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Le système de santé allemand : vers une plus grande responsabilisation de l'ensemble des acteurs (version anglaise)

23 pages
Confrontée au dérapage de ses dépenses de santé, mais décidée à conserver l'héritage bismarckien d'une assurance-maladie au caractère fortement protecteur, l'Allemagne a entrepris de nombreuses réformes depuis dix ans. Dernière étape, la troisième réforme Seehofer a marqué un tournant en 1997. Après avoir, dans un premier temps, institué des mesures d'urgence afin de maîtriser les coûts, puis entrepris un certain nombre de réformes structurelles, les autorités ont, en effet, décidé de se désengager quelque peu du système de santé. Elles entendent promouvoir une plus grande responsabilité parmi ses acteurs, à savoir les caisses d'assurance, les prestataires de soins et les patients, moins par une régulation globale que par la mise en place d'incitations d'ordre microéconomique. Si le récent changement de gouvernement en octobre 1998 s'est traduit par la disparition de certaines mesures et un plus grand contrôle des dépenses, a priori à titre provisoire, ces évolutions de fond ne devraient pas être remises en cause.
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German Healthcare System:
Promoting Greater
Responsibility Among
All System Players*
Frédéric Germany has been faced with escalating healthcare expenditures but is
Rupprecht, determined to preserve the Bismarckian legacy of a highly protective
Bruno Tissot, sickness-insurance system. To this end, it has undertaken many reforms in the
and Frédéric past decade. The latest wave—the third Seehofer reform in 1997—marked a
Chatel** turning-point.
After a first set of emergency measures to control costs, followed by a series of
structural reforms, the authorities have now decided on a partial disengagement
of the State from the healthcare system.
Their aim is to promote greater responsibility among its players—the insurance
funds, healthcare providers, and patients—less by an overall regulation than*Originally published as
“Le système de santé through new microeconomic incentives.
allemand: vers une plus
grande responsabilisation
de l’ensemble des While the October 1998 change of government has resulted in the abolition ofacteurs,” Économie et
Statistique, no. 318, 1998 some measures and in tighter spending controls (described as provisional), the
- 8, pp. 17-38.
basic scenario outlined above is unlikely to be called into question.
**At the time of writing,
Frédéric Rupprecht and
Bruno Tissot were on the
staff of the Forecasting
Directorate (DP) of the
French Ministry of
Economy, Finance, and
Industry; Frédéric Chatel ermany is one of the OECD countries with the A German patient spends 10%
was a student at the École
Nationale de Statistique Ghighest medical consumption. Moreover, it is more on health than a French patient
et de l’Administration experiencing a strong uptrend in healthcare expen-
Économique (ENSAE).
ditures—partly due to specific local factors such as
reunification and the existence of a dependency-in With 10.4% of its GDP going to pay for healthcare-
surance fund in the Social Security system. Yet the services, Germany is one of the countries that
Names and dates in
Germans do not seem to be in significantly better devote the biggest share of national wealth toparentheses refer to the
bibliography at the end of health than their neighbors. healthcare. In 1997, each German spent about
the article.
INSEE Studies no. 42, January 2000 1Table 1
A decade of reforms in the German healthcare system*
Year Name of reform Main features
1988-89 Blüm reform Reform of the pharmaceutical sector: Festbetrag
1993-95 Seehofer reform I Emergency measures to contain healthcare spending: macroeconomic controls
Introduction of flat-rate pricing for hospital procedures;
1995-96 Seehofer reform II
sickness-insurance funds opened to competition and restructured
1997 Sparpaket New emergency package: increase in co-payments
Sharp increase in co-payments; overall spending
1997-98 Seehofer reform III
caps replaced by individualized caps; greater competition between funds
*For more details on these reforms, see appendix.
USD2,300 on healthcare (in purchasing power The rise in German healthcare spending in recent years
parity terms): this is 10% more than, for example, is also due to specific local factors such as reunification
the French average. Among the industrialized and the creation of a dependency-insurance fund in the
nations, the United States is the only one to spend Social Security system.
more on healthcare per capita than Germany
(OECD Health data base).
