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Both, rising health care spendings caused by ageing and medical progress and a potential fall in revenues caused by a shrinking labour force due to ageing and falling birth rates, threaten the financial sustainability of the German health care system. Therefore, the health care reform of 2010 in Germany (Act for Sustainable and Socially Balanced Financing of Statutory Health Insurance) is particularly dedicated to reorganise the financing of the health system.
From January 2011 onwards, the income-related contribution rate is fixed at 15.5% by law. By freezing the income-related contribution rate, future over-proportional expenditure rises will be financed through premia. The premium is not income-related and has to be imposed by the respective Statutory health insurance funds (SHI-funds), which are not able to cover their costs through the funds allocated by the health care fund system (income-related contributions and subsidies by state). The premium, which has to be paid by all members of a SHI-fund is a transparent price signal, which allows the insured to compare the price and the benefit-package in order to choose for the SHI-fund with the best price-performance ratio. The basic idea of financing future health expenditure increases through premia is such to foster competition among SHI-funds. In addition, rising health expenditure in the future will not burden labour costs to the same extent as a completely wage-based financing would do.
When the average additional premium exceeds 2% of the individual assessable income, the insured person is eligible for a tax-financed social compensation. This compensation prevents members to become overburdened through the premium. The compensation is rendered indirectly by lowering the income-related contribution rate of the insured. The loss of income-related contribution revenue will be compensated by an additional tax subsidy of 2 billion Euro until 2014. The compensation can be executed automatically through the employer through the payment of wages or the pension fund through pension payments. Due to this automatic procedure members of SHI-funds usually do not have to file applications to receive this compensation.
In case a SHI-fund has to levy an additional premium or to increase the amount, it has to notify its insurees of their right to cancel membership. Insurees are allowed to leave their old SHI-fund and join a new one within two months of an additional premium coming into force.
