SICK TO THE CORE
Germany's healthcare mess and what it means for you
Hundreds of thousands of people have no health insurance, healthcare costs are skyrocketing and Germany's healthcare system is bureaucratic and hugely unfair. Expats are especially vulnerable to its shortcomings. Chancellor Angela Merkel's grand coalition's health reforms are unlikely to help.
By Rob Schneider
Sarah, 40, a Berliner from Canada , has no health insurance. When she visits a doctor she pays in cash. As a low-earning freelance English teacher, she can't afford German health insurance - be it a statutory Gesetzliche Krankenversicherung (GKV) or private health insurance (PKV). Her self-employed status means she's exempt from the mandatory contributions deducted from employees' wages, and has the 'freedom' to choose her own health insurance or to not be insured at all. 'The health insurance system here is too expensive, so I don't want to pay into it. When I first came to Germany I was insured, but I never used my insurance.' For a few years now, she's had no coverage at all. She tries not to get sick and pays out of her pocket for minor check-ups. She gets her dental work done cheaply in the Czech Republic . Now 40 years old, Sarah is growing concerned about having no insurance, and is looking for a job that will give her employee status and health coverage.
Catherine, a 26-year-old British freelance tour guide, tells a similar story of health insecurity in Germany : 'As someone who does not have a permanent contract, I am not, according to German law, entitled to any kind of support or contribution from my employer in the domain of health.' She was told that her only option was to insure herself privately. 'I registered to a website claiming it would find me the cheapest health insurance around. I was called up at the crack of dawn by an incredibly apologetic gentleman who told me that 250 euros a month was his lowest offer for a woman of childbearing age and I'd be lucky if I found an insurer who'd take me on the kind of wage I was earning. About 1,500 a month is normally the bottom limit. So he wished me the best of luck, told me not to fall off my bicycle and that was that.'
Sarah and Catherine's stories are by no means unusual. The government estimates that over 300,000 people have no health insurance in Germany, and this figure could rise to half a million over the next few years. How could this happen in Germany , a professed welfare state, in Europe , where access to affordable healthcare is considered a universal right? The answer lies in this country's strange dual public-private system, which is unique in Europe and results in extreme dysfunctions.
But the healthcare mess goes far beyond the problems of a small segment of the population. Beyond the outright uninsured, the Byzantine healthcare system is riddled with problems. When you take a closer look three emerge: 1) Healthcare is much too expensive. 2) The dual system of healthcare (gesetzlich/private) contains huge built-in inequalities. 3) Lobbies (drug companies, insurance companies, doctors) have extraordinary power over the healthcare system in Germany . And the Gesundheitsreform (healthcare reform) of Angela Merkel's grand coalition has done little to tackle any of these problems. Instead, we have had striking doctors, striking pharmacists, unhappy patients and - this was exactly what the reform was supposed to prevent - rising costs. For 2007, expect to pay higher Krankenkasse contributions, higher private insurance premiums, and higher prices for medicine.
Dual system or structural inequality: GKV versus PKV
Ninety percent of the population are insured through one of 253 gesetzliche Krankenkassen ('statutory health funds') which form the public system, similar to those found in most other European countries. Founded in 1883 by Chancellor Otto von Bismarck, this system is primarily financed by contributions paid in equal part by employer and employee. Despite the government's attempts to keep costs in check, the average contribution is expected to have risen by January from 14.2 percent of gross salaries to 15.6 percent, a further burden on both employees and employers, who cite exorbitant insurance contributions as a major reason for the prevalence in Berlin of hiring people on a freelance basis without proper employee benefits. Workers, through their contributions, pay for the health insurance of the unemployed, children, non-working spouses and so on. Sounds fair enough.
The problem lies in a peculiar aspect of the German system: High-earning employees (earning above exactly 3,562.50 euros per month), the self-employed and the independently wealthy are exempt from paying mandatory GKV contributions. They are given the option of paying voluntary gesetzliche contributions (which depend on income and usually start at around 250 euros a month), living with no insurance at all or getting private insurance. The result is that a lot of young, healthy, rich people buy private insurance, and consequently don't contribute to the system, which is chronically under-funded. They pay premiums based solely on their own risk: Men pay less than women, the young pay less than the old, the sick pay more than the healthy - i.e., a lot of money stays outside of the public Krankenkasse system - driving the contributions of the unfortunate employee further upwards. Meanwhile, 26 million employees pay for the insurance contributions of 70 million people.
