OVER the last few months, visitors from the United States have been parading into Franz Knieps's office in Bonn. Mr. Knieps is an expert on German health insurance concerns, called sickness funds, which are the backbone of the health-care system here.So far, he has hosted a congressional delegation led by House Majority Leader Richard Gephardt (D) of Missouri, an adviser to New York Gov. Mario Cuomo (D), several professors, and an American insurance association. What draws their attention, says Knieps, is that Germany insures virtually all of its citizens (as well as legal guest workers, pensioners, refugees, and the unemployed), provides them with high-quality health care, and yet keeps a lid on costs. "Our costs are not climbing up to the heavens," says Knieps, the top public-policy official for the Federal Association of Local Sickness Funds, the largest group of such funds in the country. For the last decade, Germany has been able to hold its total spending on health care to about 8.4 percent of gross national product, while other industrialized nations have seen health care take an ever-larger bite of total economic output. In the US, health care accounted for 9.2 percent of gross national product in 1980, and 12.2 percent last year.
Minimal role for federal government Under the insurance system here, most people never even see their doctor bills - the bills are sent straight to their sickness fund for payment. In all of this, the federal government plays a minimal role, acting as lawmaker and watchdog, but paying only 4 percent of the country's total health-care bill. This was the way the founder of Germany's health scheme, Otto von Bismarck, wanted it, explains Karl Furmaniak of the Federal Ministry for Health. By creating a system that covered everyone, but which did not depend heavily on central government, Bismarck was able to ward off two of his enemies at once: the Marxists and a power-hungry parliament. But the intricacy of the system, and also the culture that supports it, could make the German model tough to reproduce elsewhere, says Wolfgang Klitzsch of the German Hospital Federation. "Germans are strongly interested in consensus and solidarity. Americans are much more interested in individualism," Mr. Klitzsch says. Indeed, the German values of consensus-building and common security underpin the health system here. Everyone in this country earning less than 58,500 deutsche marks ($36,000) a year is required by law to join a nonprofit sickness fund, of which there are eight types to choose from. People making more can voluntarily join these funds. Eighty-eight percent of Germans are covered by this system. The rest of the population is either privately insured or under a separate insurance plan for people in the government or the military. The sickness funds are entirely financed by the insured's premiums, half of which must be paid by the insured's employer. According to Knieps, the average premium is 12.2 percent of gross income, or 3,875 DM ($2,400), with the employer picking up half of this cost. The sickness funds try to keep the premium percentage the same for all their members. This means that the higher earners subsidize the old and the poor.
Spending limits enforced Germans are especially proud of their track record in reining in costs. "We're the world champions," says Klitzsch of the hospital federation. The German government has accomplished this by requiring overall limits to be set on health-care spending and by enforcing certain spending rules, such as that the wages of "office doctors those working out of their own offices and not at hospitals - may not rise any faster than workers' wages. But the actual setting of the overall limits is for the sickness funds, office doctors, and hospitals - the private market - to duke out among themselves. In the end, after intense negotiations that also involve employers and unions, all parties agree to an overall budget for the nation's office doctors and an overall budget for the nation's hospitals. (Office doctors are not allowed to work in hospitals). The government also controls costs by periodically passing new laws for this purpose. In 1988 it tweaked the system by striking taxi rides from insurance coverage and restricting coverage on medicines. "When we stop looking, and stop the small controls, then costs begin to rise again," says Mr. Furmaniak of the Health Ministry. It was because of the reform of 1988, for instance, that premiums actually went down slightly, he says - though the longer term trend is up a little. Despite obvious pride in their system, the Germans recognize several problems. The biggest is the one-time challenge of adapting eastern Germany to the sickness fund system and bringing east German hospitals and technology up to Western standards. Another problem is the way hospitals are run - uneconomically, in Knieps's opinion. Unlike in the US, patients here are charged per day, rather than according to the type of care they need. Hospitals here are also under the budgetary control of two authorities with different goals: state government, which tries to keep the voters happy by providing hospitals around every bend, and the sickness funds, which are trying to control costs. "It's a swamp," says Knieps. He maintains that there are too many hospitals, too many empty beds. The average length of stay in a German hospital is nearly 17 days, compared with 9 in the US. But if the sickness funds were to exercise their authority and close some hospitals, "we'd be called hospital killers," he says. Klitzsch agrees that German hospitals should break away from the "per day" payment method and align payments more closely with costs. But, he warns against going too far in this direction. Otherwise, he says, Germany will end up like the US - having good and bad hospitals. At least in Germany the quality is consistently good, he says. A far more urgent problem in hospitals is the shortage of nurses, caused by poor pay and lack of opportunities for promotion, Klitzsch argues. "We have to cancel surgery sometimes because we don't have enough nurses," he complains. In the US, there are nearly three nurses per bed; in Germany just one. By the year 2010, he maintains, Germany will be short 80,000 nurses. Like other industrialized nations, Germany can't escape the higher costs caused by an aging society and the application of cost-intensive medical technology to a small group of people who need it. The only answer to these challenges, says Furmaniak, is to keep chipping away at costs through reform.