Steve Klingaman

Steve Klingaman
Location
Minneapolis, Minnesota,
Birthday
January 01
Title
Consultant/Writer
Bio
Steve Klingaman is a nonprofit development consultant and nonfiction writer specializing in personal finance and public policy. His music reviews can be found at minor7th.com.

Editor’s Pick
JULY 8, 2009 10:16AM

Want Health Care Reform? Follow the Germans

Rate: 18 Flag

Just don’t call it socialized medicine

            The U.S. spends 16% of gross domestic product on health care, Germany 10.7%.  They like their system much better than we like ours.  But here is the banner headline, given our gridlock on health care reform:  the German system is not socialized.  The Germans do not use a single-payer, Medicare-type plan. 

            Our vested interests seem to prefer gridlock to meaningful reform.  Advocates of the American way of health care seem determined to scare you to death about the alternatives.  Opponents of health care reform like to point to the dreaded specter of health care rationing.  Speaking of rationing, Uwe E. Reinhardt, professor of political economy at Princeton University, pointed out a decade ago out in his paper, Germany’s Health Care System: It’s Not The American Way, “…the [American] system now rations health care by income and ability to pay.”  That is, health care is rationed for the 45 million Americans who do not have health insurance.  Keep this point handy in the coming debate.

            Here are some attributes of the German system:

  • Coverage is portable
  • Premiums based on ability to pay
  • No deductibles
  • Co-payments for service
  • Free choice of provider
  • Administrative simplicity
  • Little or no wait for surgery or diagnostic tests
  • After-hours care (by a physician) a phone call away
  • 85% of the population covered by supervised semi-private plans
  • 15% covered by fully private insurance plans offering more amenities
  • Opt-in parallel private insurance available to the wealthy
  • Workers and employers each pay about 8% of salary to a health fund of their choice
  • Non-working spouse covered by employee contribution
  • Self-employed purchase relatively affordable insurance from private providers
  • Uses few tax dollars
  • No significant rationing

            The reason Germans achieve the results they enjoy is that they effectively regulate the semi-private plans offering health insurance.  These providers cannot refuse coverage to anybody.  And they cannot charge differential pricing based on age or health status.  This mandate makes the playing field level for all of the plans, with no competitive disadvantage to any provider.  The Germans call these funds sickness funds—not a very sexy name, but these are the Germans, after all.  We could call them health funds.  In Germany, there are about 200 of them.

            In exchange for tightening the social compact, causing the wealthy to pay more by virtue of percentage-of-income pricing, which has long been standard progressive taxation practice, everybody gets access to insurance they can afford.  Nobody is denied health coverage based on a pre-existing condition.  If you live in the same world I do, everybody has a family member or a loved one with a pre-existing condition.  Wouldn’t that peace of mind alone be worth ending our gridlock?

            Understand that if we do nothing, in just a few short years the cost of our system will be off the charts.  We are on a theoretical trajectory to health care consuming 100% of our gross national product by the end of the century.  Of course, that cannot happen.  Our economic system would collapse first.

            About that 8% worker contribution to the health fund:  it seems like a lot, but according to NPR, “It's about the same proportion of income that American workers pay, on average, if they get their health insurance through their job.”

            Does the German model work well enough for us to consider it? Germans experience relative greater satisfaction with their health care system than we do, according to Lou Harris polls.  And consider this:  though Germans are allowed to opt out of the sickness funds to go exclusively with private insurance, most don’t, even among the most affluent consumers.

It’s NOT Socialized Medicine—It’s Socialized Risk Management

            Our health care insurers don’t want you to like this model because it means much tighter regulation for them.  But everyone is going to take a hit in the reform scenario.  Tacit understanding of this reality has been demonstrated with the recent symbolic cost containment offers made by the consortium of doctors, hospitals, pharmaceutical companies and insurers.  Word is that hospital associations will announce similar planned measures today.  These measures are mostly window dressing and get us nowhere near where we need to go.  Still, it is a good thing that the parties are at least at the table.

            Were we to adopt a system similar to that of the Germans, physicians and hospitals would have to accept a little less in compensation, and to be compensated more for keeping people healthy.  Consumers would have to have to accept mandatory participation, and slightly higher costs for some.  Business would have to offer insurance benefits to all workers, with some allowance made for part time workers.  Insurers would lose much of their autonomy and ability to generate huge revenues based on making the customer fund the risk.

            In this system, marginal employers and insurers might take the biggest hit.  And that is as it should be.  Employers who do not offer health care are merely betting on the margin—that their employees, once sick, will either go away or find care through our meager public care offerings.  Or they are betting that another family member of the worker receives health care benefits.  So they are merely foisting their burden onto the back of someone else.  Sure, very small businesses will scream about this, and allowances may need to be made, but you get the picture.

