Reference Publications

AOK-Bundesverband (Federation of the AOK)

International Directory of Company Histories, Volume 78 (2007) by Gerald Brennan

Kortrijker Strasse 1 53177 Bonn, Germany Telephone: (49) (228) 843-0 Fax: (49) (228) 843-502 Web site: www.aok.de

Private Institution Founded: 1895 Employees: 64,260 NAIC: 524113 Direct Life Insurance Carriers; 524114 Direct Health and Medical Insurance Carriers.

The AOK-Bundesverbund (Federation of the AOK) is Germany's largest health insurance provider. AOK is one of a handful of public Krankenkassen, literally "sickness funds," that Germans whose annual earnings fall below a certain income ceiling are required by law to join. In 2004 AOK and its national network of over 1,700 offices in 17 autonomous regions throughout Germany insured more than 18.55 million people, nearly one-third of the nation's total population. Although based in statute and regulated by the German federal government, AOK is a self-administered entity. It is managed by a board consisting of individuals directly elected by members and their employers. Members are insured by local AOK member funds—the Ortskranken-kassen—ocated in the geographical region in which they live and work. Premiums are paid in equal amounts by the insured and their employers and are calculated according to the so-called solidarity principle. Rather than risk factors such as marital status, family size, age, or health, the premiums are based solely on a member's wages up to a specific statutorily determined ceiling. The amount of an individual's premium payment varies according to which local fund provides coverage, from as low as 12 percent of income in Saxony to as high as 14.6 percent in Berlin. Hospital treatment comprised AOK's largest outlay in 2004 at approximately EUR 19 billion. Medication for members was in second place at EUR 9 billion. In addition to providing a forum for communication of its various member Krankenkassen, AOK also represents their interests before the German parliament and the professional associations of physicians and other healthcare providers.

THE INVENTION OF GERMAN STATUTORY HEALTHCARE IN THE 19TH CENTURY

Termed "a revolutionary turning point in social policy" by Franz Knieps in his history of AOK, the KVG authorized communities to form local insurance funds, so-called Ortskrankenkassen, to provide insurance coverage for their residents. The coverage was based on a series of basic principles: Healthcare was provided according to need, not the ability to pay; premiums were based solely on income, not risk or actuarial calculations—the so-called "solidarity principle"; and the funds would be administered directly by the insured and their employers, not by the government. These principles remained in force at the AOK in the 21st century. Ortskrankenkassen were originally set up not only for local residents, but also for workers in different trades or industries. One reason for this was that members of the same profession shared many of the same health risks, evening out the per capita expenses. In addition it was felt that members would be less likely to file fraudulent claims against monies of friends and co-workers. Self-administration was also considered a means of combating insurance fraud by members.

Few new Ortskrankenkassen were founded as a result of the KVG. Most were older local funds that had been reorganized under the law. Older Krankenkassen won an important advantage from the KVG. Previously the funds were run at the community's own expense. Under the KVG, however, additional funds were allocated for administrative costs. In Berlin, for example, one year after the law went into effect only seven of 68 Ortskrankenkassen were new. In all, the Berlin Ortskrankenkass had about 160,000 members.

The largest of these, with some 52,000 members, was the Allgemeine Ortskrankenkasse, or "General Local Health Fund." This was an organizational forerunner to the current AOK. At the time the premiums its members paid were among the lowest of any local fund Germany (about 0.77 Marks) and the AOK's administration was considered one of the best in the country. As a result, Berlin's public officials came to see larger Ortskrankenkassen as preferable to smaller ones; they provided better service, while operating more efficiently and at a lower cost to members. A central Ortskrankenkasse for all Berlin was recommended. Nonetheless, the resulting Allgemeine Ortskrankenkasse was not a true "general" health fund in the later sense but rather an Ortskrankenkassen only for commercial workers. When general local funds were introduced in the early 20th century, they were still limited to a specific geographical area but were required to accept workers from all trades and industries.