Helsana report: income & premiums
Level of income a key factor

Under basic insurance, insured persons can change their deductible and insurance model every year, and unlike with supplementary insurance, no medical examination is carried out when this occurs. The insurance requirement stipulated by the Federal Health Insurance Act (KVG) ensures that the entire population has unrestricted access to basic medical care, with the costs borne communally by policyholders. In this report, we analyse how they choose their deductible and insurance model.

Is the deductible chosen on the basis of income, or could the correlation be due to other factors as well? Could gender, age, nationality, individual premium reductions, state of health, premium region or benefits previously received play a role? The analyses clearly show that household income is still a relevant factor when it comes to choosing a deductible, even after taking the effects of all of these factors into consideration. The higher a household’s income, the more likely it is that the maximum deductible will be chosen (with a corresponding premium discount). This analysis was carried out based on the concept of “equivalised income” so that conclusions could be drawn on a per-person basis across all types of household. This income takes the size and composition of the households into account (please refer to the information box).

You have to be able to afford to take risks

But why is it low-income households specifically that are choosing not to take advantage of the opportunity to save money on their premiums? One possible explanation is that a low deductible increases the degree of predictability. This can help people avoid a shortage of liquidity due to substantial costs for unplanned treatments. This risk is easier to address using financial reserves. One other factor could be ignorance of the fact that the deductible can easily be adjusted each year. Many insured persons struggle to deal with the complexity of the healthcare sector.

Choice of deductible influenced by premium reduction

There are two kinds of premium reduction. Firstly, the individual premium reduction (IPR) is a form of social redistribution that ensures that the premiums paid by people with modest economic means remain affordable. The IPR is based on a household’s taxable income, and is therefore independent of the deductible or insurance model chosen.

Secondly, recipients of supplementary benefits (SB) and social welfare are also granted a premium reduction. These people are entitled to be reimbursed the cost of their health insurance premiums, up to the amount of the average premium for the region. This premium reduction therefore works differently from\\\\ the IPR.

The detailed analyses show that people who benefit from premium reductions are less likely to choose the maximum deductible than those who don’t. The probability of opting for the maximum deductible is 26% for people with premium reductions and 38% for those without.

If low-income households choose a higher deductible in order to reduce their premiums, this relieves the strain on their monthly budgets but exposes them to the risk of more substantial costs if they require medical treatment. The reduction in their premiums gives them additional financial leeway, which they often use to protect themselves against the risk of costs by opting for a low deductible.

The fact that people with premium reductions are less likely to choose the maximum deductible can also be attributed to the regulations governing supplementary benefits and social welfare. Since the reduction is applied to the actual premiums paid, there is no incentive to reduce the premiums by opting for a higher deductible. On the contrary: by doing so, they would be increasing the cost-related risks they face.

When it comes to choosing between a standard model (free choice of doctor) or an alternative insurance model (general practitioner or telemedicine), households make their decision in a similar way to the choice of deductible. Standard models are most popular in the lowest and highest income categories. Households in mid-range income categories are more likely to choose an alternative insurance model.

It is less clear why people on low incomes are more likely to opt for the more expensive standard model. In our hypothetical example (please refer to the information box), the family would receive a discount of up to CHF 200 if they were to choose a general practitioner model instead of the standard model, with the same deductible and therefore the same level of risk.

This cannot be attributed to the state of their health, since the analyses take this factor into account. Instead, in this case as well, there is presumably a strong link between income and knowledge of the healthcare sector. Since income correlates with educational background, it is conceivable that this factor reflects peoples’ ability to navigate Switzerland’s complex health insurance system. Uncertainty makes people more likely to choose the standard model, as demonstrated by a recent study (study).

The statutory minimum deductible is currently CHF 300. Efforts are being made in Switzerland’s national parliament to increase it to reflect the current situation in the compulsory health insurance sector (e.g. motion 24.3636 and motion 24.3608). The deductibles have not been changed for the last 20 years, while costs in the compulsory health insurance sector have doubled during the same period. This means that the minimum deductible has become less impactful. The minimum deductible should reflect this trend and in so doing at least safeguard, if not enhance, insured persons’ personal responsibility. The reasoning behind this is that it triggers a change in insured persons’ behaviour. In Switzerland, in particular, there is ample evidence that insured persons take the amount of the co-payment into account and consider their use of medical benefits more carefully. Swiss studies and international evidence have shown that a 1% increase in an insured person’s co-payment reduces their use of medical benefits by 0.2% (study¹, study²). This is the reasoning behind the Federal Health Insurance Act’s regulation of deductibles and co-payments.

The impact of increasing the minimum deductible has been analysed using a comparison. The benefits claimed by insured persons with a deductible of CHF 300 were compared to the benefits claimed by insured persons with a deductible of CHF 500. It transpired that those with the lower deductible claimed about CHF 1,200 less in benefits. We should therefore investigate the reason for this difference. Are people with a deductible of CHF 500 healthier or younger than those with a lower deductible, for example, and is that the reason for the difference?

Increasing the minimum deductible from CHF 300 to CHF 500 would therefore have two effects. Firstly, changing insured persons’ behaviour would affect the benefits paid out and therefore save money. Secondly, insured persons would contribute more to the costs until the minimum deductible is reached.

Extrapolating this increase to everyone with a deductible of CHF 300 gives potential savings of up to CHF 1.16 billion for people insured in Switzerland. This corresponds to a reduction in the premiums for adults of up to CHF 160 per year.

The analyses of income and the chosen deductibles and insurance models clearly show that income plays a key role in the choice of deductible and insurance model. People on higher incomes are more likely to choose the maximum deductible. For financially weaker households, monthly budgets, safeguarding against the risk of costs and predictability are important factors when it comes to choosing a deductible. Alternative insurance models are not equally popular across all income categories, despite the fact that insured persons benefit from better quality of care and more substantial discounts.

Studies have shown that insured persons in Switzerland take co-payments into account when making use of medical benefits. Increasing the minimum deductible leads to a change in behaviour, and therefore to potential savings. In the example used here, an increase from CHF 300 to CHF 500 results in potential savings of up to CHF 1.16 billion.

This shines a spotlight on conflicting political goals. While increasing the deductible can relieve the burden on the general population thanks to lower premiums, people on low incomes with chronic conditions, many of whom have a low deductible, will pay up to CHF 200 more per year towards their costs. The advantages outweigh the disadvantages for all insured persons in Switzerland. A maximum additional co-payment of CHF 200 is reasonable. There are also ways that decisions regarding premiums can be optimised.

One thing that’s clear, however, is that everyone should be able to choose a contract that suits their own situation. This is also a matter of personal responsibility. Better education is required to help insured persons navigate the complexities of the healthcare system. As part of its second package of measures to reduce costs, the Swiss parliament is currently discussing amending the Federal Health Insurance Act to support this intention to impart knowledge and build up skills. This report shows that implementing a new article of the law like this is in the public interest. This is therefore what we should be working towards.