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GKV Health Insurers Record US$1.5-bil. Surplus in 2009 Despite Recession
11 Mar 10
The new federal-level fund, introduced in January 2009, has reported a 2.48-billion-euro deficit for the full year, supporting the GKV funds as Germany's economy shrank.
IHS Global Insight Perspective | | Significance | Germany's health insurance funds have reported a surplus of 1.1 billion euro for the full year 2009, compared with a collective surplus of 729 million euro in 2008. | Implications | If the financial situation of the new central healthcare fund is taken into account, the GKV reportedly made an overall deficit of 1.4 billion euro in 2009 as revenues failed to offset the burden rising healthcare expenditures represent for the country. Drug spending also rose 5.3% year-on-year in 2009 in Germany where drug cuts have become a major focus in recent weeks. | Outlook | The year ahead will be challenging for Germany's public health insurance funds which may face a 4-billion-euro deficit, according to GKV's experts. The challenge going forward for the health minister will be to convince and successfully introduce the planned reform to overhaul the German funding system while slashing drug spending. |
Surprise Surplus for 2009 Germany's public health insurance funds have recorded a collective net profit of 1.086 billion euro (US$1.5 billion) for the full year despite the GKV expecting a 2.9-billion euro deficit for 2009. Revenues were up to 171.9 billion euro, a 6.3% year-on-year increase, while expenditure grew at a similar pace to 170.8 billion euro. However, in light of the deterioration in Germany’s economy, the central healthcare fund, introduced in January 2009 to support the GKV funds and act as a buffer fund to the most indebted insurance schemes, reported a 2.48-billion-euro deficit in 2009. In 2009, the federal-level fund provided the GKV fund with monthly allocations accounting for 166.2 billion euro. These allocations were backed by beneficiaries' contributions of approximately 157.4 billion euro and by a federal grant amounting to 7.1 billion euro. As a result, an overall deficit of 1.4 billion euro was experienced by the GKV in 2009 if the central healthcare fund is taken into account. GKV Expenditure in 2009 (bil. euro) | | 2009 | % Change, Y/Y | Total Income | 171.9 | 6.31 | Total Expenditure | 170.8 | 6.21 | - Physician Treatment | 30.6 | 7.4 | - Dental Treatment | 11.6 | 1.9 | - Medicines | 32.4 | 5.3 | - Medical Devices | 5.5 | 6.5 | - Other Treatments | 4.5 | 4.7 | - Hospital Treatment | 56.4 | 6.6 | - Sick Pay | 7.2 | 10.5 | - Overseas Care | 0.5 | 0.00 | - Transport Costs | 3.6 | 7.4 | - Provisions and Rehabilitation | 2.5 | -1.2 | - Social Services and Prevention | 2.4 | -11 | - Pregnancy/Maternity | 1.0 | 1.7 | - Operational and Domestic Care | 0.2 | 0.00 | - Home Visits by Nurses | 2.9 | 11.3 | Total Administrative Costs | 8.9 | 8.1 | Balance Income and Expenditure | 1.09 | 48.97 | Source: Federal Ministry of Health |
Central Fund Expenditure in 2009 (bil. euro) | | 2009 | | Total Income | 164.5 | | - Plan Beneficiaries' Contributions | 157.4 | | - Federal Grant | 7.1 | | Total Expenditure | 167.0 | | Balance Income and Expenditure | -2.5 | | Source: Federal Ministry of Health |
A Challenging Year Ahead The situation should worsen in 2010 with GKV's experts expecting a 4-billion euro deficit for the German public health insurance. A first estimate given by the expert group in October 2009, forecast a 7.9-billion-euro deficit for the year ahead. In the meantime, the German government granted a 3.9-billion-euro tax subsidy to help the GKV stabilise its financial situation through the "Stabilisation of Social Security Act" (Sozialversicherungsstabilisierungsgesetz). In 2010, revenues will reach an estimated 171.1 billion euro, while spending will continue to grow to attain 174.3 billion euro. Outlook and Implications The deficit of the German healthcare system further draws attention to efforts being made to curb growth in drug spending, which rose 5.3 % y/y in 2009, mainly due to the roll out of innovative—and thus expensive—treatments. Germany's Health Minister Philipp Rösler (FDP) has in the past few weeks unveiled his ambition to deal with drug pricing in Germany where patented drug makers are free to set prices. The upcoming reform could see pharmaceutical companies obliged to reach agreement on prices with health insurance providers (see Germany: 7 October 2009: Germany's Next Coalition Government Enters Into Negotiation to Hammer Out Healthcare Reform Plan; Germany: 29 January 2010: German MoH Seeks Saving on Drug Expenditure and Germany: 8 March 2010: German Health Minister Increases Pressure on Pharma and Promises Further Cost Savings). Savings yield by the measures could attain 2 billion euro, reports the German newspaper Die Welt quoting the minister. The role of IQWiG should also be strengthened, with cost-effectiveness assessment having an increasing role in proving the added value of a treatment for society. Though it remains to be seen which of the measures will be introduced in the country, what is sure is the target patented drug producers represent for the Health Ministry. On the funding side, the 4-billion-euro deficit expected for 2010 has led several health insurance companies to increase subscribers' contributions (see Germany: 10 December 209: German Health Insurance Funds Face 4-bil.-Euro Deficit in 2010, Contributions to Rise). The need to reorganise and improve the efficiency of these funds was proven again this year as the number of funds fell to 169 compared with 215 insurers at the end of 2008, as a result of mergers between GKV funds. More mergers are expected for the year ahead which will be a turning point for the future stability of the German healthcare system.
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