Abstract
According to the economic theory of federalism (Oates 1999), a decentralized decision to collectively fund and supply the quantity and quality of public services will increase economic welfare as long as three conditions are fulfilled: preferences and production costs of the different local constituencies are heterogeneous; local governments are better informed than the central agency because of their proximity to the citizens; and the competition between local governments exerts a significant impact on the performance of the local administration and on the ability of public agencies to implement policy innovation. Federalism also presents some negative aspects, including the opportunity costs of decentralization, which materialize in terms of unexploited economies of scale; the emergence of spillover effects among jurisdictions; and the risk of cost-shifting exercises from one layer of the government to the other. Finally, competition between fiscal regimes can affect the level of equity. The literature considers fiscal federalism as a mechanism for controlling the size of the public sector and for constraining the development of redistributive measures. The present paper reviews the impact that federalism has on the efficiency, equity, and cost containment of the healthcare system in Switzerland, a country with a strongly decentralized political system that is based on federalism and the institutions of direct democracy, a liberal economic culture, and a well-developed tradition of mutualism and social security (generous social expenditure and welfare system). By analyzing the empirical evidence available for Switzerland, we expect to draw some general policy lessons that might also be useful for other countries.
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Notes
- 1.
The precept of Swiss decentralization is that public policies and their implementation should be assigned to the lowest level of government that is capable of achieving the objectives.
- 2.
Article 3 of the current Swiss Constitution establishes the high degree of autonomy to the cantons, stating that ‘The cantons are sovereign insofar as their sovereignty is not limited by the Federal Constitution; they shall exercise all rights which are not transferred to the Confederation.’.
- 3.
In the Swiss political system (both at the cantonal and federal levels) citizens have the opportunity to participate directly in every state decision by means of direct democracy. For example, federal laws and generally binding decisions of the Confederation are subject to an optional referendum; in this case, a popular ballot is held if 50,000 citizens request it. The referendum is similar to a veto and has the effect of delaying and safeguarding the political process by blocking amendments adopted by parliament or the government or delaying their effect. Accordingly, referenda are often described as a ‘brake’ applied by the people. A second way for citizens to induce a change is called ‘popular initiative’. If at least 100,000 signatures are collected within 18 months to propose a constitutional amendment, then a popular ballot must be held. The outcome will be binding, as long as a majority of voters and cantons support the proposal.
- 4.
A census held in 1903 counted 2,006 mutual support groups, to which 14 % of the population was affiliated (approximately 500,000 people). Half of the groups had fewer than 100 members and grouped together the inhabitants of one municipality.
- 5.
Prior to 1994, six cantons made affiliation to a sickness fund compulsory for the whole population; 12 cantons made affiliation com-pulsory for certain social groups such as people with a low income and foreigners; and four cantons delegated the decision for a man-date to each municipality (Alber and Bernardi-Schenkluhn 1992: 210).
- 6.
Three reforms of the federal law proposed by parliament and put to referendum, six popular initiatives, and two counter-projects.
- 7.
A narrow majority of 51.8 % voted in favor of the new law.
- 8.
Social insurance is not automatic, but it is compulsory. The cantons are responsible for the surveillance of this mandatory insurance and checking the membership status of each citizen. It is impossible to leave one sickness fund without having a contract with another insurer and fines are imposed on those who are caught without coverage (Brunner et al. 2007: 151–2; Cheng 2010: 1443).
- 9.
Switzerland is moving in the direction hoped for by the theory of fiscal federalism, according to which the central government should have responsibility for income redistribution (and therefore also for financing the basic stock of merit goods), whereas cantons should be responsible for the organization and production of health services (Oates 1999).
- 10.
In 2013, for the first time, the federal government issued a national health care strategy (see Federal Office of Public Health 2013).
- 11.
Switzerland has a German-speaking, a French-speaking and an Italian-speaking part.
- 12.
Socialized health expenditure (SHE) reflects collective spending for the universally accessible basket of healthcare benefits. This includes public financing, mandatory health insurance and social insurance and accounts for approximately 60–65 % of the total financing in Switzerland. Out-of pocket expenditures, co-payments and voluntary health insurance are not included.
- 13.
Doctors with legal authorization to sell pharmaceutical products directly to their patients.
- 14.
The Netherlands is the only country with lower income-related inequality in health status.
- 15.
We refer to a Bismarckian insurance model, funded by means of wage-based social contributions and designed to cover, through in-cash benefits, other health-related risks like longevity, disability, and accident.
- 16.
- 17.
In fact, this activism of the federal government still lacks a constitutional basis.
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Crivelli, L., Salari, P. (2014). The Impact of Federalism on the Healthcare System in Terms of Efficiency, Equity, and Cost Containment: The Case of Switzerland. In: Levaggi, R., Montefiori, M. (eds) Health Care Provision and Patient Mobility. Developments in Health Economics and Public Policy, vol 12. Springer, Milano. https://doi.org/10.1007/978-88-470-5480-6_7
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