Switzerland: #1 in the 2021 World Index of Healthcare Innovation
Switzerland’s universal system of individually-purchased health insurance is a model for U.S. reform.
By Gregg Girvan and Avik Roy
Introduction
For the second straight year, the Swiss health care system ranks first overall out of 31 countries ranked in the World Index of Healthcare Innovation, with a score of 65.15, ahead of second-ranked Netherlands and third-ranked Germany.
Switzerland was at or near the top in every WIHI dimension, but especially in Quality (#1, 65.39), thanks to a high degree of patient-centered care and high-quality infrastructure. Switzerland ranked third for Choice (68.25), because it allows for freedom of choice both of providers and payers, under a universal private system. Switzerland ranked a distant but respectable second for Science & Technology (53.92), behind the United States.
Switzerland’s “worst” ranking was 6th, for Fiscal Sustainability (73.06). Switzerland scored highly for overall national solvency and efficient public health care spending. However, growth in health care spending is higher than average in Switzerland.
Background
Switzerland first instituted a federal law on health insurance in 1912, establishing and regulating voluntary private coverage at the cantonal, or regional level. The percentage of Swiss residents with health insurance rose from 11% in 1915 to 40% in 1930, to 60% in 1947, and to 80% in 1959. By the 1990s, Swiss coverage was universal.
Nonetheless, the confederation introduced a major overhaul of the health care system in 1994, the Swiss Federal Health Insurance Act, which included the following measures: establishing income-based subsidies to make coverage more affordable for low-income Swiss; introducing an individual mandate to require coverage; and contain costs. As a result, today Switzerland has a universal market-based health insurance system, in which every Swiss citizen purchases private coverage on the individual market. The insurance benefit package is standardized to some degree by the Federal Office of Public Health, though individual regions (cantons) have considerable flexibility in how their insurance markets are structured.
Of note, the Swiss system was a model for Massachusetts Gov. Mitt Romney’s health reforms in 1996, and also of President Obama’s Affordable Care Act, enacted in 2010. The U.S. Medicare Advantage program, in which seniors shop for private coverage, also bears many similarities to the Swiss system. In Switzerland, there are no “public options” or other government-run insurance plans.
When it comes to prescription drug coverage, the Swiss Federal Drug Commission advises the FOPH on the inclusion of drugs in the standard insurance benefits package. The FOPH also regulates the reimbursement rates in this setting. In addition, insurers in a given canton can band together to jointly negotiate drug prices with a manufacturer.
Switzerland is home to Roche and Novartis, two of the world’s largest innovative pharmaceutical companies. Most other drug companies base their European headquarters in Switzerland due to the confederation’s low tax rates.
Quality
Switzerland leads the Index with the #1 ranking on Quality. Switzerland leads all countries in infrastructure, with one of the highest number of nurses per capita and near-optimal hospital capacity. On measures of preventable disease (#3), Switzerland particularly excels at preventing hospitalizations as well as cancer survival. Finally, Switzerland provides a high level of patient-centered care (#4), with short wait times and a high number of patients reporting positive relationships with their providers.
Choice
Switzerland ranks highly for Choice at #3 overall. The Swiss value freedom to choose health care services (#1), offering both a wide array of health insurance plans as well as completely free choice of providers. Switzerland spends more on health care as a share of economic output than any other major European country (30th in WIHI for affordability of health insurance). Switzerland has a well-developed pharmaceutical industry, with good access to novel medicines for a country of its size. It does poorly, however, in terms of market shares for generic and biosimilar drugs.
Science & Technology
At #2, Switzerland’s ranking in Science and Technology is the highest outside the United States. Switzerland invests more than twice as much in medical research & development, on a per-capita basis, than any other country. In addition, Swiss scientists ranked first for publishing highly cited academic research. While its hospitals take full advantage of health digitization, primary care and specialist providers employ such technology to a lesser degree.
Fiscal Sustainability
Switzerland ranks #6 for Fiscal Sustainability, led by the country’s aversion to debt and health care spending in the public domain. Despite having the second highest national health expenditures per capita of all countries in the Index, Switzerland spends about 2.3% of GDP on public health expenditures (#9). Still, Switzerland’s growth in public health spending (#13) is cause for concern, as it is in most countries.
