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Swiss are back to (quasi-) universal coverage

Country: 
Switzerland
Partner Institute: 
Universit della Svizzera Italiana, Lugano
Survey no: 
(15) 2010
Author(s): 
Luca Crivelli (proof reading by Mary Ries)
Health Policy Issues: 
Funding / Pooling, Access
Reform formerly reported in: 
The end of universal coverage has been averted
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no yes no no no

Abstract

The prospects for a rapid solution to the problem of the suspension of universal coverage for citizens who do not regularly pay their premiums ? highlighted two years ago ? were definitely too optimistic. The bargaining between cantons and insurers did not achieve a positive outcome, making a formal change of legislation through the Parliament necessary. In 2011 Switzerland will be back to universal coverage, but the door for the exclusion of unwilling-to-pay citizens will remain open.

Recent developments

On August 16th the Nobel Prize winner and editorialist of the New York Times, Paul Krugman, commented on the health reform project presented by the American President Obama in these words: "So where does Obamacare fit into all this? Basically, it's a plan to Swissify America, using regulation and subsidies to ensure universal coverage" [see ref. 1].

Most probably none of his American readers were aware of the fact that the coverage of medical care cost offered to Swiss citizens for some years could not be considered universal. On January 1st , 2006, a reform of the Federal Health Insurance Act (FHIA) came into force that allows health insurers to suspend coverage of health care services consumed by citizens that are not willing to pay, or cannot afford their health insurance premiums. The aim of Parliament was to provide a strong incentive to Swiss citizens, pushing also the reluctant insured, to pay their health insurance bills in due time.

Contrary to expectations, the number of insolvent insured has not decreased after this amendment was signed into law. Instead, their number has continued to grow, surpassing the threshold of 150,000 units in the meantime: more than two percent of the people obliged by law to make a health insurance contract (the figure is a very rough estimate; in some cantons where a more exact census of the number of suspended insured has been carried out, the percentage reaches even 4,3 percent of the insured). Very soon policy-makers and public officials realized that the sanction of the suspension of coverage for those in arrears hit not only those people who did not want to pay their dues even if they had the means, but also the insured who did not have sufficient resources to cope with the continuous increases in health insurance premiums.

So as not to reverse the enactment of the law by modifying an article recently applied few months later, the Federal Council considered it sufficient to seek a remedy in an application decree (that is a regulation defining the details relative to the enforcement of a given law). More precisely, with the amendments of the decree that came into force in August 2007, the federal administration granted the possibility to make an exception to the suspension of the services of insolvent insured by means of contractual agreements between cantons and health insurance funds. Some cantons (Basel Stadt, Geneva, Neuchatel, Valais and Vaud) thus signed a contract with the insurers, committing themselves to come up for the premiums in arrears and the corresponding interests for all those citizens whose injunction for debt procedures ended in the emission of a certificate attesting insufficient assets (that is with the proof of the debtor's insolvency). In exchange, the insurers would not suspend the coverage of services and would continue to reimburse treatment also for those who were not up to date with their premium payments. 

Unfortunately, these contractual agreements, which the insurers may (but do not have to) comply with, have proved to be very fragile (often the defection of one single insurer was enough to lead to a breach of the entire contract) and above all it is difficult to apply them generally to all the cantons. In compliance with the principle of subsidiarity, the instance thus passed on to the next level and an attempt was made to find a contractual agreement at the national level, on the one hand summoning the representatives of the Conference of Cantonal Directors of Public Health to the discussion table and the negotiators of Santésuisse (the blanket association of the health insurers) on the other. In May 2008 [see survey round 11(2008)] the negotiation seemed to have achieved a result ... but the climate of reciprocal distrust between the contractual partners, evolved during years of heated discussions on the various reform dossiers when cantons and insurers often found themselves on different sides of the fence, dilated the times for the formal signing of the treaty. On both sides attempts to raise the stakes were not absent, each claiming a change to the contractual terms in their own favor.

