German health fund Barmer GEK downsizes amid demographics squeeze | Business| Economy and finance news from a German perspective | DW | 24.02.2014
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German health fund Barmer GEK downsizes amid demographics squeeze

Germany’s second largest public health fund has announced massive job cuts as it expects less customers and higher medical costs in the future. Improved digital services have also made workers redundant.

In the medium term, Barmer GEK was seeking to reduce its workforce by about 3,500 jobs, which was roughly 20 percent of its current staff of 16,900, Germany's second largest public health fund announced Monday.

The job losses were part of a thorough re-organization in which 400 out of 800 offices across Germany would be closed, the company said.

“Our market studies have shown that more and more of our customers use telephone and Internet communication to contact us rather than come to our outlets,” Barmer GEK Chief Executive Christoph Straub told German ARD public television on Monday.

In Germany, about 80 percent of the population has health insurance through public health funds, while the rest of 20 percent are privately insured. Employees pay monthly health premiums, currently about 15 percent of their wages, half of which is covered by their employers. The German system of statutory public health funds is under pressure, however, as the country's ageing population means less people are paying into the system in future.

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Therefore, Barmer GEK also said the restructuring was partly the result of an envisaged drop in revenues.

“While our costs for drugs, hospitals and doctors are bound to rise, we expect our income from premiums to fall over time,” Straub noted.

The Barmer CEO added that he envisaged annual savings in the range of between 250 million euros ($343 million) and 300 million euros through the measures. He denied allegations that the fund's services to customers would worsen.

uhe/hc (dpa, Reuters)

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