Health Care Reform in Germany: Health Care Reform in Germany: - - PowerPoint PPT Presentation

Health Care Reform in Germany: Health Care Reform in Germany: Assessing Severe Intergenerational Imbalances Assessing Severe Intergenerational Imbalances

Bernd Raffelhüschen Bernd Raffelhüschen

University of University of Freiburg Freiburg, Germany , Germany and University of Bergen, Norway and University of Bergen, Norway 1 The Problem Set: Double Aging, Cost Push and, Eroding Contributions 2 The Result: No Sustainability and – Same Medal, Opposite Side – No Generational Contract in Health Care 3 How to reform the system: Revenues 4 How to really reform it: About Expenditures and Incentives 5 Where it`s even worse: Long Term Care Speech given at the IAAHS-Colloquium 2004 in the German Hygiene Museum, Dresden, Germany

Health Care Reform in Germany: Health Care Reform in Germany: Assessing Severe Intergenerational Imbalances Assessing Severe Intergenerational Imbalances

Bernd Raffelhüschen Bernd Raffelhüschen

University of University of Freiburg Freiburg, Germany , Germany and University of Bergen, Norway and University of Bergen, Norway 1 The Problem Set: Double Aging, Cost Push and, Eroding Contributions

2 The Result: No Sustainability and – Same Medal, Opposite Side – No Generational Contract in Health Care

3 How to reform the system: Revenues 4 How to really reform it: About Expenditures and Incentives 5 Where it`s even worse: Long Term Care Speech given at the IAAHS-Colloquium 2004 in the German Hygiene Museum, Dresden, Germany

Why Health Care should be a generational contract Why Health Care should be a generational contract taking from the working aged and giving to those older

• r younger:

Age-specific Revenues and Expenditures of the Geman Health Care System

1000 2000 3000 4000 5000 6000 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Age Euro in 2001

Contributions Expenditures

Under unrealistic optimistic assumptions, the health care system is indeed a (minor) generational contract, taking from those aged 20 to 30 and giving to those older or younger!

Generational Accounting of the German Health Care System Without Cost Pusch

Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5%

• 60
• 40
• 20

20 40 60 80

• 1

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

age Thousands Euro

From a realistic viewpoint, there is no generational contract but a self service of the living to the burden of future generations!

Generational Accounting of the German Health Care System

Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5%

• 60
• 40
• 20

20 40 60 80

• 1

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Age Thousands Euro

Without With Cost-Push, 1%, 30 years

Sustainability Gap of the German Health Care System

Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5% 83,8 232,2

50 100 150 200 250 300

Without With Cost-Push, 1%, 30 years

Percent of GDP

Implicit Public Liabilities of the Implicit Public Liabilities of the German Health Care System German Health Care System amount to: amount to: 4,000,000,000,000 Euro 4,000,000,000,000 Euro

To compare:

GermanTelekom:

64,200,000,000

Public Sector:

1,200,000,000,000 (statistically documented)

Contribution Rates for Health Care, Percent of Payroll

Base-year 2001, r=3%, g=1,5%

10 12 14 16 18 20 22 24 26 28 30 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065

year Percent of Payroll, Employers and Employee

without with cost push, 1%, 30y

Health Care Reform in Germany: Health Care Reform in Germany: Assessing Severe Intergenerational Imbalances Assessing Severe Intergenerational Imbalances

Bernd Raffelhüschen Bernd Raffelhüschen

University of University of Freiburg Freiburg, Germany , Germany and University of Bergen, Norway and University of Bergen, Norway 1 The Problem Set: Double Aging, Cost Push and, Eroding Contributions 2 The Result: No Sustainability and – Same Medal, Opposite Side – No Generational Contract in Health Care

3 How to reform the system: Revenues

4 How to really reform it: About Expenditures and Incentives 5 Where it`s even worse: Long Term Care Speech given at the IAAHS-Colloquium 2004 in the German Hygiene Museum, Dresden, Germany

The Public Debate The Public Debate – – So Far So Far

“Bürgerversicherung”

• Broadening Individual Eligibility
• Raising Eligible Income
• Widening Eligible Income
• r

“Gesundheitsprämie”

Strengthen Individual Equivalence through lump- sum contributions

Sustainability Gap of Status quo, actual reform (GMG), "Bürgerversicherung" and lump-sum contributions

