The German Healthcare System and Some Thoughts About the EU

1. The German Healthcare System and Some Thoughts About the EU Lecture 8 Tracey Lynn Koehlmoos, PhD, MHA HSCI 609 Comparative International Health Systems

2. Germany • Official name: Federal Republic of Germany • Population: 82.4 million • Capital: Berlin • Government: Federal Republic • Divisions: 16 states (Länder) • Largest country in Europe

3. German health update • Life Expectancy: 75.8 m/ 81.9 f (2006) • Infant Mortality: 4.1 per 1000 (2006) • Population >65: 19.4% (2006) • Leading mortality causes: 50% heart disease, 25% cancer (more heart disease and lung cancer than other European nations) • Health care expenditures as % of GDP: 11.1 (2003) • Health care expenditures per capita: $2,996 US

4. Political-Historic Impact on Health • In 1991, the five states of the German Democratic Republic (communist, East Germany) reunited with the Federal Republic of Germany (West Germany) • This reunification brought down the statistics used to indicate health status of the nation (particularly infant mortality and life expectancy) • There continues to be disparities between the two regions but the gap is closing • Cleaner environment • Adoption of the FRG’s healthcare system

5. History of the System • Germany is noted for being the first nation to introduce any form of social security • 1883, the Bismarck System made nationwide health insurance compulsory • Later additions include: • Work related accident and invalidity (1884) • Old age and disability (1889) • Long Term Nursing Care (1994)

6. Guiding Principles • Principle of Social Solidarity: a nation is responsible for the provision of social systems for its citizens (to include health care) • All members should have access regardless of ability to pay • The cost is spread across the population via income-based premiums (rather than risk-based premiums)

7. General Information • Most comprehensive system of benefits offered by any nationalized insurance scheme • Primary, specialist care • Vision • Dental • Pharmaceuticals • Alternative therapies • Some spas (health farms)

8. Organization • Ministry of Health—highly decentralized • 16 Länder--share decision making power • None have specific health departments but share with Labor and Social Services • Corporatism: further power is delegated to statutory insurance schemes • Hands over rights of the state to self governed institutions • Corporatists institutions have mandatory membership and the right to raise their own fund reserves

9. Subordinate to the Ministry of Health • Fed. Inst. of Pharmaceutical & Med. Devices • German Inst. For Medical Documentation & Information • Fed. Inst. for Communicable & Non-Communicable Diseases (like our CDC) • Fed. Inst. For Sera & Vaccines • Fed. Inst. For Health Education • Fed. Inst. For Health Protection of Consumers & Veterinary Medicine

10. How it Works… Regional healthcare systems are managed by sickness funds and physician associations Sickness funds: regional groupings or employment based third party payer insurance companies The Feds and the States are responsible for hospital planning and upkeep

11. Financing the German Healthcare System • 60% Compulsory & voluntary contributions to statutory health insurance • 21% General taxation • 11% Patient payments (modest co-payments) • 7% Private Insurance • If you earn less than ~ $40K you must carry sickness insurance • Amount of premium RAISES according to increased salary from 8.5 to 17%

12. General Financial Issues and Woes • At present income to the healthcare system exceeds expenditures • However, with the aging population, negative population growth rate (-.2 for 2006), and higher expenditures—a healthcare deficit looms large in the future without change.

13. Sweeping changes • Emergence of diagnosis related groups (DRGs) • Implementation of disease management programs (DMPs) • “Positive list” in the pharmaceuticals sector • Germans drug expenditures consume 14.6% of total health care expenditure (highest in world) • German physicians write an average of 11 prescriptions per patient

14. Complex Physician Payment • Physicians do not have a relationship with the insurers • The insurers pay regional physicians’ associations • The associations pay physicians from a capitated pool • If a physician is using too many resources, he receives a warning to cut back from the association

15. Health Services Workforce • Physicians—Surplus! High salaries! • 3.4 per 1000 population • 55% are generalists • Most generalists are in private practice but belong to professional association to negotiate rates • Patients have full choice of GP or specialists in private practice • Generalist are “gatekeepers” to hospitals and specialists—so are often skipped • Specialists—in public hospitals--salaried

16. Health Services Workforce • Nurses • 9.7 nurses per 1000 population • Traditionally the domain of nuns and/or lower class women (a nurse is called “sister”) • Mostly hospital based diploma programs • Nurses work directly under physician direction • Germany has a long standing shortage of nurses • Many hospital-based midwives delivering babies for physicians

17. Hospitals • 831 public hospitals • 835 independent, not-for-profit (denominational) • 374 private hospitals • For Operating Costs: Hospitals negotiate with Krankenfunds (prospective payment) • For Capital Investment: the Länder

18. Long Term Care • Added in 1995 as a fifth pillar of social insurance services • Pflegeversicherung • Financed through employment related insurance payments ~2% of monthly salary • Families are considered in “means testing” for funded nursing home care • There is a dichotomy between social and healthcare services

19. Compared to US • Germany has 2nd highest percent of GDP spent on health care in the world • According to the 2000 WHO study: • Germany's health care system: #6 in fairness of financial burden, #14 in overall goal attainment, and #14 in terms of overall performance. • America's system: 54th in financial fairness, 15th in goal attainment, and 37th in overall performance.

20. The European Union • I would be remiss not to address the importance of the expansive impact of the EU on its member states • The EU acknowledges the necessity of access to health services for all people as a means of reducing poverty and suffering • The guiding principles: cost, quality, access

21. More EU and healthcare • In 2000, health care accounted for 27.3% of all social protection expenditures in the EU-15 (2nd only to retirement pensions) • The EU is working to establish a “Global Strategy for Healthcare Systems” to enable citizens of member states to have portability and/or access to health care as they are free to live and work in other member states.

22. European Health Insurance Card • Issuance of European Health Insurance Card • Started June 2004 • Applicable for European citizens traveling within the European Economic Area (European Union, Norway, Iceland and Liechtenstein and Switzerland) • For use due to a medical necessity while temporarily visiting another country • The card guarantees quick refund/payment for health services received at public facilities abroad.

23. More EU • The EU mantra for health planning is “open method of coordination” • Major issue of concern: the aging of the European population • Over 65’s to increase 64% between 2010 and 2050 • Will we see a unified EU healthcare system any time soon?