Health insurance is mandatory for all citizens and permanent residents of Germany. It is provided by two systems, namely: 1) competing, not-for-profit, nongovernmental health insurance funds (“sickness funds”—there were 118 as of January 20161) in the statutory health insurance (SHI) system; and 2) substitutive private health insurance (PHI). States own most university hospitals, while municipalities play a role in public health activities and own about half of all hospital beds. However, the various levels of government have virtually no role in the direct financing or delivery of health care. To a large degree, regulation is delegated to self-governing associations within sickness funds and provider associations, which are together represented by the most important body, the Federal Joint Committee.
Publicly financed health insurance: In 2014, total health expenditure was 11.2 percent of GDP, of which 74 percent was public, mainly SHI spending (58% of total). General tax-financed federal spending on “extraneous benefits” provided by SHI, such as coverage for children, amounted to about 4.5 percent of total expenditure in 2014.2 Sickness funds are financed 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 EUR56,250 (USD71,564) per year as of 2016 are mandatorily covered by SHI, and their nonearning dependents are covered free of charge.3 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 (as 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. Military members, police, and other public-sector employees are covered under special programs. Visitors are not covered through German SHI. Refugees and undocumented immigrants are covered by social security in case of acute illness and pain, as well as pregnancy and childbirth.
As of 2016, the legally set uniform contribution rate is 14.6 percent of gross wages, shared equally by the employer and employees. A previous legally fixed additional contribution rate for employees (0.9%) and supplementary per capita premiums set by sickness funds have been abolished and replaced by a supplementary income-dependent contribution rate determined individually by each sickness fund.4 In 2015, the supplementary contribution rate was, on average, 0.83 percent—that is, most of the SHI-insured paid less than previously, with rates ranging between 0 and 1.3 percent. For 2016, the average supplementary contribution rate is estimated at 1.1 percent.5
This contribution also covers dependents (nonearning spouses and children). Earnings above EUR50,850 (USD64,994) per year (as of 2016) are exempt from contribution. The 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 2015, 8.8 million people were covered through substitutive private health insurance.6 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.
There were 42 substitutive PHI companies in April 2016 (of which 24 were for-profit) covering the two groups exempt from SHI (civil servants, whose health care costs are partly refunded by their employer, and the self-employed)7 and those who have chosen to opt out of SHI. All of the PHI-insured pay a risk-related premium, with separate premiums for dependents; risk is assessed only upon entry, and contracts are based on lifetime underwriting. Government regulates PHI to ensure that the insured do not face large premium increases as they age and are not overburdened by premiums if their income decreases.
PHI also plays a mixed complementary and supplementary role, covering minor benefits not covered by SHI, access to better amenities, and some copayments (e.g., for dental care). The federal government determines provider fees under substitutive, complementary, and supplementary PHI through a specific fee schedule. There are no government subsidies for complementary and supplementary PHI. In 2014, all forms of PHI accounted for 8.9 percent of total health expenditure.8
Services: SHI covers preventive services, inpatient and outpatient hospital care, physician services, mental health care, dental care, optometry, physical therapy, prescription drugs, medical aids, rehabilitation, hospice and palliative care, and sick leave compensation. Home care is covered by long-term care insurance (LTCI). Preventive services under SHI include regular dental checkups, child checkups, basic immunizations, checkups for chronic diseases, and cancer screening at certain ages. All prescription drugs are covered except for those explicitly excluded by law (mainly so-called lifestyle drugs) and those excluded following benefits assessment. While the broader framework of the benefit package is legally defined, specifics are determined by the Federal Joint Committee (see below). Long-term care services are covered separately by the LTCI scheme (see below).
Cost-sharing and out-of-pocket spending: Out-of-pocket spending accounted for 13.2 percent of total health spending in 2014, mostly on nursing homes, pharmaceuticals, and medical aids.9
Copayments include EUR5.00 to EUR10.00 (USD6.36 to USD12.72) per outpatient prescription, EUR10.00 per inpatient day for hospital and rehabilitation stays (for the first 28 days per year), and EUR5.00 to EUR10.00 for prescribed medical devices. Sickness funds offer selectable tariffs with a range of deductibles and no-claims bonuses. Preventive services do not count toward the deductible. SHI-contracted physicians are not allowed to charge above the fee schedule for services in the SHI benefit catalogue. However, a list of “individual health services” outside the comprehensive range of SHI coverage may be offered to patients paying out of pocket.