            Though insurers are mostly categorized as not-for-profit entities in the U.S., they are so in name only.  You only have to look at the revenues they generate to know something is out of whack.  I have worked my whole life in the nonprofit sector—take it from me—these are not nonprofits.  So I guess, on one level, we are talking about some form of income redistribution here.  A very small cadre of the executive class will take a big hit as these providers are forced to care for those they can now legally exclude by virtue of price.  Granted, this is a vastly simplified explanation, but generally, no one cares to stick around for the details.

            The upside for everyone, in addition to health care for all, is that once the system devours a smaller percentage of our GDP, that money is available to all for productive uses.  And 1% of our GDP at present is about $33 billion—or enough to bail out an automobile maker for a while.  What if we were able to follow the German example and shave five percentage points off our cost of health care?

            If we are to break the gridlock, the new paradigm that we must accept no matter what system we chose is that health care is not a market commodity, but a public resource.  It is something we must have in a civil society—access to health care for all.  Just as we need electricity for all.  The government does not need to provide it all.  The government needs to regulate its provision as it does through our system of regulated private utilities.  That is not socialism.  It is a regulated economy.  And—to stick with the energy analogy—when that regulation is undermined, breaks down, or is scammed, we end up with an Enron scandal, a manipulation of the market to benefit the few. A manipulation of the market to benefit the few…Hmmm… 45 million Americans uninsured…I wonder…

The Ugly Secret:  We Already Have a Tiered Health Care System

            The German health care system enjoys one of the best international reputations in the world.  It costs a lot less than ours.  The rate of increase in its costs is less than half our rate of increase over the last 15 years, even though their population is statistically older than ours.  Why do we insist on ignoring their example?  Is it chauvinism?  The sense that no viable solution ever arises from beyond our shores—especially from socialist Europe?  Is it that the wealthiest of our citizens enjoy a fantastic health care system, devoid of interference on any level?  And for that unfettered marketplace appeal, we are willing to sacrifice the bottom 15% of our population, who get, in all practical terms, nothing?  This is the status quo we cling to with the ferocity of NRA members?   This is our example to the world?  I hope not.  I hope we are too evolved for that to be our future as well as our past.

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As usual, you have "informed" me.

"not a market commodity, but a public resource." - thanks for that, a helpful argument to bring to the table.
The problem with US health care is the fee for service basis. The medical profession gets paid for doing stuff -- some of which doesn't need to be done.

Spreading the risk pool to the whole population will help people who have trouble getting insurance. But it doesn't deal with the high cost of gold-plated health care.

I think having doctors on a salary might help a lot and some public support for medical education. The average doctor graduates with a mountain of debt and 'just accepting a little less in compensation' means longer until they've paid off their med school debts.
I don't disagree with the idea. If we're going to have universal health care, the German system (rather than the British or Canadian) system is the way to go. One major difference between the U.S. and Germany is malpractice suits. We all know how commonplace they are in the U.S. They are not particularly common in Germany, but their frequency is increasing, which doesn't bode well for the German system in the future.

In terms of the lowered physician salary, that needs to be offset in some way for the physicians, otherwise, it's a losing situation for them, and they will never support it.
Thanks for your comments. I think everybody is going to have to compromise something--that is our central problem. How doctors are compensated may change the pay spread away from the outsized salaries specialists earn, while general practitioners are underpaid. Certainly having doctors on salaries is a viable option, too. Some hospitals already compensate some of their doctors that way.

A recent New York Times article talked about doctors opting out of the reimbursement system entirely, regaining control of their practices in exchange for reduced income in some cases. You can find it here.
a useful description, but why in the world tie health care to employment, unless you intend that the unemployed shall get little or nothing. why saddle business with health care bookkeeping?

the german system is close to the american 'system', which would make the transition less painful, but why not design a rational system and enjoy real efficiency?
My daughter is in Germany and likes the care she receives. She has no complaints.
Al, I'm thinking that a single payer system won't pass Congress. The German model says that employers must pay a share, and serve as an organizing principle. Without the funding as an employee benefit, business would just see a contribution as a tax. So it grandfather's in that element of the old model. Individuals still get to buy based on their ability to pay. That is a huge improvement over the old model.
Best,
SK
i agree. al is right that there are more efficient systems we could construct, but it's hard to market something so complicated. when i attended the anti-health care tea party this weekend, i saw people who were angry and afraid. they're not listening. but it might be effective to point to germany, simply because it's not canada or britain and they'd have to rewrite all their talking points.
I've heard a lot of great things about the German health care system from German doctors who have come to this country to earn salaries commensurate with their skill and experience.

