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Case Study: Germany

A Combination System

Germany does not have state-run, tax-funded health care, but rather has “Krankenkassen,” or sickness funds, which are essentially insurance companies. There are two types: both private and public. The vast majority of Germans, 90 percent, are in the public system. The remaining ten percent, generally those with higher incomes, utilize the private system. Like American insurance companies, the Krankenkassen handle payment of medical bills and charge a premium.

Most people in the public system are members through their employer. The insured pay half the premium, with their employer covering the remainder. Premiums are tied to income and those who cannot afford coverage are subsidized by the government. On top of premiums, public Krankenkassen can, as of 2004, charge small copays.

Doctors negotiate prices with the Krankenkassen yearly and they are standardized within each state. Krankenkassen also negotiate prices with pharmaceutical companies.

Existing problems

There has long been concern about bureaucracy, high premiums, and deficits in the German system. Doctors launched a strike in March 2006 due to a rise in work hours and no growth in salaries. Low salaries have driven thousands of German doctors to seek work in other countries.

Mandatory insurance coverage

Under a new law, all Germans are required to have insurance by January 1, 2009, either private or public.

  • Those who formerly had public coverage may stay with the same public Krankenkassen, those who had private coverage may stay with their private insurance or join the public system.
  • Neither public nor private Krankenkassen are allowed to reject people.
  • To encourage competition among Krankenkassen, the sickness funds can offer a choice of rates for different types of coverage.

A step towards a single payer system

Under the “Gesundheitsfonds,” or health funds, publicly-insured Germans will pay their premiums into a central pool, along with tax money. These funds will be distributed among the Krankenkassen. The Krankenkassen get a flat amount for each member, approximately 150 to 170 euros, and a supplement for those with chronic illnesses or other risk factors.

If they need additional money, Krankenkassen can charge each member a monthly 8 euro supplement and then, if more is needed, an extra premium of up to one percent of member income. Krankenkassen with extra money can give it back to members.

Controversy and costs

Many oppose the reform and say it only worsens existing problems

  • In October, the government will announce new rates for the public Krankenkassen, which will be universal across the country. Some experts believe that they may be as high as 16 percent of payroll. Right now, premiums vary but average 14.9 percent.
  • The Krankenkassen have huge debts— €800 billion in the first half of 2008—and many believe they will not decrease under the new plan.
  • On January 1, 2009, a new base premium will be introduced for private insurance. On top of the base premium, members can pay for additional coverage.

The coalition government is deeply divided on the reform. All parties are dissatisfied due to various compromises. Many politicians have called for the Gesundheitsfonds to be scrapped altogether. Doctors fear that with the reform will come “more bureaucracy and more cost pressure.”

With the next election in Germany set for September 2009, the failure of the reform could have lasting political ramifications.

  1. 1 Dennis Nowak, “Doctors on Strike – The Crisis in German Health Care Delivery,” New England Journal of Medicine, vol. 355, no. 15, (12 October 2006); “Doctors’ strike ends in new collective agreement,” July 2006, European Foundation for the Improvement of Living and Working Conditions, http://www.eurofound.europa.eu/eiro/2006/07/articles/DE0607019I.htm.
  2. 2 Bundesministerium für Gesundheit, “Die neue Gesundheitsversicherung: Das bringt die Gesundheitsreform den Versicherten,” May 2007, 3rd edition.
  3. 3 Ibid.
  4. 4 Ibid.
  5. 5 “Ein Jahr Reform und ein Kassenhaus im Bau,” Frankfurter Allgemeine Zeitung, 1 April 2008.
  6. 6 Carsten Germis, “Ausgetrickst; Wie Ministerin Ulla Schmidt den Gesundheitsfonds umdeutet,” Frankfurter Allgemeine Zeitung, 20 January 2008.
  7. 7 Ibid.
  8. 8 “Ein Jahr Reform und ein Kassenhaus im Bau,” Frankfurter Allgemeine Zeitung, 1 April 2008.
  9. 9 “Krankenkassen machen 800 Millionen Euro minus,“ 28 August 2008, Der Spiegel, http://www.spiegel.de/wirtschaft/0,1518,575315,00.html
  10. 10 “Die neue Gesundheitsversicherung.”
  11. 11 Mathia Huter, “Escalating costs and falling receipts spell trouble,” British Medical Journal, vol. 333, (1 July 2006).
  12. 12 Wolfgang Wagner, “’Auf den Staat ist kein Verlass’ ; Krankenkassen-Chef Klusen lehnt Steuern im Gesundheitswesen ab und äußert Verständnis für die Ärzteproteste,” Frankfurter Rundschau, 25 January 2007.
  13. 13 Thorsten Severin and Claudia Kade, “Merkel’s health reform shores up German coalition,” 5 October 2006, Reuters, http://www.alertnet.org/thenews/newsdesk/Lo519531.htm.