Increasing regulation is the biggest challenge facing health insurers

Guido Klaus, null

In 2017, health insurance premiums will rise at a higher rate than in recent years. New regulatory rules play an important role where this is concerned.


Insurers with rather healthy insured persons make a contribution to the risk compensation fund. Those with rather sick insured persons receive corresponding compensatory payments.

In the run-up to the vote on the Federal Popular Initiative: national health insurance scheme, the insurance industry was put under a lot of pressure. Calls for greater supervision and additional regulations, including in the areas of advertising and acquisition, led to the enactment of the new Health Insurance Oversight Act. Where compulsory basic insurance is concerned, this Act focuses on protecting insured persons and stabilising the system. The supervisory authority must be able to intervene, particularly in the case of abuse or impending insolvency. After all, it is about guaranteeing compulsory insurance cover.

The Oversight Act has proven to be counterproductive

The intensions sound positive. However, the new Oversight Act not only brings with it more red tape and a corresponding increase in administrative costs, it also restricts insurers’ room for manoeuvre when setting premiums. Insurers are obliged to estimate premiums that cover the costs of every group insurance scheme. The authority will in future no longer approve premiums which are set by the insurer at too low or too high a level. Small insurers in particular are facing major problems as a result: it is well known that the principle of “the large number” applies in the insurance industry: the bigger the group scheme, the better the risk distribution and the smaller the volatility. A large group insurance scheme is better able to absorb the impact of a big claim. Volatility is detrimental to the reliable and continual development of premiums. The increasing oversight and regulation will therefore be a problem in the medium term, especially for small insurers.

Risk compensation to ensure fair competition

Our compulsory health insurance is based on an obligation on the part of insurers to accept every basic insurance application and a per capita premium system. This means a well-functioning risk compensation scheme is absolutely essential. It must be able to compensate for the so-called bad risks which an insurer has to assume under the current system but would consistently reject on the free market. Risk compensation thus guarantees fair competition among health insurers by compensating structurally disadvantaged health insurers for assuming poor risks. This ensures an almost level playing field for all stakeholders. The parliament has enshrined risk compensation into law. The federal council has the task of continually developing and refining this risk compensation scheme.

Promoting integrated care

Helsana welcomes the move to further refine risk compensation. A well-functioning risk compensation scheme is a prerequisite for well-functioning competition among health insurers. They should focus their activities on offering their customer base high-quality care concepts and services which strengthen prevention and health promotion and guarantee optimal treatment processes in case of illness. However, risk compensation should not be allowed to degenerate into a system of cost compensation and must be able to be implemented easily within the industry. Age and gender, among other things, are currently being depicted. Further refinement of risk compensation should first and foremost aim at compensating for risks which an insurer cannot influence through its own control measures. The rules should not be constantly changed because insurers need planning certainty. With this in mind, Helsana is calling for risk compensation legislation to be tightened as follows: today, the chronically ill, who generate high costs in outpatient care, are still not recorded adequately in the system. The necessary incentives to promote integrated care in the long term are still lacking. In the next step, the current risk compensation policy must therefore be supplemented by pharmaceutical cost groups based on the prescribed medication. It should then be examined to what extent further refinement of inpatient care can be strived for.

Costly innovations

However, political factors are by far not the only ones responsible for a premium rise: new developments and innovations on the healthcare market also have their price. In principle, it is a good thing that advancements in medicine are continuously being made. Almost every day, we find out about new achievements in medical research, new medical technology processes, new medication and new discoveries. The decoding of our DNA, for example, opens the door for completely new possibilities. This makes it possible to identify illness-related risks much earlier and to take appropriate measures – including medical ones. Thanks to state-of-the-art technologies, doctors can now identify complex illnesses quickly and reliably. Necessary operations are putting less and less strain on the body. All of these innovations are resulting in some considerable improvements where healing and recovery or a better quality of life in the case of chronic illnesses are concerned. We are getting older and older and benefiting until old age from good health or medically necessary care which would have been unthinkable just a few decades ago.

More money is constantly required for the healthcare sector

Switzerland now has the world’s highest life expectancy. At the same time, we have established that age-related illnesses like dementia or cancer are on the increase. The fact that the cancer mortality rate in our country was at the same time able to be lowered bears testament to a well-functioning healthcare system. It is clear that this progress comes at a price. The costs associated with treating illnesses are rising – the long-term average growth rates are significantly higher than the general rate of inflation. So the general trend is that we are spending more and more on the healthcare sector. It is obvious that premiums will continue to increase as a result.

How risk compensation works

The risk compensation policy balances out systematic risk differences between the various group insurance schemes. It is based on a prospective approach, i.e. it is not a cost compensation programme.


An insurer who has insured lots of “healthy people” compared to the sector average pays a per capita compensatory amount for these “healthy people” into the risk compensation scheme. Insurers who accordingly have more “sick people” in their customer base are paid a compensatory amount for the additional costs estimated under the risk compensation policy. This figure is calculated based on the average costs incurred by the corresponding risk group in the previous year.


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