Private health insurance and Statutory health insurance in Germany: A historical perspective and outlook on the future
History of health insurance system in Germany
The Federal Republic of Germany provides residence to ~82 million people within 16 states (Länder). German healthcare system is one of the most advanced health systems in the world. In fact, according to a survey from World Health Organization (WHO), German healthcare system ranks at 25th place (WHO, 2014). German healthcare system has come a long way from 1995, in which year a micro-census reported that ~12% of the German population was ‘not healthy’ (WHO, 2000). 1883 is considered to be the starting point of the German healthcare system, and during this 135 years of history it has developed into two major health insurances namely,
1) Gesetzliche Krankenversicherung, GKV: Government health insurance/Statutory health insurance/public health scheme
2) Private Krankenversicherung, PKV: Private health insurance
The European Observatory on Health Care System categorizes the history of the modern German healthcare system into five eras. Busse et al. (2017) add the latest era to this list which includes the progress of healthcare development until 2017.
1. 1794 to 1883 Industrialization period
In 1794, all the hospitals in the largest city of Germany – Prussia – were taken under the regulation of the states, setting the first step towards the current healthcare system (Möll, 2014). In 1883, the Bismarck’s Health Insurance Act was introduced by basically establishing the solidarity and self-governance principles of statutory health insurance (SHI) in Germany. It is the first social health insurance system (Busse, Blümel, Knieps, & Bärnighausen, 2017).
The Government declared the nationwide compulsory or mandatory health insurance in the same year. During the 19th century industrial rising, industrial workers, companies, and many communities contributed towards the statutory funds so that poor and minors can also receive statutory support (WHO, 2000). During this period, people were allowed to choose either public or private healthcare suppliers.
2. 1883–1933: The Empire and the Weimar Republic period
The liberal Federal Republic of Germany (FRG) insurance system was initiated in 1990 by replacing the universal national health insurance system. Under this system, they managed to insure family dependents, disabled, students, unemployed and pensioners. The lack of specific regulations regarding how funds should be allocated to the physicians in the system established in 1883 resulted in many conflicts between public doctors and private doctors. As a result, 1990, the Leipzig Union or the Hartmann Union of physicians was formed to solve issues of German physicians (WHO, 2000).
By 1910, approximately 75% of the German physicians were part of the Hartmann Union of physicians. Still, the conflicts regarding the access of public doctors to statutory insured patients and private patients were not fully resolved until today. As a potential solution to these conflicts, the Imperial Committee of Physicians and Sickness Funds or the Federal Committee was established to take part in the decision-making process.
From 1931 onwards, the physicians who provided services to people who were insured by SHI were supposed to be a member of the Association of Statutory Health Insurance Physicians which determined the sickness fund distribution to the doctors (Busse et al., 2017).
3. 1933–1945: the period of National Socialism/socialist
This period is referred to as the period of National Socialism/socialist. During this period, the majority of the reinsurance regulations remained unaffected, even though the influence of totalitarian Nazi regime on this self-governance system cannot be ignored (Busse et al., 2017; WHO, 2000). The funds were instead used for political purposes of the national-socialist state and party. The access to healthcare services for Jewish and other minorities was restricted. Workers and doctors who contributed and worked for the sickness fund and welfare were expelled from their service, and the Jewish doctors were prohibited from providing any healthcare service at all by 1938 (WHO, 2000).
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4. 1945–1990: the post-war period
The World War II ended in 1945 and thus 1945-1949 period is considered as the post-war period. During this period self-governance structure of the insurance system was again restored. By 1949, there were two states in Germany which functioned independently and separately, named, Federal Republic of Germany (FRG) and German Democratic Republic (GDR).
However, with the increasing cost, illnesses, under-funding, and investment, lack of medical advances severely affected the quality of healthcare services provided under GDR and thus began to decline.
In 1977, the Health Insurance Cost-Containment Act was established to ensure the stability of healthcare providers and sickness funds (WHO, 2000). The changes to the spending policies at this time resulted in cut-off of many benefits from the insurance including drugs for minor conditions starting a co-payment system (Busse et al., 2017).
5. After 1990: a reunified Germany
The two governing bodies FRG and GDR were united in 1990 (German reunification). Both s integrated care, and evidence-based healthcare systems were implemented starting from 1990 (Busse et al., 2017). After 1990, several legislative reforms were implemented that included the Health Care Structure Act in 1992 which introduced spending caps, fixed budgets, increased co-payments and risk compensation schemes.
More importantly, this act gave the people the right to choose any sickness fund. 1996’s Health Insurance Contribution Rate Exoneration Act and 1997’s First and Second Statutory Health Insurance Restructuring Acts set the stage for the further increase in the private sector. However, there were many weaknesses in this system that did not align with the fundamental principles of the SHI system which ultimately resulted in reformation of the system by the Act to Strengthen Solidarity in Statutory Health Insurance (1998) and the Reform Act of Statutory Health Insurance 2000 (1999) (Busse et al., 2017; Möll, 2014; WHO, 2000).
