Questions and answers on the premium relief initiative
Published: Wednesday, May 8th 2024, 09:40
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On June 9, the people and cantons will vote on the SP's popular initiative "Maximum 10 percent of income for health insurance premiums (premium relief initiative)". Below are the most important questions and answers on the proposal:
WHAT IS THE BOUNTY?
Everyone in Switzerland receives the medical treatment they need. The costs are covered by compulsory health insurance. The capitation premium has been in place since its introduction in 1996.
While premiums for all other social insurance schemes are financed on a solidarity basis either through taxes or income-related contributions, this is not the case with health insurance premiums. A bank manager pays the same premium as a cleaner.
HOW HAVE THE PREMIUMS DEVELOPED?
As healthcare costs rise, so do health insurance premiums. They have more than doubled over the past twenty years. The premium increase announced last fall was the highest since 2010, and premiums are becoming an increasing burden for some of the population.
Households currently spend an average of 14% of their income on health insurance premiums. When the Health Insurance Act (KVG) was introduced in 1996, it was promised that premiums would not exceed 8 percent of income.
WHAT ARE PREMIUM REDUCTIONS?
The cantons are legally obliged to grant premium reductions to insured persons in modest financial circumstances. Around a quarter of the population receives a premium reduction.
The cantons largely decide for themselves how much they reduce premiums for whom. They can tailor their premium reductions to the tax burden of their population and their social benefits. The cantons use different amounts of money for their premium reductions. The average amount that the cantons spend per person also varies greatly.
WHO FINANCES THE PREMIUM REDUCTIONS?
Premium reductions are financed by the federal and cantonal governments using taxpayers' money. Today, the federal government pays 7.5 percent of the gross costs for basic insurance. The cantons pay the rest.
In 2022, around CHF 5.4 billion of public funds were spent on premium reductions. The federal government paid more than half of this. The federal government automatically increases its contribution if costs rise. The cantons are not obliged to do so. Several cantons have only partially adjusted their contribution to the increased costs in recent years or have even reduced their contribution.
WAS WILL DIE INITIATIVE?
The initiative demands that all insured persons must pay a maximum of 10% of their disposable income for premiums and that they receive a premium reduction for the amount above this. According to the text of the initiative, the federal government should cover two thirds of total expenditure. The cantons should finance one third.
In concrete terms, premiums could continue to rise in the event of a Yes vote, but the federal government and cantons would have to increase spending on premium reductions accordingly. The pharmaceutical industry and healthcare providers would not be asked to pay. How disposable income is defined and which premium is decisive would have to be determined by parliament when implementing the initiative.
WHO IS BEHIND THE INITIATIVE?
The SP submitted the initiative in January 2020 with the credo that there is an urgent need for solutions to health insurance premiums. The petition for a referendum is supported by the Greens, the Federation of Trade Unions, the employee umbrella organization Travail Suisse, Caritas and the Association of General Practitioners.
WHAT DO THE SUPPORTERS SAY?
The initiators claim that families, lower and middle incomes suffer most from the explosion in premiums. The premium burden is becoming unbearable for the middle class. According to the Swiss Association of General Practitioners and Pediatricians, almost 20 percent of the population do not go to the doctor because they do not have the money. Among other things, this leads to higher follow-up costs.
According to the proponents, a family of four with a combined net household income of CHF 9,000 would save an average of several hundred francs a month if the initiative were accepted. The initiative committee also argues that the pressure of rising healthcare costs would be shifted away from those paying premiums and onto politicians. The federal government and cantons would be given an incentive to move forward in order to get healthcare costs under control.
WHO IS FIGHTING THE INITIATIVE?
The Federal Council, parliament and cantons reject the initiative. Of the major parties, the SVP, Centre Party, FDP and GLP recommend a No. The National Council rejected the initiative by 123 votes to 70 with 3 abstentions, the Council of States by 32 votes to 11 with one abstention. Various industry and business associations also have a negative stance.
WHAT DO THE OPPONENTS SAY?
The initiative would only tackle the problem of rising healthcare costs symptomatically, but not at the root, say opponents. The initiative is also too expensive and has the wrong effect by linking it to disposable income. The major challenges should be solved with more market and personal responsibility instead of additional annual subsidies.
The initiative could even be counterproductive because it would also eliminate the individual incentives for premium payers to save, the opponents continue to argue. They prefer the indirect counter-proposal adopted by Parliament, which would come into force if the initiative is rejected. This would help to reduce the financial burden on people in the short to medium term.
WHAT ARE THE COST IMPLICATIONS OF THE INITIATIVE?
The additional annual costs of the initiative would amount to CHF 3.5 to 5 billion per year for the Confederation and cantons, writes the Federal Council. The No Committee warns of additional expenditure of up to around 12 billion francs from 2030 onwards. Civic parties warn of tax increases - otherwise the initiative cannot be financed.
In reality, the initiators argue, higher incomes, which suffer less from health insurance premiums anyway, would have to pay a little more via direct federal tax for the premium relief. This would balance out the lower incomes, which are already less burdened by federal tax.
WHAT DOES THE COUNTER-PROPOSAL CONTAIN?
The counter-proposal adopts the aim of the SP initiative to reduce premiums more than before. In contrast to the initiative, however, it adds the goal of cost containment in the healthcare system. Cantons with high costs should pay more premium reductions than cantons with low costs. Overall, many people would receive more premium relief than today.
Specifically, the cantons would have to pay a minimum contribution of 3.5% to 7.5% of the costs of compulsory basic insurance for premium reductions in future. This minimum percentage is aimed at the 40 percent of people with the lowest income and their premium burden. The counter-proposal would mean additional costs of around CHF 356 million for the cantons. By 2030, these costs could rise to CHF 960 million. The federal share would remain unchanged.
HOW DOES THE INITIATIVE PERFORM IN SURVEYS?
The supporters of the initiative currently have an advantage. According to the survey conducted by "20 Minuten" and Tamedia, if the vote had been held in mid-April, 60 percent would have voted Yes. 36 percent of respondents would have voted no. In the first SRG trend survey, 56% of respondents voted Yes and 40% voted No.
In German-speaking Switzerland, the approval ratings are significantly lower than in French-speaking Switzerland and Ticino. And overall, the approval ratings a month and a half before the vote are lower than for the successful initiative for the 13th AHV pension in March.
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