Reforming Germany’s health care system: The question of keeping solidarity

By Simon Gajer  

1. Solidarity and a chronically stressed health-care system

"Solidarity" and "individual responsibility" are two principles of the German health care system. The German Department of Health praises the German health care system: the insured receives medical treatment according to his/her needs and pays money accordingly to his/her wealth (BmG 1997: 10--11). (In Germany, every employee and their family, but also retirees, students and unemployed people have to be insured at insurance companies on either the regional level or some form of work-based level. This paper will focus on this system where around 90 percent of German citizens are insured; a short introduction to the German system: Avenarius 1997: 133--135.)  

Source: Süddeutsche Zeitung, November 11, 1998: 2.

As you can see in the charts, the contributions paid by both the employee and the employers have increased--and still are expected to increase further: from roughly 13.6 percent up to 17.5 percent by 2030; even though, the system has been reformed over the years (see Bontrup 1996: 833; Spiegel 30/1998: 72).

Some pressure groups on the side of "health-providers" argue the health care system’s expenditures are supposed to increase steadily. The society should ask itself how much its health is worth. Since Germany is supposed to have one of the best health care systems Germany should spend more money so the system can further exist, they argue (Spiegel 34 / 1998: 52).

However, other observers disagree. They say the German public health care system is falling apart because of ever increasing costs (Huber 1997: 854). The opponents of a constantly increasing budget of the health care system see the problem in increasing costs: Can a health care system only be held alive by higher individual contributions which then end solidarity among the insured--only focusing on the individual responsibility? Is Germany heading towards a two-class-patients way: those who can afford everything and those who only get a minimum treatment, like in the US?

The aim of this paper is to analyze the problems causing the financial problem. A closer look at reforms introduced by the Kohl’s government will focus on ways how to rectify. The last chapter will focus on new legislation that has already been passed by the new majority in parliament--under Chancellor Gerhard Schröder and namely his Minister of Health, Andrea Fischer--after the election in 1998.

2. Increasing life expectancy, improved medical treatments and egoism in the system

In order to meet the expectation in the future of the health care system, it is important to take a first look on the causes of the Health care system’s diseases.

Two of the fundamental problems are: an increasing life expectancy causing the need for more money by more elder people. The second problem, if medical treatment improves it then becomes more expensive (see BmG 1997: 3).

However, there are also some more ego-related problems led to increasing costs (Germany’s social system is like a jointly financed and privately exploited supermarket, says Kühn [cited from Bontrup 1996: 834]).

The people shopping in the supermarket are: the insured, the doctors, the health care insurance providers and the medical industry.

At first, I will look at the insured persons’ contribution to the health care system’s increasing costs. As you will see, the idea of supply and demand would lower the cost does not work in the health care system.

Firstly, patients, as part of the demand side, can hardly lower the costs for treatment they need. An analyst argues illnesses can not be influenced by the people--illnesses are part of life. Therefore, the demand side has no real chances to decide freely about what medical treatment is good and which is not (Bontrup 1996: 836).

However, the system working on the principle of solidarity raises a problem: insured people do not see the costs of their actions because the community of all insured people pays for medical treatments. In one way, the insured act rationally wanting medical treatment to improve their life (Bontrup 1996: 833; Spiegel 34 / 1998). At the systemic level, however, individual rational actions increase the overall costs--if done many of times. The former Minister of Health, Horst Seehofer, tried to steer the insured people’s actions towards cost-reduction, e.g., by increasing the contributions the insured had to pay for medicine and for staying in hospitals. It is expected to receive an additional 20 billion Mark in 1998 from these measures.

Further, the increasing costs have not changed the way people act. Additional costs have to be higher if people are supposed to change their behavior and visit the doctor less frequently. Increasing contributions would also end the "Solidarprinzip" (the principle of solidarity)--as said, one of the system’s main principles. Then, only the lower income insured have to change their routines. (Bontrup 1996: 836; Huber 1997: 854--855; and Spiegel 34 / 1998: 60). The new Minister of Health has canceled this law and lowered the contributions (Graupner 1998).

However, the health care system has another problem: as analysts point out, the physicians in Germany have a more powerful status than the insured people since doctors know what is (supposed to be) the best for the patients. A so-called Positivliste--list of adequate medicine and treatments--has not been established yet (Huber 1997: 854--855). Instead, the doctors’ pressure groups point out that the system’s funds should increase further to keep the standard, in other words, put more money in the system (Spiegel 34 / 1998: 54--55).

Another factor on the doctors’ side contributing to the health care systems problems is the way the doctor’s salary is calculated. Doctors are paid for each examination: the more they do, the more money they accumulate. So far, ideas to stop the collectively based system of negotiations between the physicians’ and the health insurance providers has not been changed; since the doctors' side seems not to be willing to end their ways to get the money (Bontrup 1996: 838).

Another factor contributing to increasing costs in the health care system is medicine producers. Some medicine seems to be more expensive in Germany than in other countries. The market acts like a monopoly where participants do not have to fear market pressures--everyone dealing with medicine receives its own share if the expensive medicine is sold--and paid by the collective (Bontrup 1996: 842).

After looking at the factors contributing to the increasing costs in the health care system it can be said the powerful players in the market are located on the supply-side: while doctors and medicine factories can pressure for "more money", the demand-side does not have any real choices. (Bontrup 1996: 836-837; Spiegel 34 / 1998: 60--61).

3. The way to the Two Class System à la USA?

What are the reform ideas made by past and present legislation? Will the system become a two class system: on the one hand, the class including people who can pay everything and, on the other one, those who can not?

