The elections to the German Bundestag will be held in fewer than three months, and the parties are in the middle of the hot phase of the election campaign. Security, social and immigration policy are the predominant themes. Issues of social policy have taken a back seat thus far. Only pensions play a role, but to date less in terms of truly sustainable financing, and more in terms of the issue of poverty in old age. What significance does this aspect have, particularly against the backdrop of health and nursing insurance? That is the question put by Prof. Christian Hagist, Chair of Intergenerational Economic Policy at WHU – Otto Beisheim School of Management, and his doctoral candidate, Christian Bührer, in a recently published expertise.
Without reforms, Hagist and Bührer fear a significant increase in social security contributions, which are currently at just under 40 percent. Partly as a result of demographic change and expenses-driving medical and technological progress, contribution rates could rise to more than 60 percent by the year 2050. This is a scenario that, in all likelihood, would overwhelm future contributors. “For Germany, the 40-percent mark for social security contributions could be the equivalent of the two-degree target for climate change – an ambitious project against which to measure future policies,” Prof. Dr. Christian Hagist said.
With this in mind, the expertise, published in conjunction with the Initiative für neue soziale Marktwirtschaft [Initiative for a New Social Market Economy], features a variety of proposed reforms in social policy, such as indexing the retirement age to life expectancy. Increasing life expectancy has led to a dramatic change in the ratio of the employment phase of life to the time spent drawing a pension: In 1960, this ratio stood at just 4:1, but today it is 2.25:1. This would mean, for instance, that a person would draw 20 years of pension for 45 years of employment. In order to avert substantial concomitant increases in premiums, or reductions in pension payments, the authors therefore advocate, among other things, adjusting the retirement age in line with life expectancy.
The two researchers also propose a more competitive relaxing of the hospital market, along with liberalization of the pharmacy market. Reforms such as these could raise valuable efficiency reserves in the healthcare sector, thus enabling cost savings. In addition to these supply-side approaches, they elevate the significance of enhanced responsibility on the part of the insured in the areas of health and nursing insurance. The introduction of deductibles for outpatient services help control the demand for health services more effectively and encourage health maintenance. In the field of nursing-care insurance, a factor that they view as frequently underestimated, the authors propose adapting the catalog of services in view of ensuring sustainable funding, and closing resulting gaps in coverage by means of subsidized private coverage.
The entire expertise can be downloaded here