Every year the German Federal Insurance Office distributes more than 200 billion euros from the healthcare fund to the statutory health insurance providers. The allocation of these funds is, however, somewhat controversial. The principle behind the allocation makes sense; health insurance providers ought to receive as much money for each insured individual as that individual is going to cost the insurer in the following year. That way, health insurance providers have no incentive to turn away insured people who are sick or treat them poorly simply because they incur higher costs, since for these people, insurers receive additional money from the healthcare fund. Although this principle is widely accepted, its practical implementation has been a continual source of contention.

For instance, some have argued that one particular type of insurer, namely the AOK public health insurances, receives too great a proportion of the funds, leaving the others underfunded. Many health insurance providers are also accused of encouraging doctors to make additional diagnoses so the insurer can receive more money. These critics may have a point – for instance, the number of Germans diagnosed with chronic pain rose by almost a million between 2015 and 2016.

In light of this, the German Federal Ministry of Health has tasked a scientific advisory council with examining the rules of the morbidity-oriented risk structure compensation (RSA), which serves as the basis for the allocation of funds from the health fund to insurers. The council presented its report with recommendations for improvements to the RSA in October 2017.

The task is to discourage insurers from cherry-picking healthy insured individuals

In the report, the council did not concur with the health insurers’ arguments that the extent to which the RSA had met its targets would be best measured by whether it allocates funds evenly among the various types of insurance provider. The task of the RSA is to discourage insurers from cherry-picking healthy insured individuals. For this reason, the council also declared itself in favour of continuing to take into account whether an individual receives a reduced earning capacity pension when allocating funds. A number of insurers had suggested getting rid of this particular criterion since individuals who receive this type of income support are more often insured by the AOKs.

When it comes to combating the problem of doctors knowingly making false diagnoses, the council demands, first of all, that the German Federal Insurance Office and, as a last resort, public prosecutors take a consistent approach in dealing with such behaviour. The council also suggested a set of coding guidelines to make doctors’ diagnoses more consistent.

The underlying problem of the health insurance system persists

Further suggestions made by the council attempted to make the RSA more systematic. While currently only 80 diseases are considered by the RSA, the council advocates a model that covers all types of disease. Why should funds be allocated when someone has a bacterial skin infection but not when someone has a kidney infection? While the allocation per person for a certain disease is currently the same for everyone, the council suggests that the age of the person in question also be taken into account, as treatment for a 30 year-old is quite different to that for an 80 year-old with the same condition.

The report comprises around 700 pages. Even if all of the council’s recommendations are implemented, the RSA will still not be optimal. A follow-up report taking regional factors in the RSA into account has already been commissioned.

However, the underlying problem of the statutory health insurance system will not be solved by perfecting the RSA. Because health insurance providers have the predicted costs for insured people distributed to them from the RSA, it is not in their financial interest to provide for the long-term health of their customers. Potential long-term breakthroughs in our fight against disease would lead to smaller allocations from the RSA and counteract their efforts – at least financially and from the perspective of health insurers. On this note, the council also called for the need for more research in this respect as well as regular evaluation of the RSA. A health system generating more than 200 billion euros a year is in good need of both.


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