Reunification offers
only a partial explanation of healthcareDespite a series of major reforms (table 1),
Germany is experiencing a rather steeper uptrend spending growth
in healthcare spending than its partners. The
weight of medical expenditures in GDP rose from Reunification has led to a substantial rise in
5% in 1970 to over 10% in 1997—a much bigger healthcare spending as a share of GDP. According
rise than in other predominantly public systems to the OECD, the percentage rose from 8.7% in
such as those of France and the U.K. (chart I). 1990 (former West Germany only) to 9.4% the
1Again, only the U.S.—where most healthcare following year (reunited Germany). Despite their
coverage is provided by the private economic lag, the new eastern Länder immediately
sector—registered sharper growth. The expansion benefited from the high level of medical coverage
of the healthcare-spending share of GDP appears to in the western part. In particular, the new Länder’s
be a common feature of developing countries, wages and hence social contributions lingered well
implying that health is a “superior” good (L’Horty, below those of western Germany. In 1993,
Quinet, and Rupprecht 1997). But it is not healthcare spending accounted for 14.5% of GDP
inevitable: starting from its high 1980 level, in the new Länder—a share close to that of the
Sweden has trimmed the percentage of healthcare U.S.—versus 8.4% in the old Länder, a rate lower
expenditures in GDP. than France’s (Schneider 1995). It would thus
seem logical to attribute part of the growth in
Chart I
Germany’s healthcare expenditures since 1990 to
National healthcare expenditures
reunification. Since 1993, however, the trends
have reversed. In the new Länder, medical
expenditures have leveled off or actually fallen as a
% of GDP 1970 share of GDP; in the old Länder, they have
198014.0 accelerated again after the dampening effects of the1990
12.0 1997 Blüm and Seehofer I reforms. Overall,
10.0 reunification largely explains the sharp rise in
spending in the early 1990s (especially in8.0
GDP-share terms), but fails to explain the6.0
persistence of the uptrend since approximately
21994 (table 2).
Germany United States FranceUnited Kingdom
1 In 1988, the ratio for then West Germany was 9.4%. The Blüm
reform substantially reduced the ratio in 1989 and 1990.
2 In the remainder of the article, we will not distinguish between old
Source: OECD Health data base, 1998 and new Länder: “Germany” will refer to reunified Germany.
2 INSEE Studies no. 42, January 2000The introduction of dependency insurance in 1995 habits—seems comparatively unhealthy: for
has increased the demand for benefits now better example, alcohol consumption was 14 liters per
reimbursed by the Social Security system, such as capita and per year in 1991, versus less than 9 liters
residential care in paramedical institutions and in Canada, the United Kingdom, and Japan.
specific care for people with disabilities. In some
cases, benefits previously granted in kind are now International comparisons published by the French
paid in cash, particularly to members of dependent Health Ministry’s Office of Statistics, Research,
persons’ families. and Information Systems (Service des Statistiques,
des Études et des Systèmes d’Information: SESI)
The rise in healthcare spending since the early confirm these results (SESI and DIRIS 1998).
1990s generated large deficits for the German Among the countries studied, Germany ranks last
sickness-insurance fund in 1991, 1992, 1995, and for the comparative rate of overall mortality, while
1996. These led to an increase in contributions to France ranks first. Cardiovascular diseases account
finance the additional benefits, and new insurance for almost half the deaths in Germany, compared
reforms in 1995 and 1997 (see appendix). In the with about one-third in France (table 3-B). The
medium term, the upward drift in German reasons for these disparities include the usual
healthcare spending may gain momentum because pathogenic behaviors: smoking, bad diet, and lack
of population aging. The increase in the number of of exercise (SESI and DIRIS 1998). Germany is,
elderly (and not just longer life expectancy) would with the United States, the country with the
cause healthcare spending to rise by 1.5 points of smallest drop in the mortality rate from
3GDP by 2030 (OECD 1997). cardiovascular diseases since 1980—in a period
when a large share of the decline in this rate in the
developed countries has been achieved through
Health conditions not significantly healthcare-system improvements such as better
better in Germany than elsewhere screening for diabetes and hypertension, and
surgical advances. In other words, Germany’s poor
Despite the rise in spending, the Germans do not performance in the cardiovascular statistics is
seem to enjoy significantly better health than other unquestionably due to individual behavior over
industrialized nations (table 3-A). The number of which the healthcare system has little influence,
years of potential life lost is rather high, and but also to the system itself, which is incapable of
Germany ranks last in Europe for life effectively curtailing the consequences of that
expectancy—both male and female. On balance, behavior. These findings are corroborated by other
these figures are far from satisfactory, especially summary indicators of the impact of the healthcare
given the volume of healthcare spending in system on health status. In sum, German
Germany: what is more, the figures are distinctly expenditures do not yield better health conditions
worse in the older (and richer) Länder than in those than those observed in countries with a comparable
of ex-East Germany. In recent years, despite a level of economic development. Successive
sizable increase in expenditures relative to other German governments have drawn the conclusion
countries, the health indicators have not improved that efficiency gains were possible.
faster than the average (OECD 1997).
