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Fair financing in Germany's public health insurance: income-related contributions or flat premiums

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  • Rothgang, Heinz
  • Cacace, Mirella
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    Abstract

    Social justice in health care insurance relates to both, the utilisation of services and the financing of the system. With respect to the latter, in its World Health Report 2000 the WHO promoted a concept of fair financing that asks for contributions to health care financing that are proportional to households' capacity to pay. This claim contains three dimensions: the rejection of risk-related premiums, the claim that all households with equal income should pay equal premiums (horizontal justice), and the suggestion that higher income should lead to proportionally higher premiums (vertical justice). In this paper we first discuss the normative dimension of fair financing and develop a slightly modified version of the WHO's normative framework. Second, empirical findings based on WHO data and on data from the ECuity project are presented for selected countries. While the WHO concept does not allow drawing unambiguous conclusions, the latter shows, that Germany's system is regressive. With respect to the normative framework developed we can therefore conclude that future reforms should make the system more progressive. Against this background, two recent alternative strategies for reforming health financing, the Bürgerversicherung and the Gesundheitsprämie, are discussed. While both reform options are to be judged as more or less equivalent regarding horizontal justice and the rejection of risk-related premiums, some evidence is given towards the inferiority of the Gesundheitsprämie model with respect to vertical justice. --

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    Bibliographic Info

    Paper provided by University of Bremen, Collaborative Research Center 597: Transformations of the State in its series TranState Working Papers with number 26.

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    Date of creation: 2005
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    Handle: RePEc:zbw:sfb597:26

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    1. Diana De Graeve & Tom Van Ourti, 2003. "The Distributional Impact of Health Financing in Europe: A Review," The World Economy, Wiley Blackwell, vol. 26(10), pages 1459-1479, November.
    2. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
    3. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
    4. van Doorslaer, Eddy & Wagstaff, Adam & van der Burg, Hattem & Christiansen, Terkel & Citoni, Guido & Di Biase, Rita & Gerdtham, Ulf-G. & Gerfin, Mike & Gross, Lorna & Hakinnen, Unto, 1999. "The redistributive effect of health care finance in twelve OECD countries," Journal of Health Economics, Elsevier, vol. 18(3), pages 291-313, June.
    5. Gerdtham, Ulf-G. & Johannesson, Magnus, 1999. "Income-Related Inequality in Life-Years and Quality-Adjusted Life-Years," Working Paper Series in Economics and Finance 334, Stockholm School of Economics.
    6. Adam Wagstaff, 2002. "Reflections on and alternatives to WHO's fairness of financial contribution index," Health Economics, John Wiley & Sons, Ltd., vol. 11(2), pages 103-115.
    7. Barr, Nicholas, 1992. "Economic Theory and the Welfare State: A Survey and Interpretation," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 741-803, June.
    8. Nicholas Barr, 1992. "Economic theory and the welfare state : a survey and interpretation," LSE Research Online Documents on Economics 279, London School of Economics and Political Science, LSE Library.
    9. Anita B. Pfaff & Bernhard Langer & Florian Mamberer & Florian Freund & Axel Olaf Kern & Martin Pfaff, 2003. "Zuzahlungen nach dem GKV-Modernisierungsgesetz (GMG) unter Beruecksichtigung von Haertefallregelungen," Discussion Paper Series 253, Universitaet Augsburg, Institute for Economics.
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