Illustration by Desmond Lecker
It’s a deeply boring, yet immensely important topic: health insurance. Each country has its own system and Germany’s stands out for being a strange mix. Ninety percent of the population is insured through quasi-public gesetzliche Krankenkassen, while 10 percent has fully private coverage. The system is unfair and unsustainable in all kinds of ways – yet change could be on the horizon.
A few months ago, Exberliner received an email that began like this: “I am a Canadian citizen living in Germany for the past 20 years. Due to bad advice, I ended up signing up with DKV, a private health insurance provider. I lost my job at the age of 56, and could no longer change to statutory health service...”
We called Maryam, an IT specialist, and she told us about her situation: she’s now 60, and working as a freelancer in her field. She currently pays about €700 per month for her private health insurance. In five or six years she’ll hit retirement age, after which she’ll receive a €1550 monthly pension. But she predicts that, because private insurance rates are based on age rather than income, her monthly health insurance premium will increase to €1000 or more, making life in Germany unaffordable. She is now looking into returning to her native Canada in order to be able to afford health care.
Maryam had the misfortune of being fired from her high-paying job after turning 55. Under German law, it is virtually impossible to join a public insurance fund or gesetzliche Krankenkasse (such as TK, Barmer or AOK) after that age – otherwise, so goes the logic, people would get private insurance when young and healthy and switch to public when older and sicker.
THE PRIVATE TRAP
Maryam is one of eight million German residents who have opted to be privately insured. Most of these are either high-earning employees or, especially in Berlin, self-employed. Thomas*, a 43-year-old small business owner from the UK, falls into the latter category. He signed up for private insurance 15 years ago to save costs during the start-up phase. During that time, his monthly payments have more than doubled from about €200 to around €450 per month, plus €90 for his teenage daughter. This year alone, his premium increased by €69 per month. “I’m looking into ways of leaving private insurance before it bankrupts me,” he says. Taking on a job with employee status at another company would be one way for him to get into a gesetzliche Krankenkasse. But first, he’s going to hire a lawyer who specialises in such cases. There is a chance that he could give himself employee status via a complicated legal reorganisation of his company structure, allowing him to get into the public system.
It can be tempting, especially for the young, to get private insurance, but they will probably live to regret it. Maryam says flat-out that it was a mistake: “I should not have joined. At the time, I was convinced by a friend of a friend who was selling this insurance. I had to get insurance right away, so I got it.”
These two cases illustrate just some of the Kafkaesque and expensive nightmares one wrong step can land you in in Germany – especially for self-employed people. Defenders of the country’s byzantine dual system say that private insurance “competes” with the statutory insurance companies, making the whole system healthier and efficient. And yet there is no market competition when laws artificially trap privately insured people in ever-more costly plans.
PUBLIC: GREAT IF YOU CAN GET IT
Cornelia*, a 69-year-old German citizen who left Germany in 1969 to live abroad, returned in 2012 to the shocking news that she wouldn’t be able to get into a gesetzliche Krankenkasse. “I started with [public insurer] Barmer, because that was where the rest of my family has been insured for ages. They said there was no way they could insure me because I was not in the system. I called other insurances and they more or less said the same thing. Eventually, an attorney friend told me they were required to insure me by law, because I was insured there as a kid.” After searching the internet for advice on her situation, Cornelia ending up calling the Deutsche Anwaltshotline, a legal advice hotline which costs €1.99/minute. They emailed her a set of elaborate forms to fill out and submit to Barmer.
But the insurer couldn’t find an electronic file on her. “My files were probably rotting in a vault somewhere. Eventually the manager said: ‘Well, I guess it’s not your fault that you are not in the computer... I’ll just believe you.’ That was it. I had to provide proof of health insurance for those decades outside Germany and jump through a few hoops, but finally I was insured.”
Cornelia got lucky. Although her payments are about €500/month, they are pegged to her pension income, rather than her age, still a lot less than private, and unlikely to rise by much.
Just one year after signing with Barmer, she was diagnosed with cancer. She ended up getting excellent treatment including surgery in an anthroposophical hospital with all sorts of alternative treatments, and a fantastic two-week rehabilitation rest cure in a rural, all-organic clinic – nearly entirely paid for by her public Krankenkasse.
ARCANE, ARBITRARY RULES
Getting into a Krankenkasse is often a question of your employment status. People coming from abroad who are younger than Cornelia are similarly confronted by a confusing maze of policies, rules and choices that are hard to make sense of, and make getting any sort of insurance difficult.
Paolo* and his wife Sonia* are both Brazilian scholars in their thirties hoping to do their PhDs in Berlin. They’ve been in Germany for nearly a year, and have been covered by Brazilian travel insurance. The policy runs out in April, but Sonia is due to give birth in May, by which time she will be uninsured. They both have student visas, but Sonia is now too old to get cheap public student insurance, which is only available to under-30s. Because they didn’t obtain public insurance immediately after arriving in Germany, the Krankenkassen have no obligation to take them. A German private insurer would be legally obliged to insure Sonia under a so-called “basic tariff," usually an insane €650/month. The last and probably cheapest resort would actually be for Paolo to get a regular job with employee status: he’d be insured with a public Krankenkasse, and his spouse would be automatically covered for free. Let’s hope they can find a way out of the morass by the time their baby is born in May.
