A Century Old Project Within Reach: The Overhaul of the Health Insurance Act

The introduction of mandatory health insurance had been on the political agenda since 1900. Following a number of pr0posals, the issue was finally and for the first time implemented in the revised Health Insurance Act. This Act included a certain degree of premium standardization, an expanded catalogue of benefits as well as cost-cutting measures.

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On 4th December 1994, voters accepted the completely overhauled Health Insurance Act (KVG) – which is valid to this day. The new law was the first to include a general obligation for health insurance. It enabled of the insured to switch from a health fund provider to another, stipulated equal premiums for men and women, and eradicated premiums differentiated by age. The catalogue of benefits was somewhat expanded (for instance in hospital care) as well as standardized. The system of subsidies to health funds that had applied since 1911 was replaced with a system of individual premium reductions aimed at benefitting single persons and families with low incomes. However, mandatory daily sickness allowance insurance was not accepted; this would have covered loss of income due to illness.

The complete revision was a complicated and drawn-out affair. After the 1987 failure of a partial revision, the Federal Council decided to get to work on a fundamental set of reforms. The proposal was presented to Parliament in 1992. The reform was further complicated by the range of stakeholders involved (parties, cantons, health funds, doctors, hospitals and the pharmaceutical industry) which all held different interests. A popular initiative launched by the health insurance association called for an increase in subsidies to existing health funds, while an initiative by the Social Democratic Party advocated income-related premiums. Both initiatives were rejected in 1992 and 1994 respectively. At the same time, the pressure for reform intensified due to the disproportionate rise (relative to gross domestic product) in healthcare costs and health fund premiums. Between 1985 and 1990 alone, healthcare costs per person rose by 42 percent. On average, premiums had increased ten-fold between 1965 and 1990; they had therefore increased much more sharply than household incomes. At the beginning of the 1990s, the Federal Council and Parliament thus took a number of measures to cut costs and increase burden sharing between policyholders. The Health Insurance Act provided for a temporally limited compensation of risk between the funds as well as instruments to encourage competition, health prevention measures and cost controls (including by means of price and tariff controls, cost transparency and cost sharing). Costs and premiums continued to increase, leading to renewed proposals for reform in more recent years – all which have so far failed.

Literatur / Bibliographie / Bibliografia / References: Obinger Herbert, Armingeon Klaus et al. (2005), Switzerland. The marriage of direct democracy and federalism, in H. Obinger, S. Leibfried et al. (ed.), Federalism and the welfare state: New World and European experiences, 263–306; Année politique Suisse / Schweizerische Politik, 1990–1994.