Safety nets: Children under 18 years of age are exempt from cost-sharing. For adults, there is an annual cap on cost-sharing equal to 2 percent of household income; part of a household’s income is excluded from this calculation for additional family members. About 0.3 million of those insured under SHI exceeded the 2 percent cap in 2014 and were exempted from further cost-sharing. The cap is lowered to 1 percent of annual gross income for qualifying chronically ill people; to qualify, those people have to demonstrate that they attended recommended counseling or screening procedures prior to becoming ill. Nearly 6.3 million people, or around 9 percent of all the SHI-insured, benefited from this regulation in 2014.10 Unemployed people contribute to SHI in proportion to their unemployment entitlements. For the long-term unemployed, government contributes on their behalf.
Physicians: General practitioners (GPs) and specialists in ambulatory care who get reimbursed by SHI are by law mandatory members of regional associations that negotiate contracts with sickness funds. Regional associations of SHI-accredited physicians are responsible for coordinating care requirements within their region and act as financial intermediaries between the sickness funds and the physicians in ambulatory care. However, ambulatory physicians typically work in their own private practices—around 60 percent in solo practice and 25 percent in dual practices. Most physicians employ doctors’ assistants, while other nonphysicians (e.g., physiotherapists) have their own premises. In 2015, of the roughly 108,500 self-employed SHI-accredited physicians in ambulatory care, 51,900 (48%) were practicing as family physicians (including GPs, internists, and pediatricians) and 56,600 (52%) as specialists. There were about 2,000 multispecialty clinics, with more than 13,000 physicians (10% of ambulatory care physicians), in 2015. Around 11,000 physicians working in multispecialty clinics are salaried employees, while 12,000 are employed in practices of self-employed physicians. The total number of ambulatory-care physicians and psychotherapists is more than 140,000.11 Some specialized outpatient care is provided by hospital specialists, including treatment of rare diseases and of severe progressive forms of disease, as well as highly specialized procedures.
Individuals have free choice among GPs, specialists, and, if referred to inpatient care, hospitals. Registration with a family physician is not required, and GPs have no formal gatekeeping function. However, sickness funds are required to offer their members the option to enroll in a “family physician care model,” which has been shown to provide better services and also often provides incentives for complying with gatekeeping rules.
SHI-accredited physicians in ambulatory care (GPs and specialists) are generally reimbursed on a fee-for-service (FFS) basis according to a uniform fee schedule negotiated between sickness funds and physicians (see below). Payments are limited to covering a predefined maximum number of patients per practice and reimbursement points per patient, setting thresholds on the number of patients and of treatments per patient for which a physician can be reimbursed. For the treatment of private patients, GPs and specialists also get an FFS, but the private tariffs are usually higher than the tariffs in the SHI uniform fee schedule. Pay-for-performance has not been established yet. The average reimbursement of a family physician is above EUR200,000 (USD254,452) per year, covering costs for personnel, etc., but excluding income from private patients, which varies substantially.12
Financial incentives for care coordination can be part of integrated care contracts, but are not routinely implemented. The only regular financial incentive that GPs receive is a fixed annual bonus (EUR120, or USD153, in 2016) for patients enrolled in a Disease Management Program (DMP), in which physicians provide patient training and document patient data. Bundled payments are not common in primary care, but a regional initiative, “Healthy Kinzigtal” (Kinzigtal is a valley in southeast Germany), provides an example of a shared savings model offering primary care doctors and other providers financial incentives for integrating care across providers and services.
Administrative mechanisms for direct patient payments to providers: SHI physicians in ambulatory care bill their regional associations according to a uniform fee schedule; the associations receive the money from the sickness funds in the form of annual capitations. Copayments or payments for services not included in the benefit catalogue are paid directly to the provider. In cases of private health insurance, patients pay up front and submit claims to the insurance company for reimbursement.
After-hours care: After-hours care is organized by the regional associations of SHI-accredited physicians to ensure access to ambulatory care around the clock. Physicians are obliged to provide after-hours care in their practices, with differing regional regulations. In some areas (e.g., Berlin), after-hours care has been delegated to hospitals. The patient is given a report of the visit afterward to hand to his or her GP. There is also a tight network of emergency care providers (the responsibility of the municipalities). After-hours care assistance is also available via a nationwide telephone hotline (116 117-Ärztlicher Bereitschaftsdienst). Payment for ambulatory after-hours care is based on the above-mentioned fee schedules, again with differences in the amount of reimbursement by SHI and PHI.
