Germany - Health Insurance

About 11 percent of Germans pay for private health insurance provided by about forty for-profit insurance carriers. A good portion of those choosing private insurance are civil servants who want insurance to cover the roughly 50 percent of their medical bills not covered by the government. Some sickness-fund members buy additional private insurance to secure such extras as a private room or a choice of physicians while in a hospital. Otherwise, the medical care provided to the publicly and privately insured is identical, and the same medical facilities are used. Self-employed persons earning above the income ceiling must have private insurance. Members of a sickness fund who leave it for a private insurance carrier will generally not be allowed to return to public insurance.

Sickness funds are divided into two categories: primary funds and substitute funds. Workers earning less than the periodically revised income ceiling are required to belong to the primary funds; those earning more than this ceiling may be members on a voluntary basis. Some primary-fund members have a choice of funds. Others do not and become members of a particular fund because of their occupation or place of residence. According to figures from the Ministry of Labor and Social Affairs for late 1992, of the six types of primary funds, local sickness funds, then about 270 in number, are the most important. Organized geographically, they supply about 46 percent of the insured workforce with health insurance. About 800 company-based funds, located in firms with more than 450 employees, cover about 11 percent of workers. Some 180 occupational funds organized by craft cover another 2.5 percent. There are three other kinds of primary funds (about two dozen in all); they supply insurance for self-employed farmers, sailors, and miners and cover about 4 percent of the workforce. There are also two kinds of substitute funds; they provide health insurance to white-collar and blue-collar workers earning more than the income ceiling. Substitute funds are organized on a national basis, and membership is voluntary. Such funds cover about 34 percent of insured workers.

Although private insurance companies pay health care providers about twice the amount paid by the primary sickness funds, private insurance is often cheaper than statutory health insurance, especially for policyholders without dependents. As is the case for members of sickness funds, employees who have private insurance have half their premiums paid by their employers. German private health insurance is unusual in that whatever the insured person's age, his or her premium will remain that set for his or her age cohort when the policy initially was taken. Premiums rise only according to increases in overall health care costs. Policyholders generally stay with their original policy because if they change companies, they will pay the higher rates of an older age cohort.

Because some funds have poorer overall health profiles than others as a result of the occupations of their members, the number of dependents and pensioners among its members, or other factors, premiums can range from as low as about 6.5 percent to as much as 16.0 percent of a member's gross earnings. To counter this inequity, a national reserve fund makes payments to funds with high numbers of pensioners. The GSG of 1993 mandates an equalization of contribution rates across all sickness funds by authorizing payments to funds burdened with health risks associated with age and gender.

Health insurance

Some 92 percent of Germany's residents receive health care through statutory health insurance, that is, the GKV. As of late 1992, the GKV relied on about 1,200 nonprofit sickness funds that collect premiums from their members and pay health care providers according to negotiated agreements. Those not insured through these funds, mostly civil servants and the self-employed, have private for-profit insurance. An estimated 0.3 percent of the population has no health insurance of any kind. They are generally the rich who do not need it and the very poor, who receive health care through social assistance.

Employers and employees each pay half of a member's premiums, which in the first half of the 1990s averaged between 12 and 13 percent of a worker's gross earnings up to the income ceiling. Premiums are set according to earnings rather than risk and are not affected by a member's marital status, family size, or health; they are the same for all members of a particular fund with the same earnings. In a household with two wage earners, each pays the full premium assessed by his or her sickness fund. The unemployed remain members of their sickness fund. Their contributions are paid by federal and local government offices, with one-third coming from local social assistance offices. The contributions of retirees are paid by the pensioners themselves and by their pension funds. Thus, the public health insurance program redistributes from higher to lower income groups, from the healthy to the sick, from the young to the old, from the employed to the unemployed, and from those without children to those with children.

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