German Private Health Insurance: Pricey
In a story all too familiar to Americans, Der Spiegel has reported that German private health insurance costs are skyrocketing (find the story translated to English here). Excerpt:
Many private health insurance plans pushed through hefty premium increases at the beginning of the year and that's behind the move to switch, the magazine said.
“We’ve gotten increased telephone inquiries from those privately insured who want to come to the AOK,” Wilfried Jacobs, the head of the AOK in Rheinland/Hamburg, told the magazine. The AOK, with 15 regional branches and some 24 million members, is Germany’s largest public health insurance organisation. The magazine said other public health insurers have received similar inquiries.
But it’s not so easy to switch once you’ve opted for private insurance. German law only allows people to change from public to private in exceptional situations.
These include when someone has lost their job. You can also switch if you are an employee whose salary falls below the € 45,900 level. Workers who used to be self-employed but now have a full-time position with a similar salary may also change.
But a public health organization manager said, “There are tricks that we can use to help private patients, providing the employer cooperates.”
The Barmer GEK public health organization reported that 27,600 people switched from private competitors in 2011 – nine percent more than in 2010.
A related statement by Uwe Reinhardt, professor of health economics at Princeton University (find it here):
The New York Times
December 9, 2011
Social Insurance and Individual Freedom
By Uwe E. Reinhardt
By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.
Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.
Germany does not allow people with middle or modest incomes to purchase private health insurance because that segment of society could be placed at financial risk by illness or injury if their private insurer were to fail to adequately provide for payment of needed services. The more wealthy are allowed to take the risk of purchasing private health insurance. And now, the more wealthy in Germany are being "shocked by premium increases of as much as 50 percent." Unlike Medicare private plans in the US, Germans are not allowed to simply opt back into the public health plans once they realize that private health insurers are not helping them enough. Having chosen a private pathway, they are obliged by German law to stay on that path unless and until they are bankrupted. In the US, we allow private health insurance companies to 'insure' healthy seniors and then dump them back on traditional Medicare once they become unwell and costly to cover, essentially sticking the American taxpayer twice: once for the 'premium' paid to the private health insurer and a second time when the needed care is covered by traditional Medicare anyway. The excess costs of the so-called Medicare 'Advantage' plans has been well documented in peer reviewed literature.
Let's face it, the German plan, requiring the wealthy to stick with their original health insurance choice, is better than the American plan, but both are less optimal than simply doing away with the private health insurance business model, which is the source of the excess costs and confusion. Americans should stop falling for the private health insurance sales pitch when they are healthy seniors, and we should all be working toward the elimination of the wasteful, self-serving, useless, pricey, private health insurance business model.
Dr. Joe Jarvis