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April 21, 2005

Health of Nations: Germany

It's been a long day, I desperately need some coffee, and it's really hot in my room. So you wouldn't believe how excited I am to dive into yet another country's health care structure. Let's just say I love you all very, very much. For those who've missed the previous three days of health wonkery, check out France, England and Canada. Today is Germany which, fun fact, Clinton Care was based off of.

Da Basics: Germany was the first nation to enact mandatory health insurance, doing so way back in 1883. The system is funded through employer contributions, with half the money coming from your paycheck and half coming from your employer. Participating Germans -- about 90% of the country -- are enrolled in "sickness funds", some of which are organized by geographical region, some of which are organized by trade, and some of which are organized by company. The funds are a mix between private and public entities and are all nonprofit. They can't discriminate, and can't charge customers at different rates corresponding to their health/age/lifestyle. That means no cherry-picking.

Various sickness funds have different contribution levels (so some will deduct 7% of your paycheck, others 8%), but all are required to cover a broad range of benefits (including prescription drugs) and demand only a modest copay. These funds, which are conducted through your employer, remain with you even after you lose or retire from a job. So if you're fired, your employer will still have to make contributions for you, but the government will take up your end of the bargain. Same deal if you retire, though in that case the sickness fund covers a bit less of your expenses and your retirement pension makes up the gap. The funds are administered by a board that's half company representatives and half worker representatives.

Insurance is mandatory for all Germans with incomes under $40,000. Those above can opt out, but few do. All told, about 8% of the country opts out of the sickness funds, and most of them are very wealthy. Private insurers pay doctors at much higher rates, and thus the folks they insure get preferential treatment. This way, the rich can pay for better service, unlike in Canada where the only way to attain kingly treatment is paying out of pocket in America. 2% of the country are covered through the armed forces or policy, and .2% of the country -- mostly the superrich -- have no insurance at all.

The financing method is pretty regressive. The sickness funds can vary the percentage of your paycheck they deduct under the rationale that those with larger earnings need a smaller percentage to cover expenses. So the idea is not to have the rich covering the poor, but for everyone to be covered. Eventually, however, this got out of hand and a slight reform was made: Because various sickness funds draw from differing slices of the population, some were requiring quite small percentages to run the fund, as they had healthier, richer enrollees, while others needed quite a chunk because they covered poorer, sicker demographics. So in 1994, Germany created a program that forced sickness funds with richer, healthier members to contribute a portion of their payroll revenues to a national pool, which then distributes it to the poorer funds. That means the financing is still regressive, but less so.

Germany's not traditionally been a gatekeeper system, but that's changing. Nowadays, 55% of their doctors are generalists, compared with 35% of American physicians. Non-hospital (ambulatory) physicians are required to join their regional associations, which pay them from a global fund. If the physicians bill beyond what they're budgeted for, fees are reduced in proportion to the excess spending the next quarter. This seems to present a problem, in that some physicians could over-prescribe and force others to under-prescribe, as no particular physician would know what his colleagues were doing and thus be able to judge what he could do. Whether the associations have a way of evaluating physicians individually I don't know. Otherwise, the system seems flawed as doctors lack necessary cost information.

Cost Control: The 1977 German Cost Containment Act created a body called "Concerted Action", comprised of representatives from the nation's health providers, sickness funds, employers, unions, and various levels of government. CA meets twice a year to set guidelines for hospital fees, physicians rates and so forth. Since 1986, physician's fees have been capped. As a result, their health spending actually feel a bit between 1986 and 1991. But in 1991, costs resumed their march upwards, so the German government tried to make the Sickness Funds more competitive by allowing greater flexibility in choosing them. This heightened the inequality, forcing the aforementioned law transferring wealth from healthy, rich sickness funds to worse off ones. As of 2001, Germany's health spending was at 10.7% of GDP, third highest in the world. America, for comparison, is #1.

How Do We Stack Up? Due to some concerns over the viability of GDP spending and OECD rankings, I'm going to be changing some of the metrics I use here. Per capita, Germany spends $2,817 on health care for its citizens. America spends $5,267 (which in unbelievably high, by the way -- you should really check out how nuts that is, a point well-made by this Excel file comparison). According to the WHO, Germany's health care system is #6 in fairness of financial burden, #14 in overall goal attainment, and #14 in terms of overall performance. America's system is 54th in fairness(!), 15th in goal attainment, and 37th in overall performance.