No joke--they like the system as a whole. They just didn't want to work in it, because the pay is crap. Go figure.
No doubt about it; it's a wide, wide, world of tradeoffs. What makes the German system appealing is that it is in some ways similar to our system, except for the four or five critical differences. But those differences are huge. But we need are levers to get us out of the gridlock mentality. Something has got to give or we are headed for disaster.
Very nicely done. Rated.

You wrote "I'm thinking that a single payer system won't pass Congress."

You are correct. It won't even be considered. See my posts on the topic.
.
Anyone who doesn't think health care is already "rationed" by insurance companies just hasn't gotten really sick yet. We're in week three of a serious MS problem with my husband, and we've been refused tests and had to administer our own IV here at home (a nurse put the port in for us, but still, it was a bit bizarre.)

Thank you thank you for this intelligent article. I hope it makes a difference in the debate. Time Magazine had a good article making the same point Malusinka did above - doctors get paid by the service. Thus my father in law has had four operations on his knees despite being a a poor candidate for the procedures.

Again, from one exhausted by a relatives illness and by the insurance battles this week, thank you.
The thing is, our culture is such that intelligent, motivated, capable people expect to get paid if they work really, really hard. Medicine has traditionally been one of those highly remunerative fields, so many intelligent, motivated, capable people have gone into it. However, for better or worse, monetary rewards occupy a substantially higher rung on the hierarchy of wants in this country than in other countries. I'm afraid our culture is such that, if the financial rewards of medicine shrink, the talent pool will shrink proportionately. Countries like Germany, the governments and cultures of which have sprung out of communism, are composed of individuals who are much more willing to take on a career like medicine, with its attendant sacrifices, even if the remuneration is less than stellar. I don't think this country could weather a change to such a system of reduced payment without seeing a serious shakedown in the physician ranks. The first thing to go would be the surgical subspecialties. "You mean the ones who earn so much more than primary care docs? Who cares!" you might say. Well, it's easy to say that when there's a neurosurgeon on call at the local ER should you fall and break your head or your neck; not so easy if you have to be transported several hours to the nearest academic medical center in order to receive emergency care, even under dire circumstances. (Which is how things are in countries with socialized medicine. Natasha Richardson, for example, rather than succumbing to an epidural hematoma, would have been rushed straight to the OR in this country--and would have lived).
Why not setup a special committee (Senate or the House) whose main objective would be to examine health care systems in other industrialized countries and see what works and what does not? Then, take what works and try to apply it here, given the political, social and other related constraints we have in the U.S. (which are numerous).

I too do not believe that a single-payer system will be implemented anytime soon.

As I discussed here, a system similar to France may be more feasible (private/public system in which everyone is covered). Unfortunately, I still believe this will not happened either.

Malusinka: since you were discussing the concept about spreading the risk, you may be interested in the following article: Let’s Spread the Risk (I Mean Health Care; Not Flu).
Annette: your first sentence says it all.

Jocoserious: you sound like you know what you are talking about, like you work in medicine. I guess my response is, "Yes, but..." Specialty medicine is not rationed in Germany. And even if West Germany was never communist, they do have a stronger social democratic tradition--with notable lapses—I see your point there.

University professors in this country must pay big bucks to attain their PhD's, and never come close to the pay scales of M.D.s. Wall Street titans will hopefully make less going forward in a more regulated environment, and I don't expect any shortage of them in the future.

Doctors in many specialties perform what many see as assembly line medicine. Perhaps the nature of the medical interaction itself can be improved along with compensation based on outcomes as well as procedures.

If you are saying that everyone: hospitals, government, business, individuals and insurance companies must pay more or cut rates in order to have a system under which all are covered, but doctors will enjoy the status quo in terms of compensation, you would have to show that medical outcomes in underperforming markets can be brought up to the standards of higher performing areas—that pay per procedure actually works. Higher pay for doctors does not correspond to better outcomes. That will be scrutinized--is being scrutinized--in the context of the current debate.

