A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

Ich Bin Ein Health Minister

Ich Bin Ein Health Minister

July 9, 2008

This morning the Massachusetts Health Policy Forum hosted a forum entitled “What Can Massachusetts Learn from the German Health Care System?” Philip Johnston, Chairman of the Massachusetts Health Policy Forum, moderated the event. The majority of the program consisted of a dialogue between Uwe Reinhardt, Princeton University professor of political economy, economics and public affairs and Ulla Schmidt, the German Federal Minister of Health.

Germany instituted a series of health care reforms starting in the late 1990’s, the most recent in 2007. Previously, all individuals below a certain income were placed in a statutory sickness fund, while higher-income, self-employed, and civil servants could opt for private, commercial insurance. This system became unsustainable. The main goal of the 2007 reform, according to Minister Schmidt, was to preserve the principle of social solidarity – all Germans have access to quality health care, and individuals’ monetary contribution is income-based.

Click on the (more...) for the highlights from the forum. Please note that the text is edited and paraphrased.

Uwe Reinhardt: What is so interesting about the American health care system that you keep coming back to the United States?

Minister Ulla Schmidt: The biggest problem in the United States health care system is fragmentation. However, I am impressed with how the United States organizes managed care, and with the delivery of care in the Veteran’s Health Administration.

Uwe Reinhardt: Massachusetts is known for having the finest care in the U.S. It is a big exporter of research and is also known as a pioneer in trying to solved the uninsured problem. MA health reform cut the uninsured rate to 5%. Why is complete universal health care feasible in Germany but not in Massachusetts/the United States?

Ulla Schmidt: Europeans and the Americans feel differently about the role of the state. Europeans view the state as a body that organizes society and justifies any inequalities. Everyone should have the same rights, opportunities, and choices. On the other hand, Americans – going back to the forefathers – are more wary of state power. Germany also has an individual mandate, so there is no question of whether to have health care. In this way, Massachusetts has made a big step forward. It is important to go step by step, and build on the reforms you have established.

Uwe Reinhardt: The point of cultural differences between the U.S. and Europe is important. What was the goal of health reform in Germany?

Ulla Schmidt: The goal of health reform was social solidarity, people helping each other. This principle is standard in Europe, and is dismissed in the U.S. However, the U.S. is not free from social solidarity. The government makes sure the poor and elderly have access to health care through Medicaid and Medicare.

Uwe Reinhardt: Germany spends about half of what the U.S. spend on health care. How?

Ulla Schmidt: The German system is based on access to health care for everyone. We cut costs through an individual mandate and a focus on preventive care and disease management.

Uwe Reinhardt: Germany has what some call a revolutionary financing system. Can you explain how it works?

Ulla Schmidt: Germany passed a major reform in 2007 to introduce more competition among health insurance companies. Employers and individuals pay a percentage of an individual’s income, which is funneled to a central fund. The individuals’ contribution is based on income. In turn, the central fund pays non-profit insurance companies, known as sickness funds, and adjusts for the age and chronic disease. For example, a company with more elderly members gets more money than a company that insures a younger, healthier population. Everyone has the right to choose their insurance company, and it’s easy to switch companies.

In a nutshell, the German system combines social solidarity with the competitiveness of the private sector. The focus on social solidarity is similar to the conversations Massachusetts policymakers are starting to have about shared responsibility.

During the questions from the audience, one person mentioned that access to primary care physicians is reduced. She said Germany struggles with a similar problem – there are too many physicians in the city, and not enough in rural areas. Germany has instituted a policy to provide incentives for doctors entering into primary care practice. There will be new fee schedule for doctors next year, which provides more money for doctors going into underserved areas. Germany has also invested in scholarships and tuition reimbursement. Germany also struggles with the price of prescription drugs, how to cover the undocumented population, and health disparities.
Suzanne Curry