When looking at the health care system in Germany, one might see the old question rise above the horizon: how much state action does a country need? (Bontrup 1996: 834)

To save the German system, some politicians argue liberally: the people themselves should be responsible for their health care coverage. Then, supply and demand themselves would stabilize the costs (see Bontrup 1996: 833--834 or Spiegel 34 / 1998: 60).

However, only focusing on "The more you pay the more you get" would lead to a system punishing, at least, not the rich. As it was shown in the previous chapter of this paper the side of demand has less influence than the supply side: if someone becomes ill s/he has the medicine subscribed and takes for granted the medicine is the best according to the price-performance ratio. Reforms letting the market work on its own would only lead to a two class system. It would immediately end solidarity within the health care system of Germany.

Another problem of the money-focused health care system is the non-connection of expenditures, on the one hand, and "health" on the other. A study--conducted by the OECD--showed that "expensive" systems do not necessarily provide a longer life. In the US, roughly 14 percent of the GNP is spent on health care and the life expectancy for men is 71,9, for women 78,9 years. In Germany, around 10,4 percent of the GNP is spent, and men live around 73,3 years, while women live about 79,8 years. In Japan, however, only 7,3 percent of the GNP is spent on health care, but the men live for around 77 years, women for 83 years (Spiegel 34 / 1998: 60).

Although, culturally different living styles can be hardly compared, it is important to see increasing costs in health care do not necessarily bring better health.

What steps have been taken to reform the health care system of Germany?

4. Reform proposals: end of solidarity?

As mentioned above, the system looks more like a "for free supermarket" than an "everyone gets what s/he needs store." Therefore, the main question regarding reform proposals is: does Germany’s health care system want to gain more profit or does it want a more moral system focusing on solidarity (Huber 1997: 858)?

In 1991, legislation was passed to lower the expenditures of insurance companies. For example, an annual limit was set for the expenditures on medicine subscribed by doctors, as well as the hospitals’ budgets. Also, the number of doctors per citizens was reduced. Also, rich health insurance companies had to finance poorer ones. Legislation also tried to make the health insurance providers work more efficiently: if an insurance company raises the costs for the people to be insured, the insured person is allowed to switch providers immediately (Avenarius 1997: 134; Bontrup 1996: 838--839; Spiegel 34 / 1998: 56).

The so-called third step of the health-care-system reform--introduced by the Kohl-government and passed in 1997--tried to put more pressure on the insurance companies to lower costs. For the first time since the birth of the new Germany in 1945, the system of health care could not grow as it--or the supply side--might have wanted. For example, the money doctors get from the insurance companies had been limited to a certain amount per year--it was lid-ed, as it became known in Germany (see Spiegel 34 / 1998: 56).

However, the new government is in the process of removing parts of the Kohl-legislation. "Strengthening solidarity in the statutory health insurance [translated by the author]," the legislation was named. The new government further cut down the budget of health insurance, as well as it lowered the patients’ contribution to medicine subscribed by the doctor. As one observer says, "The patient should not be anymore the provider of money if the insurers run deficits" (Graupner 1998, translated by the author).

5. Outlook: what is really needed by the patients?

This paper focused on both the problems of the German health-care and the reform proposals introduced by the parliament.

One of the main principles of the German health care system is solidarity. Since the health-providing industry calls for more money, the German health care system can hardly be run by the relationship of supply and demand while remaining, at the same time, a system based on solidarity. However, it is also important to see the problems that have already risen because of the regulated system: the increasing egoism among the participating groups in the system focusing on their gains (Bontrup 1996: 834). Therefore, the system should remain regulated by the state.

Some analysts argue, future reforms should not only focus on one part of the system: only an overall reform might stabilize the health care system and its principle of solidarity. A new system does not have to necessarily be liberal where people get a minimum standard of health care while others can afford everything. It could be more efficient when solidarity and subsidy are combined. Individual profits should be decreased and the health care system should become more socially oriented (Huber 1997: 856).

How can the efforts--made by the new parliament--be judged?

As it was mentioned, the new government’s legislation limits the expenditures of the health insurance providers and, therefore, limits the expenditures of the doctors. However, some chronically ill person may not get the right treatment because the therapy could be seen as too expensive. Thus, exceeding the budget. Limited budgets only focusing on economic aspects may forget the principle of solidarity (Graupner 1998).

6. Bibliography:

Avenarius, Hermann. 1997. Die Rechtsordnung der Bundesrepublik Deutschland. 2nd revised edition. Bonn.

  Bontrup, Heinz-J. 1996. Chronisches Leiden. Die Krise des Gesundheitsmarktes. Blätter für deutsche und internationale Politik 41.7:833--842.

  Bundesministerium für Gesundheit [cited: BmG]. 1997. Die gesetzliche Krankenversicherung. Bonn (November).

  Bundesministerium für Gesundheit. 1998. Kehrtwende in der Gesundheitspolitik. Informationen zum Gesetzentwurf zur Stärkung der Solidarität in der gesetzlichen Krankenversicherung. Bonn (November 11).

  Graupner, Heidrun. 1998. Patient soll nicht länger der Geldgeber sein. Süddeutsche Zeitung. November 11:4.

  Huber, Ellis. 1997. Das Gesundheitssystem neu denken! Das Geschäft der Medizin und das soziale Gewissen der Heilkunst. Blätter für deutsche und internationale Politik 42.7 (July):853--861.

  Der Spiegel. 39 / 1996. Ohne Stützstrumpf:120--121.

  Der Spiegel. 30 / 1998. Logik des kalten Buffets:64--75.

  Der Spiegel. 34 / 1998. "Mehr Geld ins System!" 52--61.