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Premium Increases in Private Health Insurance – Why and How Often?
An Objective Look at Private Health Insurance
This article objectively analyzes the reasons for premium increases in Private Health Insurance (PKV). It explains the legal mechanisms behind the adjustments, compares them with premium developments in the GKV, and outlines the instruments available to stabilize premiums in old age.
Fundamentals: The Systems Compared
The German healthcare system is based on two pillars: Statutory Health Insurance (GKV) and Private Health Insurance (PKV). These two systems fundamentally differ in their principles and premium calculation.
Statutory Health Insurance (GKV)
The GKV operates on the solidarity principle. This means that young and healthy contributors finance the costs for elderly and sick insured individuals. Premiums are income-dependent and do not depend on the individual's health status or the chosen scope of services. Services are uniformly defined by the legislator in Social Code Book V (SGB V) for everyone and are limited to "sufficient, appropriate, and economical care". Furthermore, no aging reserves are formed in the GKV; revenues are used directly to finance ongoing benefit expenditures (pay-as-you-go system).
Private Health Insurance (PKV)
In contrast, PKV is based on the equivalence principle and the capitalization procedure. Here, insured individuals use their premiums to provide for foreseeably increasing healthcare costs in old age by forming aging reserves. Premiums in PKV depend on the chosen tariff, the entry age, and the health status at the time of contract conclusion. The scope of services can be determined by selecting the tariff.
In-depth: Causes and Frequency of Premium Adjustments in PKV
Premium adjustments in Private Health Insurance (PKV) are legally regulated and follow clearly defined prerequisites.
Why do PKV Premiums Increase?
The reasons for premium adjustments are diverse and necessary to ensure long-term performance and access to medical progress. Key causes include:
Medical-technical progress: New diagnostic and treatment options as well as innovative medicines lead to continuous advancements in medicine, but are also associated with increasing costs.
Rising life expectancy: Higher life expectancy means that insurers must provide benefits over a longer period, which impacts costs.
Increased utilization of medical services: If insured individuals utilize medical services more frequently, this affects overall expenditures.
Low-interest rate environment: A persistent low-interest rate environment can lead to the originally calculated interest earnings on aging reserves not being achieved, necessitating higher premium adjustments.
Regulatory requirements: According to the Insurance Supervision Act (VAG), a premium adjustment must be made if insurance benefits or mortality deviate by 5% to 10% from the original calculation. An independent trustee must approve the adjustment.
How Often Do Adjustments Occur?
PKV premium adjustments occur irregularly and can sometimes be sudden. This is because changes may only be made when one of the legally defined "triggering factors" is activated. This can lead to a "premium adjustment backlog", followed by a then significantly noticeable increase.
Comparison of Premium Development GKV vs. PKV
Premium development, long-term financing, and the scope of services fundamentally differ in both systems.
Premiums and their development: In the GKV, the premium amount is income-dependent. In the PKV, the premium upon conclusion is risk- and tariff-dependent; subsequent adjustments are based on the cost developments of the respective insured collective.
Financing and future factors: The GKV pay-as-you-go system is directly influenced by demographic developments. The PKV capitalization system is more strongly shaped by capital markets and healthcare cost inflation.
Scope of services: The scope of services of the GKV is legally defined and can be adjusted. In the PKV, services are individually contractually agreed upon and cannot be unilaterally changed by the insurer.
Medical care: In the GKV, remuneration is made within the framework of budgets. In the PKV, doctors bill patients directly according to the Fee Schedule for Doctors (GOÄ).
Recommendations for Action: Measures to Stabilize and Reduce Premiums in Old Age
Formation of aging reserves: A significant portion of the PKV premium serves to build up reserves to cushion later costs.
Statutory surcharge: From age 21 to 60, a 10% surcharge is paid. This is dropped at age 60, leading to an automatic premium relief.
Cessation of daily sickness allowance: Upon retirement, the premium for daily sickness allowance usually ceases.
Premium relief tariffs: With special tariffs, one can provide for future premium relief in old age even at a young age.
Tariff change options (§ 204 VVG): Insured individuals can switch to another tariff at any time to reduce their premium, with aging reserves being credited.
Basic tariff: This ensures coverage at GKV level. The premium is limited to the maximum GKV premium and can be reduced or waived in case of need for assistance.
Tax deductibility: Contributions to basic health and mandatory long-term care insurance are unlimitedly deductible, which reduces the actual premium expenditure.
Frequently Asked Questions (FAQ)
Can PKV cancel my policy if I get sick, or individually increase my premiums?
No. Cancellations or individual premium increases due to illness are contractually and legally excluded.
Can I switch back from PKV to GKV?
A switch is possible under certain conditions (e.g., salary reduction), but usually only until the age of 55.
Summary
Regulated adjustments: Premium adjustments in PKV are not arbitrary, but are based on legally defined criteria and are reviewed by independent trustees.
Long-term provision: PKV is characterized by the capitalization procedure and the formation of aging reserves.
System comparison: The systems fundamentally differ in service definition and factors influencing premium development.
Adjustment options for insured individuals: Insured individuals have legally regulated options such as tariff changes (§ 204 VVG) or access to the basic tariff.
Outlook
In summary, Statutory and Private Health Insurance offer two different models of coverage. The GKV is based on the solidarity principle with income-dependent premiums. The PKV follows the equivalence principle with risk-based premiums, contractually defined benefits, and the formation of aging reserves.