What is an example of a private law?

2.3.3.2 Germany

Germany is the OECD country outside the US with the largest private health insurance market. Private insurance in Germany primarily serves the self-employed, civil servants, and upper-income employees who choose private insurance over social insurance. By law, private insurance premiums must be calculated by the principle that they stay constant during the whole lifetime of the customer as long as the overall level of medical technology and prices does not change. This means that the customer is insured not only: (1) against health expenditures in the current period; but also (2) against changes of his individual risk assessment (reclassification risk); and (3) against rising health expenditures with age, whereas he is not insured against the (systemic) risks of medical progress and health care cost inflation. Premiums thus only depend on gender and age of entry into the contract (and, possibly, supplements for excess risk at entry). As a counterpart, the insurance company must display so-called “aging provisions” in its balance sheet, which account for the gap between expected future health care expenditures of and future premium revenues from its present set of customers. The whole arrangement is a combination of GR and a savings process which helps finance the predictable increase of health expenditures with age, in the absence of reclassification.

The main problem with this arrangement is that it may be possible to distinguish the premium which covers type (1) of risk from the accrual to the aging provision, but it is very difficult to disentangle the premium for the coverage of reclassification risk (2) from the “pure savings” part of the premium (3). Hence, when the insured wants to cancel his insurance contract and switch to another insurer, it is not clear which part of the aging provision should be transferable (Baumann et al., 2008). In fact, German law stipulated until 2008 that aging provision could not be transferred at all, and thus there was practically no competition between private health insurers except for first-time customers. The law was changed in 2009 so that now part of the aging provisions has to be transferred to the new insurer in case of a move from one company to another, but the method of calculation is simply dividing the total amount of aging provisions in a demographic group (defined by age, sex, and age of entry) by the number of heads in that group. Instead, the correct procedure would be to calculate and transfer “individualized prospective aging provisions” by the method described above (expected future health care expenditures minus expected future premium revenue; see Cochrane, 1995).

III

In the previous sections we have seen that – in their formative years – most Latin-American countries embraced codification as a key feature of their state-building efforts. The goal was to affirm national identity, as well as to introduce clarity and coherence to Private Law (Mirow, 2004). This was seen as a necessary step to enhance commercial transactions and to better regulate family relations, given the chaotic mass of colonial law, local regulations, and informal practices prevalent at the time of independence from imperial rule. The codification of Civil Law – which was done in most countries of the region during the last decades of the nineteenth century – was followed by the introduction of codes of Civil Procedure, codes organizing the judicial branch, and codes of Criminal Law and Criminal Procedure.

In the case of Public Law, the adoption of written constitutions was done much earlier, that is to say, soon after independence from imperial rule. As stated above, the model for most of the region's Constitutional Law was the United States, given that it was the only nonmonarchical country in existence at the time. Having said this, the chronic political instability experienced by most Latin-American states at the time meant that existing constitutions were constantly replaced by new ones – or were profoundly amended – as a result of revolutions, civil wars and other types of generalized violence. This explains the astonishing number of constitutions that Latin America has had over the last two centuries (Elkins et al., 2009). The high number of constitutions has not, however, always translated into limited government, due to the heavy use of ‘states of emergence’ throughout the region's history (Loveman, 1993). Even though the chronic reality of a proliferation of formal constitutional charters and a lack of substantial constitutional rule of law just noted was the norm during the nineteenth century, a few countries eventually managed to establish relatively stable and meaningful constitutional regimes (such as Chile and Argentina, at the turn of the century).

Observers of Latin-American Public Law attribute many nations' difficulties in consolidating stable and effective constitutional regimes to a number of factors, such as geographic and ethnic fragmentation, a profoundly unequal social structure and the lack of a ‘culture of rights’ (Rosenn, 1990; Schor, 2006). Others argue that the root cause of the lack of a strong constitutional culture in the region is the persistence of a long colonial legacy characterized by a centralized, authoritarian, and hierarchical exercise of political authority (Adelman, 1999).

In spite of the problems just noted, toward the middle of the twentieth century a sizable number of states in the region managed to consolidate constitutional regimes that were gradually introducing a democratic rule (this was the case in Argentina, Brazil, Chile, Colombia, Peru, Venezuela, and Uruguay). Parallel to this process it should be noted that, starting with the Mexican Constitution of 1917, many countries of the region adopted what is known as ‘social constitutionalism,’ that is to say, they introduced into their constitutional charters various social rights, such as the right to work, education, health care, housing, and so on.

What means private law?

What is an example of a law?