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Who should control outpatient supply after 2009?

Country: 
Switzerland
Partner Institute: 
Università della Svizzera Italiana, Lugano
Survey no: 
(12) 2008
Author(s): 
Luca Crivelli
Health Policy Issues: 
Role Private Sector, System Organisation/ Integration, Political Context, Access, Remuneration / Payment
Reform formerly reported in: 
Contracting freedom for health insurers
Waiting for stronger integrated networks of care
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no yes yes no no no
Featured in half-yearly report: Health Policy Developments 12

Abstract

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.

Recent developments

The outpatient sector in Switzerland has three main features:  

  1. The fee for service reimbursement of outpatient care. Each medical service is paid in Switzerland with a separate fee. In accordance with the standard time and other inputs necessary to carry out a certain medical gesture, the TARMED scheme of tariffs defines the fixed amount of money paid to physicians for each activity performed. If the prices are fixed (and defined according to the tariff agreements between the contracting parties), the "quantity" factor is free to vary; the only instrument available to the health insurers for controlling expenses are the claims for lacking cost performance in outpatient medical services, by virtue of which it is possible to oblige a physician to pay back part of the fees s/he received if the average costs per patient exceed 30% of the average of his/her peers.
  2. Patients enjoy great freedom of choice. They are free to choose their own GP and also have direct access to any specialist.
  3. Before 2002 the outpatient market had, in fact, no control over supply. The numerus clausus, which has been in force for some years in the Swiss faculties of medicine, is not able to keep the potential flow of physicians from the EU in check; according to the bilateral agreements free movement of persons and recognition of formal higher education qualifications obtained in EU countries must be granted.

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.

  • Some countries, such as the UK and Italy, pay their outpatient medical services by capitation, i.e. through a risk-adjusted flat-rate per patient; GP reimbursements are no longer based on the number of medical services performed.
  • Other countries like Germany have introduced a ceiling for expenses, i.e. a global budget, for the outpatient sector.
  • Others still, for example the UK and Italy, have adopted the gatekeeping model, which envisages the GP as the gateway to specialist treatment.  

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. 

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Characteristics of this policy

Degree of Innovation traditional neutral innovative
Degree of Controversy consensual highly controversial highly controversial
Structural or Systemic Impact marginal rather fundamental fundamental
Public Visibility very low high very high
Transferability strongly system-dependent system-dependent system-neutral
current current   previous previous

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no yes yes no no no

Initiators of idea/main actors

  • Government: Figure
  • Parliament: Figure
  • Providers: Figure
  • Payers: Figure

Stakeholder positions

The solution which theoretically can be seen on the horizon should be chosen from these three possible variants:

  • The generalized abolition of mandatory contracting.
  • State-controlled planning of the supply of outpatient services.
  • A dual insurance system which for each insured person would imply the choice between (a) staying within the present system (characterized by mandatory contracting) or (b) opting for a managed care contract, with less freedom of choice but at the same time more contained costs.

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 place.
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)

Actors and positions

Description of actors and their positions
Government
Conference of Cantonal Directors of Public Healthvery supportivestrongly opposed strongly opposed
Federal governmentvery supportivesupportive strongly opposed
Parliament
National Councilvery supportivesupportive strongly opposed
Council of Statesvery supportivevery supportive strongly opposed
Providers
Physicians (FMH)very supportivestrongly opposed strongly opposed
Hospitals (H+)very supportiveneutral strongly opposed
Payers
santésuisse (health insurers)very supportivevery supportive strongly opposed
current current   previous previous

Influences in policy making and legislation

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.

Legislative outcome

n/a

Actors and influence

Description of actors and their influence

Government
Conference of Cantonal Directors of Public Healthvery strongstrong none
Federal governmentvery strongstrong none
Parliament
National Councilvery strongstrong none
Council of Statesvery strongstrong none
Providers
Physicians (FMH)very strongstrong none
Hospitals (H+)very strongneutral none
Payers
santésuisse (health insurers)very strongneutral none
current current   previous previous
santésuisse (health insurers)Council of StatesFederal government, National CouncilHospitals (H+)Conference of Cantonal Directors of Public Health, Physicians (FMH)

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Expected outcome

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.

