Economic Conditions and Traditional Inequities Spur Changes
Bradley, Howard L., Social Security Bulletin
After 8 years of economic growth, Switzerland experienced inflationary price increases in 1990 and a recession in 1991. Swiss unemployment rose from 0.5 percent in 1990 to a post-war high of 4.5 percent in 1993. Unemployment and other economic conditions have led to lower tax revenues and greater demand for generous social programs, with a resulting higher than expected budget deficit. These factors have prompted debate of basic changes in social programs such as disability benefits and health care benefits.
Unlike the United States, Switzerland subsidizes employer/ employee contributions to its social insurance programs. Funded jointly by the National Government and the 26 cantons, subsidies make up half of all disability insurance benefits paid. In the past 2 years, government disability expenditures have risen 17 percent, partly because many long-term unemployed persons have come on the disability rolls after expiration of their unemployment benefits. To limit costs, the government may increase employer/employee contributions and reduce total family benefits upon a disabled recipient' s attainment of retirement age.
Health care costs have also soared because of the recession and the inflationary rise in medical costs and insurance premiums. Most Swiss are covered by one of several hundred government-subsidized sickness plans. Coverage is mandatory for those with low incomes and for all residents of the five cantons requiring coverage. For persons with low incomes, the Government subsidizes health insurance premiums, but, until recently, subsidies have been frozen at 1977 levels, resulting in increases in the unsubsidized portion of the premiums. Until 1992, 96 percent of all Swiss were covered by health insurance. Many with optional coverage have recently dropped it to avoid increasing premiums and to boost take-home pay. Higher costs for medical bills of the uninsured have increased the budget deficit.
Several years ago, Switzerland's Parliament passed emergency legislation to address sharply rising medical costs and insurance premiums. These laws limited increases in medical fees in 1992 and 1993, and set up a special fund to offset a widening variation among various plans' premiums, which have come to mirror each plan's proportion of members from high-risk groups such as the elderly and the seriously ill. In 1994, the Government increased its subsidies of health insurance premiums to encourage voluntary enrollees to continue their coverage. Rising medical costs and insurance premiums have also prompted a private-sector solution: optional employer health plans are becoming popular with workers of employers offering such plans because they charge lower premiums based on better cost controls, employer subsidies, and a lower proportion of high-risk members. …