So in February 2009 a final breach in the discussions took place, which was followed by an unsuccessful mediation attempt on the part of the Federal Department of Home Affairs. Uable to find a solution through negotiation - unequivocal sign of a polarization of interests at stake and of increasing difficulties of the system in solving the issues by the usual instruments of corporativism - Parliament was persuaded of the need to find a way out of the situation through an amendment of law. On 25th March, 2009, the Committee of Social Security and Health of the National Council approved an amendment of article 64a of the FHIA, followed by the adhesion of the counterpart Senate Committee (the Council of States) without any opposition whatever. The reform bill does not represent a return to the past (status quo ante), as hoped for in a cantonal initiative presented by Canton Ticino, but a new body of law presented in August 2009 [see ref. 2], which obtained favorable advance notice on the part of the Federal Council itself [see ref. 3]. These are the principal elements contained in the draft bill [see ref. 4]: 

  • In case of non-payment of the premiums or of cost co-payment the insurer must first send the insured one or more reminders, thus enabling the insured to find an out-of-court solution to the proceeding, and only decide to send an intimation to pay within 30 days at a later date.
  • If there is also no response to the intimation to pay, the enforcement procedure is started and the insurer may be obliged by the cantonal authority to draw up a detailed list with the names of the clients against whom they have started an enforcement procedure and with the amounts of unpaid debt. In this way the canton can calculate the amount which it will be called on to cover in case the enforcement procedure should end with the issuing of a certificate attesting insufficient assets.
  • In case of proven insolvency the canton pays the insurer 85 percent of the unpaid amount and hands over the certificate of lack of assets (a document of credit which can be cashed in up to twenty years later). In case of total or partial collection of the arrears over the years the insurer must pay back half of the amount taken to the canton.
  • Insured in arrears lose the right to change their health insurer until the time they (or the canton on their behalf) have paid off their debt entirely.
  • Unlike the present law, which leaves the cantons the faculty to decide whether to pay the amounts of the premium reductions directly to the insurers or to the households which have a right to them, the new body of law obliges the cantons to transfer these subsidies directly to the insurers, in order to prevent people who benefit from a subsidy from using the money they receive for other purposes, which forces the canton to pay twice.

The debate on this amendment [see ref 5] has dragged on over three parliamentary sessions; the discussion started in September in the National Council, continued in December in the Council of States and a new passage in both chambers was necessary in the spring session, with an appeal in the Chamber of Arbitration due to the lack of an agreement on an aspect of detail. The new articles of law 64a and 65 [see ref. 6] can only come into force once the deadlines for the launching of a referendum have passed, that is not before August 1st 2010.

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Characteristics of this policy

Degree of Innovation traditional traditional innovative
Degree of Controversy consensual rather consensual highly controversial
Structural or Systemic Impact marginal neutral fundamental
Public Visibility very low very low very high
Transferability strongly system-dependent strongly 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 no yes no no no

Initiators of idea/main actors

  • Government
  • Parliament
  • Payers
  • Political Parties

Stakeholder positions

Essentially this law amendment takes up again the contractual terms of a standby agreement that seemed to exist between the cantons and health insurers before the breach in discussions. For this reason a formal consultation process was not realized. The consensus was general on the need to solve the problem of the suspended insured rapidly; in both chambers the discussion was welcomed unanimously. But a difference in points of view between center-right and center-left parties emerged on an aspect of detail.

The reason for this is not so much a counter-position in values as the uncertainty about the real causes that had lead a growing number of Swiss insured not to pay their premiums. As suggested by Fuchs (1996) [see ref. 7], if the existing empirical evidence on a particular problem is poor, policy-makers are pushed to rely on their own beliefs, which are usually driven by ideology. In this case the uncertainty concerns the proportion of insured who do not pay their bills because they can't afford community-rated premiums and the proportion of the reluctantly insured, people who opt for free-riding, trusting that the government will intervene in their support if they should urgently need health care at some time.

According to the center-left almost the total number of insured in arrears belongs to the group of people obliged to bear an excessive financial burden because of the extremely regressive financing system of Swiss health insurance [see 8 for an updated evaluation of the level of vertical equity in Swiss health care financing]. For the center-right, the opposite is true:  insured who do not pay are mainly citizens who do not respect the social contract and do not assume their own individual responsibility. These opposing points of view were expressed by the two political wings very clearly during the parliamentary debate [see ref. 5].

