The end of universal coverage has been averted

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Abstract

Thanks to an agreement between the Conference of Cantonal Health Ministers and the general association of health insurers a solution to the problem of the suspension of universal coverage for citizens who do not regularly pay their compulsory insurance premiums seems to be in sight; this suspension was decreed by an amendment to the FHIA which came into force on 1st January 2006. In these last two years the number of people without health care coverage in Switzerland has grown exponentially.

Purpose of health policy or idea

For some time now the Swiss health insurance system has been facing a thorny problem; a growing number of insured are insolvent. Although health insurance is compulsory and premium subsidies are foreseen for the insured with modest income, several households do not pay the premium due to their sickness fund regularly. What are the reasons for non-payment? There are two hypotheses.  

• According to some the burden of the compulsory premium has become unsustainable for several citizens. The present system of community rated premiums implies a significant solidarity contribution from young families in good health in favor of the aged and sick. The system is therefore the result of an intergenerational agreement, and reciprocity among age classes plays a significant role for the future sustainability of the system. Since citizens who are not eligible for earmarked subsidies pay premiums that do not depend on their ability to pay, health insurance weighs heavily on the budget of middle income households. Finally the cantons are faced with expenditure levels (and therefore premium levels) which differ greatly from one another and they subsidize economically weak households with greatly varying degrees of generosity and following extremely heteogeneous approaches.
• According to others the problem is due to the opportunistic behavior of some citizens who are in good health and, although they could afford to pay the premium, would decide to shirk the solidarity toward the sick speculating on the fact that the State will guarantee them life-saving health care services in any case.

Therefore the Swiss Parliament has decided to strengthen the sanctions placed on those who do not pay their premiums, giving the health insurers the opportunity to suspend the coverage of the health care services consumed by the insolvent insured in the short term; this suspension will be maintained until all the unpaid invoices have been settled. An apparently marginal change to the legislation is thus producing a dramatic impact on the goal of granting universal access to health care services.

Main points

Main objectives

Strengthen the sanctions placed on those who do not pay their premiums

Type of incentives

Suspension of universal coverage

Groups affected

Insured who do not pay premiums, cantons and public hospitals

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral

Political and economic background

From the introduction of the amendment on 1.1.2006 a rapid rise has been reported in the number of insured whose cover of universal access services has been suspended. According to the estimates of the Conference of Cantonal Health Ministers in 2006 in Switzerland there were 119,000 cases of insolvent insured whose cover had been suspended; this corresponds to approx. 1.6% of the population. Six months later the number of cases was already higher than 150,000. In Canton Ticino the number rose in six months from 6500 insured suspended, equal to 1.9% of the population, in December 2006 to 10,400 (3.2%) in July 2007.

The average profile of the insolvent persons is also very interesting. From a sample study carried out in Ticino, on a representative sample of 612 cases, the following average profile of insolvent insured can be seen [see ref. 1]:

• Average age: 40
• One third of the sample has an income below the limits for subsidy and therefore receives a partial reduction of the premium; moreover 10% are assisted by social aid and a further 10% receive various forms of income support for families with modest income. The remaining two thirds are often people who have not applied for a premium reduction even though they could be eligible for subsidy, or who have not filled out the tax return and are therefore taxed on an administrative assessment for high amounts as a sanction for their negligence. A preceding study relating to the population affected by a certificate attesting insufficient assets showed that 39% of those concerned were taxed on an administrative assessment, whereas 13% were not taxed at all.   
• 55% of the sample had already had notices of judgement for debt which ended in a certificate attesting insufficient assets being issued.

Generally, therefore, these are young people in socially and economically weak situations, who are still in good health or do not have great health problems. They are predominantly single (58% of those of major age). Since the unpaid amounts are destined to increase over the years, getting back into the ordinary circuit by their own means becomes costly and almost impossible and it risks dragging a future family into a situation of suspension as well; at present, even though we are only at the beginning of the measure and the unpaid amounts are still small, only 3.3% of the insolvent pay the arrears and come back into the ordinary system. 

