Why are Swiss health insurance premiums becoming more expensive — again?

Healthcare premiums eat up a considerable chunk of a household's budget and are a big strain on low, and often also middle-income families and individuals.

After this year’s increase in premiums, another hike is on the horizon: while it is not yet known exactly how much more expensive health insurance will become in 2024, Health Minister Alain Berset has not ruled out that it will be "above average." (Though he did not specify what he meant by ‘average’, as premiums have not increased in a uniform manner in the past years, this does not signal good news for the consumers).

Why do these rates keep rising and what determines how high they are?

This is a very complex issue as there are several (also complex) factors that play a role in setting prices.

And though you may be inclined to think the insurance companies are just being too greedy, there is more involved in the price-setting process.

First of all, insurance providers don’t fix the prices themselves — this is done each year by the Federal Office of Public Health (FOPH) based on various criteria, as explained below.

Companies can’t unilaterally raise their premiums above those set by FOPH, at least not for the mandatory part of the health insurance — known as KVG in German, and LaMal in French and Italian.

They are not allowed to make profit on KVG / LaMal (they can do so on the complementary / supplemental policies, however), so they have no incentive to manipulate official FOPH-mandated rates.

So the question is, what criteria does FOPH take into account in determining annual premiums?

One of the main factors is the overall cost of healthcare. And this in itself is a major reason why the premiums are so steep, and getting steeper as time goes by.

Switzerland has one the world’s priciest healthcare schemes, which may not be all that surprising given that the country is generally among the most expensive.

Some of the reasons cited by Santésuisse, an umbrella organisation of health insurers, are longevity, which means that as people live longer, they tend to suffer more from chronic, cost-intensive diseases.

But while there is nothing to be done about longevity-incurred costs, most over-spending is due to mismanagement, according to Tobias Müller, a healthcare researcher at Bern University of Applied Sciences.

This includes tests, treatments, and procedures that are not medically necessary, as well as medications (including generic ones) that cost more in Switzerland than elsewhere in Europe.

READ ALSO: Why is Swiss health insurance set to get more expensive? 

Exorbitantly high prices that insurance companies must pay for medical services and drugs must be compensated somehow, so they ultimately end up being paid by consumers in the form of higher premiums.

Remember Covid?

During the pandemic, the Swiss government spent an unprecedented sum of money.

For instance, each Covid patient admitted to an ICU cost about 100,000 francs. 

Then there were various other expenses as well: the cost of testing (which were free for long periods of time), tracing and tracking, as well as vaccines — all of which cost the government billions of francs.

One of the reasons the FOPH cited for the current hikes was that the pandemic made estimating healthcare costs “particularly difficult."

And as there was only a slight increase in premiums in previous years — 0.5 percent in 2021, and they actually fell by 0.2 percent in 2022, “it now appears that the premiums paid during the years 2021 and 2022 proved insufficient to cover the costs, so a catch-up is essential,” according to FOPH.

How much more will consumers have to pay for their health insurance in 2024?

The exact figure will not be released until October, but based on the indications we have so far, they are likely to be even higher than current ones: the statistics for January and February already show a 7.5-increase in costs per insured person.

Keep in mind, too, that healthcare premiums vary from one canton to another, so your actual rate may be well above this figure.

For instance, although the average increase in 2023 was 6.6 percent, the premiums in some cantons rose above that: Neuchâtel’s rate went up by 9.5 percent, Appenzell Innerrhoden’s by 9.3 percent, and Ticino’s by 9.2 percent.

Residents of Zurich saw their premiums climb by 7 percent.

The reason is that that cantons have different health infrastructure and levels of government funding.

Demographics and statistics also play a role: health premiums in cantons with younger and healthier population will be lower than in those with higher incidence of disease, and older, chronically ill people.

READ ALSO : Why do Swiss healthcare premiums vary so much per canton?