Health and Wealth Part II: The American and German Healthcare Systems Compared
This article is part of a series analyzing international healthcare systems. If there’s a system you’d like to see featured, let us know! Read our previous comparison between the healthcare systems of the US and the UK here.
The American healthcare system, infamous for its high costs and barriers to care, is in dire need of reform. As of 2019, 80% of Americans worry about healthcare being unaffordable to them, and 47% disapprove of the system as it stands today. Academics and politicians, recognizing the need for change, have been looking abroad for solutions to the healthcare crisis. In this series, we’ll be comparing the American system to healthcare systems in other countries to figure out what policies will work to improve people’s lives and make healthcare accessible to all.
Next on the list is Germany’s healthcare system, established by Prussian Chancellor Otto von Bismarck during Germany’s 19th century reunification. Much like the US, it consists of insurers (called sickness funds) that cover people. Those who can afford it may purchase private insurance, though only 11% of Germans are covered under a private insurance plan.
However, unlike the US, these sickness funds must cover everyone, and they don’t make a profit. Although there are about 109 sickness funds, tight regulation gives the government a significant amount of control over prices, in a way that the US simply doesn’t have. In Commonwealth fund rankings, the German funds come in 8th place for overall healthcare system and 2nd in accessibility. The United States? A dismal 11th place on both counts.
Similar systems can be found in France, Japan, Belgium, and Switzerland.
What’s covered and for who?
In the US, service coverage depends on your insurance plan. If you don’t have any sort of insurance, you pay the full amount for any service/ provider that will accept someone without insurance (although there aren’t many). The ACA created the Essential Health Benefits that all insurance plans must cover. These include:
ambulatory services
emergency services
Hospitalization
maternity and newborn care
mental health and substance use disorder services
prescription drugs
rehabilitative and services and devices
laboratory services
preventive and wellness services
pediatric services, including dental and vision care.
All insurance plans in the US are required to offer these services. Of course, these services are still subject copays and deductibles.
In Germany, sickness funds cover:
Preventive services
Inpatient/ outpatient hospital care
Primary and specialist physician services
Mental health
Dental care
Optometry
Physical therapy
Prescription drugs, except for those explicitly excluded by law (mainly so-called lifestyle drugs like appetite suppressants)
Medical aids like hearing aids
Rehabilitation
Hospice and palliative care
Maternity and sick leave
Some of these services are subject to minimal cost-sharing, but those are mostly copays of no more than €10.
How much does it cost? Who pays for it?
In the US, healthcare is about 17.1% of GDP and we pay about $10,207 per capita for our healthcare. Insurance plan costs vary hugely, depending on what plan you have and who the insurer is. Most consumers are subject to a variety of copays, deductibles, and co-insurance that shift often significant costs to them. Average out of pocket spending per capita in the US stands at $1,122.
In Germany, healthcare is about 11.5% of GDP, and they pay about $5,848 per capita. 77% of this expenditure is through the sickness funds. Everyone buying into a sickness fund pays 14.6-15.5% of their gross income for their health insurance plan. That amount is paid equally by the employer and employee through payroll taxes. The more you earn, the more you pay, and vice versa. Average out of pocket spending per capita in Germany is $731.
If you earn more than €60,750 you can decide to get private health insurance in Germany. Some other categories of people like the self-employed can also get this type of insurance. The amount you pay for your private health insurance plan depends on what coverage and benefits you want to receive.
Which system is more effective?
Let's talk about outcomes.
Of 17 high-income countries studied by the National Institutes of Health, the United States in 2013 had the highest or near-highest prevalence of a multitude of negative indicators, including but not limited to: obesity, infant mortality, heart and lung disease, STIs, adolescent pregnancies, and injuries.
A 2017 survey of the healthcare systems found the US healthcare system to be the most expensive and worst-performing in terms of health access, efficiency, and equity among developed countries. All this despite the fact that we spend about $10,207 per person on healthcare annually.
Germany’s results are more mixed. Care itself is highly accessible in both cost and abundance. However, unhealthy behaviors and a high proportion of elderly citizens means that the system’s outcomes are not what they should be. Germany has higher rates of obesity, smoking, and alcohol consumption than many OECD countries, as well as a large number of avoidable hospitalizations. To reduce these behaviors and improve outcomes, Germany needs to continue to invest in its public health and primary care infrastructure. These campaigns and early interventions can lower preventable mortality and costs of healthcare in Germany.
America’s issues of inaccessibility, questionable quality, and unaffordability, however, will require a much more complex, systemic overhaul.