Source: Estimations of the Conference of Cantonal Health Ministers (2007)

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Origins of health policy idea

Proposal of a new article of the FHIA (61a) in 2000

Already in 2000 within the ambit of the message drawn up in view of a second revision of the Federal Health Insurance Act (FHIA) [see ref. 2], the Federal Council had suggested that Parliament insert into the law the possibility for health insurers to rapidly suspend every coverage for insolvent insured. The suspension would have been possible if an insolvent insured, cautioned and duly informed about the consequences of non-payment, had not settled the unpaid premiums within 30 days of the warning (see ref. 3, article 61a). On the other hand, once the debts had been written off, including the interest on arrears and administrative expenses, the patient would have had the right to full integration into the insurance scheme and to retroactive cover for the health care services consumed during the suspension period. As is known, the whole project of the second revision of the FHIA fell through in Parliament in December 2003 and as a result also article 61a never became operative.

The solution proposed in 2000 by the Federal Council was decidely more drastic than the law in force at that time. In fact, usually the insurers had to wait for the notice for judgement for debt to be concluded and this often lasts more than 12 months. If solvency was proven, the competent authority used to expropriate assets or hold back part of the salary until the debt was paid off, whereas in the case of insolvency, sanctioned by the issuance of a certificate attesting insufficient assets, social aid would take over the payment of the retroactive premiums. The practice adopted by many cantons had however begun to create a certain ill feeling among the insurers.

Faced with the issuance of a certificate attesting insufficient assets and with the necessity to cover the whole amount of unpaid premiums in order to reinstate a cover which was itself compulsory, some cantons reserved the right to choose between two alternatives, depending on the economic convenience:

1. taking on themselves the treatment costs of the insolvent; this choice was often favored in the case of young people in good health, with the result that these individuals, whose risk of falling sick was low, were excluded definitively from the "pooling" of mandatory insurance and at the same time their return into the system was made somewhat costly.
2. paying the premiums, both retroactive and future ones, in order to reinstate the insurance cover; this choice was usually more convenient for people requiring treatment due to serious illness or to old age.

It is important to underline how the amendment to the FHIA, of which we will say more in the continuation of this section (it is a new article of law, 64a, which came into force in 2006 and differs slightly from article 61 proposed in 2000), is embedded in the framework of ever-increasing disagreement between the two main financing bodies of Swiss health care: the cantons and the health insurers. Other thorny areas in the relationship cantons-health insurers concern: (1) the sharing of the burdens of hospital financing [see report 11/2008]; (2) the passage to a monist financing system [see report 6/2005]; (3) the cover of costs for long stay treatment in nursing homes or at home [see report 5/2005]; and (4) payment of subsidies directly to the insured with modest income or directly to the health insurers.

Proposal of a slightly revised new article in 2004 (64a), in force since 1.1.2006

The amendment of law suggested in 2000 was re-launched by the Federal Council during 2004 within the ambit of the unbundling strategy [see report 3/2004], and was approved by the Federal Assembly on 18th March 2005 [see ref. 4, article 64a], without provoking particularly animated discussions [see ref. 5]. Compared to the draft bill of 2000 the new article 64a presupposes a longer procedure before services can be suspended: non-payment of three monthly premiums and the deposit of a request by the health insurer for the debt action to continue.

Some cantons, among them for example Ticino - see ref. 6, 7 and 8 - reacted to the introduction of this new article by adapting the canton's legal bases. In the legislative decree of 18th September 2007 Ticino anchored the normal procedure of being able to choose between two alternatives in the law, although it is provisional until the end of 2008: (1) reimbursing the sickness funds for the unpaid credits of the insured whose insurance coverage has been suspended or (2) directly assuming the costs of urgent life-saving treatment.

On the other hand other cantons, especially the Swiss French, have signed conventions with the health insurers, although the Conference of the Cantonal Health Ministers recommended its members to avoid subscribing to such agreements, with the intent of forcing a solution at legislative level, that is going back to amending article 64a radically.

