Per-Capita Premium (Kopfprämie, KVG)

Concept and Legal Basis

Swiss mandatory health care insurance is financed not through payroll percentages but through per-capita premiums. Under Art. 61 KVG each insurer sets the premiums for its members and, unless the law provides an exception, charges all of them the same premium. The only permitted differentiations are grading by cantonal cost differences and, within a canton, by at most three premium regions defined by the Federal Department of Home Affairs, plus three age classes: children up to 18, young adults aged 19 to 25 and adults from 26. Health status, sex and income may play no role. The premium is therefore community-rated in the strict sense; the resulting incentives for risk selection are corrected by the risk equalisation scheme.

Approval and Supervision

Premium tariffs must be approved by the Federal Office of Public Health before they take effect (Art. 16 KVAG). The FOPH checks that premiums cover costs, safeguard solvency and are not unreasonably above costs; excess reserves may be refunded to insured persons. The approved premiums for the following year are published each autumn and form the basis for the annual right to switch insurer. Premium discounts are permitted only in statutorily defined forms, namely for elective deductibles, models with restricted choice of provider, and suspension of accident cover for persons insured under the Accident Insurance Act (UVG).

Country Comparison

German statutory health insurance is financed by income-related contributions (general rate of 14.6 % plus a fund-specific supplementary contribution, shared between employer and employee), Austria by contributions under the ASVG. The per-capita premium shifts social redistribution out of the premium and into the tax system: households of modest means receive individual premium subsidies funded by the Confederation and the cantons. For employers, the system means there is no employer share in Swiss basic insurance; employer contributions to health insurance premiums are voluntary, taxable fringe benefits.