Development of the contribution rate in the German Statutory Health Insurance (GKV) and the Social Care Insurance (SPV) – projections and determinants

It is assumed that the contribution rate will increase for both the German Statutory Health Insurance and the Social Care Insurance. While the determinants for this development are mostly known their isolated quantitative effects are not explicitly analyzed yet. Therefore, the goal of this project is to isolate and quantify the determinants of the development of the contribution rates. We split the development of the contribution rate of the GKV and SPV analytically into a demographic effect, an expenditure effect and an income effect. It appears that in the medium term the demographic effect represents a considerable factor for both insurances. However, due to the steeper expenditures’ profiles the effect of the demographic development is much larger in the SPV compared to the GKV. Actually, the contribution rate of the SPV is mainly driven by the demographic development, while the GKV contribution rate is mainly determined by the expenditure effect. Due to its characteristics of a partially comprehensive insurance with given flat service charges the expenditure effect plays only a minor role in the SPV. In a flat-rate contribution system the demographic effect becomes smaller while the relevance of the expenditure effect remains unchanged and the income effect disappears completely. A higher fertility rate leads to a temporary larger increase of the GKV contribution rate due to higher expenditures for children. However, until 2060 this effect will be compensated by the increasing number of contributors. For the empirical analysis we use an expanded simulation model MEA-Pensim. The results of the project are summarized in a discussion paper and are published in "Zeitschrift für Wirtschaftspolitik".