Private Health Insurance in Germany: Consequences of a Dual System

Abstract

A variety of financial and non-financial incentives has resulted in a considerable degree of adverse selection against social health insurance in Germany. Enrollees in private health insurance are healthier, have higher incomes and have fewer dependents than enrollees in social health insurance. Adverse selection decreases average premium income and at the same time increases average healthcare expenditures in social health insurance. As a consequence, financial sustainability of the public system declines. Moreover, financial incentives for healthcare providers have led to preferential treatment for privately insured patients in outpatient care. The dual health insurance system in Germany is therefore inequitable as well as inefficient, and cannot be considered a role model for post-Chaoulli Canada.