True, these indicators give only a partial view of
Dysfunctions due to an excessive
the condition of the healthcare system or the
healthcare supplyquality of care provided. They also reflect the level
of economic development and individual behavior
(particularly the prevalence of risky habits such as erman healthcare supply is extremely
alcohol and tobacco consumption). As it happens, Gabundant. The ambulatory sector has
the German lifestyle—especially dietary expanded with little regulation by the authorities,
and the volume of items of service has been driven
up by specific factors such as the doctors’ feeTable 2
system and the high proportion of specialistAnnual changes in spending by German public
practitioners. Meanwhile, in the hospital-caresickness-insurance fund (GKV) (nominal)
1992 1993 1994 1995 1996 1997
New Länder + 45 + 8 + 16 + 8 + 7 - 4
3 While most studies concur in minimizing the impact of aging onOld Länder + 11 - 1 + 10 + 13 + 3 - 4
the recent growth of healthcare expenditures, the same finding
does not apply to the decades ahead. Aging will also have a
considerable effect on the structure of healthcare demand.Source: BMG (German health ministry).
INSEE Studies no. 42, January 2000 3sector, there is an abundance—not to say a The abundance of ambulatory-care supply is
glut—leading to long or needless hospital stays. largely due to the weakness of public regulation.
Unlike France, Germany has no tradition of quotas
on medical-school intake. Meanwhile, the attempts
The largely uncontrolled to limit the number of physicians on the basis of
expansion of ambulatory care local public-health criteria have been thwarted, as
doctors have been free to open practices without
Germany has a high density of medical geographic restrictions since 1962 (Alber 1994).
practitioners. In January 1996, the country Gradually, these rights—and hence the classic
numbered about 270,000 physicians, or 1 per 300 model of a self-administered medical
inhabitants. Admittedly, these data mask a profession—have come under challenge. Since
disparity between the rich western Länder (1 1993, the authorities have sought to reduce the
physician per 280 inhabitants in Bavaria) and those number of physicians and achieve a more even
of the former East Germany (1 physician per 380 geographic distribution. The medical-education
inhabitants in Brandenburg) (BMG 1996b). On reform aimed at a 20% cut in the number of
average, however, the density of practitioners is medical students with effect from 1994. The
considerably higher than in the other major government has now also forbidden doctors to
industrialized nations (in France, the ratio is 1:350; open practices in districts where the density of the
in the U.S., 1:400; in the U.K., 1:650). The practitioner population is 10% above the national
abundance of doctors in Germany is one of the average. Such restrictive measures are likely to be
reasons given to explain the surge in the volume of stepped up in the future. As from 1999, doctors will
clinical procedures in recent years. be required to retire at age 68, and the number of
Table 3
Summary health indicators
A - OECD indicators *
Female life Gain in female life
Male life expectancy Years of potential Infant mortality rate
expectancy at birth expectancy since 1at birth(in years) life lost (in years) (per 1,000 births)
(in years) 1970 (in years)
79.9 (6) 6.1 (3) 73.6 (6) 6.7 (5) 5.0 ( 3)Germany
81.5 5.1 75.4 5.6 6.0Canada
79.4 4.4 72.7 8.5 7.8United States
82.0 6.1 74.1 7.0 4.9France
81.3 6.4 74.9 6.3 5.8Italy
83.6 7.8 77.0 4.5 3.8Japan
79.3 4.6 74.4 5.7 6.1United Kingdom
1.Years of potential life lost are calculated as the sum of the total differences between (a) a potential longevity estimated at age 69 and (b)
the age of death for all causes of death excluding suicides (per 100,000 males, 1994 data except Italy 1993).
B- SESI indicators*
Comparative Comparative Mortality rate for Mortality
overall mortality overall mortality cardiovascular Changes in this avoidable through
rate (per 1,000 rate (per 1,000 deseases (per rate, 1980-94 (%) healthcare system
males) females) 1,000 males) (per 100 people)2
10.2 (6) 6.1 (4) 451.2 (6) - 30.1 (6) 18.7 (5)Germany
8.8 (2) 4.5 (1) 239.9 (1) - 37.4 (3) 13.5 (3)France
9.6 (4) 6.1 (4) 414.0 (5) - 33.2 (4) 16.5 (4)United Kingdom
9.9 (5) 6.1 (4) 388.8 (4) - 32.0 (5) 19.2 (6)United States
8.5 (1) 5.2 (2) 315.5 (2) - 38.4 (2) 11.2 (2)Canada (1)
9.0 (3) 5.2 (2) 318.5 (3) - 42.0 (1) 11.0 (1)Québec
1. Canada indicators include Quebec indicators.
2. Comparative rates of mortality avoidable through healthcare system are calculated for 100 people aged 5-64 years old and for
specific causes of death for which the healthcare system has been proved to have a major effect (ex. asthma and appendicotis).
* Country rank shown in parentheses : the higher the number, the worse the statistics. SESI : French Health Ministry Office of Statistics,
Research, and Information Systems.
Source: OECD for 1996 data ; SESI for 1994 data.
