JANUARY

The German Health Care System, 2015
Miriam Blümel and Reinhard Busse
Berlin University of Technology
What is the role of government?
Health insurance is mandatory for all citizens and permanent residents of Germany. It is provided by competing,
not-for-profit, nongovernmental health insurance funds (“sickness funds”; there were 124 as of January 2015)
in the statutory health insurance (SHI) system, or by substitutive private health insurance (PHI). States own most
university hospitals, while municipalities play a role in public health activities, and own about half of hospital
beds. However, the various levels of government have virtually no role in the direct financing or delivery of
health care. A large degree of regulation is delegated to self-governing associations of the sickness funds and
the provider associations, which together constitute the most important body, the Federal Joint Committee.
Who is covered and how is insurance financed?
Publicly financed health insurance: In 2013, total health expenditure was 11.5 percent of GDP, of which 73
percent was public and 58 percent was SHI spending (Federal Statistical Office, 2015). General tax–financed
federal spending on “insurance-extraneous” benefits provided by SHI (e.g., coverage for children) amounted
to about 4.4 percent of total expenditure in 2014 and 2015. Sickness funds are funded by compulsory
contributions levied as a percentage of gross wages up to a ceiling. Coverage is universal for all legal
residents. All employed citizens (and other groups such as pensioners) earning less than EUR54,900
(USD69,760) per year as of 2015 are mandatorily covered by SHI, and their nonearning dependents are
covered free of charge. 1 Individuals whose gross wages exceed the threshold and the previously SHI-insured
self-employed can remain in the publicly financed scheme on a voluntary basis (and 75% do) or purchase
substitutive PHI, which also covers civil servants. About 86 percent of the population receive their primary
coverage through SHI and 11 percent through substitutive PHI. The remainder (e.g., soldiers and policemen)
are covered under special programs. Visitors are not covered through German SHI. Undocumented immigrants
are covered by social security in case of acute illness and pain, as well as pregnancy and childbirth.
As of 2015, the legally set uniform contribution rate is 14.6 percent of gross wages. Both the legal contribution
rate for employees (0.9%) and the supplementary premiums set by sickness funds have been abolished and
replaced by a supplementary income-dependent contribution rate determined by each sickness fund
individually (Busse and Blümel, 2014). As of 2015, the supplementary contribution rate is, on average,
0.9 percent—that is, most of the SHI-insured pay the same as previously, but rates range between 0 percent
and 1.3 percent (Federal Association of Sickness Funds, 2015).
This contribution also covers dependents (nonearning spouses and children). Earnings above EUR49,500
(USD63,360) per year (as of 2015) are exempt from contribution. Sickness funds’ contributions are centrally
pooled and then reallocated to individual sickness funds using a risk-adjusted capitation formula, taking into
account age, sex, and morbidity from 80 chronic and/or serious illnesses.
Private health insurance: In 2014, 8.8 million people were covered through substitutive private health
insurance (Association of Private Health Insurance Companies, 2015). PHI is especially attractive for young
people with a good income, as insurers may offer them contracts with more extensive ranges of services and
lower premiums.
1
Please note that, throughout this profile, all figures in USD were converted from EUR at a rate of about EUR0.79 per USD,
the purchasing power parity conversion rate for GDP in 2014 reported by OECD (2015) for Germany.
International Profiles of Health Care Systems, 2015 69