The Health Care System in Germany – a Dinosaur in Perpetual Change

Dominik Naumann – presentation made by Eckhard Metze

Confederation of German Employer Organisations (BDA)

Social protection

Dominik Naumann | The Health Care System in Germany | December 6th 2013 2

How people in Germany are insured

Compulsory vs. private health insurance system

Compulsory Income-dependent contributions (rich poor) Benefits as needed (healthy sick)

„Solidarity principle“

Private Contributions based on individual contracts Benefits as contracted

„Equivalence principle“

Dominik Naumann | The Health Care System in Germany | December 6th 2013 3

Background – Bismarck´s social security laws

1883 Statutory health insurance 1884 Statutory accident insurance 1889 Statutory pension insurance scheme

1927 Imperial Institute for Labour Exchange and

Unemployment Insurance

1995 Statutory long term care insurance

Dominik Naumann | The Health Care System in Germany | December 6th 2013 4

Financing public health insurance

Employers Employees

50 % 50 %

+ 0,9 % of their income

Contribution assessment ceiling at 47 250 €.Employees with annual income above 52 200 € and self-employed people have the choice between public and private insurance.For others, public health is statutory. But they can have additional private insurance, e.g. for dental prothesis.Not employed spouses and children up to 18 years of age or in education pay no extra contributions.

Dominik Naumann | The Health Care System in Germany | December 6th 2013 5

The principle of self-government

Statutory Health Insurance Funds are public-law corporations. Representatives of employers and insurants make all decisions of

fundamental significance. They represent the interests of members independent from state

influence.

Dominik Naumann | The Health Care System in Germany | December 6th 2013 6

Institutions of the German health system

Federal Ministry of Health: provides legal basis,

e.g. budgeting, financial equalization among funds.

7

National Association of Statutory Health Insurance (SHI) Funds

Federal Associations of SHI-Funds

Insured persons

pay contributions

Physician

SHI-Funds

treatments

Federal Association of SHI-physicians

Associations of SHI-physicians

17 Regions

bargaining payments

Federal Joint Committee

Establishes guidelines,

approves new methods

Workplace health promotion

Occupational safety: Law Worklplace health promotion: Voluntary

Most common are… canteen food, back therapy training and relaxation techniques.

Big firms have more capabilities than small and medium firms.

Expenditures for health protection and prevention in 2011:

11,1 bn. €

42 % firms

36 % private households

21 % state

Dominik Naumann | The Health Care System in Germany | December 6th 2013 8

Achievements of the firms

Sickness absence rate very low: 3,6 % in 2012 (5,9 % in 1970) Occupational accidents decreased by 43 % from 1995 to 2012 Occupational invalidity decreased by 39 % from 1995 to 2012

But: Return on investment for prevention is difficult to calculate.

Dominik Naumann | The Health Care System in Germany | December 6th 2013 9

Politics: Redistribution in the public health insurance

Rich subsidize the poor Taxation? Healthy support the sick Young pay for the old Intergenerational justice? Singles subsidize families Discrimination?

Contribution rates are related to the wages, so rising wages lead to increasing non-wage costs for the employer

and rising contribution rates also lead to higher non-wage labor costs.

Finances of the public health insurance depend on employment,

both positive and negative.

Dominik Naumann | The Health Care System in Germany | December 6th 2013 10

¬

Taxing Wages, OECD 2013

A single without children with average income (44 811 € p.a.):

total tax wedge including employer´s

social security contributions 49,7 %

Dominik Naumann | The Health Care System in Germany | December 6th 2013 11

2/3 1/3

Social insurance contributions

Tax

Development of public health contributions

Dominik Naumann | The Health Care System in Germany | December 6th 2013 12

First of January each yearSource: Federal Ministry of Health, 2013.

13

Figure 1.1. Income tax plus employee and employer contributions less cash benefits, 2012As a % of labor costs, by family-type1

Political discussion – after the reform is before the reform

Finance

Private and public insurers on one market – almost unique.

More or less redistribution?

Is it sustainable to keep contributions depending on wages?

Do short-time surpluses due to low unemployment provoke new permanent expenditures?

Expenditures

Are solidarity and personal responsibility in balance?

Which needs are really basic needs?

How can competition be implemented to improve quality and reduce costs?

How can we ensure efficient medical treatment in rural areas?

Hospitals: Too many?

Drugs: Too expensive?

Dominik Naumann | The Health Care System in Germany | December 6th 2013 14

Dominik Naumann | The Health Care System in Germany | December 6th 2013 15

Thanks for your attention

BDA | Bundesvereinigung derDeutschen Arbeitgeberverbände

Mitglied von BUSINESSEUROPE

Hausadresse:Breite Straße 29 | 10178 Berlin

Briefadresse:11054 Berlin

T +49 30 2033-0F +49 30 2033-2105

bda@arbeitgeber.dewww.arbeitgeber.de