Germany

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Adverse Selection in Germany

July 27, 2011 in Health Insurance, International Health Care Systems | No comments

In Germany, poor and middle class individuals must use public insurance, but well-off Germans can choose between using public and private insurance.

“In Germany, about 90% of the population is publicly insured (Colombo & Tapay, 2004). Buying public insurance is mandatory for dependent employees with a regular employment contract as long as their income does not exceed the so-called compulsory insurance threshold. The public insurance premium equals a certain percentage (nowadays about 15% that are equally shared between the employer and the employee) of gross income up to the so-called contribution ceiling, and equal to it thereafter.”

Why would someone want private insurance? Coverage is universal in the public system and the deductibles and co-payments are limited. Here’s why”

“Contributions for private health insurance are mainly based on health and age, so buying private insurance is especially attractive for young individuals. As a consequence of this, and because of the fact that private insurers are allowed to reject individuals, the risk pool of the private insurers is much better than in the public system…Privately insured individuals can buy better care, e.g. treatment by the head doctor in a hospital or a single room in a hospital, but this comes at a higher price.  Deductibles and co-payments are much more common, and many insurers offer a rebate if an individual did not use medical services in the past calendar year.”

In fact, a paper by Hullegie and Klein (2011) finds that individuals with private insurance are much less likely visit a doctor. This is likely due to adverse selection although moral hazard may also play a role since private insurance plans have higher copayments and deductibles.

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International Healthcare Models: Germany

June 17, 2010 in Health Care Around the World | 1 comment

Here is my previous review of the German healthcare system.  Below is the some additional information on medical care in France based on the book by William Roth.

Funding and Insurance

  • An individual joins a sickness funds to receive medical coverage.  The sickness funds cover 90% of the population and the remaining 10% uses private insurance.
  • Employers and employees split the sickness fund premiums.  Employee payroll deductions for sickness fund premiums typically range between 9%-17% of income.
  • Those over 65 years old and the unemployed have the entire cost of the sickness fund paid for by the government.
  • The sickness fund sets the charges  for each procedure.

Physicians

  • Physician are paid on a fee-for-service basis.
  • Members of sickness funds can go to any physician they wish.
  • The government limits the number of providers in each field.
  • Competitive exams are taken to see who is accepted into healthcare training and who gets to specialize.  Medical education, however, is free.
  • GP students serve a residency followed by an apprenticeship with a licensed GP.
  • Physician ratio – 1:1170

HIT

  • Germany spends 8.6% of its annual healthcare budget on technological innovations.
  • The country is currently developing an electronic health cared to allow them to access the information on their electronic health record.

Source: Roth, WF (2010) Comprehensive Healthcare for the U.S.: An Idealized Model. Productivity Press, 174 pages.

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Health Care Reform in Germany

May 4, 2010 in International Health Care Systems | 1 comment

Health care in Germany achieves universal health care by mandating that individuals enroll in a sickness fund.  The German government requires lower and middle class individuals to enroll in the sickness funds, but richer individuals can opt out and choose to purchase their own private health insurance.  Approximated 9% of Germans have supplemental insurance; these private, supplemental insurance covers items not paid for in the sickness fund benefit package.  Most Germans like this system.

Yet the Economist reports that all is not  well in the German health care system.  Like Medicare in the U.S., the German sickness funds are funded by payroll taxes.  However, with an aging population and stagnant wage growth from the economic slowdown, paying for the increasing cost of medical care is becoming a burden.   Health care spending has not risen as quickly as in the U.S., party due to reforms such as the implementation of “disease management” programs to standardise care for ailments like diabetes, as well as lump-sum payments to hospitals that discourage over-treatment.

Philipp Rösler, the federal health minister, plans to institute a number of reforms to the health care system.  These include: 1) creating an agency to determine drug effectiveness relative to existing ones, and 2) “vouchers.”

Read the rest of this entry »

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Private Hospitals in Europe

January 18, 2009 in Hospitals, International Health Care Systems | 2 comments

Europe is known for having single-payer, government provided healthcare.  But  just because there is significant government involvement in the financing of medical services does not mean that private hospitals are non-existent.

An interesting series of post by HealthcareEuropa looks at private hospitals that operate in Bulgaria, Turkey and Germany.

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Health Care Around the World: Germany

April 24, 2008 in Health Care Around the World, International Health Care Systems | 3 comments

The most significant difference between Germany’s health care system and that of other countries is its use of sickness funds. All Germans with incomes under €46,300 are required to enroll in one of the sickness funds. Those with higher incomes can either join a sickness fund themselves or opt out and instead buy private insurance.

