In the healthcare sector, outpatient procedures, inpatient treatments, and nursing care are financed differently, leading to misaligned incentives. The parliament has approved a new unified financing mechanism, and the voters will decide in a referendum on November 24th.
The Key Points
- The Swiss healthcare system is riddled with misaligned incentives, resulting in wastage. One of these misalignments stems from the varying financing of different healthcare services. For instance, hospital-based inpatient treatments may be cheaper for health insurance companies than comparable outpatient procedures, even though the latter are much more cost-effective for the overall system. The proposed referendum aims to eliminate this misalignment and introduces a unified financing mechanism for outpatient, inpatient, and nursing care. Supporters believe this will reduce the overall costs of the system and ease the burden on health insurance premium payers.
- Trade unions have initiated the referendum. They argue that the reform, by integrating nursing care into the financing mechanism, will lead to higher health insurance premiums and does not address the needs of the nursing staff adequately.
Detailed Overview of the Proposal
The referendum alters the financing of healthcare services regulated by the Health Insurance Act (KVG). This encompasses a volume of around 50 billion Swiss Francs per year, with an upward trend annually. Under the current law, outpatient net services (minus patient co-payments) are entirely borne by health insurance companies and their premium payers. For inpatient services – involving patient overnight stays in hospitals – currently, at least 55% of net costs are covered by cantons and thus taxpayers. The situation is more complex for nursing care, but the costs exceeding the patient’s co-payment have been shouldered by health insurance companies to the tune of about 54% on average in recent years, with the remaining portion borne by cantons and municipalities.
The reform introduces a unified financing mechanism. Whether outpatient, inpatient, or nursing care, in the future, cantons will always cover a minimum of 26.9% of net costs, with health insurance companies covering a maximum of 73.1%. Just like in the current system, cantons can voluntarily increase their share. The reason for the odd numbers in the new distribution key is that with this key, the system switch would have been cost-neutral for health insurance companies and their premium payers on average across all cantons during the reference period from 2016 to 2019.
The new distribution key is set to take effect for outpatient and inpatient services from 2028 and for nursing care from 2032 onwards. The system switch also entails changes in the roles of various stakeholders. Cantons will now be part of the tariff organization for outpatient services, as they will also contribute to financing. Nursing services, in addition to patient co-payments, have been funded by a contribution per person in need of care set by the Federal Council and the remaining funding by cantons. Under the new system, nursing tariffs will be negotiated through a tariff organization representing nursing service providers, health insurance companies, and cantons.
Impact of Unified Financing
The unified financing is expected to align incentives for health insurance companies and cantons, encouraging them to promote the most cost-effective treatment methods since the financing shares for different methods will be the same. In the current system, outpatient treatments can be more expensive for health insurance companies due to full cost coverage than inpatient procedures, even though the latter are more costly overall.
Overall, inpatient procedures are often two to four times more expensive than comparable outpatient treatments. This is not only due to patient overnight costs but also the more expensive infrastructure and higher staffing requirements. In recent years, there has been a noticeable shift from inpatient to outpatient care, but Switzerland still has significant potential for improvement compared to international standards. The Federal Council refers to OECD country association data, indicating that in Switzerland in 2022, the market share of outpatient treatments was only 21%, far below the European peer country average of 42%.
The unified financing will increase the incentive for health insurance companies to enhance the trend towards outpatient treatments. While it is ultimately the doctors who decide whether a treatment is done on an outpatient or inpatient basis, the financing reform will make alternative insurance models with doctors’ budget responsibility more attractive. These models achieve savings, in part by avoiding unnecessary inpatient treatments, and can pass on the savings to policyholders in full in the future. This could lead to higher discounts – up to 25% instead of the current 20%. This potential could attract additional customers to such models. Currently, estimates suggest that only about 20 to 30% of all policyholders are in a model with doctors’ budget responsibility.
Conclusion
In conclusion, the proposed unified financing mechanism for healthcare services in Switzerland aims to address misaligned incentives, reduce unnecessary hospitalizations, curb rising healthcare costs, and alleviate the burden of health insurance premiums. By promoting the shift from inpatient to outpatient procedures, the reform is expected to alleviate staff shortages in hospitals. However, opponents argue that the reform may lead to higher health insurance premiums, especially with the integration of nursing care into the financing mechanism, and may not generate significant cost savings as decision-making power on outpatient or inpatient treatments lies with doctors.
FAQ
- When will the new financing mechanism take effect for outpatient and inpatient services?
The new financing key is set to be implemented from 2028 onwards for outpatient and inpatient services. - How will the unified financing impact health insurance premiums?
The reform is expected to result in a reduction in health insurance premiums by aligning incentives and promoting cost-effective treatment methods. - What are the main arguments for and against the proposed reform?
Supporters believe the reform will reduce costs, curb unnecessary hospitalizations, and ease the burden on premium payers. Opponents argue that it may lead to higher premiums, especially with the integration of nursing care, and may not generate significant cost savings.