Health insurers demand help because of low interest rates

Contributions and subsidies from the federal government flow into the health fund. The money is distributed to the health insurance funds in equal monthly installments according to a fixed formula. In the meantime, the fund will be fully emptied and then replenished again. To ensure that sufficient liquidity is always available, large sums have to be parked in term accounts at short notice. There, however, the money is subject to negative interest – in other words, penalty interest is charged for it. The background is the ECB's interest rate policy, which aims to force banks and their customers to invest money rather than hoard it.

According to the Federal Insurance Office (BVA), about 1.8 million euros in negative interest was therefore due in 2015 alone. This year, there could be significantly more: In January and February alone, the statutory health insurance already lost 800.000 euros lost.

Health insurers believe the liquidity buffer is far too high. At the end of 2015, the reserve was around ten billion euros. A minimum reserve of 25 percent of a month's expenditure is required by law. In 2015, therefore, 4.13 billion euros would actually have been enough – six billion euros less.

The German Association of Health Insurance Funds (vdek), which represents the market leaders Techniker Krankenkasse and Barmer GEK, among others, is calling for the liquidity reserve to be reduced to 35 percent of a month's spending. This would free up four billion euros. According to the vdek, these could be used by the health insurance funds to keep the additional premiums in check. Without a change in the law, however, this is not possible. "We demand that politicians implement this measure in the short term before the federal elections," says association head Ulrike Elsner to Reuters: "This would mean that less contribution money would be burned on the capital market and the prere on the additional contribution rates would be reduced, at least for a time."

On average, the additional contributions, which are paid by employees alone, are 1.1 percent. According to calculations by the GKV-Spitzenverband, they will gradually rise to as much as 1.8 percent by 2019.

From the CDU-led health ministry rather rejecting signals come to the demands. The health insurance companies are free to use their own financial reserves of around 14.5 billion euros to curb the additional contributions and thus relieve the burden on the contributors, says a spokeswoman. SPD parliamentary group vice-chairman Karl Lauterbach also does not want to touch the reserve fund at present. "I consider the liquidity reserve to be adequate in its current magnitude and do not see any acute need for action," he tells Reuters. The contributions withdrawn would quickly be used up and then renewed demands would arise to reduce the reserve, creating a vicious circle. The reserves are also important in the event of extraordinary burdens such as an epidemic.

The central association of the legal health insurance (GKV) sees problems though. What is needed, however, is a "permanent solution based on fixed rules," says spokeswoman Ann Marini. A "one-time effect for 2017" would not help, because the contribution increases threatened beyond next year.

The head of the AOK federal association, Martin Litsch, calls for the federal government or the Bundesbank to come to the aid of the social insurance funds and at least guarantee a zero interest rate for the fund money. In order to spare policyholders losses, a "state safety net" makes sense: "After all, this is a compulsory insurance scheme based on solidarity, into which tax revenues also flow."According to information from insurance circles, at least one legal change is being considered in order to be able to invest part of the money from the health fund in the long term.

So far, the government has only shown a willingness to make concessions regarding the reserves that the health insurance funds have set aside for themselves. In the future, health insurers are to be allowed to invest ten percent of the funds set aside for their employees' company pension plans in equities, so that they can achieve higher returns. This is the provision of a law of the Ministry of Labor, which still has to be decided by the Bundestag. According to the Federal Insurance Office, the health insurance funds have ageing provisions of around 4.7 billion euros.

For the health insurers, however, a share of ten percent in the old-age provisions is not far enough. Thus the GKV point federation demands a portion of 20 per cent. SPD health expert Lauterbach shows himself ready for a corresponding change to the draft. The BVA, however, argues that the principle of investment security must be maintained. A spokeswoman for the Ministry of Health also emphasizes that the legislator's priority is to keep risks to a minimum and to ensure the greatest possible protection of funds.

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