Health Funds

Health funds are among the most influential stakeholders in social policy. They have successfully fended off centralist projects for an expanded welfare state since the late 19th century. They are also partly responsible for the fact that health insurance in Switzerland developed largely within the private sector.

The history of health funds dates back to the second half of the 19th century. Alongside industrialisation, companies, professional associations or municipal authorities set up numerous small local and regional assistance funds. They offered minimum protection against the risks of illness, disability or death and spread quickly from the 1860s onwards. Their average size also grew during this time. In 1865, 632 health funds existed throughout Switzerland, on average serving 150 insured. This number had increased to over 1,000 funds with a medium of 200 members by the end of the 1880s. Less than five per cent of the overall population was insured. In industrialized regions like the cantons of Glarus, Zurich or Basel-City, the fraction of the population insured rose to up to a quarter. A growing number of funds specialized in health insurance since the 1890s. This marked the birth of the modern health funds.

Towards the end of the 19th century, there was a wide range of health funds. Many were limited to certain types of members; trade union funds were restricted to certain occupational groups, corporate funds to a company’s employees, communal and regional funds to local or regional inhabitants and Catholic funds were limited to the Catholic denomination. These funds emphasized the notion of cooperative association among peers. Only a few funds provided coverage across multiple regions or throughout the whole country. It was not until during the 20th century that a process of concentration began to take hold. This resulted in the formation of larger and increasingly interregional health funds acting as commercial insurance companies.

In 1900, more than half of all health funds merely offered wage compensations, while the costs of medical treatments had to be paid by the employees themselves. Switching from one fund to another was difficult. Many funds had set up rigorous admission requirements and no mobility rules were in place. To overcome this problem, a number of different health funds merged into regional or cantonal associations at the end of the 19th century and later formed national concordats (in 1891 the Swiss-German Concordat of Swiss Health Funds, KSK; in 1893 die Fédération des sociétés de secours mutuels de la Suisse romande, and in 1921 die Federazione ticinese delle casse malati, both of which joined the KSK in 1985 and became known as santésuisse since 2002).

Since 1900, health funds have exerted increasing influence on doctors’ incomes. In many places, collective tariff agreements were arranged between health funds and medical societies, regulating the fee rates for medical services.

For fear of losing their autonomy, many health funds remained skeptical towards national efforts to introduce a state health insurance obligation. There were also a number of federalist reservations towards centralized state programs. The opposition of health fund organizations was vital in the clear defeat of the first Health and Accident Insurance Act (KUVG) in the referendum of 1900. Consequently, the revised KUVG of 1912 was limited to federal subsidies to the cantons and municipalities that established compulsory health insurance on a regional basis.

This practice represented a turning point in the development of health funds. Health insurance remained predominantly within the private sector for the subsequent decades. Although a number of cantons passed laws on compulsory insurance – starting with the canton of Basel-City (1914) before encompassing almost half of all cantons by the end of the 1920s – the obligations typically only applied to workers with low wages. The vast majority of the population was still privately insured or had no health insurance at all. Ultimately, the health funds benefited from these obligations. They successfully fended off the creation of state funds. There were, however, some exceptions – such as in Basel-City. Likewise, the insurance obligation was largely restricted to the private funds. Following this initial phase of expansion, almost half of the population held health insurance by 1935.

The surge in health funds resulted in the balance of power shifting from medical societies towards health funds associations. The intense tariff disputes that broke out during the global economic crisis of the 1930s persisted until during the Second World War. Throughout the war, the medical profession and health funds also debated fundamental reforms to the health sector. In part, this debate flared just when the Beveridge Report called for a substantial expansion to the British welfare state and received broad international attention in 1942. In 1941 the health fund associations launched an initiative for the ‘Concentration of Swiss Social Insurance’. The aim was to establish a national social insurance encompassing all branches of social insurances that had not yet been implemented (income compensationunemploymenthealth, old age, survivors’ and disability insurance, with the exception of the already established Suva). The Federal Council rejected the proposal just like the Beveridge Report model in 1943 because it considered it to be incompatible with the federalist Swiss welfare state with private insurers playing a major role.

The period after the Second World War was one of sustained growth and consolidation for the health funds with the number of insured soaring from around two to approximately seven million between 1940 and 1980. At the same time, the number of health funds halved. The prevalence of health insurance reflected the post-war advances in welfare and the associated propagation of insurance in general (numbers section). 

In the second half of the 20th century, health insurance was characterized by increasing costs. The growth of the health sector and the increasing demand for medical services put pressure on the funds’ finances. The authorities often limited the level of premiums wherever health insurance was mandatory. The funds were thus unable to raise premium rates in accordance with rising costs, meaning many incurred structural deficits. Therefore, the partial revision of the KUVG of 1964 substantially increased the federal subsidies to the funds.

At the end of the 1960s, demands for a national obligation for health insurance returned to the political agenda after the launch of a popular initiative on this theme by the Social Democratic Party (SP). Health funds and the medical profession supported a counterproposal that was also backed in Parliament; it provided for compulsory contributions, yet no insurance obligation. However, the electorate rejected both proposals in 1974. The steadily rising healthcare costs consequently led to a political blame game. The Confederation capped its subsidies to health funds for austerity reasons. In response, the health funds jacked up insurance premiums in the 1980s and became the target of increasing public criticism. The reform debates were therefore increasingly focused on proposals to contain rising costs in health insurance – a demand put forward not least by the health funds. After a failed attempt in 1987, the successful Health Insurance Act (KVG) of 1996 not only introduced a federal obligation, but also introduced the legal basis for various cost-saving measures in health insurance. Health funds have since expanded their range of insurance accordingly, now including extended models of personal contributions by policyholders for their treatment costs (deductibles). The higher the policyholder set the annual deductible, the lower their insurance premiums would be. Furthermore, insurance models restricting access to medical service providers (managed care models) that   were introduced. These plans involve reduced premiums combined with a limited choice of doctor; policyholders would, for instance, only have access to HMO practices or family doctor networks. More recently, the left called for the introduction of a state health fund (Einheitskasse) – as part of a popular initiative launched by the SP and the Green Party. The idea of a state health fund, which was rejected by voters in 2007, was based on the argument that it would reduce administrative costs and remove competition among funds for policyholders with the lowest health risks. Health funds and bourgeois parties criticized the model for being too centralist and granting the state too much power.

> Health insurance in numbers

Literatur / Bibliographie / Bibliografia / References: Uhlmann, Björn, Braun, Dietmar (2011), Die schweizerische Krankenversicherungspolitik zwischen Veränderung und Stillstand, Zürich; Muheim, David (2000), Mutualisme et assurance maladie (1893-1912). Une adaptation ambigue, traverse. Zeitschrift für Geschichte, Heft 2, S. 79-93; Lengwiler, Martin, Rothenbühler, Verena (2004), Macht und Ohnmacht der Ärzteschaft. Geschichte des Zürcher Ärzteverbands im 20. Jahrhundert, Zürich.