Project in detail

Analysis and Assessment of Policy Measures in the German Health and Long-Term Care Insurance Sectors

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Reform measures and proposals in these sectors are analyzed and assessed with the help of numerous MEA instruments (e.g. MEA-PENSIM, MEA-GKV-SIM, or the implicit return and implicit tax models). Thus, for instance, MEA-GKV-Sim was used to evaluate the German Statutory Health Insurance Funding Act (GKV-Finanzierungsgesetz) of 2010. This law allows health insurance funds to impose lump-sum contribution surcharges without limitation. The concomitant reform of social compensation on behalf of low-income earners sought to repair two constructional defects of the former system. For one thing, by calculating the amount of social compensation on the basis of the average contribution surcharge, an incentive has been created for low-income earners to switch to a less costly health insurance fund. For another, the announced external financing of social compensation through the overarching ``health fund´´ avoids competitive distortions potentially resulting from intra-fund compensation under the previous system. If the standard contribution rate is fixed at 15.5% and future spending increases are covered by contribution surcharges, the share of these surcharges in the funding of total expenditure is projected to rise by 2030 to 14% under the baseline scenario and 25% under the realistic scenario. The volume of social compensation paid to pensioners and compulsorily insured employees is likely to be relatively low until 2015; however, by 2030, it is anticipated to grow to €15 billion under the baseline scenario and €41 billion under the realistic scenario. Together with the general federal subsidy, the federal government's current 8% funding proportion is expected to climb to 9% (baseline scenario) and correspondingly 18% (realistic scenario) by 2030. Compared with the former purely income-oriented contribution system without lump-sum surcharges, low-income earners now bear a somewhat greater burden, whereas higher earners have been relieved – yet only if the actual surcharge corresponds to the average surcharge. If a sickness fund with a lower contribution surcharge is chosen, rate progressions are partially reversed and low-income earners may likewise profit from reductions, which will be all the greater, the lower their income.

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