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Healthcare Systems: Germany – Civitas 2001 (2013)

Introduction s. 2

As of 2009 it is compulsory for all German citizens and long-term residents to have health insurance. For those earning less than €49,500, insurance is provided by the public statutory health insurance scheme (SHI), known in Germany as Gesetzliche Krankenversicherung (GKV). SHI is operated by approximately 150 competing sickness funds (SFs) and citizens are insured on a per family basis, meaning that the dependents of the insured are also covered.

Anyone earning more than €49, 500 per annum has the option of purchasing a private health insurance plan, although upwards of 85 per cent opt to remain with SHI.

GKV: Statutory Health Insurance s.2

Principles of the Health Care System

The German system of social insurance was first established on the national level in 1883 by Otto von Bismarck. The founding principles of his scheme are commonly identified as solidarity, subsidiarity, and corporatism.

When Germans speak of solidarity, they mean that the government takes responsibility for ensuring universal access by helping those unable to participate in the private health insurance sector. Thus, everybody contributes according to their means but public sector monopoly is not implied as it is in the UK. The idea of social partnership is also upheld, reflected by the similar contributions made by employers and employees.

Subsidiarity suggests a decentralised system under which policy is implemented by the smallest feasible political and administrative units in society. This doctrine is endorsed by political parties of all persuasions and is embedded in the German constitution—the Basic Law of 1949. In health care, subsidiarity means that the government is only responsible for setting the legislative framework and establishing the corporatist bargaining process.

Corporatism is seen in the democratically elected representation of employees and employers on the governing boards of sickness funds and in the importance of national and regional decision-making bodies. These bodies negotiate the terms of medical care and reflect the interests of groups such as doctors, dentists, pharmacists, the pharmaceutical industry and insurers.

Organisation s. 3

Responsibility for the health care system in Germany is shared between the Länder (states), the federal government and civil society organisations, thus combining vertical implementation of policies with strong horizontal decision-making.

What is covered by SHI? s. 4

The broad contents of the SHI benefits package (examples of which are given below) are legally defined but the specifics are decided upon by a Federal Joint Committee.24

• Preventive services, particularly during pregnancy and for the early detection of cancer or other major illness such as heart and circulatory disorders.
• Physician services
• Inpatient and outpatient hospital care
• Rehabilitation
• Mental health care
• Dental care
• Prescription drugs
• Sick leave compensation.
• Domestic nursing care where it is not possible to hospitalise patients. Patients with children under the age of 12, or who are handicapped, and whocannot be looked after by another person at home, may also receive domestic help.

Finance s. 5

Statutory sickness funds are financed predominantly through payroll taxes which have been legally fixed at 15.5 per cent of gross wages (an increase from 14.9 per cent in 2010).28 The insured are expected to pay 8.2 per cent of their income, whilst the remaining 7.3 per cent is paid by employers.

Cost-sharing s. 6

Sickness funds function as third-party payers, with patients obtaining benefits in-kind from providers, who are then paid by the insurer via one of the local associations of doctors (see below). However, SHI will not always cover all the costs associated with medical services. Often there is a small co-payment that patients must pay on top of their payroll contributions. Traditionally these co-payments only applied to a small number of services - mainly pharmaceuticals and dental care.

Private Health Insurance s. 6

The Bismarckian system of social security was based on the principle that the state should provide only for those unable to provide for themselves; consequently there was a continuing role for private enterprise alongside the state scheme.

Private health insurance (PHI) plays both a substitutive and a supplementary role. The supplementary role means that PHI can be used to cover certain SHI co-payments, especially for dental care and add minor benefits to the SHI basket, such as access to single hospital rooms.41 The substitutive role means that all Germans not covered by SHI, including civil servants and high earners who choose to opt out of SHI, must access the entirety of their health care through private insurance plans.

Unlike SHI, PHI premiums are risk-related, assessed before enrolment. Those insured with a PHI company must also pay separate premiums for their dependents. However, there is still some central government regulation in order to prevent inequity and uphold universality. For example:

• All contracts are for life and insurers may not refuse applicants with pre-existing conditions. As of 2009, private insurers offering substitutive cover will be required to take part in a risk adjustment scheme (separate from SHI) in order to be able to offer insurance for persons with ill-health at a reasonable price.
• Private health insurance companies must have a ‘basic package,’ which can be offered to those with chronic conditions, or those over 55 years old who are in financial distress. This basic package mimics the conditions offered by SHI.
• PHI companies may not increase premiums for any other reason than general expenditure increases caused by the entirety of their enrolees.

Health Care Provision s. 7

Most ambulatory general practice and specialist care is delivered by primary care physicians who work in solo practices. Hospitals play a limited role in this sector, providing few out-patient services.

Sickness funds do not pay providers directly. Instead, since 2003 they have negotiated capita grants based on the population of insured in that region and paid these directly to Regional Physician Associations. The Associations in turn distribute these funds amongst the providers in their area on a fee-for-service basis regulated by the Uniform Value Scale.

Private physicians are either paid directly by the patient, or their private insurance company. Services provided for either in the public or private sector are subject to predetermined government price schedules, although the private provision fee scale allows physicians to earn up to twice as much for services paid for privately, compared to services paid for through GKV.

Whether public or private, a majority of medical facilities are still not-for-profit and staffed by salaried doctors, although senior doctors may also treat privately insured patients on a fee-for-service basis.

In 2010, 30.5 per cent of hospitals were publically owned, 36.6 per cent were non-profit and 32.9 per cent were for-profit private. This balance represents a shift towards privatisation, as in 1992 the public sector had owned 45 per cent of hospitals and the private sector only 15 per cent. This trend has been attributed to fiscal difficulties in the municipalities, leading to privatisations and a slowdown in public construction. However, the share represented by the non-profit sector remained stable, so while the hospital sector is majority private and has a significantly greater for-profit element than it once did, it can overall still be characterised as majority (67.1 per cent) non-profit.

Reforms s. 8

Competition

Since the 1990s German governments have been trying to increase competition between insurance and medical care providers. Although price and service competition between sickness funds is muted thanks to the legally defined basic package and uniform contribution rate, individuals can choose freely between the sickness funds and switch once a year if they desire.

Since 2007, sickness funds have also been given more freedom in negotiating the price and quality of services offered, for example through selective contracting.

Competition in the private health sector is much greater than for SHI and in 2007 it became more so when the variety of tariff options and insurance plans was widened. Insurance companies may now offer lower rates to those customers that choose, for example, an integrated care scheme, which may include a gatekeeping GP element, or a contract with a high deductible (minimum insurance excess).