Elsevier

Health Policy

Volume 65, Issue 1, July 2003, Pages 63-74
Health Policy

Risk adjustment in Switzerland

https://doi.org/10.1016/S0168-8510(02)00117-3Get rights and content

Abstract

In Switzerland the new law on Health Insurance, effective since 1996, introduced pro competitive changes in the market of sickness funds. The legislator expected high mobility between sickness funds of both healthy and sick insured as open enrolment was introduced with the new law. That is why the risk adjustment scheme, that was already introduced 1993, was limited until 2005. However, consumer mobility remained low and risk selection strategies are still profitable, since risk-adjustment is based only on demographic variables. This paper describes risk adjustment, consumer mobility, risk selection activities of sickness funds and the impact of imperfect risk adjustment on the development of HMO and PPO models. The paper concludes with a description of the current political and scientific discussion in Switzerland.

Introduction

In Switzerland, as in many other countries, risk adjustment is currently an important issue. In fact, the new Federal Law on Health Insurance (KVG), effective since January 1, 1996, introduced premium competition among sickness funds. This competition is combined with a highly debated retrospective risk adjustment scheme, introduced in 1993, which aimed at reducing the amount of cream skimming taking place (‘cream skimming’ is the practice of avoiding and getting rid of categories of high-risk clients and the targeting of low-risk categories).

The layout of this paper is as follows: in Section 2, some of the background material relevant to the risk adjustment issue in Switzerland is provided. This section contains a brief description of the health care system, a description of the new law in its latest form, and an analysis of the rationale for risk adjustment in Switzerland. Section 3 describes the risk adjustment model presently in force and some of its effects. Section 4 discusses more specifically the issue of consumer mobility and risk selection in the light of available statistical information. In Section 5 some of the political arguments regarding the future of risk adjustment in Switzerland are presented.

Section snippets

The institutional situation in Switzerland—general overview

Switzerland, a country with 7 million inhabitants, is divided into 26 cantons. Cantons are responsible for health care, therefore, Switzerland has 26 different health care systems. However, most aspects of health insurance are regulated by federal law and do not differ substantially from one canton to the other.

Inpatient care is provided by private and public hospitals. Each patient pays a very small deductible (6.65 a day) to the sickness fund for every day he stays in hospital.1

Risk adjustment

Technically risk adjustment is calculated as follows: Sickness funds having an age structure that compares favourably with that of the general population—many young and male, few female and old—must contribute to a risk equalisation fund, while those showing a competitive disadvantage in this regard will receive a subsidy from it. All the comparisons are calculated for every Canton separately (the formula is presented in detail in Appendix A). Since the cantonal government is responsible for

Consumer mobility and risk selection

The sickness funds have various instruments for risk selection at their disposal. First of all, the supplementary forms of health insurance. The primary possibility is the link between supplementary forms of health insurance and social insurance. For practical reasons, many insured prefer to have their basic and supplementary insurance with the same sickness fund [9] (as discussed in Section 2.2.2). Though they are not legally obliged to do that. With the new forms of insurance, especially the

Research in progress

As Spycher [10] points out, if the risk adjustment model would be based on the set of selection criteria as used for supplemental insurance, then cream skimming would be less severe than in the present situation in Switzerland. Obviously, the most important of these criteria is ‘health status’.

Recently, Beck [11] has suggested a model for taking into account the health status of the insured. He observes that an insured person who has received an inpatient treatment, generates treatment costs in

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