Hospitals: Public hospitals make up about half of all beds, while private not-for-profits account for about a third. The number of private, for-profit hospitals has been growing in recent years (now around one-sixth of all beds). All hospitals are staffed principally by salaried doctors. Doctors in hospitals are typically not allowed to treat outpatients (similar to hospitalists in the U.S.), but exceptions are made if necessary care cannot be provided by office-based specialists. Senior doctors can treat privately insured patients on an FFS basis. Hospitals can also provide certain highly specialized services on an outpatient basis.
The 16 state governments determine hospital capacity, while ambulatory care capacity is subject to rules set by the Federal Joint Committee. Inpatient care is paid per admission through a system of diagnosis-related groups (DRGs) revised annually, currently based on around 1,200 DRG categories. DRGs also cover all physician costs. Other payment systems like pay-for-performance or bundled payments have yet to be implemented in hospitals.
Mental health care: Acute psychiatric inpatient care is largely provided by psychiatric wards in general (acute) hospitals, while the number of hospitals providing care only for patients with psychiatric and/or neurological illness is low. In 2015, there were a total of 35,368 office-based psychiatrists, neurologists, and psychotherapists working in the ambulatory care sector (paid FFS).13 Qualified GPs can provide basic psychosomatic services. Ambulatory psychiatrists are also coordinators of a set of SHI-financed benefits called “sociotherapeutic care” (which requires referral by a GP), intended to encourage the chronically mentally ill to use necessary care and to avoid unnecessary hospitalizations. To further promote outpatient care for psychiatric patients (particularly in rural areas with a low density of psychiatrists in ambulatory care), hospitals can be authorized to offer treatment in outpatient psychiatric departments.
Long-term care and social supports: LTCI is mandatory and is usually provided by the same insurer as health insurance and therefore comprises a similar public–private insurance mix. The contribution rate of 2.35 percent of gross salary is shared between employers and employees; people without children pay an additional 0.25 percent. The contribution rate will increase by 0.2 percent in early 2017. Everybody with a physical or mental illness or disability (who has contributed for at least two years) can apply for benefits, which are: 1) dependent on an evaluation of individual care needs by the SHI Medical Review Board (leading either to a denial or to a grouping into currently one of three levels of care); and 2) limited to certain maximum amounts, depending on the level of care. Beneficiaries can choose between in-kind benefits and cash payments (around a quarter of LTCI expenditure goes to these cash payments). Both home care and institutional care are provided almost exclusively by private not-for-profit and for-profit providers. As benefits usually cover approximately only 50 percent of institutional care costs, people are advised to buy supplementary private LTCI. Family caregivers get financial support through continuing payment of up to 50 percent of care costs.
Hospice care is partly covered by LTCI if the SHI Medical Review Board has determined a care level. Medical services or palliative care in a hospice are covered by SHI. The number of inpatient facilities in hospice care has grown significantly over the past 15 years, to 235 hospices and 304 palliative care wards nationwide in spring 2016.14 The Act to Improve Hospice and Palliative Care passed in 2015, with the aim of guaranteeing care in underserved rural areas and linking long-term care facilities more strongly to ambulatory palliative and hospice care.
The German health care system is notable for two essential characteristics: 1) the sharing of decision-making powers between states, federal government, and self-regulated organizations of payers and providers; and 2) the separation of SHI (including the social LTCI) and PHI (including the private LTCI). SHI and PHI (as well as the two long-term care insurance systems) use the same providers—that is, hospitals and physicians treat both statutorily and privately insured patients, unlike those in many other countries.
Within the legal framework set by the Federal Ministry of Health, the Federal Joint Committee has wide-ranging regulatory power to determine the services to be covered by sickness funds and to set quality measures for providers (see below). To the extent possible, coverage decisions are based on evidence from health technology assessments and comparative-effectiveness reviews. The Federal Joint Committee is supported by the Institute for Quality and Efficiency (IQWiG), a foundation legally charged with evaluating the cost-effectiveness of drugs with added therapeutic benefits, and the Institute for Quality and Transparency (IQTiG), which is responsible for intersectoral quality assurance. It has 13 voting members: five from the Federal Association of Sickness Funds, two each from the Federal Association of SHI Physicians and the German Hospital Federation, one from the Federal Association of SHI Dentists, and three who are unaffiliated. Five patient representatives have an advisory role but no vote. Representatives of patient organizations have the right to participate in different decision-making bodies—for example, the subcommittees of the Federal Joint Committee.
The Federal Association of Sickness Funds works with the Federal Association of SHI Physicians and the German Hospital Federation to develop the SHI ambulatory care fee schedule and the DRG catalogue, which are then adopted by bilateral joint committees.
