As one would expect of the richest country in Europe, Germany offers high quality healthcare, from primary care through to high-tech hospitals and good provision for chronic disease and old age.
It all dates back to Otto von Bismarck, the “Iron Chancellor” who established Germany’s social welfare system in the 1870s. He was reported to have said it was immoral to benefit from sickness, and that “insurance should be on the mutual principle (so that the healthy pay as much as the sick) and no dividends or profits should be derived by private persons”.
One could argue that these high-minded principles exist more in the imagination than reality. But Bismarck’s broad idea of a range of statutory health insurers, independent of providers, competing against each other, holds good. Insurers (also known as sick funds or mutuals) are financed by contributions from employers and employees.
The “Bismarck system” operates across most of Europe, including Austria, Netherlands, France and Switzerland, all with well-rated healthcare. The NHS’s “Beveridge system,” free at point of use and taxpayer funded, may be much loved by the British people, but arguably does not match the Bismarck system in medical outcomes and aspects of patient satisfaction.
Waits in Germany remain close to nonexistent – even if economic pressures apply, as with all Western countries with ageing populations. If you suffer cancer or need certain operations, your insurer may have to pay for a lengthy stay at a salubrious “rehab centre” in the Black Forest.
YOU GET WHAT YOU PAY FOR
With Germany spending 11 per cent of its (considerable) GDP on healthcare, one would expect good health outcomes. They are respectable, with life expectancy at 77 for men and 83 for women. The yardstick of a nation’s healthcare efficiency, infant mortality, is four per 1,000 live births, a satisfactory figure for a country with high numbers of less well-off immigrants.
GERMANY FEELS THE SQUEEZE
The German state is as vulnerable as the UK, America or other European states to the problems of mounting healthcare bills. Indeed, it is particularly exposed because of a shrinking and ageing workforce, and falling birth rates.
That is why Chancellor Angela Merkel defied heavy opposition to push through wide-ranging changes to the state health system in 2010. One aim was to limit ever-rising taxes on employers (who to that point jointly funded the system through equal contributions). That represented a barrier to taking on staff, in turn aggravating unemployment.
Another aim was to throw the onus of meeting rising healthcare bills on insurers, and ultimately, policyholders.
WHAT THE CHANGES MEAN
From January 2011, employers have to pay 15.5 per cent of their income towards healthcare. (The previous rate was 14.9 per cent). This is a huge proportion of income by comparison with other countries, but it should be remembered that the cover is for cradle-to-grave service.
But the 15.5 per cent employers’ rate is fixed in law and frozen long term. The sums raised are ultimately distributed among scores of state registered health insurers, many quite small and trade-union based. The idea is that by freezing the employers’ income-related contribution rate, the onus falls on insurers to cope with future cost rises. Insurers will either increase premiums – arguably the most likely scenario – or slash overheads and tighten efficiency.
As with all insurance-based health schemes, the individual needs to weigh up premium against benefits. As a German government spokesman puts it: “The premium, which has to be paid by all members of a health insurance fund, is a transparent price signal. It allows the insured to compare the price and the benefit package and choose the fund with the best price-performance ratio.”
Some relief exists for people trapped in an insurance fund that hikes premiums unreasonably. If the average additional premium exceeds two per cent of a policyholder’s income, the individual is reimbursed by the state. To avoid bureaucracy, compensation is paid indirectly, by lowering the income-related contribution rate of the person in question. To cover these costs, €2 billion has been made available until 2014.
If a health fund has to levy an additional premium, or increase its premium, it must notify its members of their right to cancel their membership. Members are allowed to leave their old fund and join a new one within two months of an additional premium coming into force.
Since 2007, expatriates in Germany, along with every German citizen, have been obliged to buy cover with a registered insurer.
The problem is that an expat who travels widely on business almost certainly also needs international medical insurance. The individual is thus doubly insured, an expensive option.
The element of compulsion applies even in a case of an EU expatriate, say, who is living in Germany for a short spell. He or she still has to buy cover from a German insurer, but may not wish to drop existing cover. This would seem the only way of guarding against becoming uninsurable for any chronic condition that occurs when German state cover lapses, and the expat policyholder wishes to move to his home country, or elsewhere.
Is the system anti-competitive, as it excludes foreign insurers? Probably, except that exceptions may be made for expatriates with high-level comprehensive insurance. If you earn more than €4,000 a month, you can take out private insurance and drop state-approved cover. Your policy needs to be at least as thorough as German public health insurance, which includes provision for chronic disease and elderly care.
The German embassy in London describes the question of using foreign insurers as “complex”. A spokesman said: “A British national working in Germany can, in principle, take out private health insurance in the UK, but would have to prove to his employer in Germany that his health insurance covers the mandatory minimum the German public health insurance would cover.”
As well as matching German state insurance in terms of benefits, the employer would need a certificate by the employee’s British health insurer guaranteeing that this was the case. “Without this certificate, the employer would automatically be obliged to register the employee with a public health insurer.”
The spokesman added: “One important factor where private health insurance has to match public health insurance in Germany is an adequate old-age provision.
“Foreign insurance companies that want to offer private health insurance in Germany usually start a German business to provide services that are in full accordance with the German Insurance Contract Act, such as AXA Germany.”
Expats on higher salaries, or those who want wider geographical cover, may find it cheaper to buy international private medical insurance.
As ever, premiums vary by around 100 per cent, but no two plans are ever strictly comparable. Among the least expensive in a list of insurers provided by Stephen Walker, of Medical Insurance Services in Brighton, is AxaPPP.
A 25-year-old man can get comprehensive cover for a year from Axa for £789 (budget plan, covering in-patient only, is £617). Other providers under £1,000 for a year’s cover for the same individual are InterGlobal at £890 (budget £581) and IMG at £915 (budget £470). The IMG premiums include a 15 per cent starter discount.
For a couple 34 and 31 in Germany seeking comprehensive cover, annual premiums under £2,000 come from AxaPPP at £1,943 (budget £1,519) and IMG because of a 15 per cent starter discount. IMG’s Global Select plan is £1,928 (budget £1,047).
Also competitive is Aviva International Solutions. For the couple 34/31, its comprehensive plan costs £2,522 a year (budget £1,766). The annual premium for Bupa’s Classic is £3,967 (budget £2,156).
PROOF OF THE PUDDING?
If the Merkel reforms work, the chancellor can thank her 19th century predecessor for bequeathing a system that makes competition possible.
Mrs Merkel needs success because the reforms prompted a steep fall in her poll ratings. She was roundly attacked by opposition parties, trade unions and insurers. They claimed the reforms were aimed more at raising money than cutting costs.
But Germany has at least made a serious attempt to tackle a problem that is afflicting every Western nation. Each is trying a different approach. That’s a sure sign that no one nation has the answer to the spiralling health costs of an increasingly greying and demanding populace
The Telegraph Expat