I thank you for your comments even if I cannot see it as you do.
Jocoserious: I need to remind you that what happened to Natasha Richardson has nothing to do with the health care system in Canada (or Quebec more specifically) (note: the term socialized medicine does not exist or is not used outside the U.S). She refused to seek medical help, although everyone around her asked her to go to the hospital or be seen by a physician. An ambulance was even called in, but she turned it away. Like most other places, unless the person is unconscious or shows signs of impairment, a person can refuse medical help and there is nothing one can do about it. If she would have followed her instructor’s advice, she would have most likely survived.
This story is posted on Digg. Readers, it only takes a second to boost it - just click the little white icon of the man holding a shovel - second to last before the colored square. Steve, you can Digg your own story, and I highly encourage you to do so.
Steve--I'm reminded of a comment overheard in a college course in which the class had turned to a heated discussion over religion: (after eagerly waving hand--) "We're not all going to agree on this, are we?"

One clarification, though--PhDs do not, by and large, pay anything for their graduate educations. While some departures occur, the standard practice is for PhD students to receive a tuition waiver and a small stipend, contingent upon participation in the teaching of undergraduates. At the end of that, many PhDs earn six-figure incomes. MDs, though, undertake VASTLY (I can't highlight that word enough) more debt than any other profession in this country--and if they stay in academic medicine (the best direct comparison to PhDs in academia), they frequently make LESS than their counterparts in the economics, engineering, etc. departments. Yes, you read that right, LESS. Many starting MDs earn under $75K for their first job in academia; some neurosurgeons, even, start as low as $125K. Frankly, that sucks--think about four years of undergrad, four years of med school, then seven years of hellish training + a year of fellowship, at the end of which you have barely the monthly income to pay the interest and start chipping away at the principal of the average MD's student loan.

And I don't see why any sort of 'burden of proof' needs to be on the physicians if they expect to see their salaries remain relatively constant. They're the ones in the trenches, taking care of patients. Sure, make some rules so that docs aren't milking cash cows that make the whole system more expensive, but for the love of god don't squeeze them so much that nobody wants to be a doctor anymore.

I guess I'm just sick of doctors being vilified. Honestly, after working as much as I do to take care of patients, training as hard as I've been training to become a neurosurgeon, it really f*%@ing pisses me off to hear all this talk about physicians making too much money and being the cause of the health care crisis. When are we going to talk about the legal crisis in this country? What percentage of GDP goes towards the legal system? Nobody cares--let's hang some doctors in effigy.

As for Germany rationing care--I don't know, maybe they don't. I know for a fact that it's rationed in several other nations, but perhaps Germany is the exception.

A side note: rationing comes in many forms. In some countries with universal health care, it's a situation of "All men are created equal, only some are more equal than others" (my apologies to Orwell). That is to say, if you are above a certain age or suffer from certain comorbidities, or are severely ill enough, you don't qualify to receive care. For example, in a particular European country with a vaunted health care system, an 85 year old with a subdural hematoma after a fall does not receive surgery. Period. Doesn't matter if he still runs marathons--he gets no surgery. Too old. But it's not rationing--he just didn't qualify for care. It was never even an option for him, so nothing was withheld, nothing was rationed.

I guess it's all a matter of how you look at it.

Anyhow, sorry if I've been a bit peevish in my comments. A lot of folks with real skin in the game get that way. I appreciate your discourse.

Kanuk -- My apologies if I received incorrect information about Richardson. I understood that she was still awake and talking--though suffering from a terrible headache--when they finally cajoled her into boarding an ambulance, and that 40 minutes later she arrived at the hospital. In this country, she would have had an immediate scan and proceeded straight to the OR (that is, if she had gone to a medical center in a region of the country in which the malpractice climate has not forced the neurosurgeons out of practice). Would she then have survived, or had a decent quality of life? Hard to say--but she would have had a shot. That's what our current health care system affords you: a shot.
As someone with a chronic illness who cannot self insure and rarely has had employment which offered insurance, I can't begin to describe how grateful I am for your article. A job I had a couple years ago did offer insurance which in all essence paid for nothing even after thousands of dollars in deductables. Upon leaving that job, I was told I could keep Cobra for only $800 a month. I've never had an extra $800 a month and certainly not while I was unemployed. My most recent job only offered insurance to managers - not to those of us who drove the state and worked our tails so they could make money. Yes, I have been denied care even in the hospital.

What's most saddening is that people who would benefit the most from a health care overhaul are the ones who are buying into the fear tactics by those who gain the most by keeping them ill and poor. Throw in the word "socialized" and people somehow assume it's the worst of communism and fascism combined. It defies all reason. Meanwhile, some of us are dying for this change
jocoserious: no problem.

What happened with Natasha Richardson was that she refused medical help following her fall, although the staff at the ski station asked her to see a medical doctor. Apparently, she was even joking with the staff shortly after the incident. She then asked to be driven back to her hotel. Since her personal ski instructor was paid for the whole day and this person stayed with Ms. Richardson in her hotel room to make sure she was alright (I believe there was another staff member from the ski resort in the room). Later on in the day (late afternoon -- a few hours after the fall), Ms. Richardson complained about major headaches and showed important signs of confusion/sickness. An ambulance was brought in and she was sent to the local hospital.

