Cost-sharing in the German healthcare system: Effects of health reforms on efficiency and equity

Abstract This paper explores the developments and effects of cost-sharing instruments in German social health insurance. It reviews official legislation on cost-sharing in Germany from 1883 to 2008, and provides a structured literature review on the efficiency and equity of cost-sharing. First introduced in 1923, cost-sharing has become a widespread instrument in social health insurance regulation since the 1980s. Indeed, to contain rapidly increasing costs, some form of cost-sharing is now used in every sector of the German health system. However, these cost-sharing measures have failed to improve allocative efficiency or equity, instead simply increasing the burden of health expenditure on patients, households and employees. That policy makers are declaring these short-term cost-shifting measures to be a success is a particularly worrying trend as it might make such reforms attractive to policy makers in other countries.