Fraser Forum

How Germany embraces the private sector to deliver universal health care

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Like those in Australia, France, the Netherlands, Sweden and Switzerland, the German health-care system is yet another example of a high-performing universal health-care system that delivers more timely, quality care—for similar or lower costs than Canada. As in these other countries, and unlike in Canada, Germans are able to access a vast network of public, private not-for-profit, and private for-profit insurers and hospitals.

In this third installment of our multi-part series, we present a brief characterization of Germany’s universal health-care system, paying particular attention to the role of for-profit insurers and hospitals.

Part 3: Universal health care in Germany

Germany spent 9.6 per cent of its Gross Domestic Product [GDP] on health care in 2012—about two percentage points less than Canada (11.8 per cent) on an age-adjusted basis. For that level of spending, Germans had access to about the same number of nurses and diagnostic imaging machines (per capita), but more physicians and beds (per capita), and considerably shorter wait times for family doctors, specialist care, elective surgery and emergency room care.

Germany’s universal health-care system actually consists of two insurance systems: the Statutory Health Insurance [SHI] system for most Germans and the optional Private Health Insurance [PHI] system, which primarily serves high-income earners and the self-employed. Both systems are funded by health insurance premiums and both are operated by multiple privately owned and operated insurance companies.

About 86 per cent of the population participates in the SHI system, which consists of about 145 competing, independent, not-for-profit “sickness funds.” Premium payments are based on a fixed percentage of wages (split between employers and employees) while unemployed spouses and dependents are covered without additional cost. These premium payments are pooled with tax contributions, and are redistributed among insurers by governments to account for differences in the risk-profile (age, pre-existing medical conditions, and so on) of their respective populations. Patients are generally expected to share the cost of their prescribed drugs, hospital stays, and prescribed medical aids through small copayments (€5–€10), although medical services rendered to children are exempt and an annual income-based ceiling applies to all adults.

About 11 per cent of the German population participates in the PHI system, which consists of 24 for-profit and 19 not-for-profit insurance companies. Such insurance is optional for those earning more than €50,850 and the self-employed, however family members are not automatically covered and individuals who choose leave the SHI system cannot opt back in (though regulated options offering similar coverage to the SHI system at lower cost are available).

Plans offered by insurers in the PHI system can include benefits that allow patients to receive treatment by senior or head physicians, superior hospital accommodation, and access to practitioners who do not participate in the SHI system. Insurers in the PHI system can set premiums based on a patient’s risk-profile at the time of application, but cannot increase them during the lifetime of the patient. They also cannot cancel contracts, and cannot refuse to cover patients with pre-existing conditions.

Regardless of their coverage by SHI or a PHI, Germans may seek care privately if they choose to do so.

Hospital care in Germany is delivered by 833 public, 1,040 not-for-profit, and 1,356 for-profit hospitals. Nearly all hospitals (public and private) provide care to both SHI and PHI patients, with 99 per cent of all hospital beds being accessible to SHI-covered patients. There are only a few private for-profit hospitals that serve only PHI patients. While patients generally have free choice of hospital within the SHI system, their choice of physician within the hospital is restricted to the doctor on duty or doctor assigned by the hospital. PHI patients may choose both their hospital and physician.

The German health-care system is a yet another example of how public and private insurers and hospitals can not only co-exist, but complement and support one and another in order to better deliver on the promise of universal health care. It’s time Canadians abandoned their fear of profit-making in health care and realized private insurers and hospitals form the basis of many of the world’s finest universal access health-care systems.


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