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Social Health Protection in Germany – Experiences and Lessons

Dr Matthias RompelHead of SectionSocial Protection

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Conference on National Health Insurance: Lessons for South Africa – Johannesburg, 07/12/2011

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Outline of Presentation

PreambleBrokering Know-How from Germany through Internat. Cooperation

Background The German System

Guiding Principles Institutional Arrangements,

Financing, Governance Recent & Envisaged Changes

Lessons & Conclusions

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Brokering Know-How from Germany through International Cooperation Germany as the country with the longest tradition in social security

worldwide German International Cooperation (GIZ) as the agency of the

German government for international cooperation:Capacity Development & Technical Cooperation on Social Health Protection and broader Social Protection issues in some 30 countries worldwide

Approach: No blueprint, advice tailored to the needs and conditions of partner country

Value basis: Universal access, solidarity, fair financing, equity Strong international partnerships e.g. Providing for Health (P4H) –

Social Health Protection Initiative as network incl. WHO, World Bank, ILO, France & others

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Background

Worldwide more than 150 million individuals per year face financial catastrophe as a result of having to pay for health care out of pocket

About 100 million individuals of these are pushed into poverty each year

In many countries health spending still below requirements to provide access to health care for all - high proportion of the world’s 1.3 billion poor have no access to health services

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The Challenge

Impoverishment due to accessing health care is strongly linked to OOP payments (user of health services)

People might be too poor to even access services (non-user)

Reliance on OOP means:

No risk sharing The most regressive financing mechanism

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P4H impact chain

Improved health outcomes

More resources spent efficiently

on health

Higher utilisation of health services

ReducedOut-of-pocket expenditures

Social Health Protection

Sustainable and equitable

financing of health systems

Improved access to quality health

services

Pre-payment

Risk-pooling

Mechanisms of Social Health Protection

Source: WHO

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Some reasons to be interested in theGerman Health Financing System

Occupying middle ground between public and private mechanisms of financing and delivering health care

Example that adequate and almost equal access to benefits can be achieved within a pluralistic system

Free choice of physicians (GP´s & Specialists) and almost free choice of hospital care - regardless of patient´s financialsituation

Successful cost containment

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Guiding Principles of the German System

Overarching Goal of nearly all domestic policy: Social Cohesion (reduction of social tension)

amongst various socio-economic classes amongst various interest groups

Also enshrined in German Social Market Economy as model to interrelate social & economic policy

Guiding Principles

Solidarity, Fair Financing & Equity

Subsidiarity

Free choice of providers

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Solidarity, Fair Financing & Equity

Ethical platform Everyone should have access to the same benefit package and same

quality of care on equal terms

no person or family should be financially burdened by illness

Implications: the wealthier pay for the poor, the young pay for the old the healthy pay for the sick, small families/singles pay for large

families

Contributions: fixed % of salary - not related to health status Government subsidies (tax-based) for persons/families and/or

services

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Subsidiarity

Solve problems at the lowest possible level higher levels only intervene in case of failure or inability

Central (Federal) Government has the role of a regulator and supervisor

direct spending on health care is insignificant

is only marginally involved in service provision

delegates state functions to actors of the system

Health care sector governs itself within the set federal legal

framework assessed along impact and process indicators

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Free choice

Patients have the freedom to choose providers – ambulatory and hospital care social health insurance carriers

Unified compensation system for providers (mix of private and public but autonomous providers)

identical, negotiated price schedules makes provider competition possible based on quality

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From Supply Side to Demand Financing

Separation of key functions of the health system Financing of health services Provision of health services Accreditation of health care providers Training of health professionals Regulation of all actors in the health sector

The legal frameworks determines the structural and institutional arrangement necessary to ensure the above:

Rules for interaction and arbitration to ensure that every citizen can access his/her constitutional rights

and that all actors in the health system can be held accountable for their respective outcomes and goals

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Long Term Trends

public health insurance - covering % of population

510

2231 31

75

8590 90 90 91 88 88 87 85 86

0

10

20

30

40

50

60

70

80

90

100

1880 1883 1913 1921 1935 1955 1960 1970 1975 1980 1985 1990 1995 2000 2005 2007

year

pe

rce

nt

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Universal Coverage – the Dimensions

Source: World Health Report 2010

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• Employees and retirees with a monthly income up to 4,125 Euro (49,500 Euro* p.a.)

• Students• Family members (included wife, children)• Unemployed (since 2004: social assistance beneficiaries)

Private Health Insurance(obligation)

Compulsory

Choice between

• Employees and retirees with monthly income above 4,125 Euro (49.500 Euro* p.a.)

• Self employed• Civil servants

Statutory Health Insurance (compulsory / voluntary)

* Limits 2011

Who is insured? How?

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The Solidarity PrincipleSocial Health InsuranceSocial Health Insurance Private Health InsurancePrivate Health Insurance

solidarity principlesolidarity principle

poorrich

contribution according to income

contribution according to individual risk (costs)

equivalence principleequivalence principle

Healthyyoungchildless

illoldfamilies

benefit according to need

benefits according to individual contract

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Statutory / Social Health Insurance Private Health insurance

Basis: legal requirement

solidarity principle

Payment in kind principle

Capacity on demand

Statutory health insurance:

Non-for profit

Insurance regardless of financial

means and medical history

(obligation to contract)

Pay-as-you-go

Basis: private contract

equivalence principle

cost reimbursement principle

Service as agreed

Private insurance company:

For profit

Tendency to exclusion of the sick,

extra corresponding risks (no

obligation to contract)

asset management / capital stocks

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How Germans are insured

No health insurance

0,2%

Public insurance

funds87,7%

Welfare1,3%

Government coverage

1,1%Private health

insurance9,7%

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Membership: Statutory / Social Health Insurance

