The Per Capita Premium

There is currently a witch hunt going on in the form ideologically motivated reservations and targeted misinformation campaigns against the idea of a “health premium”, that is, a universal contribution amount for all those subject to statutory health insurance (GKV) contributions. This has already begun with the emergence of the term “per capita premium”, suggesting that some kind of Wild West-like behaviour is afoot. The bold claims that the senior consultant at a hospital would pay the same contributions as the nurses has further helped to solidify negative public opinion. It seems to be extremely difficult to communicate to the public that the health premium actually serves to eliminate unfairness in the current system. It is therefore the job of politicians who truly care about the redistribution of wealth from the top to the bottom of society to emphatically push for the health premium to be introduced.

Let us consider for a moment the case of the senior consultant and the nurse. The reality of the situation goes something like this. Firstly, the senior consultant is probably insured privately rather than through the statutory health insurance scheme. The consultant therefore plays no direct part in the much-cited “solidarity” of statutory health insurance and only contributes indirectly inasmuch as his taxes help to fund the federal subsidy to the national healthcare fund. Given that there are around 8.7 million people insured privately in Germany (in 2007) – around 10 per cent of all people with insurance – the issue of solidarity is neither here nor there. But the story continues.

Let’s assume that the consultant actually does have statutory health insurance – perhaps he has a large family, making private insurance unaffordable. If he was privately insured, he would have to pay a contribution for every member of the family, whilst statutory health insurance would cover his wife – assuming she doesn’t work – and his many children for almost no additional contributions. Furthermore, there is a contribution assessment ceiling of 3,750 euros a month. The nurse, earning below this rate, pays the full contribution rate, which currently stands at 14.9 per cent. The consultant, meanwhile, only pays this rate on the maximum limit of 3,750 euros. In relation to his total salary, the consultant therefore pays less into the statutory health insurance scheme than the nurse. Is this a sign of the “solidarity” of statutory health insurance? Should we get rid of the contribution assessment ceiling and require the consultant to pay contributions based on his full salary? That would just make him and other high earners switch to a private insurer.

The above example highlights the crux of statutory health insurance, that is, that the burden has to be distributed in certain ways. Such distributions and how they are financed are an issue that affects all of society and should be of interest to all taxpayers with taxable income, including that of privately insured individuals as well as capital and rental income. These distribution issues in statutory health insurance therefore need to be shifted into the tax system.

This is exactly what the health premium does, as do many of the other proposed models, such as the “citizen flat fee” suggested by the German Council of Economic Experts or the proposal put forward by the Kronberger Kreis, that policy-makers have to choose between. The underlying idea remains the same: Every individual who is insured, including family members, is required to pay a fixed amount set by the insurer. If someone is not able to pay this amount, this is where methods of distribution come into play in the form of benefit payments financed through taxes. This should mean that the redistribution can more effectively target those groups most in need of support. These people also don’t need to feel like beggars as this compensation can be carried out via the tax authorities or through the employer. If the federal subsidy currently granted to statutory health insurance were to be redirected to financing these kinds of benefits, the gradual introduction of the health premium should not represent as insurmountable an obstacle as some calculations suggest.

Wolfgang Franz