Health Insurance Mergers increase costs

Bundesrechnungshof: Health insurance companies Mergers increase expenditure

30/01/2011

More and more statutory health insurance companies are planning mergers or have already taken mergers. According to an analysis by the Federal Court of Audit (Bundesrechnungshof, BRH), this does not necessarily reduce spending. On the contrary, the expenditure side will increase considerably as a result of mergers.

Smaller health insurance companies, in particular, form associations with other health insurers in order to better position themselves in the health insurance market. On behalf of the Federal Ministry of Health, the Federal Audit Office examined the financial implications of mergers. The result: Often, this increases the net administrative costs. The increase in costs is mainly caused by higher travel expenses, severance payments or increasing remuneration of the Management Board members. Another cost driver is expensive consulting services as well as seminars and advanced training. Such a result will not have the Federal Health Minister Philipp Rösler (FDP) expected.

Number of health insurance companies are decreasing continuously
The number of statutory health insurance companies has been steadily decreasing since the 1990s. At that time there were still about 1000 funds. Today only 150 health insurance companies exist. Within the last two years, the number of health insurance companies has dropped from the previous 216 to 150. The policy itself announces continuously that the mergers of the health insurance funds would be an adequate means to avoid bankruptcies. According to estimates by some health economists, such as Barmer GEK chairman Birgit Fischer, the current wave of mergers will continue until there are only 20 to 30 health insurers left. These funds would then have reached a size in which the state is forced to intervene with taxpayers, if a health insurance fails economically. The decoupling of state aid from the statutory health insurance hoped for by the Federal Government would thus be obsolete.

The report of the Federal Court of Auditors further states that the mergers do not lead to the proclaimed synergy effects. In addition, substantial and sometimes permanent additional financial resources are needed to support the health system. A total of 32 health fund mergers were examined by the Court of Auditors. An improvement in cost-effectiveness could not be detected. (Sb)

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Picture: S. Hofschlaeger