Quick Facts

• Population (2009): 82,329,758
• GDP per capita (2008): $34,800
• Life Expectancy (years): M 77, F 83
• Infant Mortality: 4 deaths/1,000 births
• Physicians per 10,000 people (2000-2009): 35
• Government health expenditures as percent of total government expenditures(2007): 18.2%
• Public-private insurance system financed by employers and workers with subsidies from the government
• Mandatory universal coverage for everyone, including temporary workers residing in Germany:  emergency, long-term care, and basic health insurance.
• Non profit “sickness funds” offer over 200 options for insurance plans, with extensive coverage, including wellness benefits
• Private insurance options for dental, private hospitals used by 7% of people
• Financed primarily by monthly income tax from workers and employers (10-15% wages) and quarterly copayments to individual doctors
• Government subsidies cover unemployed and poor residents.

Sources: CIA World Fact Book  and WHO World Health Statistics 2010; more statistics can be found at http://www.globalhealthfacts.org

Background Brief

Germany's universal health care system, the oldest in Europe, is a public-private system that is financed by a combination of employer and worker contributions and subsidized by the government; thus, the German health care system has many similarities to the reformed American system--namely an individual mandate and public-private financing. This system was originally formed by Otto von Bismarck in 1883 when he passed the Sickness Insurance Law. The Insurance Law, as well as the Accident Insurance Bill (1884) and the Old Age and Disability Bill (1889) are precursors to the social welfare programs in place throughout the developed world today. [1]

The German health care system provides coverage to nearly all 82 million Germans and guest workers (legal or not) residing in Germany. Every individual must obtain insurance. Residents are required to sign up for a 'sickness fund' with an exception for wealthy individuals and the self-employed who can seek insurance in a private marketplace (approximately 7% of people enroll in private-for-profit insurance plans). In addition, the government pays a portion of medical costs for state workers but the rest must be covered through private insurance policies. Despite being nonprofit, the sickness fund market maintains strong competition as Germans have the choice of nearly 200 different funds.

Sickness funds are required to accept all applicants and pay all valid claims. The coverage offered through the funds is among the most extensive in Europe including doctors, dentists, chiropractors, physical therapy, prescriptions, end-of-life care, health clubs, and even spa treatment if prescribed. Additionally, Germans are free to choose among all the sickness funds, can switch freely among them, and do not lose coverage if they become unemployed. Individuals also have the option to purchase supplemental coverage from private insurers, although doctors can charge higher fees to the privately insured. Supplemental coverage provides patients with dental insurance and access to private hospitals. [2]

The recent acceleration of health care costs in Germany, and around the globe, have predictably led to cost cutting measures like the movement to digital record keeping and the introduction of copayments for the first time. Despite recent changes, Bismarck's system is still largely intact and providing high quality care to all Germans.

Financing
Germany's universal health care system, excluding private insurers, is mostly funded by a monthly tax on income earned by workers and employers. This monthly tax is a fixed portion of income, usually 10-15% depending on age, so that it is the same no matter which sickness fund an individual is enrolled in, and is shouldered equally by employee and employer. The Federal Ministry of Health sets premiums for the sickness funds. At age 65 Germans enrolled in sickness funds cease paying the tax but continue to receive health care benefits for the rest of their lives. Beyond the monthly taxes, patients are also expected to pay a quarterly copayment to their doctor. Government subsidies are provided for the unemployed or those with low income.

The sickness funds negotiate prices and fees with medical clinics and hospitals in a method consistent with price controls laid out by the government. The result of these negotiations is published in an online database that details the extent of medical coverage and fees associated with various procedures. Physicians collect their fees directly from the sickness funds and other services are paid for as they are administered.[3]

The total annual expenditure on health care in Germany is almost 11% of GDP, or $3,588 per capita, making their system one of the most costly in the world (only the United State, Switzerland, and France spend more as a share of GDP. [4] These funds are divided into three different categories: public expenditure (73%), private expenditure (10%), and out-of-pocket expenditure (17%). [5] Despite the high comparative expenditure, Germany has been among the most effective countries at controlling costs, average an annual growth rate of health care spending per capita of 1.6% compared to 3.6% in America and 4.3% in the U.K. In the past decade the German government has tried a variety of programs to this effect: switching to electronic medical records, requiring quarterly copayments for the first time, and at times even freezing medical providers' salaries. The government has also begun to use global budgeting--caps on annual health care expenditures--like in the U.K., as additional means to slow the rate of spending growth. [6]

In the World Health Organization's 2000 World Health Report Germany ranked 25th globally on a cost and effectiveness scale. [7]

Service Delivery
There are three separate mandatory insurance benefits offered in the German health system: accident insurance, long-term care insurance, and health insurance. The health and long-term care insurance are co-financed by employee and employers while the accident insurance (for on-the-job accidents) is financed solely by the employer. All the doctors in Germany are private employees and most medical clinics are also private. Most hospitals, however, are public and run by charities or municipalities although there are some private for-profit hospitals.[8]

In order to see a specialist, patients must first seek diagnosis and referral from a gatekeeper physician. Since 2006, patients are required to make a copayment every quarter to their doctor but otherwise are not billed. The doctors collect their payments from the sickness funds directly.