Basically the conventions between cantons and santésuisse (the association of Swiss health insurers) provide for two things: (1) the cantons commit themselves to settling the unpaid credits of all the insured who have been issued a certificate attesting insufficient assets (this is transferred by the insurers to the cantons) after the assessment has been concluded; (2) against this the insurers commit themselves not to suspend the services for the period between the request for the notice of judgement for debt and obtaining the certificate attesting insufficient assets.

Toward a new solution: a step backward in the legislation as result of an armistice between cantons and health insurers

In the months of April and beginning of May 2008 the cantons and the health insurers negotiated an agreement and will jointly submit a request for the amendment of article 64a of the FHIA to Parliament. On the one hand the cantons accept the legal obligation to settle unpaid premiums, the interests on arrears and procedural expenses of all those citizens whose insolvency has been proved by the issuance of a certificate attesting insufficient assets within 90 days of the notification. To limit the non-payment of the premiums by the insured who have a public subsidy, with the intent of reducing the delcredere risk taken on by the insurers, the cantons have furthermore accepted the constraint to pay the premium reduction directly to the sickness funds; at present it is possible to pay these checks directly to the insured. In fact, the Commission of Social Security and Public Health of the Council of States hoped for this constraint in a motion [see 9], approved by both the Chambers in December 2007. Therefore it is not so much an extra concession on the part of the cantons as a principle destined in any case to be translated into an amendment of law. Against this the insurers commit themselves not to suspend services and to guarantee the universal access benefit basket in the period between the beginning of the notice for judgement for debt and the payment deadlines of the canton, if there is a certificate attesting insufficient assets, or the distraint of assets, if the insured is seen to be solvent.

Initiators of idea/main actors

• Regierung: The graphic

• Parlament

• Leistungserbringer

• Kostenträger

Approach of idea

The approach of the idea is described as:
amended: FHIA, article 64a

Actors and positions

Regierung
Conference of cantonal health ministers	sehr unterstützend		stark dagegen
Federal Council	sehr unterstützend		stark dagegen
Parlament
Parliamentary left-wing	sehr unterstützend		stark dagegen
Parliamentary center and right-wing	sehr unterstützend		stark dagegen
Leistungserbringer
Hospitals, physicians	sehr unterstützend		stark dagegen
Kostenträger
Santesuisse (Health insurers' association)	sehr unterstützend		stark dagegen

Actors and influence

Regierung
Conference of cantonal health ministers	sehr groß		kein
Federal Council	sehr groß		kein
Parlament
Parliamentary left-wing	sehr groß		kein
Parliamentary center and right-wing	sehr groß		kein
Leistungserbringer
Hospitals, physicians	sehr groß		kein
Kostenträger
Santesuisse (Health insurers' association)	sehr groß		kein

Positions and Influences at a glance

Adoption and implementation

Figure "Premium incidence on disposable income"

Source: Crivelli et al (2007), I costi dell'assicurazione malattia nel cantone Ticino (see ref. 11)

Expected outcome

If the solution outlined by the cantons and sickness funds is acknowledged by Parliament and leads to the desired amendments in article 64a, Switzerland should manage to emerge from a legislative situation which is dangerous to say the least, which might have brought the idea of mandatory insurance into discussion again as well as the principle of universal coverage of a standard package of health care services. The perception of a welfare state in which the "abuses are the order of the day" and some people do not pay their contribution to a mandatory insurance any more is in fact a dangerous situation. If this feeling spread further in the population, it could take legitimacy away from the principle to maintain a mandatory insurance based on solidarity among the healthy and sick, among young and old, rich and poor.

Nonetheless, not all the problems of the Swiss system of health insurance, in particular concerning the collection of premiums, are destined to disappear. In his presidential address to the American Economics Association [see ref. 10] on 6 January 1996 Victor Fuchs foresaw some of these problems, although Fuchs himself was most probably not aware of the fact that a few days earlier Switzerland had adopted such a system.

"There are only two ways to achieve systematic universal coverage: a broad-based general tax with implicit subsidies for the poor and the sick, or a system of mandates with explicit subsidies based on income. I prefer the former because the latter are extremely expensive to administer and seriously distort incentives; they result in the near-poor facing marginal tax rates that would be regarded as confiscatory if levied on the affluent" (Fuchs 1996, p. 17).