Impact of this policy

Quality of Health Care Services marginal neutral fundamental
Level of Equity system less equitable two system more equitable
Cost Efficiency very low high very high
current current   previous previous

References

Sources of Information

  1. Crivelli, L., M. Filippini and I. Mosca (2006). "Federalism and regional health care expenditures: an empirical analysis for the Swiss cantons" Health Economics 15: 535-541.  
  2. Crivelli, L., M. Filippini, B. Mantegazzini-Antonioli e F. Pallotti (2007). I costi dell'assicurazione malattia in Ticino, Studio commissionato dal Consiglio degli Anziani del Cantone Ticino (www.common.unisi.ch/pdf_pub3449).  
  3. Bundesversammlung der Schweizerischen Eidgenossenschaft (2008). Bundesgesetz über die Krankenversicherung (KVG) (Bedarfsabhängige Zulassung). Änderung vom 13. Juni 2008 www.parlament.ch/sites/doc/CuriaFolgeseite/2004/20040032/Schlussabstimmungstext%202%20NS%20D.pdf  
  4. Bundesversammlung der Schweizerischen Eidgenossenschaft (2004). Bundesgesetz über die Krankenversicherung (KVG) (Gesamtstrategie und Risikoausgleich). Änderung vom 8. Oktober 2004 (www.admin.ch/ch/d/ff/2004/5479.pdf).  
  5. Bundesrat (2004), Botschaft zur Änderung des Bundesgesetzes über die Krankenversicherung (Vertragsfreiheit) vom 26. Mai 2004 www.admin.ch/ch/d/ff/2004/4293.pdf  
  6. www.parlament.ch/D/Suche/Seiten/geschaefte.aspx?gesch_id=20040032  
  7. Santésuisse (2005), Aufhebung des Vertragszwangs - Umsetzung (10.1.2005) www.santesuisse.ch/de/dyn_output.html?content.vcid=6&content.cdid=3573&detail=yes&SID=c991242f924de7acccc31ae00f624bc5&navid=2  
  8. FMH und GDK (2008). Ressourcensteuerung: Vorschlag FMH-GDK, 15. August 2008. www.gdk-cds.ch/fileadmin/pdf/Themen/KVG-Revision_und_Vollzug/KVG-Revision/Medienkonferenz_20080818/DE_Ressourcensteuerung_20080815-d.pdf  
  9. FMH und GDK (2008). Ärztliche Versorgung: Nachfolgeregelung für Zulassungsbeschränkung Gemeinsamer Vorschlag der FMH und GDK. Medienmitteilung vom 18. August 2008. www.gdk-cds.ch/fileadmin/pdf/Themen/KVG-Revision_und_Vollzug/KVG-Revision/Medienkonferenz_20080818/MM-20080818-d.pdf  
  10. Schweizerische Konferenz der kantonalen Gesundheitsdirektorinnen und -direktoren (2007). Zulassungsbeschränkung: Konzept für eine Nachfolgeregelung (verabschiedet vom GDK-Vorstand am 6.9.07), www.gdk-cds.ch/fileadmin/pdf/Themen/KVG-Revision_und_Vollzug/KVG-Revision/Nachfolgeregelung.pdf  
  11. Schweizerische Konferenz der kantonalen Gesundheitsdirektorinnen und -direktoren (2007). Zulassungsbeschränkung: Gesetzesartikel für eine Nachfolgeregelung basierend auf den Beschlüssen des GDK-Vorstandes vom 6.9.07. Dokument vom 20.12.2007. www.gdk-cds.ch/fileadmin/pdf/Themen/KVG-Revision_und_Vollzug/KVG-Revision/Nachfolgeregelung_Art.pdf  
  12. Santésuisse (2008). Ablösung des Zulassungsstopps. Die Grundversicherung mit einem Basismodell und verschiedenen Kooperationsmodellen www.santesuisse.ch/datasheets/files/200808220900421.pdf  
  13. Santésuisse (2008). Zwei Grundversicherungen statt Zulassungsstopp für Ärzte. Medienmitteilung vom 22. August 2008. www.santesuisse.ch/datasheets/files/200808220900000.pdf
  14. Rothschild, M. e J. Stiglitz (1976). "Equilibrium in competitive insurance markets: an essay on the economics of imperfect information". Quarterly Journal of Economics 90, 629-649.
  15. Cutler, D.M. e R. Zeckhauser (2000). "The Anatomy of Health Insurance", in: Culyer and Newhouse (eds). Handbook of Health Economics, Vol. 1A, chapter 11.

Reform formerly reported in

Contracting freedom for health insurers
Process Stages: Legislation
Waiting for stronger integrated networks of care
Process Stages: Legislation

Author/s and/or contributors to this survey

Luca Crivelli

Suggested citation for this online article

Luca Crivelli. "Who should control outpatient supply after 2009?". Health Policy Monitor, October 2008. Available at http://www.hpm.org/survey/ch/a12/2