Sources: Thomas Bodenheimer's Understanding Health Policy, WHO data,

April 21, 2005 in Health Care, Health of Nations | Permalink

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» Health of Nations from The Talent Show
For those who haven't been following it, all week Ezra Klein has been following the healthcare systems of other countries and comparing them to our own. So far he's done France, England, Canada, and Germany.1 In today's installment he links... [Read More]

Tracked on Apr 21, 2005 9:12:28 PM

» Health care from The Big Lowitzki
This week Ezra is going to be analyzing the healthcare systems of different nations (France, England, Germany, Australia, and Canada) around the world:There's been a lot of talk lately about the health care structures of various other countries, how th... [Read More]

Tracked on Apr 21, 2005 9:40:59 PM

» Law and Medicine: Germany from Electoral Math
Ezra now has us traveling to Germany to inspect the wonders of their health care system and medical malpractice policy. [Read More]

Tracked on Apr 21, 2005 10:27:37 PM

» Healthcare Uber Alles from After School Snack
Seriously, this has been such an excellent series of posts - I hope Ezra makes them quickly linkable from his site, or offers them as a single downloadable document, or something. Nice to have someone looking out for the healthcare ignoramuses among ... [Read More]

Tracked on Apr 22, 2005 12:53:34 PM

» Physician, Heal Thyself from anglofritz
Doctors picket for more money, less paperwork No kidding. If it wasn't so affordable to get your medical degree in Germany (which is part of the problem, I think), I would be losing it. There's a reason why every girl... [Read More]

Tracked on Jan 19, 2006 10:00:41 AM

Comments

You are doing a great public service here, Ezra. I've printed all of your entries to share with my friends of various health care opinions, they are gems. I'm kind of sorry to know that this little series is coming to an end.

Again, this is a very valuable thing you are doing, although I am afraid you have mis-timed your Koufax potential. Also, the links are superb.

Keep up the good work.

Posted by: abjectfunk | Apr 21, 2005 8:31:43 PM

In case you're interested, I've made a graph out of the numbers in that excel sheet. You can check it out here.

Posted by: greg | Apr 21, 2005 9:17:11 PM

Yeah, this does not seem like a good model. Especially since the employer has to keep paying if you're unemployed. I think that might discourage companies from hiring.

It would be wonderful, if when you're all done, you could create a separate archive category just for this series.

Posted by: Abby | Apr 21, 2005 9:58:12 PM

I too am grateful. What a clever way to get linked to from everywhere, too! That sounds cynical, and I don't mean it to be -- industriousness and initiative should be rewarded.

I'm still hoping you'll tell us what the effect is of the artificial doctor shortage in the U.S. as compared to other nations.

Posted by: Allen K. | Apr 21, 2005 10:07:03 PM

Of historical note, the German system was started because only about 1 in 10 German workers was healthy enough to be drafted into the German army and the Kaisar and Prime Minister Bismarck rather wanted an army for a few projects.

This was a matter of national security, as well as luring liberals to support Bismarck.

Posted by: Bryan | Apr 21, 2005 10:23:25 PM

1883? that was the year marx died, wasnt it?

so it should be called the karl marx memorial (communist) healthcare system.

so all those righteous republicans in congress were right to thwart this communist usurpation of our precious bodily fluids(literally!!)

vast left wing conspiracy indeed!!

Posted by: almostinfamous | Apr 21, 2005 11:48:31 PM

thank you for the wonderfully informative tour of various health care systems. i am learning a great deal from this series...you put so much time and effort into learning and sharing.
you are a wonderful teacher and an amazing human being.

Posted by: jacqueline | Apr 22, 2005 12:51:33 AM

(I´ve reading your blog for quiet some time now, but I never thought about posting comments *shrugs* here goes nothin...)

The german health care system has been diagnosed as ill for like ten years now. Some Quarters, it´s better, some quarters, it´s so bad that the doctors go on strike for better distribution of the mentioned "Krankenkassengelder".

Of course, every once in a while there´s a public uproar when another hospital gets investigated for fraud with the payers money.
(it works like this: the doctor invents treatments he never performed and charges them to a existing patient. The patient never gets to know what the doctor charges the sickness fund and the "Krankenkasse" pays because they can´t verify the real cost of treatment. Usually these doctors get too greedy and the Krankenkasse sends in their auditors.

