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Policy Briefing Series

  • 01.09.2007

    The Crisis of the German social health Insuarance System - Lessons for Ukraine

    (Code:W7)

    Ukraine intends to provide more and stable financing to the health system by introducing a wage base social health insurance. The Ministry of Health and the Ministry of Labor and Social Affairs both submitted to the Cabinet of Ministers of Ukraine draft laws aiming at the introduction of a social health insurance. By doing so Ukrainian policy makers state their intention to follow the German role model. However, stable and sustainable financing of health care requires a broad and stable contribution base. Typically, the Western European model of wage-attached social health insurance faces a continuous erosion of the contribution base due to demographic developments and structural changes in the economy. The eroding tax base cause disproportional high individual contribution rates. Contribution rates are propelled even higher due to strong health care expenditure growth, caused by aging and inefficient health care provision. Since Ukraine faces similar socio-economic conditions, in particular demographic development, aging of the society, inefficient health care provision and structural changes in the economy a wage based social health insurance cannot be financed in a sustainable way. Hence we recommend that Ukraine improves and further develops its tax financed health system in order to provide basic health services to the entire population.

    Contents

    1. Introduction
    2. The traditional German Bismarckian social health insurance
    3. Challenges to the SHI
      3.1 Erosion of the contribution base
      3.1.1 Demographic change
      3.1.2 Structural changes of the German economy
      3.2 Strong expenditure growth of the SHI
      3.2.1 Impact of aging on health expenditures
      3.2.2 Inefficient health care provision in the German SHI system
      3.3 German policy reform outlook
    4. Is the context of Ukraine favourable for a social health insurance?
      4.1 The contribution base
      4.1.1 Demographic change
      4.1.2 Employment outside the social insurance system
      4.2 Expected expenditure growth
      4.2.1 Impact of aging on health expenditures
      4.2.2 Low efficiency of health care provision
    5. Policy recommendations
      Box 1. Expensive but inefficient health care
      Box 2. Reform of social health insurance in European countries
    Attached file  (179.5 kb)
    Authors:  , Handrich Lars
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