On 7 September 2022, just a few weeks before the announcement of the new health insurance premiums, Federal Councilor Alain Berset presented his second set of measures aimed at cushioning the rise in healthcare costs. This package is part of an increasingly dirigiste political tendency. The Federal Council had already proposed the introduction of cost targets in mandatory health insurance in 2020 as a counterproposal to a popular initiative of the center.

Setting a “justifiable” increase? 

Under this counterproposal, the federal government would set the maximum percentage of the cost increase individually for each cost block and each canton. According to the Federal Council Dispatch’s, this limit would be calculated on the basis of the increase in volume and price that is “medically and economically justifiable,” taking into account factors such as “economic development, wage and price trends, technical progress, demographics, and morbidity.” If the limit were exceeded, the federal government would consider whether corrective measures were necessary.

Regardless of whether one is for or against greater government intervention in this area, the real question is quite different: Does the Federal Council ‒ and, by extension, the federal administration ‒ even have the technical and scientific capabilities to determine a cost trend and thus set maximum cantonal values for individual cost blocks?

Projected values can go down as well as up

When it comes to determining the “medically and economically justifiable” growth of healthcare costs, we need to distinguish between two levels. The first one has to do with the desired shift in medical services between segments of the healthcare sector – for instance increased assistance and care at home (“spitex”) services to reduce costs in nursing homes. Such above-average growth would not necessarily entail inefficiencies.

On the other hand, variations in growth rates across cantons can also be explained by demographic differences: A peripheral canton that is aging at a particularly high rate owing to the outflux of its young population will see healthcare costs grow more rapidly than in a university canton that is attracting more young residents. These observations highlight the complexity of the exercise.

To this end, in 2021 the KOF Swiss Economic Institute at the Swiss Federal Institute of Technology (ETH) in Zurich, on behalf of the Federal Office of Public Health (FOPH), presented projections of cost trends for the years 2021 and 2022, based on results from 2003 to 2020. In doing so, the KOF calculated the growth in per capita costs according to the different cost groups (patient care, physiotherapy, pharmaceuticals, hospitalization, etc.).

As the authors of the study themselves concede, methodological difficulties mean that there are major uncertainties in these results. For 2022, for example, the estimates for “outpatient medical services” vary by 5 percentage points (between 0.3% and 5.6%), and for physiotherapy or inpatient hospital care by 10 percentage points each (see Figure 1).

Not only is the range of estimates very wide, but the possible values can range from decreasing (cf. negative increases in Figure 1) to increasing costs in four of eight cost groups (patient care, physiotherapy, inpatient hospital care, and pharmaceuticals).

These results are even more surprising as they are reported in a confidence interval of 90%. This means that for 90% of the results the actual figure will be within this interval. However, it is common in statistics to use 95% confidence intervals. If this interval were used, the resulting range would be even larger than the values shown in Figure 1.

Estimates per canton are even more illusory

The KOF study also attempts to estimate the growth rate of costs per insured person in the individual cantons. In this case, the uncertainty is even greater than in the estimates by cost group. In the German-speaking part of Switzerland, the values for the canton Uri vary from -3% to +8%. In the cantons Nidwalden and Lucerne, the range is almost 8 percentage points (see Figure 2). For 21 of the 26 cantons, even a decrease in costs is possible.

The hubris of knowledge

Given that the estimated values vary between decreasing and increasing costs for a cost group or a canton, and that the KOF itself points out the uncertainties in its methodology, it will be very difficult to accurately predict the development of cost corridors.

Based on such uncertainties, how is the federal administration supposed to set a growth target that is “medically and economically justified?” Any imposed target would be arbitrary and about as precise as sticking a finger in the air.

Setting targets for the development of cost corridors is like flying blind. (Jeremy Wermeille, Unsplash)

Yet the FOPH, and by extension the Federal Council, insists on setting such cost targets, which is tantamount to piloting an aircraft without a flight plan. Such an approach would require the creation of a bureaucratic monster to plan, control, and sanction the healthcare system from the top down.

Instead of plunging into an endless bureaucratic blind flight and becoming entangled in negotiations with the cantonal organizations of service providers, the Federal Council would be better advised to place the patient and not bureaucracy at the center of its considerations. However, in order to do so, it will have to provide a framework that promotes competition on the basis of quality rather than cost.