Corporate Health Insurance Costs set to Rise

Germany’s Health Minister Ulla Schmidt has made bringing down the cost of health insurance a priority of her wide-ranging tinkering with the country’s health care system. And just on Wednesday, leading state-backed German health insurance associations told the government they would aim for significant cuts in 2004 premiums.

Although insurers haven’t agreed to specific targets, Berlin would like to see average premiums reduced from the current average 14.3 percent to 13.6 percent of gross wages.

But now, Germany’s Betriebskrankenkassen, or corporate-backed insurance plans, have thrown a wrench into Schmidt’s plans, as some have announced short-notice rate hikes.

On Thursday, the Betriebskrankenkassen (BKK) federal lobby group confirmed around 20 company-based insurance plans including those of electronics giant Siemens and retailer KarstadtQuelle were planning to raise the cost of coverage. Siemens BK will have to raise its premium to 14.7 from 13.9 percent of gross wages and BKK KarstadtQuelle, which will alone affect 2.5 million insured, wants to hike rates from 14.2 to 14.9 percent of gross wages.

Understandably, the Health Ministry has criticized the decision heavily. Deputy Health Minister Klaus Theo Schröder warned that the regulators would "closely examine" the respective BKK applications to raise premiums. "If there are increases, we will remind the insured of their special right to cancel their policies in this case," he said in a statement on Thursday.

The government’s health reform is supposed to bring state-backed insurers a windfall of €9.9 billion ($11.2 billion) in 2004. Financed through cuts in service and a new tax on tobacco, the Health Ministry says the reform will give insurers more than enough room to lower premiums.

Potential for reductions

Hans Jürgen Ahrens, head of the public health insurance fund AOK, said insurers saw "a significant potential" to reduce premiums next year as a result of the government’s reforms. He told German radio SWR that he did not understand those BKK planning to raise rates.

But the head of the BKK's Federal Association, Wolfgang Schmeinck, attempted to put the move into perspective. He told German radio NDR that around half of the 250 BKK in Germany would reduce their rates by 0.5 to 0.7 percentage points and this was many more than the 20 seeking an increase.

Germany has 355 health insurers, according to Health Ministry figures. Companies are permitted to set up their own health insurance funds if they employ at least 450 employees who are subject to compulsory insurance, and if they have obtained the consent of the competent authority.

In addition to the BKK and state-backed insurance, Germany also has private health care funds, which are often considerably cheaper for younger single people.