4 INSEE Studies no. 42, January 2000Box 1
Doctors’ fees are not governed by the conventional - Payment by a capitation fee: physicians receive a flat
mechanism in which prices are set in the market by fee for each patient treated during the reference
sellers and buyers. The doctor–patient relationship period.
may be described as an agency relationship. The
patient is in an information-asymmetry situation, and
Each method has its flaws
delegates his/her decision-making power to the
physician, who is better informed as to the nature of None of the three mechanisms is the perfect solution.
the illness and the most suitable treatment. When the The macroeconomic goals of controlling healthcare
doctor acts in the sole interest of the patient, spending and ensuring fairness among providers are
healthcare demand is no different from the hard to reconcile with the microeconomic objectives of
conventional expressed by a sovereign maximizing provider income:
consumer. But the doctor may take advantage of
his/her information advantage to undertake paid - Payment per procedure allows competition among
procedures above and beyond what the patient’s providers. But the system is inflationary because of the
health requires. This “induced demand” phenomenon, information asymmetries between practitioners and
according to some analysts, plays a role in the patients, and between practitioners and public
fee-earning systems. Doctors, it is argued, adjust their authorities. France and Germany have instituted a
workload to meet their income targets (Evans 1974). requirement for doctors to compensate the
This attitude may flourish in response to changes in sickness-insurance funds if they overshoot the agreed
the physician’s “business” environment. When the overall spending targets. France uses projected
density of the practitioner population rises, for spending quotas; Germany uses “reference price”
example, doctors may encourage their patients to guidelines. In theory, such systems should curb the
consume more healthcare. But the empirical evidence spiral. However, because they cannot be fully
for the induced-demand theory is not robust. individualized, they are perceived as unfair and
Econometric studies emphasize the healthcare generate free-rider behavior.
providers’ capacity to respond to their earnings system
rather than the actual impact of medical supply on - The “floating point” ensures compliance with preset
healthcare spending (Rochaix and Jacobzone 1997). spending quotas, without giving doctors the
impression of being punished. In theory, the
To cope with the specificity of fee systems for mechanism keeps the volume of supply under control,
primary-care physicians, the industrialized countries as each practitioner is penalized by a fall in the value of
have responded with three mechanisms: the point: earnings will remain identical for a greater
number of procedures. But it does not prevent
- Payment per procedure, on the basis of a preset fee free-rider behavior. The evidence shows an
for the procedure (system now applied in Germany); over-supply of procedures by some doctors along with
penalties for practitioners who behave
- Payment per procedure, on the basis of an ex post fee virtuously—despite the profession’s self-monitoring
for the procedure and the “floating point” system. The arrangements (Rupprecht 1997).
supervisory authorities define an overall allocation to
healthcare providers; at the end of the period they add up - The capitation fee also ensures compliance with
the number of procedures performed, using a spending caps, but does not have an optimal effect on
points-per-procedure table. This gives the fee per healthcare providers. Their earnings are guaranteed
procedure—in fact, the monetary value of the “floating” whatever the actual volume of procedures they
point—which determines each doctor’s earnings. perform during their patients’ registration period The
Germany introduced this system for a transitional period in system also entails a risk of adverse selection of
order to contain healthcare spending, but abandoned it in patients: it is in the doctor’s interest to have healthy
1997. patients.
doctors will be determined by actual public-health theory of “induced demand”—was an overall
requirements. increase in the number of procedures (box 1).
Besides over-supply, there are other reasons for the - The high proportion of specialists in the
steep increase in the clinical procedures performed ambulatory-care sector probably exacerbated the
in the ambulatory-care sector: “induced-demand” effects, since the information
asymmetry between patient and doctor is stronger
- Doctors are paid per procedure (item of service), with a specialist than with a general practitioner
and until 1997 this was done under the “floating (GP) (table 4).
point” system. This undoubtedly encouraged some
practitioners to boost their income by performing Admittedly, the impact of these factors was
more procedures (at the expense of their dampened by the need for the GP’s consent to
colleagues’ incomes). The effect—predicted by the access specialist care. “Family doctors” play a
INSEE Studies no. 42, January 2000 5Table 5
Table 4
International comparison of hospital supply, 1996
Specialists as a proportion of the total medical
profession, 1994*
Number of Average Average
beds (per length of length of
Ambulatory Hospital Total 1,000 stay (in short stays
inhabitants) days) (in days)54.0 50.5 52.5Germany
9.6 14.3 11.5Germany44.4 61.4 49.9France
8.7 11.2 5.8France
* In Germany, general medicine is recognized as a speciality. For 4.5 9.8 4.8United Kingdom
comparison purposes, this group has been counted as GPs.
4.1 7.8 6.5United StatesSources: BMG 1996b for Germany; SESI1997 for France.
