How Germany's Universal Health-Care System Works

Seventy percent of Americans say the U.S. health-care system is in a state of crisis or that it has major problems. That's why we're hearing a lot about Medicare for all, including some plans going as far as banning private health insurance companies altogether. On page eight of the bill, it says that we will no longer have private insurance as we know it. And that means that one hundred and forty nine million Americans will no longer be able to have their current insurance. That's in four years. I don't think that's a bold idea. I think it's a bad idea. Problem. Senator Sanders, with that damn bill that you wrote and that Senator Warren backs, is that it doesn't trust the American people. I trust you to choose what makes the most sense for you. Not my way or the highway. One country found a way to provide universal health care coverage while maintaining a competitive insurance market that offers citizens more choices: Germany. Here's how they did it. In 2017, U.S. health care spending came to around $10,200 U.S.

dollars per capita in Germany. It was a little under $6,000. Overall, Germany spent about 11.2 percent of its GDP on health care, while the U.S. spent 17.1 percent. Germany manages to cover 100 percent of its population. In the United States, about 8.8 percent of the population remains uninsured. That comes to about 28 million people with even more people underinsured. Despite spending less, Germany has better or comparable health outcomes to the United States. Studies show that in Germany, there were fewer deaths that could have been prevented with proper access to care. In 2013, there were 83 avoidable deaths out of every 100,000 people in Germany, while the United States had 112. Life expectancy in Germany is 2.5 years higher than the United States, and the infant mortality rate is lower in Germany, with 3.3 deaths per 1,000 live births as opposed to 5.8 deaths in the United States. Additionally, the maternal mortality rate in the United States is more than 2 times higher than in Germany.

So how does Germany manage to have better health outcomes while spending nearly half as much as the United States? Germany is a system that would look familiar to Americans in that everybody buys health insurance from a private company and then the doctors and the hospitals and the labs are almost all private. That's T.R. Reid, author of the book "The Healing of America." He traveled the world exploring different health care systems and how well they worked. But it works better in Germany for a couple reasons. One is everybody is covered. Everybody is required to have insurance. Everybody's in the system. The insurance companies can't turn you down because you had cancer last year or something, they have to take you. They have to cover you. Everybody has access to the same treatment and all the doctors. You can go to any doctor without any limits set by the insurance company. In Germany, health insurance is mandatory for all citizens and permanent residents. There are two different systems that residents can turn to for insurance. SHI, which stands for statutory health insurance and PHI

or private health insurance. German citizens are eligible for PHI if they make more than a roughly 60,000 U.S. dollars per year or if they are self-employed . Citizens making under that threshold must pay into S.H.I. S.H.I is made up of a network of competing, not for profit private health insurance funds known as sickness funds. In S.H.I., dependents are covered free of charge and monthly costs are capped around 840 euro per month. Even though S.H.I sickness funds are not government agencies, many Germans think of them as part of a public system because of heavy regulation. Keith Tanner helps expats navigate the German health care system and he considers SHI sickness funds quasi -public organizations. Basically, they have to do what they're told. They they are told by the government in what range they can charge. They they're told what health procedures they can fund and they are told by the government who they can accept as clients so they're really just carrying out orders. They're basically charities. They don't exist to make a profit for investors like American health

insurance companies. They're there to keep people healthy. That's what they're there for. They follow all sorts of rules that American insurance companies wouldn't dream of. This system is funded through compulsory contributions based on a percentage of citizens' salaries with employers sharing the costs. There are also built in safety nets. The government will pay into S.H.I. on behalf of the long term unemployed. Despite being non-profit organizations, sickness funds compete for customers by offering specific coverage and perks. This competition has changed over the years as the system has allowed citizens more choice. As of 2019, there are about 100 statutory health insurance companies, but there used to be many more. When Germany's system was first established in the late 1800s, sickness funds were linked to a person's profession. It used to be that people were assigned to a specific sickness fund based on their occupation or region. Now Germans can choose where they enroll and they can change funds on a yearly basis. As a result, sickness funds begin marketing themselves in order to retain customers and attract new ones.