Quality of care is addressed through a range of measures broadly defined by law and in more detail by the Federal Joint Committee. As of 2016, the IQTiG is responsible for developing instruments for interfacility and intersectoral quality assurance on behalf of the Federal Joint Committee. In addition, the institute develops criteria for evaluating certificates and quality targets and ensures that the published results are comprehensible to the public.
All hospitals are required to publish findings on selected indicators, as defined by the IQTiG, to enable hospital comparisons. Volume thresholds have been introduced for a number of complex procedures (e.g., transplants), requiring that hospitals perform a minimum number of such procedures to be reimbursed for them. Process and, in part, outcome quality are addressed through the mandatory quality reporting system for the roughly 2,000 acute-care hospitals. The recently passed Hospital Care Structure Reform Act introduces a focus on quality-related hospital accreditation and payment, beginning in 2016.
Structural quality is further assured by the requirement that providers have a quality management system, by the stipulation that all physicians continue their medical education, and by health technology assessments for drugs and procedures. For instance, all new diagnostic and therapeutic procedures applied in ambulatory care must receive a positive evaluation for benefit and efficiency before they can be reimbursed by sickness funds.
Although there is no revalidation requirement for physicians, many institutions and health service providers include complaint management systems as part of their quality management programs; in 2013, such systems were made obligatory for hospitals. At the state level, professional providers’ organizations are urged to establish complaint systems and arbitration boards for the extrajudicial resolution of medical malpractice claims.
The Robert Koch Institute, an agency subordinate to the Federal Ministry of Health and responsible for the control of infectious diseases and for health reporting, has conducted national patient surveys and published epidemiological, public health, and health care data. Disease registries for specific diseases, such as certain cancers, are usually organized regionally. In August 2013, as part of the National Cancer Plan, the federal government passed a bill that proposes the implementation of a nationwide standardized cancer registry in 2018 to improve the quality of cancer care.
DMPs, implemented in 2002, ensure quality of care for people with chronic illness. DMPs are modeled on evidence-based treatment recommendations, with mandatory documentation and quality assurance. Nonbinding clinical guidelines are produced by the Physicians’ Agency for Quality in Medicine and other professional societies.
Strategies to reduce health disparities are delegated mainly to public health services, and the levels at which they are carried out differ among states. Health disparities are implicitly mentioned in the national health targets. A network of more than 120 health-related institutions (e.g., sickness funds and their associations) promotes the health of the socially deprived.15 Primary preventive care is mandatory by law for sickness funds; detailed regulations are delegated to the Federal Association of Sickness Funds, which has developed guidelines regarding need, target groups, and access, as well as procedure and methods. Sickness funds support 22,000 health-related programs, e.g., in nurseries and schools.16 With the Act to Strengthen Health Promotion and Prevention, these programs have recently been further developed and financially supported.
The Health Monitor (Gesundheitsmonitor) was a national association of nonprofit organizations and sickness funds. To assess the accessibility of health care, it regularly conducted studies from the patient perspective—for example, on the availability of information, experiences with health care, and progress of health system reforms. The Health Monitor, which last conducted a study in 2016, ceased to exist after 15 years. A comparable survey on health access has not been provided.
Many efforts to improve care coordination have been implemented; for example, sickness funds offer integrated-care contracts and DMPs for chronic illnesses to improve care for chronically ill patients and to improve coordination among providers in the ambulatory sector. In December 2015, 9,966 registered DMPs for six indications had enrolled about 6.6 million patients (more than 8% of all the SHI-insured).17 There is no pooling of funding streams by the health and social care sectors.
As of 2016, the Innovation Fund promotes new forms of cross-sectoral and integrated care (also for vulnerable groups) supported by annual funding of EUR300 million, or USD382 million (including EUR75 million, or USD95 million, for evaluation and health services research). Funds are awarded through an application process overseen by the Innovation Committee, based at the Federal Joint Committee.18
As of 2015, electronic medical chip cards are used nationwide by all the SHI-insured; they encode information as to the person’s name, address, date of birth, and sickness fund, along with details of insurance coverage and the person’s status regarding supplementary charges.19 In 2015, the Federal Cabinet passed a bill for secure digital communication and health care applications (E-Health Act), which provides concrete deadlines for implementing infrastructure and electronic applications and introduces incentives and sanctions if schedules are not adhered to. SHI physicians will receive additional fees for transmitting electronic medical reports (2016–2017), collecting and documenting emergency records (from 2018), and managing and reviewing basic insurance claims data online. From July 2018, SHI physicians who do not participate in online review of the basic insurance claims data will receive reduced remuneration. Furthermore, to ensure greater safety in drug therapy, patients who use at least three prescribed drugs simultaneously will receive an individualized medication plan, starting in October 2016. In the medium term, this medication plan will be included in the electronic medical record.20
Recently, there has been a shift away from reliance on overall budgets for ambulatory physicians and hospitals and on collective regional prescription caps for physicians toward an emphasis on quality and efficiency. The Hospital Care Structure Reform Act aims not only to link hospital payments to good service quality but also to reduce payments for “low-value” services.
