How can we ensure that all people have fair and affordable access to the healthcare system?
In Switzerland, the financial burden of healthcare costs for low-income households is a particularly relevant topic due to the compulsory insurance with income-independent per capita premiums. The individual premium reduction (IPV) is intended to remedy this situation and, with its cantonal organisation, offers exciting opportunities for economic research.
Industrialised countries around the world are facing the challenge of ensuring financial access to healthcare for all citizens. Public healthcare systems are faced with rising expenditure that has to be covered by taxpayers' money, which may subsequently be lacking elsewhere. In turn, countries with private insurance models are faced with rising premiums that are potentially unaffordable for low-income households. For example, although compulsory health insurance is an important pillar of the Swiss healthcare system, with per capita premiums that are independent of income, the financing of the healthcare system is an even more immediate problem for people in difficult financial situations than in other countries.
Design of transfer services
In political discourse, the level of transfer payments is usually debated. However, economic research shows that the specific design of subsidies is often just as important for their success. The cantonal sovereignty in IPV leads to major differences between the systems and therefore also exciting opportunities to empirically analyse the efficiency of the individual subsidy mechanisms.
One major difference in IPV between the cantons concerned the payment of IPV. Until harmonisation was ordered by the federal government in 2014, the Swiss cantons could decide for themselves whether to pay the IPV contributions directly into the insured person's account or transfer them to the health insurance companies, which automatically reduced the premiums. Christian P.R. Schmid and Nicolas Schreiner from the CSS Institute, together with Alois Stutzer from the University of Basel, used this reform to analyse the impact on the financial problems of the people receiving support. They compared the data from cantons that were affected by the changeover with those from cantons that did not have to change their practices.
The change in payment immediately and sustainably led to 20% fewer reminders for premium invoices, while debt collection fell by 12%. At the same time, there is no evidence that households are now experiencing payment difficulties with other expenses. Evidence-based design of the framework conditions in the healthcare system can therefore achieve social policy goals more effectively without costing a single additional franc - even with a seemingly small adjustment such as the IPV payment method.
Individual premium reductions were introduced with the Health Insurance Act (KVG) to alleviate financial inequalities. In its message to Parliament, the Federal Council emphasised that the aim of health insurance should not only be solidarity between the healthy and the sick, but also between the rich and the poor. However, the premium reduction only applies to premiums and not to co-payments such as deductibles and co-payments. Despite the high annual expenditure of over CHF 5 billion, there is little research on this using modern methods. This raises the question of whether the IPV is designed efficiently enough to ensure financial fairness in the healthcare system. Although the federal government bears around 50% of the costs of IPV, implementation is the responsibility of the cantons. This leads to considerable differences, for example in the generosity of support and the criteria for eligibility. Switzerland's federal structure therefore offers unique opportunities for research to analyse the effects of these different approaches to premium reduction, but also to transfer benefits in general. Causal empirical analyses can thus provide evidence-based foundations to ensure sustainable access to healthcare for all.
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