This also led to the funds merging so they could become more competitive. Some of the sickness funds offer perks that might seem similar to credit card rewards. You still can get a bonus for going to the gym and a bonus having a checkup. This is in the public system. And if you get a certain number of bonus points, then you get a voucher. But kind of trivial stuff like 200 euros a year or something like that. 200 euros a year. Nothing which is particularly relevant to the person who's paying their 840 a month. As of 2017, roughly 87 percent of Germans receive their primary coverage through S.H.I. and 11 percent of the population through P.H.I. The remaining population, such as soldiers, police officers and refugees receive health insurance through specific government programs. All individuals insured through P.H.I. pay a risk related premium with separate premiums for each dependent. These risk based premiums mean that costs will increase as the insured gets older. As a result, the government regulates P.H.I. so people don't become overburdened by premiums as they age.

The biggest issue with private health insurance if you opt out of a public system is affordability in old age. If you don't impose these financial constraints on insurers, then the government will be lumbered about a whole lot of old people who reach 85, 90, 95. It's gonna be totally able to pay for their health insurance, so it'll all fall back on the government. Once someone switches to P.H.I., they can not switch back to S.H.I. in the future. But Tanner says there are ways around that. If you're a freelancer in the private system, you just can't get a job paying less than the threshold. Any employee earning under about 5000 euro a month is required to have public. If they own more than that, they can opt out. So if you are a freelancer, you want to go back into the public system for some reason. Then you'll get a part time job with a friend, pays you 500 a month for a few months, and then you react in the public system.

So there are ways to do it. The only reason you probably want to do that, though, is if you have lots of children, because children can be covered free in the public system, in the private system, have to pay separately for each child. Germans can also buy supplemental private insurance while staying in S.H.I.. For example, many Germans buy supplemental dental insurance. The public system pays like for major dental work, about half the cost and then you get supplementary to take it up to 80, 90 percent of the cost. Germany's system is not perfect. With so many different insurance companies, there's a lot of bureaucracy that contributes to costs. One of the financial things thinking it's a big system administered by more than 100 organizations is called krankenkassen, each of those has a head office and a president and vice president and a financial officer, a whole lot of unnecessary bureaucracy. This may be one of the reasons that the German system is not as cost effective as other European countries. More than 30 percent of both Germans and Americans felt bureaucracy was a major issue in their country's system.

Wait times can also be an issue for people in S.H.I. Thirty seven percent of Germans cite wait times as one of the biggest problems within their system, while 22 percent of Americans feel the same. Generally I think people are quite happy with the public system. It works reasonably well. The major issue in big cities — I'm in Berlin, Munich, Düsseldorf, Hamburg. It can take quite a while to get an appointment with a specialist. It is the case that the doctors prefer private patients because they own up to three times more if they see a private patient. So what can the United States learn from the German system? Germany has managed to balance cost controls and universal coverage while also maintaining competition. And Germans generally like their system. In one survey, not a single German said they had to wait more than four months for an elective surgery, while four percent of Americans said that they had to wait that long for the same kinds of procedures. And only 7 percent of Germans said they experienced a barrier to care because of cost in the past year compared to 33 percent of Americans.

Those citizens really like it. They like the fact that everybody is covered. They like the fact that the costs are totally predictable. You know what it's going to cost you and how much your insurance company is going to pay you before you walk in, unlike the United States. They think it's normal that the insurance company pays every claim. They can't believe that insurance company might deny a claim. And they think it's normal that they get to choose the doctor. They don't understand America, where the insurance company says we won't cover a doctor Jones. You have to go to Dr. Smith instead. So the main thing I learned in going around the world is you have to make the commitment to provide health care for everybody. That's the destination. It turns out there are many different routes to that destination. I found, you know, the Canadian model, the French model, the British model, the German model. They all get to this goal in different ways and different models. So I don't care what the model is. I think it's important that you make the commitment to cover everybody. And this is something the world's richest country has

never done.