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http://www.prospect.org/csnc/blogs/...year=2005&base_name=health_of_nations_germany
THIS IS FROM THE AMERICAN PROSPECT
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,
Posted by Ezra Klein on April 21, 2005 8:15 PM
THIS IS FROM THE AMERICAN PROSPECT
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,
Posted by Ezra Klein on April 21, 2005 8:15 PM