Establishing where the truth lies is a matter which is not at all simple and presupposes a detailed study of the average profile of those people, whose health care cover has been suspended. The data available are somewhat sketchy and it is difficult to link the information recorded in the various datasets (tax information, social-economic information etc.).

A pilot study was commissioned by the government of Canton Ticino (limited to the suspended citizens resident in this canton) and published in July 2009 [see ref. 9]. In the sample of suspended insured, compared to the resident population, an overrepresentation can be seen of people aged 20-59, of divorced or single people and foreigners, of people who receive a subsidy for their health insurance and people who benefit from other forms of social aid.

A second interesting point of comparison is that 45 percent of the suspended insured do not have regular taxation; 35 percent were taxed automatically. This practice is set in motion when a person does not fill in his/her own income declaration. The incomes are estimated by the tax administration and slightly increased for penalty purposes, aiming at sanctioning the lack of respect of the rules and deadlines of the ordinary taxation procedure. As a result of this increased income, it is possible that people who would normally have a right to a subsidy because of their real economic situation are deprived of it. A large number of the people who are suspended indicate an income close to, if not below, the threshold for social intervention. It cannot be excluded that these people are facing living conditions that are more precarious compared to those who receive social aid, by virtue of a strong "threshold-effect". It must be noted that Ticino is among the Swiss regions with an average income that is 14 percent lower than the Swiss average, whereas the premium level is among the highest. Finally, 83 percent of the suspended insured had already been hit previously by a certificate attesting insufficient assets. In other words the enforcement procedure had already verified a preceding inability to pay of these citizens.

Therefore, the picture that emerges is one of people who, as a result of unforeseen events (a personal or family crisis), lose control over their situation; one quarter of those suspended made use of mental health services in 2008. So they find themselves in a situation of insolvency which is difficult to remedy. Finally, the study indicates that the suspensions are lasting for the majority of the insolvent insured; 75 percent of the people suspended on 31st March 2009 had been in this situation for 18 months or more. In fact, it is rare that suspensions of longer duration are revoked due to the payment of the arrears by the debtors. If a family of four had not paid the premium for two years, the accumulated debt would be around 20,000 francs. Among the somewhat limited number of people readmitted to the system more than half were suspended for less than a year, and for approximately a quarter of the subjects it was not the first suspension. Readmissions are recorded among people who alternate short periods of non-payment with periods of payment.

As confirmed in the bill of Ticino's Council of State of 6th October 2009 [see ref. 10], the article introduced in 2006 did not manage to stem the phenomenon of the insolvent insured nor forestall the non-payment of premiums. The reason is that, without distinction, the measure has hit both opportunist subjects as well as people who, for various reasons, have a hard time managing their own situations and have found themselves saddled with burdens of solidarity concerning the sick and the elderly, which are heavier than their own economic resources enable them to bear. It must be taken into consideration that a model of community rating financing, with ex-post earmarked subsidies, transfers heavy burdens of solidarity onto the shoulders of insured with incomes only slightly above the subsidy threshold. Moreover, on average the health insurance premiums have doubled between 1996 and 2010, while the increase in subsidies paid to households with modest incomes was insufficient to neutralize the effects of this rise.

Actors and positions

Description of actors and their positions
Government
Federal Councilvery supportivesupportive strongly opposed
Conference of cantonal health ministersvery supportivesupportive strongly opposed
Parliament
National Councilvery supportivesupportive strongly opposed
Council of Statesvery supportivesupportive strongly opposed
Payers
Santesuisse (Health insurers' association)very supportivesupportive strongly opposed
Political Parties
left-wingvery supportivesupportive strongly opposed
right wingvery supportivesupportive strongly opposed
current current   previous previous

Influences in policy making and legislation

The key points in the discussion concerned:

  • Which sanctions to adopt with those insured who continue not to pay their premiums because of ill-will, though they are solvent?
  • Is it right to force the insurers to pay back 50 percent of the amounts collected over the years to the cantons?

