My Health Insurance and Welcome to It

by PapaScott on 14 August 2009

With the current debate on health insurance in the United States, some of my readers might be interested in my health coverage here in Germany.

Most employees are required to join the public insurance system. It’s financed something like Social Security, with a percentage (currently 14.9%) of income up to a certain limit (currently 3675€ per month) split between employer and employee. The system covers children and students through their parents, as well as the unemployed and pensioners. Insured patients do not see any bills, but fixed co-payments for prescriptions, office visits per quarter, dental, and optical. There is not a single insurer, but nearly 200 different “sickness funds” with similar coverage and rates. Lost wages due to sickness are covered (actually, the employer pays the first 6 weeks, the insurer thereafter).

High-income employees and the self-employed can opt out of the public system and purchase private insurance. Private insurance might be cheaper than public insurance (since premiums don’t rise with your income) or might not (children cost extra, premiums depend on your age). However the coverage is better and generally there is a set deductable rather than co-payments. And as an employee, the employer covers half the premium.

As a free-lancer, I was able to opt out of the public system in my early 30s and lock in good rates. Through a loophole in the system (involving extended part-time work), I’m now permanently opted out, regardless of my salary. My monthly cost for medical and dental is €135 with a €500 yearly deductable. That covers virtually anything, including lost wages. Even expenses when visiting the US are covered.

Our disadvantages as private patients? Women pay more (pregnancy risk). We have to pay for Christopher. And our premiums may go up with time (with increases in inflation and life expectancy).

The German health system is not perfect. The systems in France and Switzerland might be better. There are fairness issues… private insurance compensate better than the public system, so doctors favor private patients. Administrative costs for the sickness funds are high, and there is fraud. Drug costs are high, doctors are poorly compensated, and there are too many hospital beds. The system undergoes constant tinkering… but the system, which dates to the 19th century, still works.

(As an employer, the multitude of sickness funds, covering sick pay for the first 6 weeks, and keeping track of various classes of employees with and without insurance is a bureaucratic nightmare. But we outsource to a payroll accountant that deals with all that.)

The biggest benefit of the health system is peace of mind. I simply do not have to worry financially about getting sick. I still may worry about pain and needles and hospital food, but I don’t need to worry about paying the bill.

Updated 17 Aug 2009 Added current rates to 2nd paragraph (14.9% of income up to 3675€ per month).

Hal Rager August 14, 2009 at 23:28

Thanks for your view on this debate in the US. I really hope we can get something single-payer/public option going over here.

Paul J. August 16, 2009 at 10:56

Scott, this is a good overview. Just out of curiosity? Wouldn’t you be better served being in the public system via your wife and then simply adding an additional private insurance option on top? This gives you the best of both worlds from my perspective. To be honest, I fell into the private insurance bracket without the option for public insurance and never invested much time in understanding it. I’ve always wondered about what benefits those that have public insurance would have with the additional (optional) private insurance on top cost-wise and benefit-wise. I can only imagine that with kids, plus being married, this would be the best option.

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