How can we ensure that everyone has fair and affordable access to the healthcare system?
In Switzerland, the financial burden of healthcare costs for low-income households is a particularly relevant issue due to the mandatory health insurance system with income-independent flat-rate premiums. The individual premium reduction (IPV) is designed to alleviate this burden and, with its cantonal organization, offers exciting opportunities for economic research.
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Globally, industrialized countries face the challenge of ensuring financial access to healthcare for all citizens. Public healthcare systems are grappling with rising expenditures, which must be covered by tax revenues that may consequently be unavailable for other needs. On the other hand, countries with private insurance models face increasing premiums, which can become unaffordable for low-income households. In Switzerland, the mandatory health insurance system is a crucial pillar of the healthcare system. However, with income-independent flat-rate premiums, the financing of the healthcare system poses an even more immediate and tangible problem for people in difficult financial situations compared to other countries.
Design of transfer services
In political discourse, debates typically focus on the amount of transfer payments. However, economic research shows that the specific design of subsidies is often just as important to their success. The cantonal authority over the IPV results in significant differences between systems, creating exciting opportunities to empirically analyze the efficiency of 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 the payment method immediately and sustainably reduced premium payment reminders by 20%, while debt collection proceedings decreased by 12%. At the same time, there is no evidence that households faced payment difficulties with other expenses as a result. By designing the framework of the healthcare system based on evidence, social policy objectives can be achieved more effectively without spending a single additional franc — even with seemingly small adjustments like the payment method for the IPV.
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To mitigate financial inequalities, the individual premium reduction (IPV) was introduced with the Health Insurance Act (KVG). In its message to Parliament, the Federal Council emphasized that the goal of health insurance should not only be solidarity between the healthy and the sick but also between the wealthy and the poor. However, the premium reduction applies only to premiums and not to cost-sharing elements like deductibles and co-payments. Despite annual expenditures exceeding 5 billion francs, there is little research on this topic using modern methods. This raises the question of whether the IPV is designed efficiently enough to ensure financial equity in the healthcare system.
Although the federal government covers approximately 50% of IPV costs, its implementation is the responsibility of the cantons. This results in significant differences, such as in the generosity of support and eligibility criteria. Switzerland's federal structure thus offers unique opportunities for research into the effects of these differing approaches to premium reduction and transfer payments in general. Causal empirical analyses can provide evidence-based foundations to sustainably ensure access to healthcare for all.