Since the Commission of the National Council considered the fundamental objective of the reform to be a reaffirmation of universal coverage in health insurance in Switzerland, it had preferred to refer to another seat the solution of the problem linked to those citizens who could per se pay but in fact do not take it on themselves to pay their premiums regularly. However, the plenum in the National Council decided to retrieve the proposal contained in a parliamentary initiative placed in March 2009 by right-wing exponents [see ref. 11], who suggested fixing in the federal law the model tested in Canton Thurgau regarding die-hard insured, that is citizens who persist in not paying health insurance although they have the means to.

In fact, the National Councillor who was the author of the initiative suggested including a new paragraph in the law reaffirming the principle of suspension of coverage limited to this category of insured [see ref. 12]. In this way the cantons would keep the power to decree the suspension of medical care, except for treatment of maximum urgency necessary to guarantee the survival of these citizens in case of illness. Not only: the cantons would also be granted the authority to fuel a database with the names of the so-called "black sheep" and to make this information accessible both to the providers of health care and to the municipal and cantonal authorities.

The second important change was proposed by a National Councilor who is on the scientific committee of a large sickness fund [see ref. 13] and during the debates the amendment was defended by the president himself of santésuisse (also a member of Parliament). In order to keep the incentive of the insurers intact so that they would undertake the necessary steps to collect the debts from the certificates attesting insufficient assets, the motion proposed abolishing the sickness funds' obligation to pay back the 50 percent of the amounts collected to the cantons. Both amendments were accepted by the majority of the National Council's deputies.

The ball passed into the court of the Council of States, which accepted the first proposal to suspend die-hard debtors and to draw up a black list but rejected the second (the opportunity for the insurers to keep 100 percent of the amount collected for the certificates attesting insufficient assets). After a further vote in both chambers, where parties kept to their own positions, in spring the arbitration chamber, a body for mediation, was called in. In the end it confirmed the original text , i.e. the obligation for the sickness funds to give back 50 percent of the credits collected to the cantons.

Legislative outcome

Enactment

Actors and influence

Description of actors and their influence

Government
Federal Councilvery strongstrong none
Conference of cantonal health ministersvery strongneutral none
Parliament
National Councilvery strongstrong none
Council of Statesvery strongstrong none
Payers
Santesuisse (Health insurers' association)very strongneutral none
Political Parties
left-wingvery strongstrong none
right wingvery strongvery strong none
current current   previous previous
Conference of cantonal health ministers, Santesuisse (Health insurers' association)Federal Council, National Council, Council of States, left-wingright wing

Positions and Influences at a glance

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

Expected outcome

Without doubt the decision to amend article 64a in order to reaffirm the principle of universal coverage and to avoid the suspension of medical care cover for insolvent insured is superior from the symbolic point of view to the simple contractual solution which seemed to be appearing on the horizon in 2008. In fact, the federal law amendment institutes a legal obligation for the cantons (and not only a contractual restraint) toward those who do not manage to pay their premiums. If the economic inability of an insured is proven, it is the community of taxpayers, through the cantonal treasury, who are called on to pay for the invoices in arrears in order to guarantee that health insurance is also maintained for these fragile citizens. This decision represents an important admission of the failure of the social shock absorber set up by the FHIA. The present system of subsidies is not enough to make the cost of health insurance financially sustainable for all. Some citizens simply do not have the economic means to deal with this expense and therefore the obligation of the cantons to intervene in their support is recognized.

The power granted to the cantons to draw up a black list with the names of the insured who abdicate their own civic duties, despite having the means, and the resulting opportunity to suspend their insurance coverage, thus excluding them from the system, in fact opens the door to the scenario of quasi-universal coverage. The sanction, though comprehensible for the purpose of limiting the moral hazard problem, conveys an insidious and dangerous message. However, the social contract, which the regime of health insurance is based on, is brought into question by the presence of "bad" citizens, who free-ride and exit from the solidarity contribution embedded in the Swiss health insurance system.

