|Implemented in this survey?|
In August and September 2003, two major proposals to reform the social security systems in Germany were presented to the public. The Goverment appointed Rürup Commission could not settle on one proposal. One part voted for a citizens? insurance scheme based on the individual's ability to pay, the other group favoured flat-rate health premiums. The opposition party's Herzog Commission also favoured the flat-rate health premiums yet in combination with capital stock.
In August and September 2003, two major proposals on how to reform the German social security systems were presented to the public. The first proposal was developed by an ad-hoc commission
appointed by the re-elected government (Rürup Commission). The second proposal, elaborated by the so-called Herzog Commission, had been commissioned by the
opposition party (Christian Democrats) with substantial input from a major consulting company.
The "Commission for financial sustainability of social security systems" (Rürup Commission) was set up by MoH Ulla Schmidt in November 2002, shortly after the governing coalition of Social Democrats (SPD) and the Green Party (Bündnis90/Die Grünen) had been confirmed in power in the general elections held in September 2002.
The commission was established when in the post electoral period a major deficit in the pension funds was "discovered". Green Party leaders and parts of the SPD insisted on exploring the issue of financial sustainability, combining a long-term perspective with inmediately effective, short-term measures.
The commission was headed by Bert Rürup, a professor of economics and public finance, who is also a member of the Advisory Council for National Economic Development and of the German Social Democratic Party (SPD). Members came from the scientific community as well as from various sectors of civil society: the industry, the unions, statutory and private health insurance companies, consulting agencies, delegates from the regions (Länder) and representatives from German cities and municipalities.
The commission submitted its final report in late August 2003.
Meanwhile, the opposition group in parliament, the Christian Democratic Party (CDU/CSU) likewise appointed a commission ("Social Security Commission"), with the very much the same task. This commission, presided by and named after Roman Herzog (CDU), former German President, was also composed by a wide range of experts and representatives from civil society. Financial projections were assisted by a ubiquituous consulting company. The Herzog Commission also presented its report a month later, at the end of September 2003.
Looking at both reports, the proposals concerning the statutory health insurance (SHI) reform can be assessed along two major questions:
The Rürup Commission was deeply divided and could not agree on one single strategic proposition. One part of the commission favored the so called citizens' insurance scheme as the future
funding source. The other part pleaded for a system of flat-rate health premiums.
The citizens' insurance scheme (Lauterbach) is based on the premise that contributions to health care insurance should be levied in accordance to the ability to pay. Its basic principles are
This insurance scheme covers the entire population with an income related contribution rate on all types of income.
Under the flat-rate health premiums (Rürup) proposal, the principle of equivalence of contributions and benefits is considered most important. While the exact definition of benificiaries and benefits of this health care scheme is lacking still, the key elements of the flat rate scheme are:
This insurance scheme is likely to also cover the entire population, with a flate rate contribution independent from income, though taking all kinds of income and revenue into account. With no
employer contribution to the health insurance premium, the flat-rate premium scheme is further expected to contribute to lowering labour cost.
The Herzog Commission also suggested a flat rate health premium scheme, differing from the above plan in that it combines flat rate premium payments with the building of a capital stock, aimed to compensate individually for illness and aging. The main principles are:
All proposals presented in 2003 aim to retain some kind of social redistribution, to maintain access to high standard medical services, and to decrease so called wage-related labour
At the moment it is difficult to estimate any outcomes of the reform proposals as many issues still remain ambiguous, requiring further clarification and/or better data:
All stakeholders blame each other of having presented unviable solutions, unable to reach the objectives of either short-time consolidation or sustainable financing.
Non-financial incentives need to be weighted: one could be to increase equity (citizens' insurance), as opposed to more risk equivalence in case of flat-rate health premiums.
Financial incentives: With regard to long-term measures, both systems claim to reduce wage-related costs (labor cost). The assumption is that if labor costs are reduced, more (profits) will be invested in new workplaces, more jobs with lower social contribution rates will increase available income and generate positive effects on demand and consumption.
Short term relief from the financial pressure on the SHI by short-term measures. Sustainable financing of the German SHI. Equal access to high quality health care for the entire population.
Financial and non-financial
The whole German population, especially employers and employees., SHI companies, PHI companies, Providers
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
The overall economic situation is characterised by a rising pressure on the German national budget, the national economy and thereby on the social security systems. Against the background of
excessive national debts and the requirements of the Maastricht criteria, Germany has to work on the national budget deficit.
The height of work related costs is regarded as an obstacle to competitive capacity and more employment. These factors are estimated as condition precedent to recovery of the national economy. As contribution rates to the social security system are connected with employment and wage, the overall economic situation has a strong impact on the social insurance system as well as on demand and consumption.
The problems concerning the SHI are reflecting the high level of unemployment and an increasingly ageing society in terms of decreasing income revenues of SHI in contrast to constantly rising health care expenditure.
The financial trend of the SHI at midyear 2003 showed again a shortfall about approximately 1.8 billion €. Even though the increase rate seems to lower the accounts are expected to be negative at the end of the year.
The ideas formulated by the Rürup Commission are not new. Taking the Swiss health insurance system as a model, a flat-rate health premium scheme had been displayed earlier by the Advisory Council for the Development of the National Economy (Titel Prüfen).
The alternative model was probably taken from the Netherlands where the funding basis of statutory health insurance is broader than to Germany.
In view of the SHI funding reform there have been several preceding policy papers
Agendas from different political parties:
All these papers share the main goal of stable contribution rates.
