The debate about a two-tier healthcare system in Germany is misguided

Health economist Hendrik Jürges on the future of German health insurance

Is healthcare a luxury good? Statutory and private health insurers are stretched to the limit. Political parties are calling for a universal health insurance scheme because costs are skyrocketing. 350 billion euros a year no longer seems to be enough. But are expenditure levels actually too high? What does the academic community make of this? The economist Gérard Gäfgen once said: “A health economist is someone who does not consider healthcare expenditure to be too high simply because it is too high”. Health economist Hendrik Jürges from the University of Wuppertal shares this view and discusses the development of the German health insurance system.

Health insurance is compulsory in Germany

In Germany, there is a general obligation to have health insurance, meaning that every person residing in the country must have health insurance. Employees earning below a certain income threshold are automatically covered by statutory health insurance. Those who earn a high income, are civil servants or are self-employed can choose between statutory and private schemes. “Statutory health insurance is not purely an insurance scheme,” explains Jürges, “but also serves, in a sense, as a means of indirect redistribution. Due to the principle of solidarity, the contributions one pays are income-based and not, as with normal insurance, risk-based.” Without compulsory insurance, the economist emphasises, healthier people on higher incomes would tend not to take part at all, simply because they pay in more than they receive. “So you have to force people to be insured.” Otherwise, premiums for the sick and low-income earners would have to rise continuously, and fewer and fewer people would then be able to afford insurance.

The debate over a two-tier healthcare system is misguided

Whether privately insured or on the state scheme, the debate has flared up again. Parties such as the SPD, the Greens and Die Linke have long been calling for a single-payer system (citizens’ insurance), whilst the federal government and the PKV Association (Private Health Insurance) are sticking to the dual system. However, the researcher does not see the danger of a two-tier healthcare system, which many critics have been denouncing for years, and says: “In my view, the debate about a two-tier healthcare system in Germany is misguided, because whether you’re sitting in a leather armchair or on a wooden chair in the waiting room makes no difference to the quality of medical care.” Jürges also considers the frequently cited argument that privately insured patients receive better medicines to be untenable. On the contrary: “There is actually a greater risk that privately insured patients will be over-treated and, for example, receive medicines that do not really help at all.” The scientist identifies the potential waiting time for an appointment with a specialist as the key instance of unequal treatment, which every patient can check for themselves on Doctolib. “Take an orthopaedic surgeon, for example: you’ll see that an appointment for a privately insured patient is in three days, whilst one for a patient on statutory health insurance is in three months. This is an instance of unequal treatment that is open to discussion, because when it comes to a serious illness, time is of the essence.” Similarly, he adds, one could discuss the forthcoming increases in co-payments – for example, for medicines – which privately insured patients do not have to pay. That said, Jürges notes: “The standard of medical care under the German statutory health insurance system is very good. In my view, there is no better care for privately insured patients.”

A universal health insurance system only makes sense if citizens have a free choice of insurer

The issue of universal health insurance is also being discussed in academic circles, says Jürges, adding that the major problem is simply how to implement such a system in a way that complies with the constitution. “A citizens’ insurance scheme sounds good in theory, but you can’t simply lump all civil servants and the self-employed into the same insurance scheme. There are existing contracts that cannot be altered, and it is certainly not the right way to impose a universal insurance scheme from above.” The expert therefore proposes changing the institutional framework so that, to begin with, every citizen has the freedom to choose between statutory and private insurance, regardless of their profession or income. To achieve this, private health insurance must simultaneously be included in the so-called risk structure compensation scheme to ensure that competition remains fair.

Creating a standardised remuneration structure – supplementary insurance options available

“For me, the root of all the problems surrounding the debate on two-tier healthcare is the disparity in remuneration,” says Jürges. “Under the statutory health insurance scheme (GKV), there is a catalogue – the standardised assessment scale – which sets out the cost of each service. The same applies to the doctors’ fee schedule for private health insurance. And if you compare the two side by side, you can see that the standard rate in the fee schedule and the uniform valuation scale amount to roughly the same price. The problem with privately insured patients is that, if a case is deemed to be particularly difficult, the doctor is allowed to charge 2.3 times the standard rate or, with justification, 3.5 times the standard rate.” This means that, for the same service, the doctor earns more from privately insured patients. And that is the reason why privately insured patients are favoured in the first place. “In a potential universal health insurance scheme, however, the doctor would no longer be able to bill a privately insured patient at 2.3or even 3.5 times the standard rate, but only the standard rate applicable to those with statutory health insurance, which would certainly lead to losses running into the billions unless contribution rates were raised across the board at the same time,” says Jürges. However, the path to a uniform remuneration structure is not that far off, as one need only create institutional fairness in the competition between private and statutory health insurance and then let the market decide the rest. “Nobody knows at the moment where that will end. Both types of insurance will then have to adapt. What’s important here is the insured person’s freedom of choice.”
A uniform insurance system could, however, also mean that users gain access to better medical care through supplementary insurance. “Supplementary cover in itself is not objectionable,” Jürges replies, “because you can decide for yourself which medical services you wish to make use of.”

