Explainer: Swiss Vote On Capping Health Insurance Premiums At 10% Of Income

(MENAFN- Swissinfo) On June 9, Swiss voters will decide whether to accept or reject an initiative from the left-wing Social Democratic Party which proposes that no one should pay more than 10% of their income on health insurance premiums.

Journalist based in Bern. I am particularly interested in topics about society, politics and social media. Previously I worked in regional media, for the newspaper Journal du Jura and Radio Jura bernois.

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Many Swiss find it difficult to pay their healthcare bills. Millions of people in Europe are facing the same problem, as shown in a recent reportExternal link by the World Health Organization.

This problem could grow even worse. Demographic changes and medical-technical advances are constantly pushing up costs. To tackle this, every year the Swiss government announces a substantial increase in health insurance premiums. In 2024 they rose to an average of 8.7% of income.

These constantly rising costs hit the budget of people living in Switzerland particularly hard, as they cover a quarter of the costs of the healthcare system directly. The Social Democrats' initiative is aimed at helping them.

Both the federal government and the cantons already help more than a quarter of the population who are unable to pay the compulsory health insurance premiums. These people benefit from the lowering of their premiums by means of subsidies. However, there are important disparities between regions of the country, given that the cantons decide who is entitled to them.

In fact, for the Social Democrats the present financial support does not go far enough. Its initiative, called“premium reliefExternal link”, would entitle all those whose premiums exceed 10% of their disposable income to receive financial help. The legislative proposal stipulates that at least two-thirds of the supplementary subsidies should be covered by the federal government, the rest by the cantons. In this way the system would be harmonised.

If this popular initiative is accepted, the proportion of the population entitled to a reduction of their premiums will increase. Their exact number will be clear once parliament enacts the new proposal. It will mainly be the middle class that will benefit, as the poorest households already receive subsidies.

In the long run, the government estimates that nearly everyone will be spending more than 10% of their income on health insurance premiums. Therefore, except for those who have a very high income, everyone will be entitled to financial help.

The new law could cost the federal government and the cantons CHF3.5-5 billion ($3.8-5.5 billion) more annually, according to estimates from the Federal Office of Public Health. The government warns that tax increases or spending cuts elsewhere would be needed to cover these new costs.

In opposition to the Social Democrats' popular initiative, the government and parliament have come up with an indirect counterproposal. It would come into law if the popular initiative is turned down and no referendum is launched to oppose it.

The counterproposal would force the cantons to make a minimum contribution to the premium reduction. This amount would be between 3.5% and 7.5% of the total costs of the compulsory healthcare insurance. The federal government would continue to provide 7.5% of the total costs of premium reduction, as at present.

The government and parliament believe that their counterproposal would encourage cantons to curtail the increase in healthcare costs,“by efficient hospital planning for example”. This would, they believe, allow health premiums to be reduced by at least an additional CHF360 million.

On June 9, Swiss voters will decide on two initiatives aimed at capping the cost of healthcare in the country. Have your say on the issue here.

Through its legislative proposal, the Social Democratic Party wants to guarantee everyone access to the healthcare system. In the past 20 years health insurance premiums have more than doubled. Wages have not.

The Social Democrats observe that consequently more and more people try to limit costs by choosing the health insurance with the highest deductible. If they fall ill, they forgo any treatment. They can't afford it, the party says.

Through this new proposal, its proponents also want to put everyone on an equal footing. The 26 cantons currently have different systems for distributing subsidies and over the years some of them have withdrawn from financing premium reduction. With the proposal, conditions would be similar everywhere.

Opponents point out that the initiative doesn't tackle the root of the problem: the continuous increase in the costs of healthcare. In their opinion, this increase should be limited rather than raising subsidies.

To finance further premium reductions, the federal government and the cantons would have to take on considerably more costs. This would entail tax increases or spending cuts elsewhere, the governent has warned.

The division of the supplementary expenses between the federal government and the cantons has also faced criticism. The government would pay more than half. It is not happy with the idea, as costs of healthcare are strongly influenced by decisions made at the cantonal level.

Only the left views the Social Democrats' popular initiative positively. Among the main political parties, only the Green Party is supportive of the proposal. Parties on the right and the centre are opposed.

The government and a large majority of parliament are calling for it to be rejected. Not surprisingly, Swiss business circles are also against this proposed law, whereas the unions are in favour.

The number of people insured in Switzerland but who live abroad is growing year by year, as reported in a June 2023 government statement. They numbered around 170,000 in 2021. The majority are cross-border commuters from France and Germany, who can choose between being insured in their country of residence or in Switzerland.

Among the Swiss living abroad, those who have emigrated to a country outside the European Union cannot continue to be insured in Switzerland. Therefore, they will not be affected by the outcome of the vote. Those inside the European Union who earn a living in their country of residence are not concerned either. They are obliged to take out health insurance in the country in which they work.

As for the Swiss living in the EU who are retired, or who benefit from an invalidity pension or accident insurance, they should in principle still have healthcare insurance in Switzerland. Some exceptions exist in the cases of Germany, France, Italy, Austria and Spain, where individuals may be exempted for the obligation to be insured in Switzerland.

Of the people residing abroad but insured in Switzerland, 630 already benefit from a health premium reduction. This amounts to about CHF9 million. In its message about the popular initiative, the government explains that this financial help is given by the government to those who are insured and have a low income and reside in a member state of the European Union or in Iceland or Norway. The Federal Office of Public Health says that if the popular initiative is accepted those who are insured in Switzerland but live abroad could also benefit from the proposed cap on the health premiums. However, parliament would have the final say when enacting the new law.

Edited by Samuel Jaberg. Adapted from French by Johannes Waardenburg/ts

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