Summary

Health insurance has been mandatory in Germany since 2009. More than 85% of the German Population is covered by social health insurance that is compulsory for the entire population, for up to a certain gross income per month, which is about EUR 4,125, or an annual income of EUR 50,850. Social Health Insurance (SHI) is provided by 145 independent, not-for-profit sickness funds. SHI premiums are based on a fixed percentage of gross salaries or wages (14.6%), split between employers and employees (7.3% each).

Private healthcare insurers either provide a complete health service for those who are not covered by GKV/SHI, or provide a top-up cover for those who remain within any social security scheme. Private health insurers cover only about 1/10th of the Germans. The insurance premiums are not based on income but on other factors, such as age, general health, and any other requested health care services provided by the 24 for-profit and 19 not-for-profit insurance companies.

Key Highlights
Drivers:
Key Highlights
Increase in the overall health expenditure and rising medical costs
Rising disposable incomes across different economic classes
Increasing stress on the public to attain Universal Health Care coverage to meet all kinds of healthcare needs


Restraints:
Key Highlights
Many operational challenges within the private insurance sector leading to inequalities in healthcare coverage




Key Market Trends

The Rapid Emergence of Supplemental Private Long-term Healthcare Market over the Many Social Healthcare Funds

There has been a shift to private long term care, owing to the growing cost of long term care, which is burdening the national health and social care systems of many countries, causing them to encourage individuals and families to shield themselves from the financial risk posed by long-term care needs.

This segment is expected to procure a revenue share of about 25-30% in terms of premium income in the overall health insurance market during the historical period of 2015-2018. The segment is expected to grow further during the forecast period, due to the varied benefits in terms of healthcare services provided.

Spotlight on the Health Insurance offered to Self-employed in Germany

Until 2007, self-employed and small business individuals had to face many hurdles with regard to acquiring health insurance, as it had been an expensive affair. Many, who resorted to private insurance, were no longer able to pay the higher contributions as they grew older.

With the implementation of ‘Insurance Relief Act’ for public health insurance, which came into effect since January 2019, the following changes were noted:


Health insurance contributions are financed on an equal basis
The basis of assessment for the minimum contribution of the self-employed is brought down to 50%
Former members of the Federal Armed Forces would receive better social protection


It is a huge advantage for the self-employed, especially for those with lower income, who could expect lower contributions in future if they are a voluntarily member of a public health insurance. Whoever earns up to EUR 1,142 per month, only has to pay a contribution of EUR 171 per month from 2019. Currently, the minimum contribution is about twice as much.

In the future, health insurance companies will be allowed to increase their additional contribution only if their financial reserves are lower than their expenditure for one month. Currently, the public health insurance funds have large financial reserves, which they were able to build on the recent positive economic development. From 2020, the reserves of the health insurances are to be reduced in favor of the insured.

The growth in self-employed coverage in the complementary health insurance coverage can be attributed to the shift of consumers from private insurance to mandatory healthcare insurance schemes, since many former self-employed persons who took on a job that was below the upper limit for mandatory insurance cover had to take out a mandatory healthcare insurance – regardless of whether they wanted it or not. The disproportionately high, annual elevation of the upper limit for mandatory insurance cover also further complicated matters.

Competitive Landscape

The market concentration is medium and it is consolidating, considering the top 10 largest health insurers in the country contributing to a cumulative share of more than 75%. Allianz Insurance Company had a market share of close to 10% in 2017, while many other social health insurance sickness funds, such as AOK, Barmer GEK, DAK, and TK, are leading the market with vast health coverage among Germans.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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