Is it time to scrap private health insurance in Germany?

If all citizens were covered by statutory health insurance, contributions to social security would sink dramatically. That’s according to a new representative study, conducted by the Berlin-based Iges Institute on behalf of the Bertelsmann Foundation, which was published on Monday. 

Scrapping private health insurance could save 10,6 billion euros per year

According to the report’s authors, if everyone in Germany currently covered by private health insurance (PKV) were to switch to state insurance (GKV), each person currently covered by GKV - and their employers - could save an average of 145 euros per year. 

The report argues this on the basis that privately insured persons - people commanding high salaries, civil servants and entrepreneurs - earn at least 56 percent more, on average, than those covered by state insurance. They also tend to be healthier.

If they were instead covered by statutory health insurance, the German health insurance system could hypothetically bag an additional 38,6 billion euros per year in premiums. Adjusting for additional expenditure, this would bring in a net financial surplus of 8,7 to 10,6 billion euros each year, allowing the government to reduce the contribution rate by 0,6 to 0,7 percentage points.

However, the remuneration for doctors is approximately 2,5 times higher for private patients than statutory ones. If doctors were compensated for loss of fees, the study’s simulation calculates that the contribution rate could still be lowered by 0,2 to 0,3 percentage points. Then GKV-insured people and their employers would be relieved by 48 euros per year, on average. 

The study is based on the latest data (2016) from an annual repeat survey of around 12.000 households. In 2016, around 8,8 million people in Germany were privately insured, compared with the approximately 70,4 million insured by the GKV. 

Germany’s dual insurance system weakens social cohesion?

Overall, the Bertelsmann Foundation warned that Germany’s dual system threatened to erode solidarity and weaken social cohesion. The Foundation’s health expert, Stefan Etgeton, criticised the fact that, “The average [GKV] insured person pays more than necessary every year so that high-income earners, civil servants and the self-employed can avoid solidarity compensation. 

The Foundation is therefore calling for a change to health insurance and long-term care insurance, to make it easier to switch from private health insurance to statutory health insurance. They argue that contributions should be based on income, not on individual risks. 

The civil service association dbb, on the other hand, emphasised that Germany’s dual health insurance system is “lived solidarity”. Dbb boss Ulrich Silberbach dismissed the abolition of the dual system as “nonsense”, arguing instead that “Our healthcare system is one of the best in the world.”

Last year, the state health insurance system in Germany recorded a loss for the first time since 2014, of around one billion euros.