Source: OECD Health data base, 1998.
screening role similar to the U.K. “gatekeeper”:
they curb access to secondary care—which tends to
be more expensive—and ensure better
coordination of treatments. In the U.K., however, hospitals—representing about one-half of total
GPs are paid for ordinary items of service on a beds—are public institutions managed by the
capitation basis, whereas in Germany they are paid municipality or region; their employees enjoy
4per item. Now this method of payment is hard to quasi-civil-servant status. Another 35% of beds are
reconcile with the role of gatekeeper, since it in private non-profit hospitals managed by
sometimes means sending the patient to a charities and churches. The remaining 15% of beds
“competitor” and thus risking the loss of a “client.” are in private for-profit hospitals and clinics. The
abundance and diversity of supply have had a
positive effect on the volume of service provided,
A large supply of hospital care both in terms of care and length of stays.
stimulates demand
True, the admission to hospital must be approved
Germany’s supply of hospital healthcare is equally by a GP and is confined to procedures specifically
abundant. The 1972 finance act promoted requiring hospitalization: hospitals do not offer
the construction of many large facilities equipped specialist consultations for outpatients. This strict
with state-of-the-art technology. Hospitals are segregation is intended to allow a screening of the
funded from two sources: infrastructure is paid for healthcare supply but has actually had many
by the Länder, while operating costs are paid for by adverse consequences. The first is an inflation of
the sickness-insurance funds at a per-diem rate. specialist ambulatory care (table 4)—unlike in the
This system turned out to be doubly inflationary. U.K., where public-sector specialists practice only
The Länder had an incentive to push for new in hospitals. The second is an increased
hospitals, since they generated jobs that the Länder redundancy between the ambulatory sector and the
did not have to pay for. The hospitals had an hospitals of a given region, notably for heavy
incentive to extend hospital stays, since they were equipment such as scanners and lithotripters. To
remunerated per item of service (i.e., per day of remedy the phenomenon, the authorities are now
stay). trying to promote shared acquisitions by hospitals
and the ambulatory sector.
The number of beds rose 50% in a decade. The
number of staff —particularly paramedics— This context has led to a proliferation of unwarranted
increased sharply in the 1980s. By 1996, Germany or over-long hospital stays—particularly for post-operative
had 785,000 hospital beds, or 9.7 per 1,000 treatment—as few hospital doctors also have an
inhabitants, one percentage point more than ambulatory practice. Almost 15% of patients
France. In this healthcare sector as well, the treated in hospital could be treated in the far
geographic distribution of supply is uneven. The cheaper ambulatory sector (OECD 1997). The
new Länder post a ratio of 8.4 beds per 1,000 length of stays—including long stays and short
inhabitants, below the old Länder’s ratio of 10.0 stays—is considerably greater in Germany than in
(BMG 1996b). This profusion is combined with a neighboring countries (table 5). The Seehofer
wide diversity of legal statuses. Sixty percent of reforms tried to remedy the situation by increasing
the links between the hospital and ambulatory
sectors, notably by facilitating transfers of patients
4 To be more accurate, British GPs derive a significant share of
from one sector to the other. Now, post-operativetheir income from per-item payments as well. The main items
include preventive procedures and house calls to the elderly: it care can be provided by a hospital doctor in an
may actually be in the public interest for doctors to be encouraged
ambulatory setting, but for limited periods so as notto engage in more activities of this kind than they would be
spontaneously inclined to perform on a flat-fee basis. to harm the interests of primary-care physicians.
6 INSEE Studies no. 42, January 2000Sickness insurance: gradually Beyond this individual insurance principle, the
opening up to competition German system actually functions as a universal
insurance from which few people are excluded.
Sickness-risk coverage is theoretically based on Indeed, two categories are automatically
the Bismarckian principle of personal insurance insured: (1) close relatives (spouse, children) are
but takes the form of a universal insurance from covered free of charge by the contributor’s fund,
which few are excluded. Germany does feature a provided they earn less than the floor rate below
significant proportion of “voluntarily” insured and, which no contributions are collected; (2) many
by implication, an extensive private “disadvantaged” categories are eligible for
sickness-insurance system. However, the vast coverage as part of the national solidarity effort.
majority of Germans are insured by one of the They notably include recipients of welfare support
many public funds co-managed by the “social and solidarity unemployment benefits, often via
partners” (employers and unions). Until recently, general local sickness-insurance funds (AOKs),
6the so-called “compulsorily” insured could register and people in contingent employment.
only with the public sickness-insurance fund
serving their personal occupational category. Since Another feature of the German system is the
1996, the public funds are free to compete, and significant proportion of persons insured by the
workers have a greater latitude for choosing their private sector (7 million in 1995). To obtain
insurance provider. This exposure to competition coverage, they can sign up voluntarily with a
has been broadened by measures allowing patients public GKV fund—provided they apply within
to switch funds rapidly. three months of entering the workplace—or with a
private insurance provider, U.S.-style. Under the
In Germany, sickness-risk coverage is not latter option, there is no automatic coverage of
universal. Its basic principle is not a national dependents: the contribution is proportional to the
compulsory welfare system, but voluntary number of people insured (spouse, children).
