The private health insurance: demarketization of a welfare market?

VerfasserBockmann, Roman

1 Introduction

The German health care system with its coexistence of statutory and private health insurance (SHI/PHI) is characterized by a peculiarity, which differs substantially from other European health care systems. However, this peculiarity results less from the general existence of private health insurances, but rather from its substitutive character. Therefore, the PHI is not only suitable as supplementary insurance but also as a substitute full-cover of SHI. In spite of this substitutive function, many fundamental differences exist between these systems. The past years have witnessed a tendency of convergence of PHI and SHI systems. In the SHI, a development of marketization took place, whereas the PHI faced a growing influence of regulatory state intervention. While changes in the SHI--due to their relevance for a predominant part of the population--are often analyzed in detail, reforms of PHI normally play a subordinate role. This article will focus on recent developments of Germany's private health insurance and tries to analyze, if this process can be described as "demarketization" of a welfare market.

In Chapter 1, some general considerations of health insurance and the role of welfare markets are outlined. Chapter 2 gives a brief overview of historical path dependencies and the exceptional position of the German PHI in Europe, where the Third Non-Life Insurance Directive (Dritte Richtlinie Nichtlebensversicherung) of the European Union exerts a relevant influence on national state interventions. The most important regulations are represented and analyzed in the following sections: the introduction of the standard tariff in 1994 and its replacement by the basic tariff in 2009 (Chapter 3), the implementation of consumer protection concepts (Chapter 4), as well as fixing the funding principle as a sociopolitical adjustment to protect older private insured (Chapter 5). Against the background of these developments, Chapter 6 analyses the modified relationship of PHI and SHI regarding the principles of solidarity and competition. Finally, the results are summarized and alternatives for the future organization of health insurance are proposed.

2 Health insurance and the role of welfare markets

The past decades have witnessed a tendency towards marketization in many fields of social policy. Looking at the German welfare state and especially health care policies, it seems that these changes run counter to its constitutive characteristics, which were often identified as conservative or corporatist (Esping-Anderson 1990; Pierson 2001). Even if many of these comparative studies focused on pension systems as well as labor market and family policies, for a long time, most notably the self-government of "Bismarckian" statutory health insurance was one of the central pillars of the German health care system. Self-administration became predominantly a field for corporatist representatives with relatively little transparency and democratic rights for SHI-insured. Political discourses of the 1980s and early 1990s have tended to focus on "reform blockades", "structural constancies", and "institutional stickiness" of corporatist decision-making and mutual self-government institutions (Mayntz 1990; Rosewitz/Webber 1990; Alber 1992; Pierson 2001). Yet the German health care system was much more market-based than was highlighted in welfare state research (e.g. the double-role of office-based physicians as associated doctors and freelancers with strong economic interests; the existence of private health insurances, to a certain extent hospitals in private ownership, a mainly market-based pharmaceutical sector etc.).

Since the early 1990s, however, the role of markets has grown in social policy. Issues of health policy have been analyzed under a variety of headings over the last 20 years. A range of health policy dichotomies like "State vs. Market" or "Regulation vs. Competition" have been discussed. Each was often presented as a choice between opposites, between incompatible concepts for constructing a health care system. When looking across German health care institutions, however, one sees no dichotomies, but rather a variety of traditional and new models. They incorporate key elements of both aspects of theoretical dichotomies into pragmatic health care systems (Salt-man 2001: 60). Already in the 1990s, the concept of "quasi markets" was used to analyze reforms of the National Health Service (NHS) in Great Britain (LeGrand 1991; Bartlett 1998). The "quasi-market" debates had in common a weak understanding of market elements on the supply and demand side. They considered that service suppliers are not necessarily out to maximize their profits, that they are not necessarily private owned, and that consumer purchasing power is not expressed in monetary terms (LeGrand 1991: 1260). Building on this, actual debates on social policies are strongly influenced by the concept of "welfare markets" (Taylor-Gooby 1999; Nullmeier 2001, Leisering et al. 2002). Especially the (German) welfare market research until today has tended to focus on pension reforms ("Riester-Rente") and labor market reforms ("Hartz-Reformen") established under the red-green government (1998-2005) rather than developments reached by recent health care reforms (Nullmeier 2001; Leisering et al. 2002; Berner 2004). Following a large tradition in policy research, the debate is dominated by a focus on the changing role of the state as well as new impacts of social-policy regulation:

"Welfare markets include all kinds of market-like structures aimed at the production or distribution of goods and services traditionally connected with the welfare state. But "welfare markets" still remain under the specific regulations of social politics to maintain social justice and social security" (Nullmeier 2006: 387). The concept of welfare market obviously refers to an institutional arrangement as a consequence of recent welfare state reforms. What all concepts of welfare market have in common, however, is that market structures, such as competition, price elements, profit orientation, private ownership etc., are used to reach social-policy goals. From this point of view, social politics can not only be seen as "social politics against markets", where national political activity protects the population against basic risks of markets, but rather as "social politics with markets", where different kinds of regulated welfare markets are used as an instrument of social politics (Nullmeier 2001). In this context, the interdependencies of both (welfare) market structures and (socio-political) state interventions were highlighted in recent studies (Berner 2004; Bode 2005). These interventions might include different forms of socio-political regulations, such as social legislation, special forms of earmarked subventions, redistribution to a certain extent, as well as different forms of consumer protection and limitation of supplier's market power.

Furthermore, it is important to note that welfare market debates in Germany solely gain importance as a result of marketization ("welfare markets still remain under specific regulations of social politics"). This predominant perspective relies on the theoretical deconstruction of the "traditional" social insurance. This academical one-sidedness can obviously be ascribed to some far-reaching reforms such as the Riester pension reform of 2001 and the Hartz labor market reform of the red-green government's second legislative period. For the concept of welfare markets, however, it is hardly relevant, whether "traditional" welfare state institutions (like statutory health insurance, statutory pension insurance etc.) are undergoing a process of marketization, or "traditional" market institutions (like private health insur-ance) receive new--and potentially stronger--socio-political interventions. Especially the German PHI with its centennial tradition was at all times an integral part of the social security system, but never a genuine component of the welfare state in a narrower sense.

From a general perspective, health care systems should be primarily intended to benefit the insured, patients and their dependants. Health is considered as a "conditional good", whose "possession must be assumed", so that humans can successfully exist and master their life (Kersting 2005: 144). The human desire for a long and healthy life reflects not least the social consensus that equal and need-related access to primary health care is guaranteed for everyone. These general findings might be shared by a predominant majority of humans. If access to primary medical care has to be need-related, the exclusive access by means of ability to pay a market price is excluded. Thus, a pure market-based system of access is refused by nearly all political forces. However, this normative approach encounters two fundamental difficulties: Firstly, the criterion of need has to be substantiated and secondly, the extent of distributive elements for primary health care has to be negotiated. Thus, a substantial disagreement exists about the extent of "basic" care and the amount of distributive elements in financing health insurance. Proponents of free market economy normally plead for minimalistic basic care with little redistribution, whereas proponents of solidarity usually favor an expansion of the benefit package including a high level of distribution.

According to this cleavage, each society has to define a common understanding of health and sickness. Without any doubt, terms like health and disease contain always a cultural, political and historical variability. They also depend on economic frameworks and progress in medical technology. Even if these factors are constant at a certain time in a society, the individual perception of health and disease will cause a subjective need of health care. Due to the fact that subjective needs have an "all embracing...

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