Policy reform: Private health insurance for all

  • A few years ago I already wrote about the German health insurance system and a possible and necessary reform. Still today we have two very different health insurance systems in Germany. The first is a compulsory public health insurance where premiums are determined by income and by the insurance benefits and health of the insured. The second is a private health insurance system where your premiums are determined by the insurance benefits and health of the insured. Consequently, the first is a social redistribution scheme where the coverage of health care is determined by the state and the second is a private health insurance where coverage is directly determined by the insured. The problem is, only public servants and high-income earners are allowed to opt out of the public scheme and insure themselves privately. As a result the average premium in the private system is lower than the contribution of the same individuals to the public scheme would be, and health benefits are better for those privately insured. Most who are allowed opt out.

    It is my opinion that a health insurance system should not redistribute income, we have a tax system for that. A health insurance should pool the risk and cost of getting ill. Nothing more and nothing less.

    Therefore, I welcome the current FDP’s legislative initiative to reform the German health system. They demand that everyone should be entitled to privately insure herself and the obligation of insurers to sign a contract with everyone for a basic coverage without any discrimination.

    Of course, such a private system should not copy the mistakes made elsewhere. Therefore, everyone should have to get basic coverage independent of his or her employment status. Rates may differ from insurer to insurer but not for contracts from the same insurer regardless of age, sex or health of the insured. Additional coverage can then bought at whatever conditions the insurers are willing to offer to an individual. The important thing is, basic coverage should always be cheaper than basic + some additional coverage. If an individual is too poor to afford paying for the basic coverage she should get the necessary social benefits financed through the tax system. Through the tax system and not the health insurance system! Medical services like inoculations that provide positive external effects to society may very well be subsidized by the government, too, to reduce the individual premiums.

    There are benefits for all involved. There is no discrimination in service between privately and publicly insured. The medical practitioners can provide the best service to their knowledge and according to the needs of their patients and are not constrained by their remaining budget allocated to them by the public health insurance association. I do not expect that this privately organized health insurance system will be considerably cheaper. I do expect, however, that it will be fairer and more orientated to the needs of the insured.