Intergenerational solidarity is key

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Solidarity between the generations plays a central role in health insurance, as it enables affordable premiums for those who are older and sicker.

Interview with Christian Schmid: solidarity be­tween the generations

Solidarity between the generations plays a central role in health insurance, as it enables affordable premiums for those who are older and sicker. Christian Schmid explains why in an interview.

The principle of health in­sur­ance in Switzerland is based on the concept of younger insured persons helping to pay the costs of older insured persons. Is such a system fair?

This is ultimately a societal question. In Switzerland, there’s clearly a consensus that solidarity between the generations is important: take AHV (Old Age and Survivors' Insurance), for instance, or, indeed, health insurance. It can therefore be assumed that the Swiss population regards such a system as fair and is prepared to support it.

Would a health insurance system without inter­gen­er­a­tional solidarity even be conceivable?

Theoretically, yes. However, in such a system, those who are older and sicker would have to pay higher premiums. The risk would be that insurance premiums could become unaffordable for these people. For this reason, health insurance without generational solidarity is practically inconceivable in Switzerland.

People over 60 are no longer able to cover the costs themselves.
Christian Schmid

Who benefits in the system from inter­gen­er­a­tional solidarity and who pays?

There are two age groups whose premiums roughly cover the healthcare costs they incur: children and young people up to 18, and those aged 56 to 60. People over 60 are no longer able to cover the costs themselves. This leaves the age group 19 to 55. They pay more premiums than they incur costs.

We’re getting older and older, and healthcare costs rise with age. On this basis, can intergenerational solidarity be maintained?

It's true that we’re getting older. But we’re also ageing more healthily. So the age at which the particularly high costs are incurred is rising. But it’s clear that costs are rising sharply, especially for the very old. In the end it’s a societal and therefore a political question as to the extent to which health insurance should provide for generational solidarity.

Improvements to the system could make a significant contribution towards ensuring that solidarity between the generations doesn’t need to be pushed to its limit.
Christian Schmid

There’s a risk that solidarity between young and old will eventually be stretched to its limit. Do you see any ways of defusing the problem?

It’s undisputed that there are numerous false incentives in the Swiss healthcare system. Some lead to situations like unnecessary treatments, for example, while others arise from excessively high medication prices. Corresponding improvements to the system could therefore make a significant contribution towards ensuring that solidarity between the generations doesn’t need to be pushed to its limit.

Intergenerational solidarity is not only practised in health insurance but also between the individual health insurers in the form of risk equalisation. How does this equalisation work?

In simplified terms, risk equalisation transfers money from health insurers with many young, healthy and thus inexpensive insured persons to health insurers who insure more older people who incur higher costs. Risk equalisation was initially introduced in 1993 as a temporary measure and aimed to curb the «hunt» for young, low-cost insured persons – so-called risk selection. In 2014, risk equalisation was anchored in law. Since its introduction, it has been continuously fine-tuned on the basis of findings provided by the CSS Institute. Whereas the only criteria that counted at the beginning were age and gender, other factors were gradually taken into account, such as whether a person was treated in a hospital and the amount of medication costs they incur.

Who is Christian Schmid?

Christian Schmid, 39, is a qualified economist. He joined the CSS Institute for Empirical Health Economics in 2015 as a research assistant. In 2020 he was appointed head of the Institute.

christian-schmid.jpg

Christian Schmid has been head of the CSS Institute since 2020.

CSS Institute for Empir­i­cal Health Economics

The Institute was founded in 2007 as a centre of scientific teaching and research on all aspects of health insurance. The Institute's research outcomes are also used to facilitate political discourse.

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