A multi-billion-euro austerity package to stabilise contributions

Around 90 per cent of the population – that is, approximately 75 million people – are covered by statutory health insurance. Statutory health insurance (GKV) in Germany is under considerable financial pressure, which is why the Bundestag and Bundesrat approved a multi-billion-euro austerity package in July 2026 to stabilise contributions. Among other things, the new law caps pay rises for doctors and hospitals, scraps extra payments in doctors’ practices and cuts the regular federal subsidy. Resistance is inevitable. “The reforms that have now been agreed upon for funding are based on the proposals of a commission of experts. This commission put forward around 60 proposals. Some of these survived the discussion process and have been adopted. We have particularly powerful interest groups in the healthcare sector, and you can’t get anything done without stepping on people’s toes,” explains the researcher, whilst expressing the hope that politicians will focus less on increasing revenue and more on sensible cost-cutting in this debate. What is really lacking in this country, he says, is a cost-benefit analysis of medical services, because quite simply, a great deal of money is being spent. “Other countries do this; the UK is a pioneer in this regard – they take a more rational approach.”

350 billion euros in revenue for statutory health insurance funds is not enough

Statutory health insurance funds take in more than 350 billion euros a year. “The mistake people often make is looking at the figure in absolute terms. At first glance, 350 billion sounds like a lot of money. Our healthcare ratio – that is, the proportion of healthcare expenditure relative to gross domestic product – stands at 12.4 per cent as of 2024. This means that, together with France and Switzerland, we are indeed among the countries with the highest healthcare ratios.” Expenditure has also been rising steadily for over 50 years. However, our standard of living and the quality of treatment have also improved. In this context, Jürges likes to quote the US health economist Dana Goldman in his lectures, saying: “Would you rather have today’s healthcare at today’s cost, or 1970s healthcare at 1970s cost?” (Would you prefer today’s healthcare at today’s cost, or 1970s healthcare at 1970s cost? Editor’s note) and says: “In my lectures, nobody wants to go back to the 1970s. Advances in medical technology naturally increase expenditure, but they also improve quality of life.”

Too many operations, too many medicines

The biggest items of expenditure that have become more expensive in recent years are hospital treatment, medicines and medical treatment. Critics say that, for years, people have been undergoing surgery too readily and too many medicines have been prescribed. “This brings me back to the lack of a cost-benefit analysis I just mentioned,” says Jürges, “we simply do not systematically record what is happening in the healthcare system.” As an example, he cites the enormous number of hip and knee operations and explains that Germany is the world leader in this respect. “If you look at the statistics, other countries perform, on average, just under half that number.” Patients trust their doctors because they lack specialist knowledge, whilst doctors, in turn, have two motives. “They are interested in the patient’s well-being, but also in their income. That’s why there’s always this tendency towards over-treatment.”
Rising expenditure in the healthcare sector – in hospitals, GP practices and on medicines – is forcing health insurance funds to make adjustments, leading to additional contributions. Jürges comments: “We’re approaching the 50 per cent mark of income spent on social security contributions; this can’t go on for much longer.”

To get the German healthcare system back on a sound footing, the expert advises following the British model. The cost-benefit analyses already in place there would be a first step. Furthermore, the UK Department of Health receives a fixed annual budget, currently standing at 200 billion pounds, which it must make do with. “It stands to reason that, given a fixed budget, one would seek to maximise the population’s health-related quality of life by simply not paying for expensive, ineffective treatments.” This approach is something we have not yet adopted. “And then,” he concludes, “I would address the unequal treatment of privately and stately insured patients by creating a unified market where private and statutory health insurers operate on an equal footing, to see what happens.”

Uwe Blass

Prof. Dr Hendrik Jürges heads the Chair of Economics, specialising in Health Economics, at the Schumpeter School of Business and Economics at the University of Wuppertal.