Basisjahr 2001, r=3%, g=1,5%

475,8 411,5 405 414,8

50 100 150 200 250 300 350 400 450 500 550 600

Status quo GMG GMG + "Bürgerversicherung" GMG + Lump-sum payments

Percent of GDP

Health Care Reform in Germany: Health Care Reform in Germany: Assessing Severe Intergenerational Imbalances Assessing Severe Intergenerational Imbalances

Bernd Raffelhüschen Bernd Raffelhüschen

University of University of Freiburg Freiburg, Germany , Germany and University of Bergen, Norway and University of Bergen, Norway 1 The Problem Set: Double Aging, Cost Push and, Eroding Contributions 2 The Result: No Sustainability and – Same Medal, Opposite Side – No Generational Contract in Health Care 3 How to reform the system: Revenues

4 How to really reform it: About Expenditures and Incentives

5 Where it`s even worse: Long Term Care Speech given at the IAAHS-Colloquium 2004 in the German Hygiene Museum, Dresden, Germany

„ „Freiburg Freiburg Agenda“ for a Market Agenda“ for a Market-

• rientated Reform Proposal:
• rientated Reform Proposal:

1. Avoiding cost-push in hospital treatment through selective contracting, that is, introducing prices competition 2. Phasing in deductables of 900 € p.a. for ambulant treatment and pharmacy products 3. Phasing out dental care compensation

Impact of the Freiburg Agenda on the Sustainability Gap

Base-year 2001, r=3%, g=1,5% 232,2 117,3 60,3 193,6

50 100 150 200 250 300

Without Reform

• 1. Phasing out Dental care
• 1. + 2. Deductables for ambulant

treatment and pharmaceutic products

• 1. + 2. + 3. Selctive bargaining in

hospital care

Percent off GDP

Generational Accounting of German Health Care, Status quo and Freiburg Agenda

Basisjahr 2001, r=3%, g=1,5%

• 60
• 40
• 20

20 40 60 80

• 1

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Age Thousands Euro

With Cost-Push, 1%, 30 years Freiburg Agenda

Contribution Rates for Health Care: Freiburg Agenda vs. Status quo

Base-year 2001, r=3%, g=1,5%

10 12 14 16 18 20 22 24 26 28 30 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065

Jahr Percent of payroll

without with cost push, 1%, 30y Freiburg Agenda (with cost push)

Health Care Reform in Germany: Health Care Reform in Germany: Assessing Severe Intergenerational Imbalances Assessing Severe Intergenerational Imbalances

Bernd Raffelhüschen Bernd Raffelhüschen

University of University of Freiburg Freiburg, Germany , Germany and University of Bergen, Norway and University of Bergen, Norway 1 The Problem Set: Double Aging, Cost Push, and Eroding Contributions 2 The Result: No Sustainability and – Same Medal, Opposite Side – No Generational Contract in Health Care 3 How to reform the system: Revenues 4 How to really reform it: About Expenditures and Incentives

5 Where it`s even worse: Long Term Care

Speech given at the IAAHS-Colloquium 2004 in the German Hygiene Museum, Dresden, Germany

Age-specific Revenues and Expenditures of the German Long-term-care System

500 1000 1500 2000 2500 3000 3500 4000 4500 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

age Euro

Contributions Expenditures

Generational Accounting of the German Long-term Care System

Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5%

• 25
• 20
• 15
• 10
• 5

5 10 15 20 25

• 1

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Alter Thousands Euro

Without With Cost push

Sustainability Gap of the German Long-term Care System

Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5% 35,9 67,4

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0

Without With Cost push

Percent of GDP

Contribution Rates for Health Care, Percent of Payroll

Base-year 2001, r=3%, g=1,5%

1 2 3 4 5 6 7 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065

Jahr Percent of Payroll, Employers and Employee

Withouit Cost push With

Conclusion Conclusion

Aging phenomenon is much more pronounced in the

Germany/Europe than in e.g. the US

Social protection via health and long-term care in

Germany is on a high level – but totally unsustainable

Appropriate reform proposals should include two

ingredients:

– 1) cutting back implicit demands in the medium and long-run

through incentive-orientated measures in public plans

– 2) immediate strengthening of funded private insurance

systems

No fun to be young in Germany!