Universal Healthcare, German Style

Likely because German-Americans have been so completely absorbed into American culture, we’re often surprised to learn that more Americans (17% plus, in fact) trace their family origins to Germany than to any other country. The huge wave of German immigration occurred in the 19th century, when eight million arrived in New York, virtually all passing though the famous Ellis Island.

Most had left Germany for all the usual reasons: the first wave farmers seeking better land, later waves seeking religious or political freedom.

During the second half of the 19th century Prime Minister (and later chancellor) Otto von Bismarck was succeeding in the Herculean task of coalescing the many separate kingdoms of Germany into a single German empire. One particularly compelling group of laws he forced through in the 1880s would actually survive two world wars, two military defeats, and continue as a vital part of today’s Germany.

These were his so-called socialist laws, namely financial compensation for injured workers and veterans, pensions for the elderly, and universal health care. Oddly, these weren’t particularly socialist at all. Bismarck hated taxes and didn’t want to spend a Deutschmark of government money on it. Instead, everything then (and even now) was funded via joint contributions by employer and employee. There’s even money set aside for coverage when there is no employer, such as during periods of unemployment.

In a previous health tip, I discussed the French health care system, generally regarded as the best on the planet.

Now, and especially since so many of us trace our family roots to Germany, here’s something about Germany’s system, regarded as second only to that of France.  We Americans might be more familiar with the Bismarck system than we realize because of its similarity to our own. There are hundreds of privately owned health insurance companies in Germany, called Krankenkassen, or sickness funds, and by law virtually everyone is enrolled in a company of their choice. These companies are highly competitive with each other, and people select one or another based on benefits and prices.

The major difference between Krankenkassen and US insurance companies is that the former are all not-for-profit, comparable to our Blue Cross companies. Most of ours, of course, are for-profit companies, with shareholders making more money when fewer benefits are paid out to you, the enrollee. Like our Blue Cross, senior management can pay themselves very substantial salaries and thus are amply rewarded when they can increase enrollment.

Every German chooses whatever sickness fund he or she wishes to enroll in, the choice made by employee, not employer. Like our system, however, the premium is shared between employee and employer, subtracted from every paycheck. If a worker becomes unemployed, a reserve fund covers all premiums until the enrollee returns to work.

Almost everyone in Germany is covered–virtually all citizens, “guest workers” (our green card holders), and even illegal immigrants. Like France, no one is deprived of health care because of lack of funds. No company can ever turn down a prospective enrollee because of a previous illness. There is no cherry picking for healthy membership as our system allows. Only the very wealthy are exempted from enrolling in a Krankenkasse. They instead may choose a separate and expensive system of private hospitals and doctors.

Like the French system, as a German enrollee you carry your medical records with you on a digitally encoded card, the Gesundheitskarte, which you present whenever you have a health service of any kind. The German system is undeniably generous, including visits to doctors, dentists, chiropractors, psychologists, physical therapists, opticians, hospitals, and nursing homes, as well as health club memberships and (with a doctor’s prescription) vacation trips to health spas. There is a tiny co-pay (roughly $15 every three months) and no deductible. Germany educates huge numbers of physicians and other health care providers (health care schools are free) and has a very large number of hospitals and clinics so there are no long waits for health care.

Costs

You can imagine that all this gets very expensive and indeed, whereas health care in France represents 10% of its gross domestic product (GDP), in Germany it’s up to 11%. But both these numbers are modest when compared to ours. The US spends 17% of its GDP on health care, and we’re world famous for our unequal distribution, with much of that spending going into the coffers of the for-profit insurance industry for administrative expenses (20% here, 5% in Germany).

As a side note, one of the provisions of the Affordable Care Act, signed into law in March 2010, requires the health insurance industry to reduce its administrative expenses to 15%. You can imagine the furor this caused. The industry countered by insisting that agent commissions, advertising, and promotional expenses of insurance products should be included in the health-benefit 85% portion, not in the administrative 15%. Just a couple of weeks ago, Health and Human Services ruled against the health insurance companies. If the new healthcare legislation is not overturned by the Supreme Court, insurance companies will officially be limited to 15% for expenses.

Even so, 11% of anybody’s GDP is quite a lot of money, and as a result there’s constant fee negotiation and re-negotiation going on in Germany. Unlike in France, the German government isn’t involved in this. Fees–whether to practitioners, clinics, or hospitals–are arranged between the Krankenkasse and the profession or hospital itself. There’s all the usual complaining that fees aren’t high enough (a fairly common provider complaint, regardless the system), but remember that medical school is free, malpractice insurance costs a fraction of what it does in the US, a majority of doctors have never been sued anytime in their careers, and payment follows days after service (rather than weeks or months, as in the US), and is never contested.

“The greatest burden for the working class is the uncertainty of life.”

It has puzzled health care historians just why a right-wing, war oriented ruler like Bismarck who hated taxes and government funding more than Ron Paul would initiate all these changes in Germany, changes Bismarck himself called “state socialism.” One clue is that he was willing to introduce social rights to avoid giving anyone political rights. And it was this failure of political rights that led to the massive emigration of Germans to the US during the Bismarck years.

But Germany was growing exponentially in the 19th century and Bismarck saw the need for a healthy workforce and for healthy young men for his army. Introducing these social benefits in 1884, Bismarck admirably stated, “The greatest burden for the working class is the uncertainty of life. They can never be certain if they will have a job, or that they will have health and the ability to work. We cannot protect a man from all sickness and misfortune. But it is our obligation, as a society, to provide assistance when he encounters difficulties…a rich society must care for the poor.”

Bismarck’s Lutheran streak apparently surfaced here, as he referred to his entire health and welfare system for everyone within German borders as “applied Christianity.”

Since our politicians endlessly refer to the US as a “Christian nation,” we might give more thought, as apparently Bismarck did more than 130 years ago, to just how we can apply some of that Christianity to ourselves.

Be well,
David Edelberg, MD

Acknowledgement  Much of the data in this article is derived from the 2009 book The Healing of America, by T.R. Reid. Subtitled “A Global Quest for Better, Cheaper, and Fairer Health Care,” I recommend it highly to anyone interested in our health care crisis and its possible solutions.