The federal government decides the global budget and which procedures to include in the benefit package. The National Association of Sickness Funds and the National Association of Physicians also help to form which benefits are included in the sickness fund benefit package. The state government regulates physicians and sets physician reimbursement rates.

In 2006, Angela Merkel proposed reforming the health care system by creating a centralized health fund, shifting funding from payroll taxes to general revenues, trimming benefits, and increasing cost sharing. This plan was abandoned due to a lack of public support and political opposition.

Percent Insured. 99.6% (There are about 300,00 uninsured individuals)

Funding. Sickness funds are financed through a payroll tax which averages 15% (but varies depending on the fund chosen). The tax is split between the employer and employee. In 2006, Germany ran a €7 billion deficit and the government has proposed a 1% increase in the payroll tax.

Private Ins. Approximated 9% of Germans have supplemental insurance. The private, supplemental insurance covers items not paid for in the sickness fund benefit package. As mentioned above, only middle- and upper-class individuals can opt-out of the sickness funds. Of those eligible to opt out, only about 1/4 of individuals do decide to opt out.

Physician Compensation. Physician reimbursement is set through negotiation with the sickness funds. Most of the negotiating power, however, lies with the sickness funds. Thus, the purchasing power of German physician’s wages is about 20% of that of physicians in the U.S. In 2005, there were physician strikes over low wage compensation. Further, physicians have to deal with significant reimbursement caps and budget restrictions. According to Tanner, physicians only attempt to provide the minimum care necessary.

Copayment/Deductibles. Until recently, there have been almost no copays or deductibles. Recently, Germans have begun paying €10 copays for prescription drugs, doctors visits, and hospital stays.

Technology. The U.S. has four times as many MRI units per capita and twice as many CT scanners per capita. Tanner claims that the existence of a small private insurance market helps to supplement technology spending. For instance, CT scanners at one point were almost non-existent in the public sector, but competition with private insurance companies meant that the public system had to add more CT scanners.

Waiting Times. It is a matter of some debate whether or not there are long waits for medical care in Germany. A WHO report says that “Waiting lists and explicit rationing decisions are virtually unknown.” On the other hand, another study finds that care is frequently rationed. For instance, the elderly and those with terminal illnesses are often denied care. Since hospitals are run through a global budget, this can reduce their incentive to treat those with serious, expensive-to-treat medical conditions.

Benefits covered. There is an extensive benefit package which even includes sick pay (70% to 90% of pay) for up to 78 weeks.

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Rating the “demi-gods in white”

November 19, 2007 in Healthcare IT | Permalink

GigaOM reports on some new Health 2.0 developments in Germany in its article “Health 2.0 Gaining Traction in Germany.”  Websites such as Helpster and Imedo are among a number of website which are now rating German physicians.  In order to take into account established medical institutions, Imedo is including the physician certification status as part of its rating.  This certification status is decided by the German Kassenärztliche Vereinigung, “a public organization in charge of distributing the lion’s share of physicians’ income.”

Will German physicians even engage in price competition for patients?  Two German websites believe so:

In the transactional domain, 2te-Zahnarztmeinung and Arzt-Preisvergleich have gained significant traction by running reverse auctions — primarily for dentists’ treatments — which allow for a high degree of comparability. Navigating closely on the edge of what German law allows, a potential patient does not have to automatically contract with the cheapest offering. Instead, she can compare all anonymously quoted prices and take into account the ratings given by patients who have undergone a similar treatment. The physician she chooses then awards 15 to 20 percent of his fee back to the platform.

Is this the wave of the future?  The Healthcare Economist says yes and no.

Yes because for medical procedures which are 1) fairly routine, 2) of relatively low risk and 3) where the patient has a high quality of information regarding the cost and benefits of the procedure, the internet can provide an important means of disseminating information and driving down price.  Dentist visits are predictable and quality is relatively easy to measure.  Thus using these websites will be a boon to consumers.

No because for more complicated procedures these website’s information will likely not be helpful.  Using outcome measures for complicated procedures must make risk adjustments to take into account patient case mix.  Process measures may be to simple to take into account factors such as disease interactions.  And structural measures (e.g.: nurse-patient ratio, the use of electronic medical records) may only be peripherally related to the quality of care.  I doubt that cardiothorasic surgeons will start bidding for patients any time in the near future.  Patients, whose cost for these expensive procedures will generally be covered by insurance, will choose a doctor likely based on their primary care doc’s referral or the opinions of their peers.

Thus, the Health 2.0 movement is likely to be a significant development for the low-cost, predictable sector of medical care.  Specialist and hospital care is much more difficult to measure and price and I believe will likely be hardly affected by these new developments.

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