by Jenny Kakasuleff of the Liberal Examiner
July 26, 2009
In 2008, health care consumption in Germany was 10.7 percent of GDP – slightly higher than in Canada. According to the CIA World Factbook, the German’s have a higher life expectancy than the U.S., as well as the U.K. and Taiwan – though they rank lower than Canada, France, Japan, and the Netherlands. However, Germany outperforms each on infant mortality – with the exception of Japan and France.
According to the Commonwealth Fund, the state health insurance (SHI) benefits package covers preventive services; inpatient and outpatient hospital care; physician services; mental health care; dental care; prescription drugs; medical aids; rehabilitation; sick leave compensation; and since 1995, long-term care.
A rather dated poll from 1999 indicated that roughly half of those polled n Germany were either very or fairly satisfied with their health care – which means about half were not. In 2003, the German health ministry concluded that their system suffered from “lack of competition; superfluous, insufficient or inappropriate care; shrinking revenue and an aging population.” Germany suffered from waiting lines, just like Canada and the U.K.
Recommended solutions to tackle these problems included “providing incentives to promote cost-effective care; perform a therapeutic benefits/cost analysis of prescription drugs by the Centre for Quality in Medicine; and finance benefits not covered by health insurance by increasing cigarette taxes.” Germany is in the process of addressing weaknesses in its health care system, but because many reforms have just gone into effect this year, it is difficult to measure their success.
As of July 2002, the average premium rate was about 14% of an employees’ non-exempt income – split roughly in half with the employer, making the combined maximum contribution about $750 per month. Those making between 400 and 800 Euros per month pay less – about 4 percent. Those earning less than £48000 per year are automatically enrolled, and their contributions cover family members – this applies to roughly 75 percent of the population.
Nearly 90 percent of the population is covered by the compulsory state health insurance program. Of the 20 percent of the population eligible to purchase private insurance, 75 percent continue to enroll voluntarily in the state health insurance plan. Even though only less than 1 percent of the population has no coverage, beginning this year health insurance will be mandatory.
There are over 200 competing insurance funds; independent, private, nonprofit, government-regulated entities.Although the sickness funds (SF’s) had traditionally been allowed to set their own premium rates, beginning in 2009, they will be required to charge a uniform contribution, or “community rate,” as the earlier Committee on the Costs of Medical Care had recommended to the U.S. in 1932. In 2002, legislation created disease management programs (DMP’s) for chronic illnesses in order to give the SF’s an incentive to care for chronically ill patients.
Although the SF’s will continue to collect contributions, they will be pooled into a new national health insurance fund – similar to that discussed under the Taiwanese model – based on a risk-adjusted, weighted capitation formula similar to that in Britain. The government will provide considerably more to funds that take on consumers with cancer, AIDS, or any other one of 80 cost-intensive conditions.
Also, starting this year, private insurers offering coverage will be required to take part in a risk-adjustment scheme to be able to offer insurance for persons with ill health who could otherwise not afford a risk-related premium. Unlike the U.K., in which private coverage is often duplicative, the private health care industry in Germany is more supplemental, and offers coverage unavailable through the SHI, such as better amenities, and some co-payments.
The German government delegates regulation to the self-governing corporatist bodies of both the SFs and the medical providers’ associations. The most important body is the Federal Joint Committee, created in 2004 to increase efficacy and compliance; it replaced several sectoral committees. However, more purchasing powers are also given directly to the individual SFs, e.g. to contract providers directly, to negotiate rebates with pharmaceutical companies or to procure medical aids.
Germany also took action in 2004 to improve its quality of care by requiring continuing education, and health technology assessment for drugs and procedures; though hospital accreditation remains voluntary. “Minimum volume requirements were introduced for a number of complex procedures (e.g. transplantations), thereby requiring hospitals to provide this number in order to be reimbursed.” Furthermore, transparency and accountability are encouraged through the mandatory quality reporting system for all acute care hospitals. More than 150 indicators are measured and hospitals receive feedback on their performance. Since 2007, around 30 indicators are made public annually.
While there are no gatekeepers blocking patient’s access to physicians, there are plans that incentivize consumers to be more conscientious of the care they receive by offering bonuses for restraint. Physicians in the outpatient sector are paid by a mixture of fees per time period and per medical procedure, which is different than the fee-for-service reimbursements used in the single-payers models and encourages providers to offer more care to more people. SF’s annually negotiate with the regional associations of physicians to determine aggregate payments – a mechanism used to contain costs.
According to one source, “most of the negotiating power lies with the sickness funds. Thus, the purchasing power of German physician’s wages is about 20 percent of that of physicians in the U.S. In 2005, there were physician strikes over low wage compensation. Further, physicians have to deal with significant reimbursement caps and budget restrictions.” As a result, physicians only attempt to provide the minimum care necessary.
However, another source notes that health care professionals in other OECD countries pay significantly less, if anything for their medical education.
Inpatient care is paid through a system of diagnosis-related groups (DRG) per admission, currently based on around 1,100 DRG categories. Introduced in 2004, it is revised annually to take new technologies, changes in treatment patterns, and costs into account. DRG’s ensure that hospitals are paid the same amount for the same type of patient – because they are based on average costs, hospitals are pressured to perform.
With respect to prescription drugs, SF’s are free to negotiate with pharmaceutical manufacturers and incentives are used as a means to achieve prices below the reference prices. Hospital budgets were phased out between 2005 and 2008; and beginning in 2009, the fixed budgets for ambulatory care will be replaced by more flexible budgets that take population morbidity into account.
Reform efforts in 2004 have been unpopular; patients are now required to pay a co-pay of £10 each quarter, £5–10 for prescriptions, and £10 per inpatient day. As mentioned above, it is still too early to tell if the new policies will have the desired effect of addressing problems with the German health care system. However, they are clearly taking a proactive approach to targeting and correcting problems that do not consider the possibility of dismantling their universal model.
The next article will examine how Japan mixes the private and public sectors to achieve some of the highest health care rankings in the world.
Read: The Japanese health care system
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Copyright ©2009 Jenny Kakasuleff
