Reimbursement and cost containment: a German perspective

Abstract

This paper distinguishes short- and long-term financing problems in social health insurance systems in Germany and other European countries. The first part focuses on recent healthcare reforms in Germany that are directed at short-term problems, in particular measures of cost containment in the pharmaceutical sector such as the introduction of a drug formulary and reforms in the system of risk adjustment to enhance competition between sickness funds. The second part discusses the likely effects of the aging of the population on the sustainability of present types of mandatory insurance coverage in Germany and possible reforms that could solve the problems. It is argued that the proposed distinction between basic and supplementary benefits requires a system of explicit rationing (e.g. by age), which determines the package of basic benefits several decades in advance.