Health Care Reform in Germany: 2011 Reform

Building a Smarter German-American Partnership


While the United States Congress passed health care reform in 2010, the German government worked on a less comprehensive reform of its own system. The U.S. reform, enacted by Patient Protection and Affordable Care Act, emphasized expanding coverage and making health care less expensive for those disadvantaged in the market. In Germany, reform efforts focused on containing rising costs resulting from a demographic transition toward an older population.

In 2010 the public health insurance system faced a projected of deficit of €9 billion for the upcoming year. In order to raise revenue to cover insurance payments and bring costs under control, the CDU-FPD coalition passed the GKV-Finanzierungsgesetz for insurance reform and the Arzneimittelmarktneuordnungsgesetz (AMNOG) for pharmaceutical reform, both of which came into effect on 1 January 2011. The GKV-Finanzierungsgesetz leaves the insurance system generally intact, altering the financing ratios for public health insurance (Gesetzliche Krankenversicherung, GKV) and implementing pro-competitive measures to hold down costs in private insurance. Meanwhile, the AMNOG attempts to reign in expenditures of pharmaceuticals by leveraging the extensive market power of the Krankenkassen as a group.

Revenue-Raising Measures

The GKV-Finanzierungsgesetz:
  • Increases income-based contributions from 14.9 percent to 15.5 percent and permanently fixes them at this level.
    • Decouples future insurance premium increases from employment, placing the burden of further increases entirely on the individual but also decreasing barriers to employment.
    • Requires Krankenkassen who need to raise premiums above this level to request an increase from the insured. Because consumers may switch to different Krankenkassen, this should increase competition.
  • Provides a federal means-tested subsidy to individuals whose insurance costs rise an additional 2 percent above the 15.5 percent in order to decrease the burden of supplementary costs.

Cost-Containing Measures

The GKV-Finanzierungsgesetz:
  • Restricts increases in administrative spending for the Krankenkassen to 2010 levels until 2013.
  • Reduces “additional services” offered by hospitals.
  • Ties price increases for acute in-patient hospital services to the basic wage rate.
  • Limits increases on some doctors’ salaries.
The Arzneimittelmarktneuordnungsgesetz (AMNOG):
  • Ties the price of new medications to the additional value of the medication as compared to existing treatment options.
    • The Institute für Qualität und Wirtschaftlichkeit im Gesundheitswesen (IQWiG), an independent research institute, determines the additional value of new medications.