Secondly, the law amendment is also a sign of victory of the health insurance industry, which has battled for some years for the health insurance subsidies to be paid directly to the insurers rather than to the citizens themselves. Many cantons have put up resistance for years, claiming that the information that a family benefits from a subsidy is confidential and sensitive; therefore the insurer should not be aware of it. From the point of view of the procedure of money collection it is certainly safer to pay the subsidies to the insurers, who, in this way, have only to invoice subsidized insured with a part of the premium. It should be noted that at administrative level the system might incur heavy transaction costs, if the different members of one family were not insured with the same sickness fund. At the same time the knowledge of the amount of the subsidy is sensitive information about the economic situation of the insured, data which might offer the health insurance industry indications that could make cream-skimming strategies even more successful than they already are today.

Impact of this policy

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

References

Sources of Information

  1. Krugman, P. (2009), The Swiss Menace, New York Times (16-8-2009), www.nytimes.com/2009/08/17/opinion/17krugman.html?_r=1&scp=1&sq=krugman%20swissify&st=cse
  2. Kommission für Soziale Sicherheit und Gesundheit des Nationalrates (2009), Parlamentarische Initiative. Artikel 64a KVG und unbezahlte Prämien. Bericht vom 28. August 2009.www.admin.ch/ch/d/ff/2009/6617.pdf
  3. Bundesrat (2009). Parlamentarische Initiative. Artikel 64a KVG und unbezahlte Prämien. Stellungsnahme des Bundesrates zum Bericht vom 28. August 2009. www.admin.ch/ch/d/ff/2009/6631.pdf
  4. Bundesgesetz über die Krankenversicherung (2009). Entwurf. www.admin.ch/ch/d/ff/2009/6627.pdf
  5. Amtliches Bulletin (2009 and 2010). Parlamentarische Initiative SGK-NR. Artikel 64a KVG und unbezahlte Prämien. Wortprotokoll der parlamentarischen Diskussionen. www.parlament.ch/ab/frameset/d/n/4813/318729/d_n_4813_318729_318858.htm
  6. Bundesgesetz über die Krankenversicherung (2010). Änderung vom 19. März 2010. www.admin.ch/ch/d/ff/2010/2009.pdf
  7. Fuchs, V.R. (1996), Economics, Values, and Health Care Reform, The American Economic Review, Vol. 86, No. 1. (Mar., 1996), pp. 1-24.
  8. Bilger, M. (2008), Progressivity, horizontal inequality and reranking caused by health system financing: A decomposition analysis for Switzerland, Journal of Health Economics, 27, pp. 1582-1593.
  9. Egloff, M. (2009). Studio sul fenomeno degli assicurati morose. Mandato del Consiglio di Stato. www.ti.ch/CAN/SegGC/comunicazioni/GC/odg-mes/allegati/M6275-Allegato.pdf
  10. Dipartimenro di sanità e socialità del Cantone Ticino (2009), Messaggio del 6 ottobre 2009. Decreto legislativo che disciplina le conseguenze del mancato pagamento dei premi e delle partecipazioni ai costi nell'assicurazione obbligatoria contro le malattie. www.ti.ch/CAN/SegGC/comunicazioni/GC/odg-mes/6275.htm
  11. Bortoluzzi, T. (2009). Eigenverantwortung statt Vollkasko bei säumigen Krankenkassenprämienzahlern - am 16.03.2009 eingereichte parlamentarische Initiative 09.406. www.parlament.ch/D/Suche/Seiten/geschaefte.aspx?gesch_id=20090406
  12. Bortoluzzi, T. (2009). Antrag vom 22. September 2009. www.parlament.ch/sites/doc/CuriaFolgeseite/2009/20090425/N02,%20Bortoluzzi%20DF.pdf  
  13. Triponez, P. (2009). Antrag vom 22. September 2009. www.parlament.ch/sites/doc/CuriaFolgeseite/2009/20090425/N01,%20Triponez%20DF.pdf

Reform formerly reported in

The end of universal coverage has been averted
Process Stages: Implementation

Author/s and/or contributors to this survey

Luca Crivelli (proof reading by Mary Ries)

Suggested citation for this online article

Luca Crivelli (proof reading by Mary Ries). "Swiss are back to (quasi-) universal coverage". Health Policy Monitor, April 2010. Available at http://www.hpm.org/survey/ch/a15/1