Healthy, high-income people in Germany choose private health insurance. Sick, low-income people generally choose public insurance through Germany’s sickness funds. It shouldn’t be surprising risk selection between public and private insurance occurs in Germany. Here’s why:
While public premiums [in Germany] are subject to community rating, private premiums are risk rated. Moreover, public premiums are proportional to income (up to some ceiling), and private premiums do not depend on income. The private system is, thus, particularly attractive for high-income – low-risk individuals.
About 90% of Germans have health insurance through public sickness funds; about 10% of Germans rely on private health insurance. For many Germans, however, enrollment in the public sickness funds is compulsory.
- Grunow, M. and Nuscheler, R. (2013), PUBLIC AND PRIVATE HEALTH INSURANCE IN GERMANY: THE IGNORED RISK SELECTION PROBLEM. Health Econ.. doi: 10.1002/hec.2942