In fact, this is the situation today in Switzerland. For many insured whose income is situated slightly above the poverty threshold possible increases in income are eroded by the increase in the incidence of premiums, due to a reduction of the subsidies provided, thus determining significant "threshold effects". Figure "Premium incidence on disposable income" above shows two typical shapes of net insurance premium incidence on household disposable income in Switzerland (although computed for two particular households, a family with two children and a retired single person living in 2007 in one of the 26 Cantons, Ticino). The highest levels of incidence,16% of taxable income, are reached, in fact, correspondent to the middle class (an income of 75,000 CHF for a family of 4, an income of 35,000 CHF for an elderly single person), for whom there is no possible relief through a subsidy.

In the future the risk of the decrease in the amounts earmarked by the cantons to reducing premiums in conncection with the new financial equalization (see report 11/2008) could exacerbate the problem, determining a further increase in the number of people who have no other choice than to become insolvent because of the excessive burden of the mandatory health insurance premium.

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch

References

Sources of Information

1. Cereghetti, B. (2007), Studio concernente assicurato con sospensione del riconoscimento delle prestazioni LAMal, 14 agosto 2007 (quoted in ref. 7).
2. The Federal Council, Botschaft betreffend die Änderung des Bundesgesetzes über die Krankenversicherung vom 18. September 2000 (www.admin.ch/ch/d/ff/2001/741.pdf).
3. The Federal Council, Bundesgesetz über die Krankenversicherung. Entwurf (www.admin.ch/ch/d/ff/2001/817.pdf).
4. The Federal Assembly, Bundesgesetz über die Krankenversicherung (Prämienverbilligung). Änderung vom 18. März 2005 (www.admin.ch/ch/d/ff/2005/2271.pdf).
5. Amtliches Bulletin. Wintersession 2004 and Frühjahrssession 2005 (www.parlament.ch/ab/frameset/d/s/4706/116943/d_s_4706_116943_116968.htm?DisplayTextOid=116969 and www.parlament.ch/ab/frameset/d/n/4707/119514/d_n_4707_119514_119515.htm?DisplayTextOid=119516).
6. Consiglio di Stato del Cantone Ticino, Messaggio n. 5810 del 5 luglio 2006 (modifica della legge cantonale di applicazione della legge federale sull'assicurazione contro le malattie del 26 giugno 1997 riguardante gli assicurati con sospensione di prestazioni LAMal) (www.ti.ch/CAN/SegGC/comunicazioni/GC/odg-mes/5810.htm).
7. Commissione della gestione e delle finanze, Rapporto del 4 settembre 2007 sul messaggio n. 5810 (www.ti.ch/CAN/SegGC/comunicazioni/GC/odg-mes/rapporti/5810-2-r.htm ).
8. Decreto legislativo che disciplina le conseguenze del mancato pagamento dei premi e delle partecipazioni ai costi nell'assicurazione obbligatoria contro le malattie, Foglio Ufficiale 76/2007, pp. 7284-7285. (www.ti.ch/CAN/TEMI/FU/STRUMENTO/ARCHIVIOFU/2007/076-21.09.07/1.pdf).
9. Kommission für soziale Sicherheit und Gesundheit SR, Motion 07.3275 Auszahlung der Prämienverbilligung. (www.parlament.ch/D/Suche/Seiten/geschaefte.aspx?gesch_id=20073275)
10. Fuchs, V. (1996). Economics, Values and Health Care Reform. American Economic Review, 86(1): 1-24.
11. Crivelli, L., M. Filippini, B. Mantegazzini-Antonioli e F. Pallotti (2007), I costi dell'assicurazione malattia in Ticino, Studio commissionato dal Consiglio degli Anziani del Cantone Ticino (www.common.unisi.ch/pdf_pub3449).

Author/s and/or contributors to this survey

Crivelli, Luca

Proof-reading by Mary Ries

Empfohlene Zitierweise für diesen Online-Artikel:

Crivelli, Luca. "The end of universal coverage has been averted". Health Policy Monitor, May 2008. Available at http://www.hpm.org/survey/ch/a11/2