What Happens When Basic Health Insurance Coverage Is Expanded?

On May 17, 2009, the Swiss population voted in favor of “considering complementary medicine” by the federal and cantonal authorities within their respective areas of responsibility, with a 67% approval rate. In the area of mandatory health insurance, the new constitutional provision was implemented by including four treatment methods in the catalog of benefits: Medical services in the fields of anthroposophic medicine, acupuncture and herbal therapies of Traditional Chinese Medicine (TCM), homeopathy, and phytotherapy have been covered by basic insurance since 2012. Previously, these treatments had to be paid for out-of-pocket or via private supplementary insurance. This raises two questions: What are the financial consequences for basic insurance, and how does the behavior of physicians change as a result of this expansion in coverage?

For our analysis, we leveraged the fact that complementary medical services can only be billed by physicians who have completed relevant additional training. It is also important to note that such training programs were available long before the referendum and its implementation. In fact, today’s certification programs for homeopathy, Traditional Chinese Medicine, and anthroposophic medicine have existed since 1999. Therefore, when these four treatment methods were added to basic insurance, there were already doctors who had undergone the required training, as well as others who had not. By comparing these two groups over time, we can investigate the effects of the expanded coverage. Physicians without complementary medical training serve as the “control group” since nothing directly changed for them.

To analyze physician behavior, we used data from two sources, both covering the period from 2007 to 2017. First, we utilized the SASIS “data pool,” which includes virtually all services covered by Swiss health insurers under basic insurance. These data allow us to assess the financial impact of the coverage expansion with great precision. Second, we used data from CSS, which insures about one-sixth of the population. The advantage of the CSS data is that they also include services paid for by supplementary insurance. This enables a deeper analysis of how doctors responded to the coverage change. Although the CSS data represent only a subset of the data pool, they are very comparable – especially for the physician services that matter most for our analysis: In the data pool, physicians with complementary medical training billed CHF 381 per patient before the coverage expansion, while the figure in the CSS data is CHF 380. In the control group, the corresponding figures are CHF 333 and CHF 334, respectively – a difference of only one franc in each case.

The chart below shows the trend in cost per patient for the group of alternative medicine physicians, i.e., doctors who had the relevant training before the coverage expansion, and the control group. Two things are noteworthy: First, the physician costs for alternative medicine doctors are clearly higher than for the control group, but they follow a parallel trend up to 2011. Second, at the point of coverage expansion in 2012, there is a noticeable cost increase for alternative medicine physicians – about CHF 25 per patient, corresponding to 7.1% of physician services. A detailed analysis shows that this increase is almost entirely due to homeopathic practitioners, for whom costs rose by about CHF 70 per patient. The inclusion of the four treatment methods in the catalog of benefits has therefore increased costs in the basic insurance system. However, we still do not know whether this increase is due to changes in physician behavior or merely a shift of costs from supplementary to basic insurance.

Looking at the second chart, which is based only on CSS data, we see a very similar pattern. The trends in both groups are almost parallel before the coverage expansion, and in 2012, there is a rise for alternative medicine physicians. However, this chart includes two additional lines: The violet line shows the trend in costs for alternative medical services covered by supplementary insurance, while the red line represents the total costs incurred by alternative medicine physicians – that is, the sum of costs from basic and supplementary insurance. The violet line shows a decline starting in 2012, which is not surprising given that part of complementary medicine is now covered by basic insurance. What is interesting, however, is the comparison between the red line and the trend in the control group. There is no longer a difference starting in 2012, meaning that alternative medicine physicians did not provide more services due to the coverage expansion. In other words, there is no indication of a volume increase – the services are simply being financed differently than before.

There are several reasons why we might not see a volume increase. First, the demand for alternative medical services may not be very price sensitive. That is, patients’ preferences may play a more significant role than insurance coverage. Second, perhaps little has changed for patients, since about two-thirds of them already had supplementary insurance that covered alternative medicine before 2012. For this group, the effective price changed only slightly. If one group of customers has no preference for the service and the other group experiences no real change, it’s not surprising that there is no change in quantity. It is interesting, however, that the approval rate for the constitutional amendment and the share of the population with supplementary insurance for complementary medicine are very similar. This raises the possibility that a majority has arranged for a service to be financed in solidarity by a minority, even though that minority has no preference for the service.

Ultimately, this is about what belongs in the basic insurance package – and about the fair distribution of healthcare costs. In this case, one could argue that the amount involved is relatively small. Today, basic insurance pays only about CHF 18 million per year for complementary medicine services across Switzerland. On the other hand, there was a functioning market and insurance products that met patient needs before the reform. From an economic perspective, the justification for the expansion of coverage is therefore questionable. Recently, there was another expansion of basic insurance, covering podiatry and psychological psychotherapy – again partially at the expense of supplementary insurance. The general trend is an increasing share of services financed through solidarity, and therefore rising premiums in basic insurance, while private financing is declining. Given the growing burden of premiums, it would be desirable for the political debate to place greater emphasis on the trade-off between the scope of services and the cost of premiums.