The inequity of the Swiss health care system financing from a federal state perspective

INTRODUCTION Previous studies have shown that Swiss health-care financing is particularly regressive. However, as it has been emphasized in the 2011 OECD Review of the Swiss Health System, the inter cantonal variations of income-related inequities are still broadly unexplored. The present paper aims to fill this gap by analyzing the differences in the level of equity of health-care system financing across cantons and its evolution over time using household data. METHODS Following the methodology proposed by Wagstaff et al. (JHE 11:361-387, 1992) we use the Kakwani index as a summary measure of regressivity and we compute it for each canton and for each of the sources that have a role in financing the health care system. We graphed concentration curves and performed relative dominance tests, which utilize the full distribution of expenditures.The microdata come from the Swiss Household Income and Expenditure Survey (SHIES) based on a sample of the Swiss population (about 3500 households per year), for the years 1998 - 2005. RESULTS The empirical evidence confirms that the health-care financing in Switzerland has remained regressive since the major reform of 1996 and shows that the variations in equity across cantons are quite significant: the difference between the most and the least regressive canton is about the same as between two extremely different financing systems like the US and Sweden. There is no evidence, instead, of a clear evolution over time of regressivity. CONCLUSIONS The significant variation in equity across cantons can be explained by fiscal federalism and the related autonomy in the design of tax and social policies. In particular, the results highlight that earmarked subsidies, the policy adopted to smooth the regressivity of the premiums, appear to be not enough; in the practice of federal states the combination of allowances with mandatory community-rated health insurance premiums might lead to a modest outcome in terms of equity.