AOS: The sustainability of the Swiss healthcare system under scrutiny
In-depth analysis of the evolution of compulsory health insurance costs in Switzerland and the challenges of its financing by 2050.
Introduction
Will basic health insurance still be able to guarantee access to a high-quality healthcare system for everyone in 30 years? The increase in health insurance premiums is knocking on the door again. This year, the average premium will be CHF 1,300 per adult. This is what will happen by 2050 if the annual increase is similar to 2025. At 4.4% on average according to the FOPH, the real increase could actually be around 7% (Deloitte, 2025). The cause is the evolution of healthcare costs borne by the Mandatory Health Insurance (MHI). Health insurance premiums directly reflect the evolution of healthcare costs: they are financed two-thirds by health insurance funds – that is, by the insured. The scale of the premium increase is a pulse check on the sustainability of the current system. Increases continue to be accepted, not without reluctance, but they are. The question is whether this will always be the case in the future. Will MHI continue to provide quality care to all citizens regardless of age, sex, at a cost bearable for society in the coming years? Switzerland is not alone in facing this question. It is central to all developed countries, which have built efficient, high-quality healthcare systems but increasingly costly ones. Healthcare expenditure represents an increasing share of GDP; in other words, expenditure is growing faster than revenue.
The ongoing rise in healthcare costs
Several factors explain this dynamic. Demographic ageing is most often cited because it is the most visible: with age, medical needs mechanically increase. However, the Federal Finance Administration (FFA) estimates its contribution at only 15% of the cost increase between 1960 and 2022.
The real drivers of growth lie elsewhere, more diffuse and harder to quantify: income growth (which increases demand for care), increasing use of services, and above all medical progress. Each therapeutic innovation – from cancer immunotherapies to next-generation prosthetics – costs more than the treatments it replaces.
The decomposition of expenditure growth between 2012 and 2017 perfectly illustrates this: 43.5% comes from increased spending per patient, compared with only 29.8% from demographic growth and 14.5% from ageing. In other words: it is not that there are more sick people, but that each patient costs more to treat. Disease prevalence remains relatively stable; it is the intensity and cost of care that are exploding.
Financing the rising costs
Combined, these factors will undoubtedly continue to push healthcare spending up in developed countries. Switzerland ranks near the very top with 11.8% of its GDP devoted to healthcare spending. But it is not an exception among OECD countries, all of which are devoting an increasing share to healthcare spending, at a level more or less similar to Switzerland. Scenarios for evolution are also consistent with other OECD countries. Healthcare spending should reach 15% of GDP by 2050 according to the FFA baseline scenario.
Costs will therefore be undeniably heavier in the future, and the question of financing will be crucial. European economies' responses vary: while Germany or Austria prefer to maintain balance by increasing revenue, France, for example, is massively accumulating debt to maintain a structurally deficit-ridden system.
Switzerland maintains a rather unique and broadly balanced system, relying on a mix of funding from taxation, households and salary contributions. To maintain this balance – slightly in surplus – the Swiss choice is to directly increase the revenue financing healthcare expenditure (CHF 97 billion in the latest year). This revenue comes in four types: health insurance premiums, tax revenue, social insurance levies (mainly salaries), private insurance, and direct out-of-pocket (OOP) payments.
Within this revenue, two types can be distinguished: income-indexed financing (taxation, social insurance contributions as a share of wages) and non-indexed financing such as basic insurance premiums or OOP costs. The fastest-growing financing is unquestionably that of MHI, which means the system is financed mainly by non-indexed revenue. Levied per capita, the premium is proportionally heavier for lower-income households.
MHI, together with private insurance and the direct household payment share, accounts for approximately 65% of healthcare system financing. This mixed funding ensures a form of resilience: because it does not depend solely on wage-indexed contributions, the financing is not directly sensitive to labour market fluctuations or the economic context. More than resilient, the system is currently in surplus: health insurers are required to maintain a sufficient reserve level. They display an average solvency of 147%, reinforcing the robustness of the system.
The sustainability of flat-rate premiums
However, the increase in the flat-rate share has the effect of increasing the pressure on less well-off households and calling into question the social dimension of financing, which is one of the pillars of the system. Unpaid health insurance premiums are thus structurally increasing, pushing certain households into over-indebtedness.
To counter this phenomenon, the legislator has put in place a mechanism to partially circumvent the problem: premium reductions. Financed jointly by the Confederation and the cantons, they enable social rebalancing by funding a share of premiums for the lowest-income households. Thus, it is indirectly taxation that comes to refinance the system. Subsidies amounted to CHF 5.9 billion in 2023 and are increasing year on year.
Historically, the distribution of costs between the State and MHI was based on whether care is provided on an outpatient or inpatient basis. Outpatient care is 100% borne by MHI, but inpatient care is shared with 55% borne by the State. However, with the shift to outpatient care, an increasing number of treatments are being performed without overnight stays and are therefore 100% borne by MHI.
This situation will come to an end in 2028 with the amendment of the Health Insurance Act (KVG/LAMal) through uniform service financing. The State will now contribute approximately one-third of costs regardless of their nature. This will reduce the share of flat-rate premiums in the financing and therefore the increase in premiums for the insured.
Despite this, unresolved problems continue to weigh on MHI's bill without any real solutions being proposed: the continuous expansion of the catalogue of services covered by MHI (drugs, therapies, etc.), and population ageing with the cost represented by long-term care (LTC), which is borne by MHI to the tune of more than 50%. The FFA baseline scenario forecasts an evolution of MHI's share of GDP from 3.6% to 4.9% by 2050. In short, an evolution faster than disposable income.
The expansion of MHI-covered services
The expansion of the catalogue of services and drugs covered is heading in the direction of even faster cost increases. This is a major alert raised by Santé Suisse, which points out that the current device no longer contains any effective regulatory function. Costs are undergoing structural increase.
Conclusion
Without structural reforms, the gap between healthcare costs and households' ability to bear them risks widening, leading to a system that is technically universal but socially inequitable. Switzerland has a robust and surplus system, but the predominantly non-income-indexed financing raises a growing equity question. The future of MHI will depend on the legislator's ability to balance the universality of coverage, the quality of care and financial sustainability for all citizens.
