving it.
|Quality of Health Care Services||marginal||fundamental|
|Level of Equity||system less equitable||system more equitable|
|Cost Efficiency||very low||very high|
|Contracting freedom for health insurers|
Process Stages: Legislation
|Waiting for stronger integrated networks of care|
Process Stages: Legislation