Don't look back:
the private insurance scam
'Ernst anlocken, dann abzocken.' 'Lure you in, rip you off,' is a rough translation of this German truism about private health insurance. If you're self-employed, young and healthy, the much lower premiums offered by private providers are often the only viable option. But beware: getting private insurance is riddled with pitfalls.
It's easy to get thrown out of private insurance, and once you're out, you're out. No other private insurer will accept you and you won't be permitted to join a public Krankenkasse. Most of those without insurance in Germany are the 'small self-employed' who can't afford the payments, so they just stop paying - they'd rather go without insurance than stop working and go on welfare (which, ironically, would give them complete coverage through a state-funded Krankenkasse).
American businessman Harvey, 37, was stripped of his private health insurance after he was accused of failing to report a pre-existing condition. Harvey had been seeing a therapist and by mistake submitted a bill from the therapist dated before the beginning of his insurance coverage. The company did some detective work and found out that a psychotherapist whom Harvey had seen for just a few months had diagnosed him with depression and alcoholism (in Germany private insurers manage to access private medical files unknown even to the patient himself - Harvey was unaware of this diagnosis, which he found outrageous). Harvey spent two years without any insurance: 'With that diagnosis nobody else would insure me. I was considered high risk. After talking to all the experts for six months, the only company that would accept me asked me to pay 600 euros a month for basic coverage.' He finally found a temporary solution that covers emergency treatment and that few expats seem to be aware of: travel health insurance. He now pays 60 euros a month and is covered if he gets sick or has an accident. It's a stop-gap measure, though: The policy can be used for a maximum of three years and isn't a serious option for a long-term resident.
Richard had private insurance for himself and his six-year-old son, but the company threatened to take away his son's insurance when he was diagnosed with asthma. They accused Richard of withholding information when he signed the contract (which he did not - until then the child was only diagnosed with allergies). After he complained that they had distorted information they had collected by 'interrogating' his son's previous doctors, the company finally agreed to continue insuring him, but at a higher rate.
Even if you don't get thrown out, private insurance is no bed of roses - despite the widespread notion in Germany that private means lower payments, luxury hospital rooms and premium treatment. First, if you have a family, you have to pay for each child separately as well as your spouse or partner. If you have GKV, family members are usually all automatically covered under your policy if they're not employed themselves. Secondly, private insurance doesn't actually mean all your doctor bills are 100 percent covered. You will probably still have to pay either an annual deductible yourself, or else a percentage of all doctor bills - policies vary wildly.
Thirdly, private insurance companies increase premiums whenever they feel like it. Jessica, a German 26-year-old self-employed 'mobile hairdresser', has been privately insured for two-and-a-half years and is worried that one day she won't be able to afford the premiums, which have already gone up three times, each time by about 20 euros a month. She's now paying 213 euros a month. At that rate, one can conservatively estimate that she'll be paying over 800 euros a month at age 56 and well over 1,000 euros by age 66 - simply not affordable for Jessica and most people in Germany . Jessica was lured in by initial low premiums. And the agent who sold her the policy lied and told her she could switch back to GKV any time she wished. Not true. Only if she is hired as an employee can she get back into the Krankenkasse.
Melanie, 36, founder of a small design agency, is also disappointed by her private insurance, for which she pays nearly 350 euros a month: 'It was the only option as a self-employed "boss" and extremely expensive in relation to my income. It is also totally fickle when it comes to the monthly premium. They just raise it at will. Two months after I joined I went to physiotherapy for back problems that arose from giving birth. Not only did the physiotherapist take the opportunity to overcharge me - since I'm privately insured, I can pay more right? - but my insurers immediately increased my monthly premium by 30 euros. And don't forget that I still have to pay 20 percent of all my doctor bills out of my own pocket.' The much-hyped privileges she'd heard so much about failed to materialize. 'I waited just as long as before and was never aware of receiving better treatment. Only once when I phoned a specialist did I hear on her voicemail that privately insured patients could call her on her mobile phone for a special appointment. I did just that, but then she just saw me for five minutes, prescribed me some medicine I knew I didn't want to take and charged me 60 euros.'