Expats from the US and other parts of the world might be surprised that Germany doesn’t have “European-style free healthcare” in the style of Britain’s National Health Service or the universal tax-funded healthcare systems of Scandinavian countries. Instead, Germany’s system is a messy patchwork of hundreds of gesetzliche Krankenkassen, under which 90 percent of the population is insured. Then there are the privately insured, including cases like Thomas and Maryam as well as civil servants, who are covered by a totally different system of social insurance than normal workers. According to popular wisdom, ‘going private’ grants insurees first-class treatment, amazing dental benefits, private hospital rooms, treatment by the hospital’s head physician (the legendary Chefartzt) and all sorts of alternative medicine perks, as well as the privilege of jumping the queue when it comes to getting operations. Empirical reality shows a less rosy picture, with suspicion of over-treatment by doctors carried away by the lucrative prospect of milking private patients.
Severin Schmidt, health policy expert at the Friedrich-Ebert-Stiftung (FES), the think tank associated with the centre-left SPD party, says that there is virtually no difference in the level of treatment between private and public patients – both get a very high level of care. The problem with the current system is its unfair, wasteful and unsustainable financing. A 2016 FES report put together by Schmidt found that about 400,000 privately insured people in Germany (like Maryam) could barely afford their insurance payments, with some of them paying up to half of their income for their health insurance.
The study finds no justifiable reason for the vastly high fees Germany’s doctors get for private patients, or for the plenty of people who, faced with the bureaucratic maze, fall through the cracks and end up completely uninsured. In short, says Schmidt, the dual system is “unfair and illogical” and must be reformed.
HOPE FOR REFORM?
For years the SPD, the Greens and Die Linke have called for an end to the private-public system in favour of a single public insurance, or Bürgerversichung, which would cover the entire population. But Angela Merkel’s CDU-CSU majority in the Bundestag has always blocked any such initiative. Many legislators themselves have private health insurance and are apparently happy with the status quo. In 2012, it was revealed that members of the CDU were offered a special discount by AXA private health insurance as part of a “group contract." This is legal, but shows the chumminess between the governing party and the insurance industry. “There are so many healthcare industry lobbyists going around in Berlin!” says Schmidt. It is easy to seethe work of insurance industry and doctors’ associations spreading questionable, if not fake, information online. A search for Bürgerversicherung spits out countless fear mongering videos on Youtube or news articles decrying the SPD’s plans: “longer waiting times”, “state-controlled medicine”, “no more free choice of doctors”, “massive job losses in insurance companies”. Bürgerversicherung would be a return to the disastrous East German “planned economy”, one private insurance “expert” even claims.
If the SPD’s candidate for chancellor Martin Schulz is able to dethrone Angela Merkel in September’s election, there is a good chance a “red-red-green” coalition of the SPD, the Greens and Die Linke could reform the healthcare system. After all, according to a poll by the IG Metall union, two-thirds of Germans (and even a majority of the privately insured) favour a switch to a universal Bürgerversicherung type of insurance with payments based on income level, rather than age or status. A new model proposed by the FES would also include an insurance levy on non-wage income from investments and rents, meaning the rich would pay more, contributing to greater equality in society as a whole. According to Schmidt, this broader financing model would probably lower insurance costs for middle- and low-income people.
Whether the SPD wins the next election or not, the private insurance system is on its last legs, maintains Schmidt, because of three factors: low interest rates mean the insurance companies are unable to build up sufficient financial reserves; the retirement of the huge baby boomer generation will put huge pressure on the system; and the fact that very few healthy young people are signing up for private insurance is making the business model unsustainable.
Doctors, big pharma, pharmacists and the insurance industry are all benefiting from the current German system and are sure to fight any change with a wave of lawsuits. The reform could take a long time, an evolution rather than a revolution, says Schmidt. If Maryam is lucky, something will improve by the time she retires, allowing her to remain in Germany without being bankrupted by her health insurance.
But for now, if you’re young and Googling “health insurance in Germany”, be very wary of those ads for cheap “Private Krankenversicherung” – signing up with private insurance is a step you might regret for the rest of your life.
Private insurees: Patients or cash cows?
Because private insurance pays higher fees to doctors, private patients are extremely lucrative for them. And while doctors would certainly deny it, anecdotal evidence suggests that private patients are very often subjected to unnecessary tests and treatments. A few years ago, Thomas went to a Prenzlauer Berg orthopaedic specialist for knee pain. “On the very first visit, the doctor urged me to have knee surgery. I looked around his gleaming office full of designer furniture and expensive art and thought, something’s not right here.” He went to another, more down-to-earth doctor who said that before getting surgery, he should stop playing squash and ride his bike more. Within weeks the pain had disappeared.
Another way doctors milk private patients is “creative billing”. According to the Association of Private Health Insurers, doctors use special software to “optimise” fees for private patients, i.e. squeeze the most out of them and then pass on the costs to their insurance. It is ironic that the private insurance lobby complains about this, because they justify the existence of private insurance in Germany with the fact that doctors can earn high fees on private patients, ensuring a broad base of independent, quality practitioners!
And what about those doctors? Doesn’t it go against the Hippocratic Oath to over treat and overcharge patients? The oath’s third sentence reads: “I will apply, for the benefit of the sick, all measures which are required, avoiding those twin traps of over treatment and therapeutic nihilism.” Posed this question, health policy expert Severin Schmidt glibly responds: “In Germany, not all doctors take the Hippocratic Oath.”