One guide to rule them all — Health insurance in Germany
This is part 1 of our guide to health insurance in Germany.
We will start here with a little history lesson and quickly break down how health insurance in Germany come to be and how it became what it is today.
The main part 2 will be divided into several sub-sections and tackle the two systems that exist in Germany: public and private health insurance. Next to an in-depth description of the system itself, there will be a direct comparison between the two systems. It will go into a lot of detail and therefore will be long but hopefully not boring…
Part 3 will then try to give you guidelines as to how to decide which option is the best for you.
But we are getting ahead of ourselves, let us begin where every good story begins: at the beginning.
A small history of the German health care system
The beginning of social security
Once upon the time, there was a Reichskanzler called Otto von Bismarck and chances are that you have come across a Bismarckstraße or Bismarck train station if you have ever set foot in Germany. Among other things, Bismarck has entered the collective German mind as the father of the social security system in Germany.
Having proclaimed the government’s intentions in 1881 to introduce new social laws, Bismarck got the legislature to enact the “Gesetz betreffend der Krankenversicherung der Arbeiter”, starting December 1st 1884. It was the start of what ultimately became the social security system we enjoy today.It already included central provisions that are the foundation of modern public health care, including things such as:
· Free medical treatment
· Free medicine
· The employer had to shoulder some costs, at the beginning 1/3 of the premiums
· Continued payment of wages in case of illness
Next to the benefits, it also already included something many outside of Germany have to get used to: the mandatory enrolment in the public health care (Sidenote: public health care is translated as gesetzliche Krankenversicherung which is abbreviated as GKV. Since we all have somewhere to be, I will start using that abbreviation from now on).
That meant that from 01.12.1884 every industrial worker and all employees in craft and trade enterprises HAD to enrol in the GKV and they HAD to pay 2/3 of the costs, affecting around 10 % of the German population[1].
The law also created the “Ortskrankenkassen” (literally translated local health care carriers) as health care provider. They joined the already existing “Betriebskrankenkassen” (carriers organized by big companies aka “Betriebe”), some of which still exist today, and other providers.
Changes throughout the years
Over the years new law and addendums came and continuously increased not only the number of people that were affected by the GKV but also the scope of benefits as well as adding new social security systems. For example, in 1914 the mandatory enrolment was increased to include servants and menials, migrant workers and agricultural and forestry workers.
Additionally, the new social security systems put into place included the accident and pension insurance or the inception of the unemployment insurance in 1927, already shaping the way the social security apparatus we know today.
During the Nazi reign, the way the carriers were operating was changed dramatically but the general system itself was more or less kept the same.
After WWII, West-Germany build up a system that was very similar to the known system, of course with a lot of organizational and structural changes that go far beyond the scope here (if you really want to know more, you can find more information here). In 1951 it was decided that employer and employee should share the premiums (called “Parität”), which is still the case today.
In the 1960’s and 1970’s, people started to realize that a health care system needs to adapt to the times and medical advances and more benefits were gradually added, e.g. psychotherapy in 1967. A landmark law was the “Continuation of Wage Act”, leading to around 90 % of the population being affected by the GKV (and forcing employers to keep on paying employees for the first six weeks of an illness).
But of course increasing the benefits comes with increasing costs. Combined with a slow economy, the late 1970’s and 1980’ were times of laws that tried to cut costs and benefits.
When Germany was reunited in 1991, East-Germany was included in the existing laws and social securities of West-Germany, leading to a more or less identical health care system in Germany.
In the 1990’ costs were still drastically increasing and since raising taxes is not something politicians like to do, cost cutting measures were introduced, e.g. lowering the illness payment from 80 % to 70 % of the income in 1997. In 2004 a major reform cut a lot of benefits from the books, for example “Sterbegeld” (literally translated to death money. A lot more positive than it sounds, it means that your decendents receive a payment should you die), “Entbindungsgeld” (money for having a child) and a lot of vision aids provisions.
Since 01.01.2009 it is mandated that everybody has to have health insurance that meets the minimum requirements set by the governments, regardless of employment status.
In an attempt to give the GKV carriers more financial flexibility, the “Zusatzbeitrag” was introduced in 01.01.2015. While cutting the total premium from 15.5 % to 14.6 %, the law allowed every carrier to take an individual premium of up to 1.7 %. This extra contribution was paid fully by the employee, which was changed in 2019, leading to full parity again, i.e. employer and employee both pay 50 % of health insurance costs.
Despite its drawbacks and admitted flaws, the GKV is one the greatest successes of social security. At the moment around 90 % of the population is insured in the GKV, making that an astonishing 72.98 million insured women, men, children and everything in between [2].
The sibling: private health insurance
Since the GKV was meant for employees (and at first only certain employees), that left out a lot of people that wanted/needed health insurance as well: Beamte, business owners, students, freelancer, self-employed and the employees that were only gradually included in the GKV. Already in 1843 employees of a tabacco plant in Nürnberg founded the first private health insurance “uniVersa”, which still operates today [3].
This was a reoccurring theme in the history of private insurances, companies were founded because people had nowhere to go e.g. a carrier for Beamte in 1905 (nowadays the Debeka) or a carrier for medical professionals in 1925 (which would become the Continentale)[4].
Especially in the 1920', the private health insurance (from now on abbreviated as PKV) took off, insuring around 2 million people. WWII naturally meant a deep cut, leading to a virtual stop of increasing the PKV.
Already in 1949 a West-German association of the PKV was founded and from then on, the PKV started it’s way to become the system it is today.
The PLV system is of course also subject to German law and was therefore heavily shaped by it. Especially a law from 1970 put the coexistence with the GKV into place, setting the mandatory enrol threshold for everyone who earns more than 75 % of a government-set threshold (more on that threshold later). From 1989 onwards it was allowed for the first time people earning more than that threshold to to be fully privately health insured.
In the 1990’ certain minimum standards for PKV were put into place and as well as maximum contributions for older insures, pensioners and ill Beamte. In 1995 long-term nursing care was also made mandatory and the PKV was allowed to be a carrier of that, analogue to the GKV carriers.
Today 8.74 million people are fully privately insured and there are around 26 million private supplementary insurances (e.g. extra dental, private hospital rooms, etc.)[5].
Thank you for reading! If you enjoyed part 1, you are bound to enjoy the rest of the series that we steadily publish here.
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[1] https://www.bundesgesundheitsministerium.de/themen/krankenversicherung/grundprinzipien/geschichte.html
[2] https://www.gkv-spitzenverband.de/gkv_spitzenverband/presse/zahlen_und_grafiken/zahlen_und_grafiken.jsp
[3] https://www.krankenkassenzentrale.de/wiki/geschichte-der-kv#
[4] https://www.math.uni-hamburg.de/home/drees/PKV_HIST_VOR_K_HH_KURZ.pdf