insurance. In practice, however, the system is Another difference with statutory sickness
constraining. Payroll employees earning more than insurance is that the contribution also depends on
a set limit must join a sickness-insurance fund, the insured’s health risk. This has created a de facto
unless their monthly income exceeds DEM6,150 risk selection that has benefited the private sector
in the western Länder or DEM5,325 in the and seems to be relatively durable: the young,
5eastern Länder. The following categories are singles, people in good health, and the relatively
also automatically enrolled in the system, well-to-do join the private insurance plans, while
irrespective of their income: retirees who were the GKV funds insure a higher proportion of
covered by the compulsory insurance fund people in poor health, the elderly, and large
before leaving the workplace; students; families. To curtail this phenomenon, the
unemployment-benefit recipients; people private-insurance option has been made
enrolled in continuing-education programs; and irreversible: barring borderline situations (such as
specific occupational groups such as farmers and a change in family status), policyholders cannot
maritime workers. All these categories are return to the public system.
covered by the “statutory sickness-insurance”
(Gesetzliche Krankenversicherung: GKV) system. However, the public sector is by far the main
In keeping with the solidarity principle, “everyone provider of sickness insurance. In 1995, 72
contributes what he or she can afford”: the million Germans, or 88% of the population,
contribution is based exclusively on earned income were enrolled in the public sickness-insurance
and the sickness-insurance fund’s contribution system, including 51 million actual
rates—irrespective of the insured’s age, sex, or contributors and 21 million dependents.
health risks. Sixty-one percent were “compulsorily”
insured people in employment, 17% were
“voluntarily” enrolled, and 22% were retirees
(Sachverständigenrat zur Begutachtung der
gesamtwirtschaftlischen Entwicklung, [“Wise
Men’s Report”] 1996-97).
5These ceilings are equal to 75% of the assessment base used to
compute the old-age pension contribution. The amounts change
each year as they are wage-indexed.
6 A special category of workers exempt from social contributions
consists of people employed in so-called “low-importance jobs,”
whose monthly earnings are below the exemption threshold
(DEM610 in the West, DEM520 in the East). The new government,
however, wants to reintroduce social contributions for these jobs.
INSEE Studies no. 42, January 2000 7Chart IIAn abundance of sickness-insurance
GKV annual operating-account balancefunds, most of them public
DEM billion
15In sum, the healthcare-system financing
arrangements are still very largely identical to 10
those established by the Bismarck administration
5in the late nineteenth century. Private insurance
remains in the minority, and most of the population
is covered by a multitude of self-administered
sickness-insurance funds in the public sector. Their -5
number reflects the dual institutional
-10fragmentation that has characterized the German
1990 1991 1992 1993 1994 1995 1996 1997
system since its inception in 1883. First, the
divisions are strictly consistent with occupational
Source: National accounts, Federal Statistical Office.
categories, each of which—manual workers,
clerical workers, craftsmen, self-employed—was
covered by a different type of insurance fund.
Second, the role of each fund was limited in The public sickness-insurance funds are
geographic terms. However, the number of funds autonomous organizations under public law, with
has fallen sharply throughout the twentieth their own management. They are self-administered
century, from 22,000 initially to about 650 at by employee and employer representatives (the
year-end 1996 (Milano 1995). The Seehofer “substitute funds” [Ersatz- krankenkasse or EKKs]
reforms have recently accelerated this trend, as the are administered by employee representatives
exposure to competition has triggered a wave of only). They also have their own resources,
concentration (box 2). essentially the payroll contributions paid in equal
Box 2
A number of countries—the United States, the ill-informed about the coverage offered by other
Netherlands, Germany—have introduced or expanded insurers.
competition in the medical insurance sector for the
purpose of (1) improving provider efficiency by curbing - In social terms, an under-regulated competition
management expenses, and (2) improving the services would engender risk selection, denying the weakest
offered to patients. Most of all, this policy makes it categories access to any sickness-insurance
possible to enhance the system’s overall efficiency by coverage. Conversely, a regulation that required
establishing competition among healthcare producers. insurers to accept any applicant would involve the
The insurer’s price competitiveness in the market establishment of complex financial mechanisms to
depends on its ability to cut costs more deeply than its compensate for the differences in insurance portfolio
rivals. U.S. patients, for example, are free to choose make-up: this would take the form of risk-equalization
their insurer, which forces insurance companies to offer funds such as now exist in Germany and the
the most attractive premiums. The insurer will thus seek Netherlands.
to obtain, on a contractual basis, the best prices from
healthcare producers and to cut healthcare-provision - In medical terms, the impact of competition among
costs. The Health Maintenance Organizations (HMOs), insurers may lead consumers to shop for the cheapest
which policyholders are required to use, ensure strict coverage while sacrificing healthcare quality and
cost control. neglecting prevention efforts (prevention represents a
costly investment over the long run, which could benefit
Introducing competition in the insurance sector does, rival providers). Again, only a fine-tuned regulation of
however, carry economic, social, and medical risks: healthcare quality, imposing a minimum of prevention
measures, can avoid such perverse effects.