Nobody knows how much of the money we all get deducted from our paychecks disappears into the coffers of those doctors. Actually, it´s just an intelligence problem: the system as it is now is not very secure against fraud from within. As long as Germany was financially better off, no one cared about the irregularities.

I still believe it´s a good idea: everyone who can´t afford preferential treatment is safe in the "gesetzliche Krankenkassen". Those who can afford it can choose to spend a premium in a "Privatversicherung". And nobody has to sell his kids into slavery because his parents got into a car accident.

Posted by: apunkt | Apr 22, 2005 3:12:33 AM

I am a Canadian studying in Germany. (I am paying far less for University in Germany (as a foreign student) than I was paying as a Canadian citizen in Canada)

Anyways, I'm going off topic here. I find the system here to be MUCH more effective than what I encountered in Canada. Meeting with the neurologist in Canada required me to wait 3 months, which I found completely unacceptable. Here in Germany, I got an appointment with a Neurologist within 2 weeks, and that was with the public insurance, not the more expensive private insurance. It is easier, by orders of magnitude, to see a specialist here.

Also, when I was visiting Germany, I had to pay $85 to have FULL travel coverage for 3 months. Recently, I applied for FULL travel coverage from Germany, and I recieved worldwide travel coverage for a period of one year, at a price of 11 Euros!

Dental care is also much better here, and one does not have to spend a fortune here to keep your teeth healthy. One does not have to pay riduculous fees such as ambulance fees.

These and other things simply make me think, regardless of any charts or numbers, that the care I recieve here is much better than the care I recieved in Canada.

Posted by: Jason | Apr 22, 2005 6:49:45 AM

Oh yeah, and also, what you mentioned in your article on NHS also occurs in Canada. When we moved, and had to change our family physician, we were told by several of the nearest Clinics that they were no longer accepting patients. Not exactly what one expects from a "world-class" Healthcare system.

Posted by: Jason | Apr 22, 2005 6:59:38 AM

I would be curious to know what effect the reunification with East Germany had on the overall system (I am assuming that East Germans had a different system in place while under communist control; if not, I'd be curious how their system compared to the other satellite states). (Which also raises tantalizing questions about what healthcare was like in Berlin before the wall came down.) I would think reunification has had yet more adverse effect on health care costs overall, but that's just a guess. I would speculate as well that (West) Germany's postwar wealth boom helped mask the rising costs for a long time and that the realization of higher costs and disparities across the "sickness funds" (and you know, at the very least, we'd have to call them "wellness funds") is a recent development. This thumbnail has, I think, been the most provacative - at least to me - so far, since it seems like something we could lurch towards, though it's probably not a great answer to our issues.

Posted by: weboy | Apr 22, 2005 9:26:26 AM

Did you mean "done" as in this is the last country...? What about China or Japan or Malaysia or India...anything other than Europe...?

Posted by: Russ | Apr 22, 2005 11:04:07 AM

What happened in Norway? Their health care costs appear to have risen 25% in the last two years!

Posted by: curt | Apr 22, 2005 11:42:28 AM

You see the comments, Ezra, looks like this might need to be more than a week long thing! Every country of the world: go!

Posted by: kate | Apr 22, 2005 3:56:29 PM

Ezra, thanks so much for your hard work on this series. Especially since I know that yesterday the sun was shining so bright it made UCLA sparkle, and everywhere beautiful people were sitting on every available square foot of grass "studying" and everything in nature was saying to you, "Don't write about German health care! Come outside and have fun!" and to me, "Don't go into your Wills and Trust classroom that doesn't even have any windows! Flunk out of law school and have fun outside!" So, thanks.

Posted by: jengould | Apr 22, 2005 4:20:10 PM

Hi,

I live and work in Germany (and have been here for the last 14 years) - a couple of comments on things that I think are incorrect/misleading in the article. (Though I think it does give a very good overview of the German health system).

> These funds, which are conducted through your employer, remain with you even after you
> lose or retire from a job. So if you're fired, your employer will still have to make
> contributions for you, but the government will take up your end of the bargain.
Actually, the government (i.e. unemployment insurance) pays both the employer's and the employee's side if you are unemployed.

> Insurance is mandatory for all Germans with incomes under $40,000. Those above can opt
> out, but few do. All told, about 8% of the country opts out of the sickness funds, and most
> of them are very wealthy.
Probably a larger group than the very wealthy are all civil servants. For historical reasons, even civil servants earning under the mandatory income level have private insurance.

