Federal Constitutional Court - Press office -
Press release no. 59/2009 of 10 June 2009
Judgment of 10 June 2009
– 1 BvR 706/08, 1 BvR 814/08, 1 BvR 819/08, 1 BvR 832/08 and 1 BvR 837/08 –
Constitutional complaints relating to private health insurance
are unsuccessful
On 10 June 2009, the First Senate of the Federal Constitutional Court
decided on several constitutional complaints directed against provisions
of the Act to Strengthen Competition in Statutory Health Insurance
(Gesetz zur Stärkung des Wettbewerbs in der gesetzlichen
Krankenversicherung – GKV-WSG) of 26 March 2007 and against provisions
of the Act for the Reform of Private Insurance Law (Gesetz zur Reform
des Vertragsversicherungsrecht – VVG-ReformG) of 23 November 2007.
The GKV-WSG maintains the bipartite health insurance system of statutory
and private health insurance, but it has introduced substantial reforms
from 1 January 2009. It makes statutory or private health insurance
compulsory for all inhabitants of Germany. In addition to a number of
new provisions, which are intended to strengthen competition by giving
the health insurance funds greater freedom of contract, the Act aims to
improve rights of choice and possibilities to change insurer in private
health insurance by making it possible for some of the ageing reserve to
be transferred to another health insurance fund and by introducing a
basic category. Statutory and private health insurance are each, as
separate pillars, to ensure that the categories of persons allocated to
them have permanent and adequate insurance cover against the risk of
illness, even in situations of social need.
The Federal Constitutional Court has rejected as unfounded the
constitutional complaints directed against this by five health insurance
companies and three complainants with private health insurance. The
provisions reviewed do not infringe the complainants’ fundamental
rights, in particular their occupational freedom and freedom of
association. The prognoses on which the Act is based are
constitutionally unobjectionable; however, the legislature has a duty to
observe the consequences of the reform.
The following considerations were conclusive for this result:
It is true that the provisions on the basic category in private health
insurance restrict the private health insurance companies’ exercise of
their occupation. However, with regard to the aims these provisions
pursue, they are justified, and at present, according to the prognosis
of the legislature, which is unobjectionable, they are not to be
regarded as so serious as to prevent private health insurance from
functioning in future. The companies do now have to offer a basic
category in addition to and alongside their normal rates, and upon
application they have to grant insurance cover under that rate. But this
does not make it either impossible or more difficult in the long term to
meaningfully exercise the occupation of a private health insurer. Where
persons choose the basic category, it is true that the companies might
be forced in individual cases not to insure them at a premium
commensurate with the risk, because the amount of the premium is limited
in the basic category and risk loading and exclusions of benefits are
not permitted. But the insufficiency of cover that may arise is borne
not by the insurance companies, but by the persons insured in private
health insurance, in the form of a contribution.
In drafting the Act, it was reasonable for the legislature, within its
scope for making a prognosis, to proceed on the basis that in the
foreseeable future the basic category will have no significant effects
on the business of the private insurance companies. The possibility of
many insured moving to the basic category is out of the question, at all
events at present. For the basic category entails a high premium of
approximately 570 euros per month. At the same time, the main benefits
of the basic category are narrower in scope than the customary benefits
of the normal categories of private health insurance. Contrary to the
fears of the companies, the legislature was therefore able to assume
that there would be no disproportionate increases of premium in the
normal categories of private health insurance as a result of the need to
finance the basic category, whose premiums might not be sufficient to
cover costs, and that this would not in future lead to a substantial
move to the basic category, which in the long term would destroy the
complete business model of private health insurance. If it should
transpire in future that this reasonable prognosis is mistaken, the
legislature would if necessary have a duty to correct it.
To justify the goal expressed in the GKV-WSG of ensuring that all the
inhabitants of the Federal Republic of Germany have affordable health
cover in the statutory or private health insurance system, the
legislature may invoke the principle of the social welfare state
contained in the Basic Law (Grundgesetz – GG). The combination of
compulsory insurance and obligation to enter into contracts in the basic
category is appropriate to achieve the legislature’s goal of
guaranteeing adequate and affordable health insurance cover for the
category of persons allocated to private health insurance. If there were
no obligation to enter into contracts, in particular persons with
serious pre-existing conditions would have no possibility of being
accepted by a private health insurance company because it would not
accept them by reason of the increased risk. Nor did the legislature
exceed the drafting discretion to which it is entitled in the further
provisions on the basic category; in particular, it had no duty to
restrict the basic category to a minimum basic provision.