- In economic terms, the transaction costs can be high,
owing to the many negotiations with healthcare The problems encountered by the Netherlands when it
producers and because of the advertising campaigns introduced competition as part of the Dekker-Simons
to attract patients. These excess costs are, in theory, reform show that a theoretically convincing regulation
all the higher as healthcare is a sector with genuine system is delicate to put into practice. Moreover, the
information asymmetries: it is difficult for an insurer to U.S. example—which combines a high rate of
judge the quality or efficiency of healthcare providers uninsured (about 15% of the population) and some of
with whom it signs contracts; patients, for their part, the world’s most expensive healthcare—underscores
are reluctant to switch policies and are often the need to regulate competition between insurers.
8 INSEE Studies no. 42, January 2000proportion by the employer and the employee, at a They can now join the local fund serving their
rate specific to each fund. There is, however, an place of residence or work (AOK), any “substitute
important restriction on this autonomy: the legal fund” (EKK), their company’s fund (BKK), or any
obligation for the funds to balance their books. The of the other company funds that have decided to
funds are not allowed to borrow, but they may “open up” to outside contributors. The choice can
7report deficits in their budget outturns. The 1992, also be broadened to the funds serving localities
1995, and 1996 deficits were covered by drawing other than the contributor’s place of residence or
on the funds’ reserves (chart II). The funds’ work, for example a spouse’s fund. Since 1997,
operations are governed by a fairly strict legislative retirees, as well, are free to choose their
framework. There is a significant trend toward sickness-insurance fund.
uniformity, in particular as regards benefits for the
insured. Government supervision has intensified, The new competitive environment has been
notably as a result of the Seehofer reforms and strengthened by allowing contributors to switch
Germany’s fiscal problems of the 1990s. funds quickly, even during an illness. The change
can be made at the start of each year, provided the
The book-balancing requirement has led the funds contributor gives statutory notice and complies
to steadily raise their contribution rates—the only with specific administrative procedures to avoid a
instrument at their disposal to match revenues and temporary loss of coverage. These restrictions are
expenditures. The contribution rates have risen eased when the fund raises its contribution rate: in
from 8% in the early 1970s to almost 13.6% today. that case, the insured person is not required to wait
This has weighed heavily on labor costs, which are until the end of the calendar year, and the advance
already much higher than in other countries. notice period is shortened to one month. By and
Unlike France, Germany clings to the principle of large, the heightened competition has driven
financing sickness-insurance expenditures solely contributors to exercise closer scrutiny of fund
from earned income. management. As 97.5% of the benefits are defined
in the legislation, the differences in coverage
8Until recently, the so-called “compulsorily” between funds are minimal. For the consumer,
insured could only enroll in the public therefore, the choice is mainly determined by
sickness-insurance fund corresponding to their contribution rates—which are highly variable. The
personal status in regard to (1) place of residence rates, in turn, depend on the degree of control
(general local fund: AOK), (2) occupation (fund achieved over non-medical costs (for the most part,
for employees of the contributor’s company administrative expenses) and on the bargaining
[BKK], when such a fund exists), or pressure that funds can exert on healthcare
(3) membership in certain specific categories providers to obtain discounts on fees: these savings
(funds for farmers, miners, maritime workers, can then be passed on to contributors in the form of
craftsmen, “guild funds,” etc.). The only lower premiums. The local funds enjoy significant
exceptions allowed concern persons earning above market power, since they cover about 40% of the
a given threshold or a few designated categories population in the old Länder and 50% in the new
such as clerical workers, who can choose a ones. As a result, the fees they pay private
“substitute fund” (EKK). practitioners are about 15-20% lower than those
paid by the “substitute” funds (Bocognano et al.