> .2% of the country -- mostly the superrich -- have no insurance at all.
Since it is not normally permitted to move back to the public (Krankenkasse / sickness fund) system, after having moved to the private system, there is a group of people who have no insurance because they cannot afford private and can no longer use the public system. I'm not sure how big this group actually is, though I have seen different figures of between 200.000 and 300.000 people in various newspaper articles. This would be between .25% to .375% of the population (80 million). The main group of people affected is unsuccessful self-employed persons, not the super-wealthy.

Posted by: ray | Apr 24, 2005 9:41:09 AM

Your article comparing healthcare in Germany, Canada and the US was interesting and informative. I've been doing a report on German healthcare and I've been checking so many sites that I'm getting dizzy. I have to include information about what the education requirements are to be a physician in Germany.And what type of healthcare is available to children in Germany. Could you give me an idea where I might find this type of information on the internet?
Thanks very much,
Shari from RI

Posted by: Shari | Dec 17, 2005 2:14:26 AM

Dear Sir/Madam,
I am delighted to contact you on a private note, my name is Dr. Moses A. Jones Director of Telex Department Central Bank of Nigeria, National head quarter Abuja, two years ago, some executive officers in the federal ministry of petroleum resource (FMPR) approached me that they want to present some one (a foreigner) as the beneficiary of a fund (money) resulting from an over invoice contract which was awarded to a foreign firm.
So after the negotiation, we unanimously agreed that they (the officers) would give me the sum of USD500, 000.00 (cash) and on my acceptance to assist them transfer the fund as soon as I made some level of fruitful effort on the business and demanded my money (USD500, 000.00) as agreed, they deviated from our initial agreement and decided to go through the chief accountant at (CBN at my back).
Hence, I decided to deviate the fund to Holland offshore paying center of central bank of Nigeria and as I am writing to you the fund is there. So I need an honest person who will stand as the beneficiary of the fund in question as it is floating in central bank record with anybody to claim it.
Note, the amount which is in central bank record is (USD15, 500.000.00) so upon the receipt of this mail if you will give me assurance that you will not link the transaction and you will keep it private and confidential within your self and I assured you that I will arrange to get all the covering documents and send to you so that you will go to Holland and claim the fund which we will share within us 50% for you and 50% for me.
Take note of the following assurance from you first before we proceed: -
1. You have to assure me that you are going to keep my dealings with you secret because of my position.
2. We are going to share the fund in question equal as soon as the fund get to your account which you will submit for the transfer from Holland to your country any where in the world.
3. I would want you to issue me a promissory note that you will not betray me and you should sign it and scan to my private email address.
4. I will secure proper documentation’s to make the claim genuine and place you as the rightful owner of the fund and the original foreign contractor.
5. Finally, as soon as they receive the fund from Central Bank paying center in Holland you will send a Letter of invitation for me to meet you in your country.
If you are interested in my proposal, reply through my private email address as above and below.
mosesjones2006@yahoo.com
Best regards,
Dr. Moses A. Jones

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Posted by: esaudi.info | Oct 31, 2006 8:41:51 AM

Hi,

I live and work in Germany (and have been here for the last 14 years) - a couple of comments on things that I think are incorrect/misleading in the article. (Though I think it does give a very good overview of the German health system).

> These funds, which are conducted through your employer, remain with you even after you
> lose or retire from a job. Fulvic AcidSo if you're fired, your employer will still have to make
> contributions for you, but the government will take up your end of the bargain.
Actually, the government (i.e. unemployment insurance) pays both the employer's and the employee's side if you are unemployed.

1. You have to assure me that you are going to keep my dealings with you secret because of my position.
2. We are going to share the fund in question equal as soon as the fund get to your account which you will submit for the transfer from Holland to your country any where in the world.
3. I would want you to issue me a promissory note that you will not betray me and you should sign it and scan to my private email address.
4. I will secure proper documentation’s to make the claim genuine and place you as the rightful owner of the fund and the original foreign contractor.
5. Finally, as soon as they receive Fulvic Acid scams the fund from Central Bank paying center in Holland you will send a Letter of invitation for me to meet you in your country.
Sounds hard

Posted by: Thyui | Nov 4, 2006 7:26:41 AM

I think you should have said more about Germans health and not so muck about health insurance.

Posted by: rachel | Nov 26, 2006 5:21:20 PM

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