Risk Equalisation (Risikoausgleich, KVG)

Purpose and Legal Basis

Because Swiss basic insurance combines a duty to accept with uniform per-capita premiums, insurers would otherwise have a strong incentive to court young, healthy people and avoid high-cost members. Risk equalisation under Art. 16 et seq. KVG neutralises this incentive: insurers whose portfolio within a canton shows a below-average risk of illness pay levies into the scheme, while insurers with above-average risk receive contributions. Equalisation is calculated per canton and is self-financing; no tax money is involved. It is administered by the Common Institution under the KVG (Gemeinsame Einrichtung KVG), a foundation funded by the insurers with a statutory mandate (Art. 18 KVG). Details, in particular calculation and data delivery, are laid down in the Ordinance on Risk Equalisation (VORA).

Indicators and Development

Originally the scheme relied only on age and sex, which left risk selection based on health characteristics profitable. Since 2012 a hospital or nursing home stay in the previous year has been added, and since 2020 morbidity has been captured through pharmaceutical cost groups (PCG): insured persons whose medicine consumption indicates defined chronic conditions increase the expected cost value of their insurer. Swiss risk equalisation is thus morbidity-based and significantly reduces the profitability of selection strategies such as targeted low-cost funds or selective distribution channels. The scheme’s figures are an important explanatory factor for premium differences between insurers and cantons.

Country Comparison

Germany operates a comparable system with its morbidity-based risk structure equalisation (Morbi-RSA, § 266 et seq. SGB V): the funds receive risk-adjusted allocations from the Health Fund based on age, sex, reduced earning capacity and hierarchical morbidity groups. In Austria, risk equalisation between funds has become largely obsolete since the regional funds merged into the ÖGK. In private supplementary insurance under the VVG there is no risk equalisation; here risk selection through medical underwriting and exclusions is permitted.