Reducing public health insurance expenditure: a numerical analysis for Germany

Abstract

In recent decades, Germany’s statutory health insurance expenditure increased drastically. To combat moral hazard, moderate copayments for the purchase of prescription drugs were introduced and increased several times. These measures, however, have been insufficient to buck the steadily increasing tide of Germany’s statutory health care expenditure, making further reforms indispensable. Among a multitude of potential reform proposals, such as a switch to a health premia regime, are two policy options that provide for incentives to limit health care demand: mandatory deductibles and further elevating copayments. By combining an applied general equilibrium (AGE) model with abundant empirical data on heterogeneous household types, this article investigates the economic effects of these two policy options, thereby looking at both the current earnings-related SHI system and a hypothetical health premia regime characterized by per capita premia. As a key outcome, we find that the decrease in expenditure associated with both reform options is too small to induce substantial overall effects, most notably, because both the level of deductibles and the copayment rate are rather moderate in international contexts.