The absolute prohibition of termination of comprehensive health
insurance policies introduced by the GKV-WSG is a justified encroachment
in order that members of private health insurance companies, just as in
state health insurance, are covered fully, without legal risks and
permanently. The same applies to the duty of the companies to provide
emergency treatment for their insured even where there has been default
in payment.
The introduction of partial portability of ageing reserves for new
insured of private health insurance is compatible with the GG.
Previously, the companies have without exception chosen contracts under
which, if the insurance contract is terminated, there is no claim to
transfer the ageing reserve created for the insured; as a result of this
provision, this will not happen in future. This encroachment upon the
freedom of the health insurance companies to practise an occupation is
justified by legitimate public interests. In making ageing reserves
portable, the legislature is pursuing the goal of creating a functioning
competition in the private insurance market and making it easier for the
insured to move to another insurance company. In the proceedings, the
complainant companies themselves admitted that for the existing insured
of private health insurance companies it was practically impossible
after a certain age to change their health insurance company, because
the loss of ageing reserves entailed by this meant that a new insurer
had to make its calculations without these reserves and therefore
charged increased premiums.
The introduction of partial portability of the ageing reserve does not
constitute an encroachment that is unreasonable as a result of the
danger of risk selection among the companies’ existing insured persons.
It is true that if the companies are to be able to perform their health
insurance contracts in the long term, this in principle presupposes that
their insured include a sufficient number of persons who are good risks.
A constant migration of insured persons who are good risks, with the
consequence that a company only insures persons who are bad risks and
have high sickness costs, could ultimately lead to the insolvency of the
company. In the past, for this reason, the discussion on reform has
rejected models providing for portability of the total calculated ageing
reserve, because they would carry the danger of unacceptable risk
selection and increased homogeneity of insured persons. However, the
GKV-WSG does not provide for the transfer of the total calculated ageing
reserve, but merely for its transfer in the extent of the benefits
covered in the basic category. Consequently, where a person changes
insurer, under the new law a considerable proportion of the ageing
reserve created for the insured in his or her normal category will still
remain with the previous company. Although the reform increases the risk
of migration of insured persons, it also offers increased opportunities
of obtaining new insured as a result of their changing their insurers.
In this way, competition between the insurance companies is encouraged
in an acceptable manner.
The introduction, limited to the first six months of 2009, of partial
portability in the case of contracts entered into before 1 January 2009
is also constitutionally unobjectionable. This is a provision which is
only slightly onerous for the companies, for transferring part of the
ageing reserve is permitted only in the basic category, which, however,
is as a general rule not of financial interest to the average person
with private health insurance by reason of its inferior range of
benefits together with a high premium. The possibility of moving direct
from the basic category to the new insurer’s normal category, which is
objected to by the complainant companies as an incentive to change, has
de facto ceased to exist as a result of an amendment in the law at the
end of 2008.
The provision of § 6.1 no. 1 of the Fifth Book of the Code of Social Law
(Sozialgesetzbuch V SGB V) as amended by the GKV-WSG, challenged by a
complainant who has had private health insurance to date, but also by a
number of health insurance companies, is compatible with the GG. Whereas
previously wage-earners and salary-earners were released from compulsory
insurance if their regular earnings exceeded a specific sum in one year
(annual earnings limit), it is now necessary for the earnings to be
higher in three consecutive calendar years before they are released from
compulsory insurance. This arrangement is reasonable for the insured
persons affected. The legislature has merely extended the period in
which insured persons have to remain in the statutory health insurance
system before they may decide to move to private health insurance. This
is directed in particular to employed persons who prior to their
employment had sometimes profited from the benefits of the social
security system for decades, as children covered by dependent insurance
but exempt from contributions, or as trainees or career entrants with
low earnings; when their earnings first exceed the annual earnings
limit, they are to continue to be bound to the social security system
for a certain period of time. But persons such as those commencing an
academic career, who under the previous law were released from
compulsory insurance at the very beginning of employment subject to
insurance by reason of the amount of their earnings can also reasonably
be expected to be subject to compulsory insurance for at least three
years. When requiring evidence that the annual earnings limit is
exceeded, the legislature may require that this situation continues for
a certain period of time and remains consistent.
The decision on the three-year period was passed by five votes to three;
the remainder of the decision was unanimous.
This press release is also available in the original german version.
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