Germany compares favorably to other European countries in terms of provider distribution with nearly 35 physicians, 80 nurses, and 83 hospital beds per 10,000 people. [9] In addition, a 2008 Commonwealth Fund survey indicated that 43% of adults with chronic conditions could receive treatment for a same-day appointment compared with just 26% in the United States. [10]

A 2005 Commonwealth Fund report found that Germany ranked second among developed countries, behind only New Zealand, in the percentage of adults who could receive needed health care on the same (56%) or next (13%) day. In contrast, only 30% of American adults could receive a same day appointment for health problems and 17% for the next day. [11] Germans visit physicians on average 7 times a year compared with the OECD median of 6.4 and in the United States 4.0 visits. [12]

Resources

Busse, R. (2004). Disease Management Programs in Germany’s Statutory Health Insurance System. Health Affairs. 23.3: 56-67.
This article explains how the German health care system tries to spread insurance risk among the sickness funds using age and sex as barometers.

Busse, R. and A. Riesberg. (2004). Health Care Systems in Transition: Germany. World Health Organization Regional Office Europe.
This report describes the German health care system and outlines reform initiatives in progress or under development.

Hallek, M. (2006). Recent Health Care Reform Strategies in Germany, With Emphasis on the Treatment of Cancer. The Commonwealth Fund.
This analysis reviews different attempts at health care reform in Germany specifically with regard to cancer patients.

Klein, E. (April 2005). The Health of Nations: Germany. The American Prospect.
This article provides a brief historical background of Germany’s health system and compares its costliness to that of the U.S.

Paris, V. and E. Docteur. (2008). Pharmaceutical Pricing and Reimbursement Policies in Germany. Organisation for Economic Co-operation and Development.
This white paper assesses the impact of pharmaceutical pricing and reimbursement policies in Germany.

Reid, T. R. (2009). The Healing of America: a Global Quest for Better, Cheaper, Fairer Health Care. New York: Penguin.
This book analyzes several international health systems and compares them with the American health care system in an effort to see where reform can be most effective.

Sawicki, P. (July 2009). Comparative Effectiveness in German Health Care. The Commonwealth Fund.
In this video, the director of Germany’s Institute for Quality and Efficiency in Health Care, discusses German health care policy and reform .

Stock, S., M. Redaelli, and K. W. Lauterbach. (2006). The Influence of the Labor Market on German Health Care Reforms. Health Affairs. 25.4: 1143-1152.
This article discusses the relationship between health care financing and the labor market in Germany and the United States.

Schoen, C. et al. (December 2009). Harnessing Health Care Markets for the Public Interest: Insights for U.S. Health Reform from the German and Dutch Multipayer Systems. The Commonwealth Fund.
This article discusses how insurance exchanges have been an effective way of providing universal coverage in Germany and the Netherlands through private insurance plans.

Schoen, C. et al. (November 2005). Taking the Pulse of Health Care Systems: Experiences of Patients with Health Problems in Six Countries. Health Affairs.
This paper examines a 2005 survey of sick adults in Australia, Canada, Germany, New Zealand, the U.K, and the U.S. Safety risks, care for chronic conditions, and care coordination are among the subjects discussed.

The Commonwealth Fund. (2008). Access to Doctor When Sick or Needed Care.
This interactive chart provides data on access to care for various developed countries.

The World Health Organization. (2010). Country Profiles: Germany.
This WHO website provides an overview, relevant statistics, and various reports on the German health care system.
World Health Organization. World Health Statistics 2010.

The World Health Organization. World Health Report 2000. Health Systems: Improving Performance.
This report provides comprehensive rankings for the health systems of each country in the WHO.

Zifonun, N. (2004). SHA-Based Health Accounts in 13 OECD Countries: Country Studies-Germany-2001 Health Accounts. Organisation for Economic Co-operation and Development.
This in depth OECD report provides a thorough examination of German State Health Accounts examining health care expenditure by function, provider, and financing.