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 Freiburg Freiburg, Germany , Germany University of 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 Freiburg Freiburg, Germany , Germany University of 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 or younger: Age-specific Revenues and Expenditures of the Geman Health Care System 6000 5000 4000 Euro in 2001 3000 2000 1000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Age Contributions Expenditures

Generational Accounting of the German Health Care System Without Cost Pusch Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5% 80 60 40 Thousands Euro 20 0 -20 -40 -60 -1 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 age 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 Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5% 80 60 40 Thousands Euro 20 0 -20 -40 -60 -1 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Age Without With Cost-Push, 1%, 30 years From a realistic viewpoint, there is no generational contract but a self service of the living to the burden of future generations!

Sustainability Gap of the German Health Care System Base-year 2001, interest rate r=3%, GDP-growth rate g=1,5% 300 250 232,2 200 Percent of GDP 150 100 83,8 50 0 Without With Cost-Push, 1%, 30 years

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% 30 Percent of Payroll, Employers and 28 26 24 Employee 22 20 18 16 14 12 10 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 year 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 Freiburg Freiburg, Germany , Germany University of 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 – – So Far So Far The Public Debate � “Bürgerversicherung” - Broadening Individual Eligibility - Raising Eligible Income - Widening Eligible Income or � “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% 600 550 475,8 500 450 411,5 414,8 405 400 Percent of GDP 350 300 250 200 150 100 50 0 Status quo GMG GMG + "Bürgerversicherung" GMG + Lump-sum payments

Health Care Reform in Germany: Health Care Reform in Germany: Assessing Severe Intergenerational Imbalances Assessing Severe Intergenerational Imbalances Bernd Raffelhüschen Bernd Raffelhüschen University of Freiburg Freiburg, Germany , Germany University of 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- - „ orientated Reform Proposal: orientated 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% 300 250 232,2 193,6 Percent off GDP 200 150 117,3 100 60,3 50 0 Without Reform 1. Phasing out Dental care 1. + 2. Deductables for ambulant 1. + 2. + 3. Selctive bargaining in treatment and pharmaceutic hospital care products

Generational Accounting of German Health Care, Status quo and Freiburg Agenda Basisjahr 2001, r=3%, g=1,5% 80 60 40 Thousands Euro 20 0 -20 -40 -60 -1 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Age 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% 30 28 26 Percent of payroll 24 22 20 18 16 14 12 10 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 Jahr 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 Freiburg Freiburg, Germany , Germany University of 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 4500 4000 3500 3000 2500 Euro 2000 1500 1000 500 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 age 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 Thousands Euro 5 0 -5 -10 -15 -20 -25 -1 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Alter 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% 80,0 67,4 70,0 60,0 Percent of GDP 50,0 40,0 35,9 30,0 20,0 10,0 0,0 Without With Cost push

Contribution Rates for Health Care, Percent of Payroll Base-year 2001, r=3%, g=1,5% 7 Percent of Payroll, Employers and 6 5 Employee 4 3 2 1 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 Jahr 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!