Health care cost in Switzerland: Quantity- or price-driven?

- Differences in medical costs are split into price and quantity effects.
- Regional cost differences are mainly quantity driven.
- The relative price of medical services from 2004 to 2010 remained unaltered.

In Switzerland, per capita health care costs vary substantially from canton to canton and rise considerably and steadily from year to year. Since costs are equal to the product of quantities and prices, the question arises whether regional cost variations and cost increase over time are quantity- or price-driven. Depending on the answer, the containment of health care costs must be approached differently.This article examines the cost of mandatory health insurance in Switzerland for the period from 2004 to 2010 and breaks it down into quantity and price effects. The main result of the cross-section analysis reveals that regional cost differences are mainly due to quantity differences. Similarly, the longitudinal analysis shows that the cost increase across all health care services is primarily caused by increasing per capita quantities.Any attempt to contain costs must therefore focus primarily on the extent of medical care utilization, and the key challenge to be met is how to identify medical care services which do not have a positive effect on patients' health status.