To enhance competition, some purchasing power has been handed over to the sickness funds. For example, the funds can now selectively negotiate integrated care contracts with providers and negotiate rebates with pharmaceutical companies.
All drugs, both patented and generic, are placed into groups with a reference price serving as a maximum level for reimbursement, unless they can demonstrate added medical benefit. For drugs with added benefit (evaluated by IQWiG but decided on by the Federal Joint Committee), the Federal Association of Sickness Funds negotiates a rebate on the manufacturer’s price that is applied to all patients. In addition, rebates are negotiated between individual sickness funds and pharmaceutical manufacturers to lower prices below the reference price.
Since 2012, the German health care system has been undergoing a period of active reform in several areas. The most influential reform in the past year was the Second Act to Strengthen Long-Term Care, which went into effect in January 2016; this followed the First Act, which significantly expanded support for individuals in need of long-term care and for their families. The Second Act, set to start in 2017, will broaden eligibility for long-term care services, which previously have been granted only to people with considerably restricted daily functions. The new act aims to provide services more equitably, by expanding eligibility to people with physical, mental, and psychological impairments. The new benefits are being integrated into the standard legislation on benefits.21
To finance these reforms, the contribution rate for LTCI will increase by 0.2 percentage points, up to 2.55 percent of income for people with children and 2.80 percent for people without children. According to the government, the increase in contribution rates will generate about EUR6.0 billion (USD7.6 billion) in additional revenue, which should cover the additional spending on long-term care by 2022.22
The authors would like to acknowledge Stephanie Stock as a contributing author to earlier versions of this profile.
1The Federal Association of Sickness Funds, Kennzahlen der gesetzlichen Krankenversicherung; accessed Sept. 5, 2016.
2The Federal Statistical Office, Gesundheitsberichterstattung des Bundes; accessed Sept. 5, 2016.
3Please note that, throughout this profile, all figures in USD were converted from EUR at a rate of about EUR0.786 per USD, the purchasing power parity conversion rate for GDP in 2015 reported by OECD (2016) for Germany. Organisation for Economic Co-operation and Development (OECD) (2016), “Purchasing power parities (PPP)” (indicator). doi: 10.1787/1290ee5a-en; accessed Sept. 23, 2016.
4R. Busse and M. Blümel, “Germany: Health System Review,” Health Systems in Transition, 2014 16(2):1–296. Accessed Sept. 5, 2016.
5Federal Association of Sickness Funds, Kennzahlen GKV, 2016.
6The Association of Private Health Insurance Companies, Zahlen und Fakten; accessed Sept. 5, 2016.
8Federal Statistical Office, Gesundheitsberichterstattung, 2016.
11The Federal Association of SHI Physicians, Statistische Informationen aus dem Bundesarztregister 2015; accessed Sept. 5, 2016.
14The German Hospice and Palliative Association, Stationäre Hospize für Erwachsene, stationäre Hospize für Kinder, Jugendliche und junge Erwachsene sowie Palliativstationen in Deutschland – Daten zur Entwicklung und zum aktuellen Stand; accessed Sept. 5, 2016.
15Cooperative Alliance National Health Targets (2016), Gesundheitsziele.de; accessed Sept. 5, 2016.
16Federal Association of Sickness Funds, Kennzahlen der GKV, 2016.
17The Federal Social Insurance Office, Zulassung der strukturierten Behandlungsprogramme durch das Bundesversicherungsamt; accessed Sept. 23, 2016.
18The Federal Joint Committee, Der Innovationsfonds und der Innovationsausschuss beim Gemeinsamen Bundesausschuss; accessed Sept. 23, 2016.
19Company for Telematics Applications for the Electronic Health Card, Elektronische Gesundheitskarte; accessed Nov. 5, 2015.
20Federal Ministry of Health, Gesetze und Verordnungen; accessed July 22, 2015.
21Health Systems and Policy Monitor, Germany; accessed Sept. 23, 2016.
22Federal Ministry of Health, Gesetze und Verordnungen, 2015.