6. Until 2017: The current status
From 2000-2017 period, there have been multiple acts brought about to enhance the German healthcare system. They include, Statutory Health Insurance Reform Act of 2000 (2000), Act to Reform the Risk Structure Compensation Scheme in Statutory Health Insurance (2001), Case Fees Act (2002), Statutory Health Insurance Modernization Act (2004), Act to Strengthen Competition in Statutory Health Insurance (2007), Statutory Health Insurance Care Structures Act (2011), Pharmaceutical Market Reform Act (2011), Act to Further Develop the Financial Structures and Quality in Statutory Health Insurance (2014), Statutory Health Insurance Care Provision Strengthening Act (2015), and Hospital Structure Reform Act (2016) [reviewed in (Busse et al., 2017)].
As of 2017, German healthcare system provides universal coverage of SHI through 113 sickness funds to everyone including unemployed dependents. People have the choice to use SHI or substitutive private health insurance voluntarily.
Currently, SHI is used by ~87% of the German population whereas ~11% use private insurance. Assuring the success of the development of the healthcare system, the mortality rate in German had decreased by 37% from 2004 to 2014. Yet, like any country, German healthcare system is also subjected to criticism which brings us to the next question whether the SHI system is going to survive for long in the future.
Outlook to the future: Will SHI survive?
Public opinion is a strong indicator of how efficient or successful a healthcare system is. Many studies have conducted surveys on how satisfactory the German healthcare system is compared to other systems in the world. In 2013, Commonwealth Fund’s 2013 survey reported 6th rank to German healthcare system while 2014 WHO survey ranked Germany at 25th position. Michael E. Porter and Clemens Guth in their book on Redefining German Health Care describe this situation as “Increasingly, none of the stakeholders in the healthcare system are satisfied. As the government, physicians, hospitals, insurance companies, and suppliers struggle to protect their interests, patients are left worried and disappointed. Overall, over 50% of German citizens are dissatisfied with the system” (Porter & Guth, 2012).
Within the German healthcare system, the SHI is facing challenges and have caused dissatisfaction in many Germans.
The SHI is based on the wage-based premiums, and currently, 15.5% of the wage is considered as the contribution to the insurance system. For this reason, the overall SHI system is dependent on the number of employees working as well as their wage levels.
Unfortunately, studies indicate demographic decline and ageing in the German population resulting in reduced contributions to the insurance pool and increased pensioners (laboureconomics, 2012; Porter & Guth, 2012). For this reason, the SHI premiums continue to increase burdening the people who are insured by this system.
On the contrary, the private health insurance is dependent not on wage but on other factors such as age, gender, and the needs of the person making it cheaper than the SHI despite increasing premiums. Ultimately, the concept of German SHI “the young finance the old, the better off finance, the worse off, the single earners support the families, and the healthy finance the sick” is becoming a burden and an uncertainty (Porter & Guth, 2012). Among the low quality of the services, inconsistencies in efficiency and quality of services, and rapidly increasing costs, the trust and confidence of the Germans on the SHI as a sustainable and financially viable system has suffered considerably over the last decade (Porter & Guth, 2012; van der Schee, Braun, Calnan, Schnee, & Groenewegen, 2007).
The German government, as well as other interested parties, have suggested many forms of reconfiguration of the German healthcare system which included significant tax contributions from the government, whether they have been successful is still up for questioning. One major reformation suggested for German healthcare system is the replacement of the wage-based system with a Value-Based Health Care System (Porter & Guth, 2012).
As the German healthcare system already possess many of the requirements for a value-based system such as universal coverage, the enhancement of the capabilities of the physicians and other healthcare professionals, increased use of sophisticated medical technologies and increasing the access to the available services may render the system more compatible with a value-based healthcare reform. With appropriate structural changes, German healthcare system may be able to adopt a more patient satisfying, cost-containing, high quality as well as a profitable healthcare system in the future.
Busse, R., Blümel, M., Knieps, F., & Bärnighausen, T. (2017). Statutory health insurance in Germany: a health system shaped by 135 years of solidarity, self-governance, and competition. The Lancet, 390(10097), 882-897.
laboureconomics. (2012). The problem of demographic change in Germany. Retrieved from https://laboureconomics.wordpress.com/2012/04/27/the-problem-of-demographic-change-in-germany/
Möll, M.-P. (2014). Private and Public Health Insurance in Germany Current Status, Future Priorities and Strategic Targets. Azerbaijan International Insurance Forum Retrieved from http://docplayer.net/9918449-Private-and-public-health-insurance-in-germany-current-status-future-priorities-and-strategic-targets.html
Porter, M. E., & Guth, C. (2012). Redefining German health care: moving to a value-based system (Retrieved from https://link-springer-com.uml.idm.oclc.org/content/pdf/10.1007%2F978-3-642-10826-6.pdf): Springer Science & Business Media.
van der Schee, E., Braun, B., Calnan, M., Schnee, M., & Groenewegen, P. P. (2007). Public trust in health care: a comparison of Germany, The Netherlands, and England and Wales. Health Policy, 81(1), 56-67. doi:10.1016/j.healthpol.2006.04.004
WHO. (2014). World Health Organization’s Ranking of the World’s Health Systems. Retrieved from http://thepatientfactor.com/canadian-health-care-information/world-health-organizations-ranking-of-the-worlds-health-systems/
WHO. (2000). Health care systems in transition: Germany. Retrieved from http://www.euro.who.int/__data/assets/pdf_file/0010/80776/E68952.pdf
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