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German election shapes the future of Social Health Insurance

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Over the weekend, German Chancellor Angela Merkel and her conservative Christian Democratic/Social Union (CDU/CSU) secured 41.5% of the vote in the German elections, but she fell short of a majority and her classical liberal allies the Free Democrats (FDP) failed to get into the Bundestag, meaning a minority government or a ‘grand coalition’ between Merkel and the Social Democrats (SPD) may follow. Most coverage outside Germany focused on the implications of the election for the EU, but domestically, Germany’s Social Health Insurance (SHI) system – often acknowledged to be world-class and the inspiration for many other European health systems – was also a key issue, and the impact of a grand coalition upon health policy could be interesting. Civitas’ report on German healthcare is available here.

In July, Britain proudly celebrated the 65th anniversary of the founding of the NHS, but Germany’s system was founded 130 years ago in June 1883 by Otto von Bismarck – systems like it are hence known as the ‘Bismarckian’ model. This system guaranteed Germans publicly-funded care (initially the working population, but eventually the entire population, as in the NHS) and is funded primarily from payroll contributions, supplemented by general revenue. A key difference, however, is that the greater role of direct NI-style contributions means a contributory principle is upheld, something UK Labour is exploring how to resurrect and Frank Field MP recommended for the NHS. German universal healthcare is also more pluralistic, incorporating public, private and civil society sector elements. 85% of Germans are covered by public health insurance (GKV) and choose to be members of one of 140 krankenkassen (sickness funds), non-profit insurers founded by employers, trade guilds or mutual societies. Those earning over €52,200 can instead be privately insured (PKV). Hospital capacity is divided between municipally-run hospitals (48%), religious or guild-affiliated non-profit hospitals (36%) and smaller for-profit hospitals (16%). Healthcare-amenable mortality, spending, numbers of doctors and beds and technological access are better than in the UK and waiting times are the lowest in the OECD.

During the election, the CDU/CSU largely advocated keeping the status quo, while the FDP argued for deregulating more of the system. The SPD warned this would undercut universalism, instead arguing that public coverage should be more comprehensive (‘citizens’ insurance’) and for employers to contribute more funding, though the latter proposal may potentially exacerbate one flaw in the German system – the anti-competitive economic burden some claim it places on German employers. A grand coalition would entail compromise between the SPD and CDU agendas, as occurred in 2007 under a similar government.

Robust debate of this kind is right, as Germany faces many of the same health challenges we do – population ageing, chronic illness, obesity, technology costs. However, funding is less of a current concern, as major reforms in 2007 and 2010 created a €26 bn surplus in Germany’s system – British policymakers could perhaps learn from the decisive compromises Germany’s policymakers have made and the strength it has brought to the future of their health system.

For more of our work on health, including books and research papers, visit our website here.


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