What is Health Insurance?
The health insurance covers the costs of medical treatment, medicines, remedies and aids. Private health insurance (PKV), which is only open for full health insurance to persons who are not subject to compulsory insurance or who are exempt from compulsory insurance on application under the conditions of § 8 SGB V. Private health insurance is concluded by concluding an insurance contract under private law between the policyholder and a private insurance company. Insurance undertakings which conclude insurance contracts to cover the risk of illness are subject to supervision by the Federal Financial Supervisory Authority (BaFin).
Statutory health insurance
Branch of the German social insurance which is regulated in the Social Security Code, Fifth Book (SGB V). The GKV is the first pillar of the German social insurance system – alongside the statutory pension insurance (GRV), the statutory accident insurance (GUV), the statutory unemployment insurance and the social long-term care insurance (SPV). The GKV was born in 1883 under the Health Insurance of Workers Act, which was enacted largely at the instigation of Bismarck.
Initially, the task (as with private health insurance, or PKV for short) was to guarantee a wage replacement benefit for the period of sick leave. It was not until later that the reimbursement of treatment costs was assumed. According to § 1 SGB V the GKV as a solidarity community has the task to maintain, restore or improve the health of the insured persons.
Group of insured persons and sponsors
All employees subject to social insurance contributions whose income subject to social insurance contributions is below the annual earnings limit as well as recipients of benefits under the SPS and unemployment benefits I and II are compulsorily insured under the SHI system. In addition, spouses with no income of their own and children up to a certain age limit are also insured free of charge. Employees subject to social insurance contributions with a salary above the annual salary limit as well as civil servants and self-employed persons are exempt from compulsory insurance, but may take out voluntary SHI insurance subject to certain criteria. These three groups can also take out full private health insurance. The SHI funds are the individual health insurance funds that are organised as public corporations. See also Ersatzkasse, Betriebskrankenkasse, Innungskrankenkasse as well as private health insurance (PKV).
The basic principle of the SHI is the principle of benefits in kind. The catalogue of benefits includes medical and dental treatment, hospital treatment, medicines, remedies and aids, domestic nursing care as well as preventive measures, sickness and maternity benefits. The SHI benefits are largely determined by law. If the law permits more extensive benefits, these must be clearly regulated in the statutes of the respective health insurance fund. In the outpatient and inpatient sectors, the billing of services by service providers is carried out directly with the health insurance fund. In the case of drugs, remedies and aids as well as hospital stays, the insured may have to make additional payments (§ 61 SGB V).
Private health insurance
The origins of private health insurance (PKV) lie in the Middle Ages. In contrast to statutory health insurance (GKV), private health insurance in the current sense can be said to have existed since 1883.
The compulsory insurance of certain groups of people in the SHI system prompted the non-included sections of the population to set up corresponding insurance institutions on a private-sector basis. The historical development of private health insurance was initially based on institutions of a professional nature. The main impetus came from civil servants and members of small and medium-sized enterprises who are not subject to compulsory insurance. The legal form of a stock corporation was first established in 1913.
After the First World War, PKV began to expand by leaps and bounds. Between 1924 and 1925 alone, the private health insurance portfolio grew to over two million insured. But even before the Second World War, there was strong competition between PKV and GKV. An expansion of the SHI groups subject to compulsory insurance and the regular raising of the compulsory insurance limit were at times associated with considerable member losses for private health insurance. By 1975, the number of insured persons had fallen to 4.2 million. In 2014, 8.85 million people are covered by full health insurance under private health insurance. In addition, almost 24 million supplementary insurances have been taken out in private health insurance as a supplement to SHI protection.
Legal basis of private health insurance
The statutory health insurers are exclusively public corporations. PKV, on the other hand, is operated by private companies in the form of stock corporations (AG) or mutual insurance associations (VVaG).
Their legal bases are company law, insurance contract law and insurance supervision law. In private health insurance, health insurance is thus concluded through a contract under private law. The result is a voluntary legal relationship which includes the obligation for the policyholder to pay the agreed premiums and the right to contractual benefits upon occurrence of the insured event.