Germany: Bundesbank Monthly Report: Financial development and outlook of the statutory health insurance scheme

The health service in Germany represents an important - and fast-growing - part of the national economy. The range of health benefits are largely financed via the statutory health insurance scheme by wage-related contributions from members. The financial development of the statutory health insurance scheme and the resultant changes in the contribution rates have a significant impact on the overall economy. Despite a considerable rise in the average contribution rate, the statutory health insurance scheme has recorded substantial deficits in the past few years. This development prompted the latest reform of the health service, the aim of which is to help lower the accumulated debt and noticeably reduce the contribution rates in the next few years. Nevertheless, in the longer term this reform will be unable to prevent a further increase in contribution rates, particularly in the light of demographic changes and the cost-boosting effects of advances in medical technology. In considering the additional reforms which are consequently required, key requirements are to limit the levy burden on labour, to separate income redistribution aspects from the equivalence principle and to intensify competition