Consolidation of the national budget, necessity to meet the Maastricht Criteria
Stability of SHI contributions to decrease the work related costs and to increase the available income in order to stimulate the German economy
|Implemented in this survey?|
Appointed by the Minister of Health Ulla Schmidt in November 2002 the Rürup Commission was to develop proposals on financial sustainability for the German social security systems.
During their working period clashes within the subgroup on SHI as well as discussion interna often (were) leaked outside the commission. The general public was aware and took part in much of the controversies. The head of the commission Bert Rürup himself stated publicly that he favoured the flat-rate health premium system thereby prejudicing the chance of reaching consensus in the commission's sub-group.
The idea of a system of flat-rate health premiums (pauschale Gesundheitsprämien) had already been disseminated with the report of the Advisory Council for Development of the National Economy (SVR-Gutachten zur gesamtwirtschaftlichen Entwicklung 2002) in spring 2003. It was again advanced by the Rürup Commission. Additionally there have been several preceding scientific reports on this type of funding (Wasem, Greß, Rothgang 2003). Switzerland probably served as a role model for this proposal. Driving forces behind the proposal are certain sectors of the research community, particularly national economists and business economists.
The alternative proposal, the citizens' insurance scheme (Bürgerversicherung) was also submitted by the commission. It was strongly supported by Bert Rürup's chief opponent within the commission - Karl Lauterbach, a physician and professor of health economics, member of the SPD (like Rürup) and confident of the Minister of Health (unlike Rürup). The idea of the citizens' insurance scheme which is based on an expansion of income sources of the SHI is possibly influenced by health insurance models from France, the Netherlands and Austria (Die ZEIT 47/2003). Proponents are other parts of the Social Democrats; the Green Party, the unions and consumer associations.
Regardless of the system choice politicians will have to make the Rürup Commission recommends accompanying measures. Specific reform measures need to the expenditure side of the health care system (e.g. enhancing quality management and integrated care), as well as family policy, increased female labour participation and productivity, education policy and fiscal reform.
The proposal of the Herzog Commission to combine flat-rate health premiums with an additional capital stock to be built over various years has also been presented earlier. Henke et al. (2002) had developed the idea of provision of capital for health care costs in seniority. Driving forces are the opposition in parliament and parts of the micro-economist research community. The Herzog Commission also proposed complementary short term measures to achieve cost-containment.
There are no small scale examples.
The approach of the idea is described as:
renewed: Ideas derived from other European countries, renewed debate in Germany since 2002
As described the Rürup Commission was split into two camps. Reflecting these, two opposed reform directions are stated in the commissions report. The decision on an effective, sustainable
long term funding system was left to be taken by the politicians as the commission could not agree on a concerted proposal. Government parties, scientific community, media and public remain also
In addition the proposals were rejected by a minority group vote.
Members of the minority group came from the Social Democrats, the Green Party, and, chiefly, from the unions and consumer associations. This group brought their own policy paper before the SHI subgroup of the Rürup Commission. They argued for a conservation of the existing SHI, but broadening the funding basis by means of elevating the income threshold for compulsory insurance and by comprising all types of earned income. Furthermore they pleaded for the outsourcing of socio-political tasks like redistribution issues to the tax system e.g. by up-rating the taxes for tobacco and alcohol. After all they submit a reform of the co-payments for pharmaceuticals. All together the proposals are quite similar to the citizens' insurance scheme.
The opposition in parliament (the Christian Democrats) also assigned a commission for developing alternative proposals with respect to sustainable financing of the SHI (statutory health insurance). The so called Herzog Commission also proposed a system of flat-rate premiums for the SHI. The difference to the Rürup Commission mainly consists in changing gradually from a pay-as-you-go procedure to a partially capital covered procedure.
The short term measures concerning health insurance, submitted by the subgroup on SHI, are to some extent adapted and incorporated into the Law for the Modernisation of the SHI (Gesetz zur
Modernisierung der GKV - GMG) becoming effective in January 2004. The negotiation process between government and opposition was remarkably fast, with very little changes on the GMG.
The funding system to-be of the SHI is still not defined. Depending on the proposed funding system the debate in parliament will be more or less controversial and accordingly the negotiation process will be more or less complicated.
Regardless the chosen system, formal legislation is required to realise these fundamental changes.
It is very difficult to foresee the consequences possibly occurring during the decision process.
As the 120 year old SHI system is at stake there will probably start an active public debate on the two main reform proposals with the involved groups wheeling and dealing their interests.
The parliamentary debate will probably also be controversial as the consequences of this reform will have a formerly unknown impact on the whole healthcare system.
There is no planning for evaluation.
Concerning the future financing system it depends on the system chosen.
Discussing the main arguments in favour of the flat-rate health premiums may give some insights:
Disconnection of contribution rates and work related costs is not necessarily tied to this funding system.
The impact of this measure is possibly overestimated with respect to positive effects on employment, consumer behaviour and the introduction of market mechanisms into the Health Care System.
The problem of risk-demixing between SHI and PHI is not tied to a health premium system.
Social redistribution via tax system is always depending on a stable national economy. In times of high national debts income redistribution monies are likely to be subject to negotiations concerning the national budget and thereby at stake.
|Quality of Health Care Services||marginal||fundamental|
|Level of Equity||system less equitable||system more equitable|
|Cost Efficiency||very low||very high|
Susanne Weinbrenner, Reinhard Busse; reviewed and edited by Sophia Schlette