Healthcare in Germany

Germany’s healthcare system has its roots in the Middle Ages. Guilds provided an early form of health insurance based on the principle of solidarity. All guild members paid into a fund which was then used to help individual members if they had financial difficulties, like in case of an illness or accident. Germany also started the world’s first national social health insurance system in 1883. Its main primary goal was to provide insurance in the event of illness, mainly for workers involved in both industrial and non-industrial production. Anyone who was insured was granted the right to free medical treatment and medicine. As well as sick benefits and a funeral allowance. At that time, around 10% of the population had health insurance. Germany currently has a universal multi-payer healthcare system paid for by a combination of statutory health insurance and private health insurance. 

The German healthcare system is notable for the sharing of decision-making powers between the federal and state governments and self-regulated organizations of payers and providers. The way Germany’s legal framework is setup, the federal government has wide-ranging regulatory power over health care but is not directly involved in care delivery. The German healthcare system is regulated by the Federal Joint Committee. It is a public health organization authorized to make binding regulations growing out of health reform bills passed by lawmakers, along with routine decisions regarding healthcare in Germany.  

The Federal Joint Committee consists of 13 members. They are entitled to vote on these binding regulations. The members are composed of legal representatives of the public health insurances, the hospitals, the doctors and dentists and three impartial members. There are also five representatives of the patients in a nonvoting advisory role. One of the committee’s most important tasks is to decide which treatments the insurances have to pay for by law. The principle about these decisions is that every treatment has to be required, economic, sufficient and appropriate. 

The Federal Association of Sickness Funds works with the Federal Association of Statutory Health Insurance Physicians and the German Hospital Federation to develop the ambulatory care fee schedule for sickness funds and the diagnosis-related group catalog, which are then adopted by bilateral joint committees. Germany’s state governments also play an important administrative role. The 16 state governments determine hospital capacity and finance hospital investments. States also supervise public health services. Regional associations are required to guarantee the local availability of ambulatory services for all specialties in urban and rural areas and to also negotiate ambulatory physicians’ fee schedules with sickness funds. 

As of 2009, when health coverage was expanded to everyone, health insurance has been mandatory for the entire population. Around 86% of the people in Germany are enrolled in statutory health insurance (SHI). SHI provides inpatient, outpatient, mental health and prescription drug coverage. Administration is handled by nongovernmental insurers known as sickness funds. Salaried workers and employees who make less than 62,550 Euros are automatically enrolled in a sickness fund. The fund has a common rate for all members and is paid for with joint employer-employee contributions. The employer pays half of the contribution, and the employee pays the other half. Each end up paying a little over 7%. Those who are unemployed or self-employed without benefits must pay the entire contribution themselves. Social welfare beneficiaries are also enrolled in SHI and municipalities pay contributions on behalf of them. 

People who make over 62,550 Euros, students and civil servants can choose private insurance. Currently, around 11% have private insurance. Private insurers charge risk-related contributions. This can result in large savings for younger individuals in good health. With age, private contributions tend to rise and a number of individuals formerly cancel their private insurance plan in order to return to statutory health insurance. In the Private system the premium is based on an agreement between the insurance company and the insured person defining the set of covered services and the percentage of coverage. Also, it depends on the amount of services chosen and the person’s risk and age and is used to build up savings for the rising health costs at higher age which is required by law. For sickness fund enrollees, private insurance plays a mixed complementary and supplementary role, covering minor benefits not covered by SHI, including some copayments and private hospital rooms. 

In 2017, out-of-pocket spending accounted for around 13% of total health costs. Most individual spending went to nursing homes, pharmaceuticals and medical aids. Copayments are set by federal legislation and applied at the national level. To stay competitive, sickness funds offer a range of deductibles and no-claims bonuses. Preventive services do not count toward the deductible and there are no copayments for recommended preventive services. Physicians who contract with sickness funds are not allowed to charge above the fee schedule for services in the SHI benefit catalogue. However, a list of individual health services outside the comprehensive range of coverage can be offered for a fee to patients paying out-of-pocket.  

Quality of care is determined by law and by the Federal Joint Committee. The Institute for Quality Assurance and Transparency is responsible for measuring and reporting on quality of care and provider performance. Germany has good access and little discrepancies in its healthcare. Compared to percentages in other European countries, the share of population reporting an unmet need for medical care is very low. Germany has some of the lowest infant and maternal death rates. They also have a long life expectancy. Many in the U.S. believe that they should model any future healthcare reforms on the German system.