74% compulsory members (including insured‘s relatives)

14% voluntary members (with insured‘s relatives)

74%14%

Complusory member free insured

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Equal Access to SHI & Free Choice of Service Provider

SHI carriers have to accept everyone (exceptions for special funds for farmers, miners, seamen and guild

funds which are not open to the public)

Freedom of choice between all physicians in

ambulatory care (OPD)

Global Co-Payment limits of 2 % of the income for all

people / 1 % for people who are chronically ill

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Service-Delivery: Benefits in Kind No cash payment for the patients (exception: co-payments)

Comprehensive contracting system to regulate prices, quantities and qualities of products and services implemented through self-administration

Case-based payments (DRGs for in-patient care)

SHI carrier Provider

Patient

Associationsof SHI carriers

Associationsof Providers

Co-payments are collected directly by the providers

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Physician Insured

SHI carrierAssociation

of Physicians

feeChip-card

contribution

Chip card (licence)

benefit

contractscostsbenefitsBudgets

Overall remuneration for medical services

Division of Purchaser & Provider Functions

membership

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Envisaged Contractual Relationships in Future

Physician /Hospital

Insured

SHI carrierAssociation of Physicians /

Hospitals

Increasing the indirect contract relations between SHI carriers and the provider

Contract

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Composition of Funding for Healthcare

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Health Fund

Changes in the System: The Health Fund (since 2009)

Additionalcontribution

If the costsof the SHI- carrier exceed the revenues received by the health fund (mandatory!)

SHI carriercompetition between each other

insured personsfreedom of choice

state

federal subsidyfinanced by taxes(e.g. for the insurance coverage of children) (2011: 14 Bill. €)

insured persons

Health Fund (2011: ~180 Bill. €)

payroll contribution

(2011: 8,2%)

employers

Payroll contribution

(2011: 7,3%)

uniform lump sums for all insured plus risk supplement

Refund

If the revenues

received bythe health fund exceed the costs of the SHI-carrier (voluntary!)

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• Contributions

• Co-payments

• Tax-input

• Private Insurance

Sources of Funding

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- Contributions -

• percentage of wages / salaries / pension (up to the contribution assessment limit of 49.500 Euro per year)

• paid-up co-insurance (non-working spouse, children)

• parity financing (~ 50% employer, 50% employee)

• contributions of the pensioners (each 50% SI-carrier / pensioner at the statutory pension, since 2004: 100% at additional pensions)

• contributions at unemployed, people receiving welfare (contribution since 2004: ALG I / II, Social Assistance)

• pay-as-you-go financing (permanent coverage of expenditures)

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Contribution Rate (1980 – 2011)

* since 1.7.2005 feature of 0,9%

11,4 11,412,6

13,2 13,5 13,6 13,6 13,6 13,6 13,6 14,0 14,3 14,2 14,213,3

13,9 14,014,6

14,014,6

0

2

4

6

8

10

12

14

16

1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

per

cen

t

year

average contribution rate in % (at the 1.1. each year)

trend

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- Co-payments -• Pharmaceuticals

• Dentures / orthodontic

• non-physician treatment (e.g. physiotherapy)

• since 2004: ambulatory treatment - OPD (consultation fee)

• hospital stay (lodging)

• transportation to and from medical facility

• preventive spa / inpatient rehabilitation

• Exemptions: critical loads / hardship (children and general max. 2% of the household income p.a. respectively 1% of the income for chronically ill)

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- Taxes -• coverage of contributions or absorption of costs for people

receiving welfare benefits (statutory intergation since 2004)

• investment costs of hospitals

• public health service (immunization, control of epidemics)

• governmental coverage (soldiers, civil servants)

• Partial coverage of private expenditures on health for civil servants („Beihilfe“)

• subsidies for the agricultural sickness funds

• since 2004: subsidy for benefits not directly belonging to health / sickness (e.g. maternity) -> 2011: 14 Billion €

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Access EquityEfficiency

Qu

alit

yS

ust

ain

abil

ity

Objectives

Rig

hts

So

cial Justice

SolidarityGood Governance Values

Participation

ContextPolitical and economicenvironment

Development PerspectivePro-poor orientationProcess – values – holistic approach

Social Perspective

Social ProtectionSocial Capital

Social Perspective

Social ProtectionSocial Capital

Health Perspective

Health Systems

Health Perspective

Health Systems

Social Health Protection

Focus: Health Financing,Financial Protection

Focus: Health Financing,Financial Protection

Systems matter: coherence in the “broader picture” is important

Lessons & Conclusions (I)

Source: GIZ / P4H

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Systems matter: health financing relates to other health system functions

Source: WHO

Lessons & Conclusions (II)

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• Vision matters: Build consensus on where you want to go: in terms of population coverage, in terms of service coverage, in terms of support value

• Political economy matters: Find mechanisms to dialogue on interests, create checks and balances to balance power relationships (private providers, pharmaceutical industry, independency from political day-to-day business etc)

• Regulation matters: Patients need protection from the inefficiencies of providers and cost pressures of the industry in all health care markets

• More health for the money: Efficiency needs to be build in the system. Improving efficiency in the given health care system is more important than generating additional resources

• Effective mechanisms matter: provider-payment (e.g. DRGs), contracting, ICT capacities and systems, strategic purchasing etc are necessary to ensure good outcomes

Lessons & Conclusions (III)

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Thank you very much for your attention !

Contact:

Matthias.Rompel@giz.de

www.giz.de

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