'A daft system'
Despite the incentive to offer better treatment, most doctors treat private patients the same as everyone else - and get paid a lot more for it. Dr. Schmidt, a Berlin podiatrist, earns 25 to 30 euros per visit from private patients, and much more for longer check-ups, while for children in the GKV she receives a maximum flat fee of 50 euros every quarter, no matter how often the patients need treatment. 'When I get chronically ill kids who come every week, I basically work for free,' she explains.
In line with national statistics, 10 percent of Schmidt's patients are privately insured, but they account for an astounding 50 percent of her income.
'The system is daft. There is a temptation to actually over-treat the privately insured, because the money is so much better. And because of this complicated system, I spend two hours a day on paperwork and billing, time I should be spending with patients. Back in the GDR we had one Krankenkasse that paid for everyone. It was fair and bureaucracy was kept to a minimum.'
Deadlocked reforms
While nobody really wants to return to the days of East German socialism, the current patchwork healthcare system in Germany is unsustainable by any measure. Before last year's parliamentary election both main camps - SPD/Greens/Linkspartei on the Left and CDU/CSU/FDP on the Right - more or less agreed that a Systemwechsel was needed, a fundamental change in the way health insurance is financed and organised. The Left wanted a Bürgerversicherung, similar to many Western European countries', under which all residents are covered and which is financed by proportional contributions based on all forms of income, including that of the self-employed, along with salaries. The Right proposed introducing a Kopfpauschale (per person flat rate) of roughly 150 euros a month for healthcare, paid by everyone, regardless of their income - which would considerably simplify the system but be ruthlessly unfair as the rich would pay the same as the poor. Under both of these proposals, the private system would be either abolished or else fully integrated into the public system, by requiring them to offer the same conditions as the Krankenkassen.
When Merkel's CDU/CSU formed a grand coalition with the SPD, it became immediately clear that the two models were irreconcilable, and that any 'reform' would be a dirty compromise. Last autumn the coalition finally hammered out an agreement, which the Bundesrat (upper house of parliament) is supposed to pass by April. But it does not seriously address any of the big problems facing the German healthcare system: rising contributions, rising costs, the unfair separation of private and public health insurance, and the plight of hundreds of thousands of un- or under-insured.
So what does the reform promise? For one, starting in 2008, private insurance companies will have to offer everyone a Basistarif, or basic coverage, including people previously insured with them who were thrown out for whatever reason. Insurers won't be allowed to ask people who sign up for the Basistarif about pre-existing conditions or the state of their health. Only age and gender can be used to determine the price of coverage. But how much will this 'basic' package cost? The proposed law only specifies that it cannot cost more than the maximum public Krankenkasse contributions (paid by both employee and employers), which are currently 500 euros a month! While this will help some self-employed people get insured again, private insurance companies themselves are hostile to the plan and are threatening to increase prices for regular health policies to cover the additional costs - even more so than they already have.
The other main element of the reform is the Gesundheitsfonds (health fund) - a centralized fund into which all public GKV contributions will be paid. The money will then be redistributed amongst the Krankenkassen, who will be required to all charge the same contributions, which currently range from between 12 to 16 percent of salaries. This is supposed to create more transparency.
These organizational reforms are unlikely to have much impact on the lives of those in precarious freelance employment situations, or solve the inbuilt equalities of the dual private/public system. Only after the next general election (probably 2009) is there a chance for a more complete system overhaul.
Catherine the tour guide has gone for a year and half without insurance. 'Not having health insurance is like traveling the underground without a ticket. Except the fines are a damn sight heftier. Since I moved to Berlin ,' she jokes, 'I have been a total hypochondriac. I've been paranoid that I've had all kind of ailments: kidney failure, angina, tuberculosis, AIDS … fortunately they all passed with no lasting effects.' Like Sarah, the English teacher, she's banking on preventative measures: 'I take my vitamin tablets, do regular exercise, avoid extreme sports, cross my fingers and pray for the day I will earn over 1,500 euros a month.'
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