Global Insight Perspective | |
Significance | Two of Germany's health insurance funds—IKK-Direkt and Techniker Krankenkasse (TK)—are to merge, operating as a single entity under the TK brand from January 2009. |
Implications | This rare move within the German public health insurance sector has been prompted by a major reform scheduled for 2009, when a new central insurance fund will supply all the existing insurers. Patient contributions are to be standardised, causing smaller funds to charge more than their subscribers can afford. |
Outlook | The merger could trigger a wave of similar takeovers within the insurance sector. In the meantime, health insurers will have no choice but to implement cost-saving measures such as generic rebate contracts, more effectively. |
Public health insurer IKK-Direkt is to merge with private rival the Techniker Krankenkasse (TK), creating a new hybrid public health insurance fund offering coverage to some 7.1 million people. The new fund is set to come online in January 2009, and will operate under the TK brand. The TK's board of directors has already given its assent to the merger, while IKK-Direkt's board is set to meet and most likely agree to the decision tomorrow. The Federal Insurance Office (Bundesversicherungsamt) also needs to approve the takeover.
According to German newspaper Die Welt, the move was prompted by the imminent reform of the country's public healthcare system, which will see a central health fund introduced from 1 January 2009. The feeling among the more than 210 health insurance funds that currently operate in Germany—collectively known as the Gesetzlichen Krankenkassen (GKV)—is that many will need to increase their salary-based patient contribution rates in order to survive.
Under reforms hammered out in 2006, the central fund will collect employer and employee-based contributions and allocate fixed portions to each public health insurer (see Germany: 4 July 2006: Chancellor Heralds "Breakthrough" Agreement on German Healthcare Reform). If an insurer requires more than has been allocated, it will need to reapply for additional funding, although most are likely to avoid doing this initially to avoid losing members angry at seeing their contributions increased. By 1 November, the German government is to reveal the uniform rate of salary-based contributions that all public health insurers must use from next year. Various sources have estimated that the rate could be 15.5-16%, up from the current GKV average of 14.9%.
Outlook and Implications
IKK-Direkt is known for having the lowest patient contribution rate in Germany, at 12.9%. Not only will this be untenable from next year, but the fund's very existence would have been threatened if it needed to boost its rates beyond what its subscribers could afford. Both IKK-Direkt and TK have acknowledged that the merger is a preventative measure ahead of the 2009 health insurance reform, and it seems likely that other small German health insurers will seek to follow suit in order to prevent bankruptcy. Even the largest public and private health insurers are already known to be struggling with heavy debts (see Germany: 27 May 2008: GKV Insurance Funds See Collective Deficit Jump 46.7% Y/Y in Q1).
The rationalisation of public healthcare costs is now the order of the day, and the GKV funds will have little choice but to make better use of cost-savings measures such as generic rebate contracts, where funds negotiate discounts from drug producers in exchange for exclusively supplying their products to pharmacies (see Germany: 12 August 2008: AOK Casts Net Wide in Search for New Generic Rebate Partners). Depending on the success of the new scheme next year, the Ministry of Health may need to impose new restrictions on drug reimbursement from 2010.