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Germany: A Model for What Health Care Should Be?

It’s fairly safe to say that the debate surrounding health care in the United States is long from over. During President Barack Obama’s first term, he fought to implement a new health care system that is projected to shave hundreds of billions off medical costs over the first decade. Once President Obama’s second term comes to an end, many Republican candidates have sworn to repeal the Affordable Care Act (ACA) if elected into office. Why is it so hard for all Americans to come together and agree on a single health care system? How is it that so many European countries have implemented successful universal health care systems for decades, while the United States still lags behind? Why does the United States spend, in many cases, more than twice the amount in health care costs than any other developed nation? Quite simply: can’t we just copy the European models?

For instance, Germany has one of the most successful universal health care systems in Europe. Unlike the United States, each and every German citizen has insurance. There are dozens of insurance collectives that provide coverage; each citizen must belong to one of these funds according to German law. These sickness funds, in turn, cover the bulk of medical costs. Even in terms of co-pays, the out-of-pocket cost is typically very low (approximately 10 euros) and in cases with frequent visits, there is a limit on how much co-pay an individual will have to pay.

The good news is that the United States, through the ACA, has actually implemented a similar system. Under the new law, every citizen – if financially able – is required to buy insurance. Moreover, there are limits to how much each person must pay for co-pays. Unfortunately not everyone in the United States has insurance, co-pays are far more expensive in the United States than in Germany, and co-pay limits are higher.

Other differences exist. In the United States, those living in poverty are Medicaid-eligible while those in the middle class and above are forced to buy insurance. The problem is that there is a gap between these two social classes; there are those who make too much to be Medicaid-eligible yet make too little to qualify for government-funded insurance via the new exchanges. As a result, these individuals are far less likely to have insurance. What’s Germany’s solution? They simply base each citizen’s insurance premium on a percentage of their income.

Perhaps the biggest difference between Germany’s health care system and that established by the ACA centers on medical networks and cost. In Germany, there are no network limitations. In other words, you can see pretty much any doctor you want. Even more importantly, there are no deductibles, so Germans do not have to meet some match-price before their insurance begins covering the bulk of any future medical expenses. Another difference is how Germany bills for procedures. While the United States has an extremely variable range of cost for medical procedures, Germany employs a uniform fee schedule where all physicians abide under a single code that lays out what each procedure costs. This is in contrast to the United States, where operations can differ by tens of thousands of dollars depending on what state and hospital you visit.

Just how does Germany pay for all this? Well, it’s not cheap. Unlike the United States, Germany mandates that all citizens spend 50% of their income on taxes. While this is higher than the average 25% to 35% tax bracket here in the United States, the 50% in Germany goes a long way. Not only are these taxes being used for the same purposes as in other nations (transportation, parks, city maintenance, etc.) but it also pays for two very important things: education and health care. In Germany, education is either completely free or so cheap that it’s practically free. Moreover, living expenses for German students are at a greatly reduced price; dorm costs are so inexpensive that many Germans continue their studies so that they can live at such low costs. Thus while the average American may spend about 30% of their income on taxes and the average German spends around 50%, this extra 20% goes towards providing them with a nearly free education and one of the best health care systems in the world.

So where does Germany stand among other European nations in terms of health care? While Germany spends more per person in health care costs than the United Kingdom and France, Germans are actually rated as more satisfied with their health care system when it comes to medical access and wait times. Germany spends a little over 10% of its GDP on health care while the United States uses almost 20%; this comes out to approximately $4,000 and $9,000 per person, respectively. In other words, the United States pays more than twice the cost of health care per person compared to Germany.

The ACA is similar to Germany’s health care system in that both require its citizens to purchase health care, are multi-payer, employer-based, and fee-for-service. Given its infancy, it would be premature to discredit the ACA as a viable option for the United States. Does a system like Germany’s require a 50% income tax collect in order to be successful or can the ACA prove to be just as successful by leveraging taxes from pharmaceutical companies and eliminating medical waste? We’ll just have to wait and see.

Ghady Rahhal Ghady Rahhal (4 Posts)

Contributing Writer

Medical College of Wisconsin

Ghady Rahhal graduated from SUNY with a bachelors in Molecular Biology and minors in chemistry and philosophy. Shorty thereafter, Ghady moved to Boston and worked as a Network & Clinical Analyst for a healthcare company that focused on community-based care. Prior to attending college, Ghady lived in Lebanon which has given him an appreciation for Global Health - a field which he continues to be active in today. Currently, Ghady is a medical student at the Medical College of Wisconsin.