Posted on May 17, 2011 by Sergio Ulloa
Germany's statutory health insurance system, the oldest in Europe, may soon raise premiums on its 72 million members by up to €840 (US$1,195) per year due to spiraling healthcare costs and other factors.
Health insurance in Germany is mandatory. Those residing in the country have three options when selecting a medical coverage plan: the government-regulated public system (Gesetzlichen Krankenversicherung or GKV), private health insurance purchased through local or international agents (referred to as Private Krankenversicherung or PKV), or an individual combination of public and private plans.
Most German residents are members of the public health insurance scheme. Around 15 percent of the population opts out of the state scheme, typically when they are younger as premiums are lower. Through the GKV, citizens pay into one of the 300 independent statutory state 'sickness funds' through either payroll deductions or their bank. In general, each sickness fund is governed jointly through employers and employees and operate through collective reimbursement mechanisms with hospitals and GPs. Since January 2011, insurance payments are capped at 15.5 percent of gross earnings by law. Citizens are free to compare rates and can switch between state health funds to save on premiums, pending government approval.
Germany, like many industrialized countries, has been challenged by ever-increasing healthcare costs, which now consume over 11 percent of the country's GDP. Last year, public sector austerity measures were put in place to avoid a predicted €11 billion (US$13.2 billion) shortfall in German state healthcare finances. Under the new proposals, mandatory health insurance contributions rose by 0.6 percent from 14.9 percent to 15.5 percent of gross wages with any future planned increases in contribution to be borne solely by employers.
However, according to the head of the GKV, Doris Pfeiffer, these measures will not do enough to control spiraling healthcare and pharmaceutical expenses for participating insurance companies and that ultimately more of the cost burden must be passed onto consumers. Mrs. Phfeiffer put forward that members of the public health insurance scheme could be subject to additional surcharges, or Zusatzbeiträge, amounting to anything between €50 (US$ 70) and €70 (US$100) a month in the coming years.
"Such sums are conceivable and even required by government policy," Mrs. Pfeiffer added.
The GKV head's assessment comes in the controversial aftermath of prominent German insurer City BKK's bankruptcy. Former BKK policyholders, many of them old and infirm, have since struggled to join other statutory insurers. Insurance companies in Germany's system are trapped; they are struggling with increased healthcare costs but cannot raise contribution levels due to intense competition for customers within their market. Mrs. Pfeiffer believed that this belligerent environment would push more health insurance companies towards insolvency, like City BKK.
A recent study released by the University of Cologne confirmed that the financing gap in Germany's health insurance system was unsustainable. However, researchers held that, if current costs structures hold, monthly premiums for statutory insurance would only need rise €33 (US$47) on average.
The German Health Ministry, meanwhile, has rejected such grim forecasts about the impact surging health insurance costs would have on the country and its citizens' monthly insurance premiums. A Health Ministry spokesman commented that "an increase in additional contributions of this magnitude is not expected in the foreseeable future." The German government has projected health insurance surcharges within the GKV to remain on average below €10 (US$14) per month going forward into the next year.
Germany's healthcare system
has thus far been able to maintain comprehensive and high quality medical treatment options for patients throughout the country. However, as mentioned previously, cost control has continued to be an issue for the statutory system. The government has developed numerous measures to mitigate rising expenses, raising revenues through increased contributions limits and reducing costs through strict limits on public hospital expenditure, services and salaries. Further reforms must continue to walk the tightrope of cost-effectiveness and quality care and to better address issues concerning the aging population and the shrinking German work force.
Many developed countries are facing similar problems to Germany, with the costs of healthcare growing steadily. In many nations this may be due to expensive pharmaceuticals, the population's desire for new medical technology or even an aging population. The increasing rise of medical inflation may also have a knock on effect on medical insurance globally, having the potential to push up premiums whether they be from a national health insurance service such as Germany, or an international health insurance company.