Swiss Insurers and Risk Selection
OECD paper on the Swiss health system; structure; regulation
(2001)
It discusses how reform to induce competition among their non-profit sickness funds failed as insurers risk-selected enrollees rather than competed on price and quality. It suggests reforms, but notes that they may cause more harm than benefit if insurers continue to cherry-pick enrolless.
The Abstract is included here - a link to the full paper, with many useful graphs, is below.
Towards More Choice in Social Protection? Individual Choice of Insurer in Basic Mandatory Health Insurance in Switzerland (Labour Market and Social Policy Occasional Paper No. 53)
This paper reviews the system of free choice of insurer in basic mandatory health insurance that was introduced in Switzerland with the 1994 Health Insurance Law (LAMal). The thrust of the reform was to increase solidarity in basic health insurance while enhancing choice among individuals and competition on quality-price ratios among insurers. The reform encompassed regulatory mechanisms to facilitate the switching mechanism and choice-led competition, such as measures to ensure cross-subsidisation across individuals of different risk and income, information disclosure requirements for insurers, and the mandatory participation to a risk equalisation mechanism for all insurers offering basic health insurance.
The analysis presented in this paper suggests that some features of the individual choice mechanism need to be reinforced to make it function better, and also suggest that the initial objectives of the choice system have not been fully attained yet. Conditions to facilitate liberty of choice of individuals are reviewed. However, the analysis also indicates that measures to improve the switching process should be accompanied by other interventions to foster competition on quality and efficiency rather than on risk selection. Promoting an increase in absolute rates of switching might otherwise come at a higher price than the benefits.
*See especially pages 27-41 on health care financing and expenditure
Full text of paper: http://www.olis.oecd.org/OLIS/2001DOC.NSF/LINKTO/DEELSA-ELSA-WD6