The following extract from the CESifo Dice Report: Journal for Institutional Comparisons describes the Social Health Insurance Pro Competition Act of 2007.
On 1 April 2007 an act became effective which will radically change the German system of health care: the GKV-Wettbewerbsstärkungsgesetz (Social Health Insurance Pro Competition Act; henceforth cited as GKV-WSG). The list of provisions is long and diverse. It includes mandatory coverage for everyone by 2009, extended outpatient care by hospitals, new rules for pricing the services supplied by physicians in free practice and strengthened efficiency requirements for the approval of prescription drugs. Above all, the law changes the contractual relationships between the insured, the suppliers of insurance and the providers of health care services. The reform aims at fostering competition in the health care sector. This dominating objective explains the act’s name. From an economic point of view the most interesting provisions are
- granting extended autonomy to the social health insurance (SHI) sickness funds which enables them to contract selectively with the suppliers of health care services
- breaking with a regime under which the sickness funds compete for membership by means of wage-related contribution rates and moving towards competition on the basis of payroll-tax financed vouchers
- obligating private insurers to transfer accumulated premium reserves when an insured switches to another insurance plan.