Financing and fiscal sustainability: Achilles‘ heel of the German health system?

ms@basys.de Bad Hofgastein 27 September 2002 Page 1

Financing and fiscal sustainability: Achilles‘ heel of the German health

system?

Markus Schneider (BASYS)

ms@basys.de Bad Hofgastein 27 September 2002 Page 2

Questions?

• How sustainable is the German health system?

• Is financing via contributions a reason for concern?

• What are measures to increase fiscal sustainability?

ms@basys.de Bad Hofgastein 27 September 2002 Page 3

Health Expenditure as % of the GDP

1,05 1,31 1,35 1,39 1,53 1,51

1,031,17 1,27 1,36 1,29 1,340,26

0,54 0,57 0,600,93 0,99

0,57

1,04 1,00 0,880,91 0,87

1,92

2,89 2,99 3,16

3,34 3,09

0,27

0,460,58

0,69

0,89 1,08

0,79

0,960,99

1,05

1,43 1,37

0,00

2,00

4,00

6,00

8,00

10,00

12,00

1970 1977 1983 1989 1995 2000

other

dependency care

hospital care

dental care

medical aids

pharmaceuticals

physicians

West-Germany

ms@basys.de Bad Hofgastein 27 September 2002 Page 4

Annual Growth Rates(West-Germany)

1995-2000 1977-2000

physicians' outpatient services 2,6 5,4

pharmaceuticals 3,6 5,4

medical aids 4,1 7,6

dental care 1,9 4,0

hospital care 1,3 5,1

dependency care 6,9 8,8

other 2,0 6,4

total health expenditures 2,7 5,7

BIP 2,8 4,8

ms@basys.de Bad Hofgastein 27 September 2002 Page 5

Financing of THE as % of GDP(West Germany)

5,00 5,09 5,076,01 5,78

3,36 3,66 4,06

4,31 4,47

0,00

2,00

4,00

6,00

8,00

10,00

12,00

1 2 3 4 5

GKV Others

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Average contribution rate of GKV (%)

11,411,8

12,5

13,6 1414,1 13,913,5

6

8

10

12

14

16

1980 1985 1990 1995 1998 2002

West East

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Willingness to pay contribution

sacifrice benefits

19%

increase contributions

71%

do not know10%

Source: WidO 2002

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„Shunts“

Period Cumulated Financial Burden Mrd. €

Reduction of contribution base for unemployed in training: Pension Reform Law 1992

1995-2003 17,51

Increase of contributions from sickness benefits: Pension Reform Law 1992

1995-2002 4,89

Reduction of contribution base for beneficiaries with unemployed assistance: Law for Nonrecurring Payments 2000

2001-2003 1,83

Others 1995-2003 5,38

Total 1995-2003 29,61

Source: Beske 2002.

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Cost-control

• Bulit-in-Stabilizer• Pharmaceuticals• Integration• Health Centers• Disease Management• Prevention• Choice of Gate-keeping

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Conclusions

• Financing via contributions is not the Achilles‘ heel of the German health system

• Institutional restrictions, which limit selective contracting, vertical and horizontal integration, and the choice of tarifs in the statutory system, are rather the Achilles‘ heel of the German health system