Why are health costs and premiums rising?

We are seeing pleasing progress thanks to new diagnosis and treatment options and could even save costs in the medium to long term – such as when a disease can be successfully treated thanks to early diagnosis. Treatments are also now available for diseases for which there were previously no treatment options or medication available, such as many types of cancer.

Many of these new medications are extremely expensive, however, because they took a long time to develop and they are very promising. New diagnostic and treatment options often push up costs too as they are increasingly used by the service providers or increasingly in demand among patients, according to the principle that says “if the offer’s there, it’ll be taken”. While this response is understandable, it has a direct impact on premiums.

Thanks to the outstanding medical care available, the population of Switzerland is living longer and longer. So high health costs are being at least partially offset by high benefits. Moreover, as well as getting older, we are staying healthier for longer. Regardless of age, most of a person’s health costs are incurred in the last year of their life.

People need more and more medical treatment as they get older and the population is ageing. The proportion of the population aged over 65 increased by more than 50% between 2001 and 2023 (Federal Statistical Office, Permanent residents by age, category of citizenship and sex, 1999–2023). This has led to a significant increase in care costs: between 2011 (when the new care financing arrangements were introduced) and 2022, these rose by 42% in care homes and by 124% for care at home (Santésuisse, Pflegereport 2024).

According to a study conducted by the Federal Office of Public Health (FOPH), patients with supplementary insurance undergo medically unnecessary surgery more frequently than those with basic insurance coverage. Various studies looking into knee, spine, hip, prostate and heart surgery have reached the same conclusion. Despite the patients in question paying for supplementary insurance, each of these operations is partially covered by basic insurance, which has a knock-on effect on the premiums paid by all policyholders in Switzerland. It is usually a good idea to seek a second opinion before having any scheduled surgery.

Hospitals aim to make a profit, but many of them are not profitable. This is down to the fact that there are too many hospitals and (as far as the hospitals are concerned) the tariffs are too low. Looking after their bottom line, hospitals have a tendency to offer more medical services as a way of boosting their income.

Switzerland is very well served by hospitals, doctors, nurses, pharmacies, therapists, etc. and medical equipment. But they all need to aim to make a profit and make the most of the medical infrastructure. This often has a detrimental effect on efficiency, which in turn causes costs to rise.

• Standardised funding for outpatient and inpatient health benefits (EFAS): Outpatient treatments cost less than inpatient hospital stays and are increasingly being promoted (“outpatient before inpatient” regulation). However, with the current financing structures, more outpatient treatments are resulting in higher premiums. Why is this? The canton pays 55% and the health insurer 45% of the costs of hospital admission as an inpatient. Outpatient treatment, in contrast, is paid for in full by the health insurance companies and therefore by the premium payer. This principle creates misguided incentives and is hampering the widely called-for shift towards more outpatient care. Therefore, health insurance companies as well as doctors, hospitals, the pharmaceutical industry and various other organisations have campaigned for standardised funding for inpatient and outpatient services – with success: on 24 November 2024, the Swiss electorate approved the amendment to the law. This means that from 1 January 2028, insurers will cover a maximum of 73.1% and the cantons at least 26.9% of the costs of all outpatient and inpatient services covered by basic insurance. From 2032, this will also apply to care services. More information about EFAS (in German) >
• Conflicts of interests for cantons: Cantons sometimes have multiple roles, especially in relation to hospitals, which can result in conflicts of interests. For example, they might be responsible for planning healthcare but also own hospitals, provide some of the funding and approve tariffs. This means they can exert influence that gives them an unfair advantage – when working on hospital planning, setting tariffs and allocating funding to inefficient hospitals, for example. The fact of the matter is that Switzerland has too many hospitals and would manage perfectly with a reduced number of hospitals and careful planning. The same generally applies to the number of doctors. An admission control system could help here, but this hasn’t been applied sufficiently yet.
• Excessive medication prices: Spending on medication has increased drastically in recent years and is now among the highest per capita in the world. Medication prices are much higher in Switzerland than in other countries too. The prices are set by the Federal Office of Public Health and monitored regularly. The pharmaceutical industry, however, has little interest in dropping its prices. As the largest export industry, it has huge political influence due to the jobs and tax income it provides. The health insurance industry association santésuisse is committed to reducing prices.
• Expanded scope of basic insurance: More and more benefits are being covered by basic insurance. Psychotherapy and podiatry are the most recent additions. This is positive in principle because it will help people receive treatment for widespread issues. But expanding the scope of basic insurance means that all premium payers are now paying the price for treatment that would have previously been paid for privately or covered by voluntary supplementary insurance. Many key aspects of implementing this change were not taken into account despite causing costs to rise as far as health insurance associations are concerned.
  Basic insurance pays for treatments if they meet the “WZW” criteria: they must be “wirksam” (effective), “zweckmässig” (appropriate) and “wirtschaftlich” (cost-effective). The law stipulates that benefits must be checked regularly against these criteria, but unfortunately this legislation is not being sufficiently enforced. Santésuisse is calling for an end to remuneration of ineffective benefits. Several therapies have already been found to be ineffective, and according to an assessment by Santésuisse, 200 million Swiss francs could be saved just by eliminating these benefits.

Since 1 January 2024, the following applies to prescription medicines: patients who wish to take a branded preparation even though there is a generic or biosimilar with the same active ingredient must generally pay a higher deductible of 40%, instead of 10%. Branded preparations are more expensive and therefore place a heavier burden on basic insurance premiums. In addition, prices have been lowered for generics and biosimilars and sales margins have been adjusted, because up to now it has been more advantageous for pharmacies and medical practices to sell the more expensive medications. They can now earn the same amount by selling the generic/biosimilar as they can from the branded medicine. More information on generics and biosimilars >

Tarmed, the 20-year-old tariff for outpatient medical benefits, has long been viewed as outdated. In future, flat rates will apply to some benefits, while the newly developed Tardoc tariff will be used for others. For a long time, there was considerable disagreement about how to structure the new system, which delayed its introduction. Now, however, both structures have been mostly approved, with just a few final details to be worked out. They are set to come into force on 1 January 2026.