The Future of the Private Health Insurance System in Germany: Problems and Perspectives

The German private health insurance system is frequently criticised for rising premiums and intran-sparent tariffs. Furthermore the current capital cover system is put into question due to the financial crisis. The article will highlight the problems of the current system and present adequate measures to solve them. The fundamental problem of the German private health insurance system is the lack of competition due to lock-in effects: Since ageing provisions are not transferred, insureds, and here especially high risk insureds, cannot switch insurers without negative economic consequences. The transfer of average provisions does not solve this problem either. An efficient competition between insurers can only be achieved if insureds can switch insurers without detriment. This is possible by transferring individual prospective ageing provisions which are adjusted to the individual health risk of the insureds. The article outlines this system and analyses frequent objections to the transfer of individual ageing provisions.