Cantonal Compensation Fund: What the Federal Council’s Report Says
Could the Swiss healthcare system operate differently? This is the central question of a report published last May by the Federal Council on the feasibility of a cantonal cost compensation fund within health insurance (LAMal), in response to the postulate by Council of States member Mauro Poggia. Today, we revisit the key points of the Federal Council’s comprehensive 40-page report.
What are we talking about?
The postulate did not aim for a single national fund, but rather a model in which each canton could choose to entrust the management of mandatory health insurance to a cantonal compensation fund. This fund would be the sole insurer in the canton and would delegate certain administrative tasks, particularly invoice verification, to existing health insurers, which would then become mere service providers.
The idea is not new: it had already been explored through a popular initiative launched in 2017, then through cantonal initiatives in Neuchâtel and Vaud, which were largely rejected by Parliament.
The 10 Key Points of the Federal Council’s Report
This report provides interesting factual elements on a reform that fuels many debates in Switzerland. If you wish to consult it in its entirety, it is available here
The report responds to postulate 24.3224 by Council of States member Mauro Poggia, which mandates the Federal Council to examine the feasibility of a system in which each canton could implement social health insurance via a cantonal cost compensation fund, delegating certain administrative tasks to existing health insurers.
In the analyzed model, the compensation fund would be the sole insurer in the canton. All insured persons residing in that canton would be obliged to affiliate with it. This monopoly is deemed compatible with economic freedom and the guarantee of property.
Current health insurers would become mere delegates of the compensation fund, without public authority powers. In particular, they would no longer be able to issue administrative decisions – an exclusive prerogative of the compensation fund.
The compensation fund could entrust health insurers with tasks such as invoice verification, general correspondence with insured persons, or handling disputes. However, it cannot delegate the power to issue decisions to them.
The implementation of this system would require numerous amendments to federal and cantonal law: creation of an alternative regime based on cantonal choice, rules on the fund’s insolvency, data protection for insured persons, obligations towards cross-border commuters, etc.
The report concludes that administrative costs would increase: the coexistence of two entities (compensation fund + delegated health insurers) would generate additional costs. The comparison with unemployment insurance, where administrative costs represent 9.75% of contributions, illustrates this risk.
The principle of an identical premium for all insured persons in the canton would deprive health insurers of any incentive to control costs. Their primary interest would lie in customer satisfaction, to the detriment of rigorous invoice verification.
Insured persons would have two distinct points of contact (the compensation fund and the delegated health insurer), which risks generating confusion, addressing errors, and loss of information, particularly for decisions, cost-sharing, or changes in personal situation.
The canton would simultaneously be an insurer (via the compensation fund), owner of public hospitals, and the authority for approving tariff agreements. This multiple role is deemed difficult to reconcile with good governance rules.
The only clearly identified positive point in the report: the compensation fund would have an increased interest in investing in prevention, as insured persons remain affiliated as long as they reside in the canton. However, this advantage remains limited by the strict legal framework of preventive measures reimbursable by mandatory health insurance.
Our Experts’ Perspective
This report touches on issues that directly concern us as insurance specialists. As one of our Loycomates, Head of Healthcare, Marcos Cosi, emphasizes:
“This is a sensitive and complex topic. On the one hand, a single fund could simplify the structure of the healthcare system, as well as pricing and costs. On the other hand, it raises legitimate questions about the potential impact of such a reform, particularly concerning competition among insurers, incentives for innovation, and the long-term effects on the quality of services and cost management.
This question certainly prompts reflection, as it could profoundly alter the landscape of health insurance and, consequently, directly influence our interactions and our way of working with the various stakeholders in the healthcare system.”
“What could be the main advantages and potential risks of such a transition? What concrete changes should we prepare for? These are all important questions to ask ourselves to best anticipate the future.”
The Federal Council has made its technical decision, but the political debate is far from exhausted. The idea of a cantonal organization for health insurance continues to appeal to a part of the political spectrum, and new texts may emerge. We will continue to monitor these developments to provide you with a clear and documented analysis.
Questions? Our Loycomates are available!