Compulsory enrollment on occupational or “local” 1998). In addition to productivity gains for the
criteria has inevitably caused persistent differences healthcare system, the competition between funds
in the funds’ risk portfolios. Local funds carry a is designed to level the contribution rates and
heavier burden of high-risk insured who prefer the therefore reduce inequality in financing terms.
public system to the private one. Other specific
funds, such as the miners’ fund, have a portfolio of
insured with high healthcare needs and/or low 7 The balancing obligation applies to stocks, not flows. In other
words, a fund may spend more than it receives in a given year,incomes. These historical arrangements have thus
provided that its reserves carried forward from the previous yearcreated wide disparities between funds, with
are sufficient to cover the current year’s operating deficit. Even if
contribution rates twice as high in some funds as in the sickness-insurance system continues to run a net surplus, the
change in its financial position plays a major role in the change inothers (Schneider 1995).
the total general-government deficit as recorded in the national
accounts. This had a distinctive positive effect in 1997, enabling
Germany to meet the Maastricht criteria of a public deficit noThe Seehofer reforms have radically altered the
greater than 3% of GDP in that year.
situation (see appendix). Since 1996, the public 8 In theory, a fund is free to increase the range of benefits offered
beyond the minimum legal requirements, and competition amongfunds are in competition with one another, and the
funds does revolve on the scope of coverage as well asinsured are freer to choose their funds without
contribution rates. In practice, however, competition focuses on
being restricted by their occupation or industry. the latter.
INSEE Studies no. 42, January 2000 9A regulated competition list,” and, more recently, the rise in fixed
prescription charges.
To limit the possibility of risk selection by the
sickness-insurance funds, an equalization fund was
set up in 1994 (box 2 and appendix). In particular, Introduction of individualized
it covers all the risks related to family size that spending quotas
could have distorted the spread of competition
between sickness-insurance funds. Without Ambulatory-sector financing rests on a tripartite
equalization, the dependents-eligibility rules organization linking patients, healthcare providers,
would have led funds to turn away large families in and sickness-insurance funds. The funds pay
favor of childless singles. The impact of physicians directly—with no direct payment by the
equalization is already visible, since the funds with insured. Since the introduction of the “healthcare
the lowest-risk insured in their portfolios (BKKs voucher” in 1984, healthcare providers maintain
and EKKs) are handing over substantial amounts to registers of procedures performed that enable them
local funds (AOKs) (OECD 1997). The difference to be compensated by the funds later on. In
in contribution rates between BKKs and AOKs in exchange, patients’ freedom of choice is mildly
the old Länder has narrowed from 2.3 points in restricted. They are required to visit the same GP
1993 to 1.1 points in 1997—diminishing the for at least three months; otherwise, they will have
incentive for AOK contributors to switch funds to advance the fees. Direct payments by insurance
(Bocognano et al. 1998). Risk equalization does, funds to providers is the rule, but there have been
however, involve technical problems in computing some alterations. For many years now, private
the inter-fund transfers. Defining the categories of funds have been reimbursing patients’
risks covered by the equalization system is also a out-of-pocket expenses ex post; public funds were
delicate exercise: too broad a field could inhibit allowed to offer this option to their contributors in
9competition and eventually lead to the de facto 1998.
establishment of a single, universal fund.
The funds do not compensate practitioners directly
On balance, the introduction of competition has but via “groupings”: physicians accredited by the
had a limited impact because there is not enough sickness-insurance system are required to form
latitude to encourage the insured to exercise their associations under public law at the regional and
new rights. Moreover, the insured show little national levels. The funds, too, are joined in
mobility. The new market-based rules also appear associations, and the two sets of groupings enter
to have triggered financial spirals due to heavy into agreements on healthcare delivery terms and
promotion spending and to competition over practitioners’ compensation. Doctors who wish to
benefits in excess of the minimum legal treat patients of a specific fund must therefore join
requirement (for the most part, spa treatments). the local grouping that has signed an agreement
This has gone so far as to jeopardize the savings with that fund. The fund pays a lump sum to the
that the funds could expect to achieve by doctors’ grouping, which redistributes it to its
bargaining with healthcare providers. members in proportion to their volume of
procedures, using a detailed fee schedule for each
item of service. The healthcare-provider
groupings—not be confused with the medicalAn increasingly innovative array
associations—wield considerable power over their
of methods for containing
members, notably by conducting routine
healthcare expenditures inspections of the volume of procedures
performed. This arrangement enables the funds to
he German system has enacted increasingly avoid unconditional financing of healthcare thanksTinnovative methods to curtail healthcare to collective bargaining with providers over the
spending. The funding of the ambulatory sector amount of coverage and—even more important—a
rests largely on the co-payment principle, but funds tracking of aggregate ambulatory-care
can negotiate the percentage rate of coverage with expenditures. Conversely, the system restricts the
providers: this is the “volume guidelines”
procedure for drugs and doctors’ fees. In hospital
funding, there is a move toward fixed coverage for
each procedure, chiefly based on a detailed 9 The new government has, however, restricted the option to the
voluntarily insured, and is blocking attempts to introduce thehealthcare pricing schedule. Direct contributions
“private” mechanisms advocated by Seehofer such as
by the insured have been substantially increased,
co-payment, no-claims bonuses (partial reimbursements of
via the “reference price” principle, the “negative contributions to patients who have claimed no benefits), etc.
10 INSEE Studies no. 42, January 2000