BERLIN, Germany — With all the outlandish, scurrilous and otherworldly aspects of the health care reform melee in the United States, it is strange that the German model is almost never invoked — neither by the Obama administration nor its foes on the right. This is particularly odd since its mix of public and private insurance plans is much more like the Democrats’ vision than those of the health care systems of France or Great Britain, which are so often cited. Also, it works pretty well and might be something Americans could profit from examining.
Allow me to use myself as an example: As an American living in Germany and working as a freelance writer, I have health insurance through a multi-payer, non-profit insurance company. I can walk into any doctor's office in all of Germany, show my provider's plastic card and receive treatment without ever seeing a bill. I can go to another doctor the next day and do the same — and the day after that. I pay a $15 cash-fee on the first visit of every quarter, and a modest percentage of the cost of most prescriptions.
There are more than a few glitches in Germany's health care system, which dates back to the 1880s. Nevertheless, I find it a basically sound, effective model, if one in growing need of adjustment. One thing is certain: It is cheaper by half than the American system, and everyone here is insured.
The first thing to clarify about Germany's system is that it is not a public, state-run scheme like those in France and Great Britain — or the U.S., in the case of Medicare. Rather, it is financed by its users, individuals like myself, and German employers. So health care isn't "free" in Germany by any means. Rather, the law compels everyone to be insured.
This is how it works: Just about every full-time employed person in Germany has about 10 percent of his wages deducted from his paycheck, which is paid into a government-supervised central fund. The individual's premium is then matched by his employer. This central fund distributes these revenues to over 200 non-profit health insurance companies. As I said, these companies aren’t state-run, but they're tightly regulated and monitored by government agencies.
The percentage of payroll tax that (just about) every breadwinner pays, however, is determined by the state. Here's where the rationale of Germany’s social welfare state kicks in: If every earner forks over 10 percent of his paycheck, those who earn less, pay less, and those who earn more, pay more — for the same health care. A young, healthy man pays the same as someone 60 years old and chronically ill. This is the social solidarity principle, which was introduced under Kaiser Wilhelm I and his chancellor, Otto von Bismarck, in 1883, although it has come a long way and changed dramatically since then.
Germany's model is quite similar to that of other European states, such as the Netherlands and Switzerland. They are the opposite of single-payer systems, in which one price fits all. Also important, the premiums are not contingent on the individual's health condition, something that President Obama wants in the U.S. The insurance sector is compelled by law to insure anyone who qualifies for insurance — and who pays into the central fund — as well as their spouse and family.
Although this model is the rule in Germany, there are also privately insured people. High-income earners and those who demand better health care than the standard service can opt for more expensive, private health plans. Generally, these profit-driven, private insurers offer better, more extensive coverage than the regulated, non-profit companies. Many freelancers, too, use the private option because they have no formal employer to match their payroll contributions. This, of course, begs the question of how I am covered since I am a freelancer. The closest Germany comes to a state-financed public option is the Kunstlersozialkasse, or Artists' Social Fund. It acts as a full-time employer for independent writers, translators and broadly defined “artists” of all kinds. Thus I have the mandatory payroll tax deducted from my bank account every month, based on my previous year’s income, and the Artists' Social Fund matches that amount. I know dozens of independent “artist-types” like myself who could never afford private insurance, but are fully covered through the artists’ fund. The state benefits because freelancers pay at least something into the system and don't show up at hospital doors with health problems and not a penny to pay for care. Incidentally, Germany’s version of social security works the same way.
Now, for all of the perks of the German model, there are distinct drawbacks and flaws. One is that the discrepancy between the privately insured and everyone else has grown ever larger over the years, creating a de facto two-class system. Thus, the better off do in fact receive better care — exactly what is not supposed to happen in Germany’s great social welfare state. Also, many freelancers (that is, if you do not qualify as an “artist”) fall through the cracks. This pool of people, which has been steadily growing, is forced to buy private insurance, which is extremely expensive.
But the greatest problem facing the German system today is its exploding costs. Technological advances and new drugs have made health care costs skyrocket. Moreover, Germany's rapidly aging society is straining the system to its breaking point. Ultimately, in the German model, today's workforce (and its employers) pay for the health costs of those now retired, who are using the system the most. With an ever older population and sagging birth rates across Europe, it leaves fewer people paying for the health care costs of ever more people. Closing this gap is the dilemma that Germany's political class faces, and to which it has so far found no answer at all.
Perhaps it isn’t so curious that America’s Obama-bashers don’t pick up on the German plan for fodder. For one, it works, and two, it’s not strictly “government-run” (i.e. socialist). Should the right manage to kill the public option in the U.S., the White House might want to take a closer look at the pros and cons of Germany’s system.