In its judgment, the Federal Supreme Court (the Court) upheld an appeal by the Federal Office of Public Health (FOPH) against a judgment of the Federal Administrative Court (FAC) of 11 March 2025, confirming the FOPH's decision of 5 April 2022 setting the Canton of Basel-Stadt's share of the federal contribution to individual premium reductions for 2022. At issue was the lawfulness of art. 3 para. 4^bis of the Ordinance of 7 November 2007 on the Contributions of the Cantons and the Confederation to Premium Reductions in Health Insurance (bis Ende 2025 geltende Verordnung über die Beiträge der Kantone und des Bundes zur Prämienverbilligung in der Krankenversicherung, aVPVK), under which the FOPH deducts 7.5 per cent from a canton's share where excess premium income has been offset under art. 17 of the Health Insurance Oversight Act (Krankenversicherungsaufsichtsgesetz, KVAG).

The Federal Administrative Court had held that art. 3 para. 4^bis aVPVK lacked a statutory basis: the premium equalisation under art. 17 KVAG was not among the parameters for calculating the gross costs under art. 66 para. 2 of the Health Insurance Act (Bundesgesetz über die Krankenversicherung, KVG), and art. 66 para. 3 KVG exhaustively defined the distribution criteria as resident population and number of insured persons, leaving the Federal Council no room to take account of premium equalisation. It accordingly ordered the FOPH to recalculate the cantonal share without the deduction.

The Court disagreed. It held that, notwithstanding the wording of art. 66 para. 3 KVG referring to the Federal Council, the FOPH was competent to set an individual canton's share by way of a decision, since reading the provision to require a Federal Council decision would deprive the cantons of legal protection; it also confirmed that the Basel-Stadt Office for Social Contributions had validly acted on behalf of the canton. On the merits, the Court held that the aVPVK, enacted on art. 66 and 96 KVG, merely regulated the details of determining and allocating the federal contribution. It further held that the absence of an explicit statutory basis in the KVAG for the correction mechanism set out in Article 3 para. 4bis aVPVK was immaterial, provided that the mechanism did not contravene the KVG or any other provision of federal law..As the premium equalisation under art. 17 KVAG amounted to a factual correction of approved premium tariffs and thus implied a reduction in both the premium target and the gross costs of compulsory health insurance, taking such reduction into account did not breach art. 66 KVG. Nor did art. 66 para. 3 KVG preclude the reduction from being taken into account only in those cantons in which it had occurred. It was not for the Court to rule on the economic or political appropriateness of the Federal Council's rule, nor was it relevant that the current ordinance no longer provides for such equalisation. Consequently, the Court upheld the appeal.

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