Germany has two systems of healthcare: statutory and private. The statutory health insurance (SHI) is commonly known as “sickness funds” and is required for everyone below a certain income level. Germany has been viewed as a model for healthcare since it created the first universal healthcare system, now known as the Bismarck Model, in the late 1800’s (Glazinski, n.d.). The Bismarck Model uses an insurance system that is financed by both employers and employees through payroll deductions. Germany would view health as a basic human right that everyone is entitled to since everyone is guaranteed coverage in this system (although some can opt out). The German system is also noted by low costs due to tight government regulations, and hospitals tend to be private.
Germany is unique in that decision-making powers are shared between federal governments, state governments, and self-regulated organizations of payers and providers. SHI-contracted physicians are not allowed to charge above the fee schedule negotiated between sickness funds and physicians for services in the SHI benefit catalogue and are generally reimbursed on a fee-for-services basis (Blümel & Busse, n.d.). The Federal Association of Sickness Funds, the Federal Association of SHI Physicians, and the German Hospital Federation work together in the Federal Joint Committee to develop the fee schedule and DRG catalogue each year. The Institute for Quality and Efficiency supports the Federal Joint Committee. The IQUiG’s main function is doing cost/benefit analysis to evaluate the cost effectiveness of drugs with added therapeutic benefits (Institute for Quality and Efficiency in Health Care, 2008). This information is then used to inform the Federal Joint Committee in making decisions for the fee schedule and catalogue.
Another important piece of the German health care system is that both the publicly and privately insured use the same providers. 85% of physicians work in their own private practice or dual practices. Hospitals are about half public, a third private not-for-profit, and one-sixth private, for-profit, which is a number that has been growing in recent years. German hospitals have been a source of criticism due to the large number of general hospitals, rather than specialized hospitals, which has resulted in mediocre scores on treatment quality (Björnberg, 2016). However, since 2000, the Federal Ministry of Health has been taking initiative to establish national health goals each year, with the purpose of “the quality of prevention, curation and rehabilitation, as well as to the efficient use of resources.” (Federal Ministry of Health, 2017, 1). The government is also mandating quality control systems in hospitals to address this quality challenge.
Financing
In 2014, total health expenditure was 11.2% of GDP, 74% of which was public spending, 58% being SHI spending. The sickness funds are financed by mandatory contributions based on a percentage of gross wages up to a fixed ceiling (Blümel & Busse, n.d.). This way, everyone pays the same portion of their income, with the rich paying more, up to a certain amount. Everyone who earns less than $71,564 is mandatorily covered by SHI, and those earning above that are able to opt out for private insurance, however, 75% choose to remain in the publicly financed system. There are special programs for military members, the police, and other public sector employees, as well as those who are self-employed, but visitors are not covered through SHI. Refugees and undocumented immigrants are covered by social security. In 2016, the uniform contribution rate of gross wages was 14.6%, split equally by the employer and employees.
In 2016, there were 42 private health insurance companies to substitute the groups of people exempt from SHI. Those who choose private health insurance pay a risk-related premium that is determined only upon health at the time of entry, with contracts based on lifetime underwriting due to government regulation to ensure the insured do not face huge premium increases as they age (Blümel & Busse, n.d). Out-of-pocket spending counted for 13.2% of total health spending in 2014, primarily on nursing homes, pharmaceuticals, and medical aids. However, private health insurance also acts in a supplementary role, covering health services that aren’t covered by SHI. In 2014, private health insurance accounted for 8.9% of total health expenditure.
Various safety nets are in place to keep people from paying too much. Children are exempt from cost-sharing, and there is an annual cap on cost-sharing at 2% of household income, which is lowered to 1% for qualifying chronically ill people (Blümel & Busse, n.d.). The lowered cap on cost sharing is only available to those who can prove that they attended recommended counseling/screening procedures before becoming chronically ill. This incentivizes people to utilize the preventative services available to them, but keeps costs low for people who cannot help being sick, and would face higher medical costs.
Lastly, even unemployed people contribute to SHI the same proportion to their unemployment benefits as everyone else pays from their income, and the government contributes on behalf of those facing long-term unemployment.
One of the primary concerns regarding universal healthcare systems that have minimal costs for patients is overuse. To prevent this, the sickness funds offer a range of deductibles and no-claims bonuses to deter people from seeing a doctor unless they really need it (GKV-Spitzenverband, 2017). However, preventive services do not count toward these deductibles since higher initial spending on preventive services has been proven to reduce long-term medical costs.
Stakeholder perspectives
The administrative costs of health care in Germany is lower than in the US because it is more efficient. SHI physicians bill their regional associations according to a uniform fee schedule. These regional associations receive money from the sickness funds in the form of annual capitations. Copayments and payments for services not included in the catalogue are paid directly to the provider. For those with private health insurance, patients pay up front, then submit claims to their insurance company for reimbursement. To further improve administrative efficiency, Germany has moved towards electronic health cards to store medical data, insurance information, etc. (Glazinski, n.d.).
Because the prices for health services are fixed, and since there is a higher number of physicians per capita than in the US, the average salary for physicians is lower. However, higher income is projected due to less physicians currently in training (Björnberg, 2016). There also aren’t many financial incentives for doctors to keep patients healthy besides receiving a fixed annual bonus of $153 for patients enrolled in a Disease Management Program. This is somewhat offset by the competition that is inherent with private practices and hospitals.
Germans are notably more satisfied with their health care system compared to other OECD countries. 85% of Germans expressed satisfaction in their system, while the average for all the OECD countries was 71% (OECD, 2015). Wait times remain fairly low for both the publicly and privately insured in Germany. In fact, Germany had the highest percentage of patients who reported their last specialist appointment took less than 4 weeks, doing 3% better than the US (Blümel & Busse, n.d.).
The goal of the German healthcare system is to be more restriction-free and consumer-oriented (Björnberg, 2016). As long as they’re SHI-contracted, patients are allowed to choose their own doctor, choose their own hospital, and see a specialist when they see fit, all without having to face extreme costs. Similarly, health care is fairly decentralized and self-governing through the various organizations that negotiate insurance and price points.
The German healthcare system is also based on the principle of solidarity and strives to reflect communitarian values (GKV-Spitzenverband, 2017). Everyone covered by the SHI has equal access to receive care, regardless of their income level. The rich help the poor, and the healthy help the ill. In terms of access, the German health care system has been an absolute success, and that goal has been achieved. However, if quality of care is the primary metric of success, Germany still has a way to go. Because the number of physicians per capita is decreasing due to the aging population, Germany will especially need to focus on new technologies to improve both quality and efficiency.