From what I read in the Quebec media, at that point, it was already too late to help her. Given her conditions, she was sent to a trauma center in Montreal (an hour and a half away by ambulance), where she was already brain dead or in a coma (in critical condition) when she arrived. The family decided to sent her to the US in order to be close to relatives when came the time pull her from life support. This is obviously very unfortunate and tragic incident.
At first glance this looks like a better plan than anything our politicians can have put out there.

Of course your comment about "vested interests" sums it up nicely.
If there isn't something in it for somebody our politicians are against it. They don't like to see doctors or others get rich based on their work but they sure do like to get rich themselves taking bribes from lobbyists.
Anyone who votes against coverage for all Americans should really be treated as a pariah. Let's have a list of their names so we can invite them to go to the devil they serve!
... to sacrifice the bottom 15% of our population ... hope we are too evolved for that to be our future

Of course we are not. Obama promised hope. But change we are not going to get.
Envision our "health care" landscape as a group of poisonous scorpions in a sandbox. All are waiting to make their thrust to add more poison to the atmosphere. Most important: they PREFER it the way it is. Virtually none are willing to make sacrifices sufficient to get us out of the health care quagmire and onto a real reform road. It will take an economic catastrophe to breakup the jam. Which mushrooming medical costs coupled with a collapsing private sector may bring about.
What amazes me is the way that the Insurance, Hospital and "Health" Industries have convinced so many of us that they're only looking out for our interests and that "gummint" interference on our behalf will be bad for us. Of course, they have the money and money seems to talk.
PS: It must, much of mine has said goodbye recently...
This is an excellent article that could help to enlighten those who reflexly reject meaningful healthcare reform. As a physician who has worked in the British nationalized system, in the government financed National Institutes of Health and at the George Washington University Medical Center I have had the experience of a variety of systems. Suffice to say that the least rewarding professionally has been private American healthcare. It is widely accepted that as much as 50% of our investment in private health care is wasted - worse than any socialized system in the Western world. As pointed out, rationing is rampant in the U.S. driven by ruthless profiteering, especially by the insurance industry. This is not the place for a detailed analysis of the current reform debate, but it is time for the public to put pressure on their representatives to ignore the disinformation campaign of the vested interests, and to do what is necessary to ensure that universal health care becomes a reality. Without the pressure of a public option, nothing will change for the better. And without strong public pressure, the public option will fade away.
My ground truth: my gut is telling me I'm going to be one of the many people who are not going to live out what would have been my lifespan because I've fallen, very hard, through several of the holes in the U.S. health care "safety net" (you know, the think that looks like starving rats were let loose on it for a decade or two.) So I figure that means I can say whatever the hell I want...ave, Caesar, morituri te salutant. I've been hanging on (barely) for 23 years praying for the calvary to come, and now that it's here, it's nearing exhaustion just fighting for a watered-down "public option" that will exclude me entirely anyway. Health care in this country could be fixed. German system, Swiss system, French system, Cuban system, Benelux, Canadian...even the mess the UK has still costs less and covers a lot more of the population better than ours does. We shouldn't be afraid of change, since we are already paying more than it would take under any other' country's system to cover each and every single US citizen totally--plus MORE. In other words, we are overpaying for the health care we are not getting. But we very much risk not getting the changes we not only need, but DESERVE, folks. I don't care if you are one of the meanies who say "I don't want MY PRECIOUS ADORABLE MMM KISS KISS I LOVE YOU MONEY GOING TO HELP SOME WELFARE SCUM"...because you are *already paying* for the, I mean us, welfare scum...plus more, remember? So the problem with health care in this country is actually very very simple: the people who are profiting off of the present "system." All that money must go somewhere, you know. And some of it is used to scare the bejesus out of the population anytime anyone gets close to making a change that might take a few coins away from the treasure a few have become accustomed to collecting at the expense of the many. And I'm not talking about doctors and patients. When you hear that, know it's a smokescreen. That's not where the Big Money in health care is--or was, since I'm sure a lot of the siphoners put their ill-gotten gains into the market some of their fellow greedheads managed to crash. If there is one thing I trust even less than the government, it's private corporations. And Adam Smith would have agreed with me, so anyone who emails me a bunch of voodoo economics may experience the soft sound of my delete key. Wish President Reagan had had a delete key when David Stockman et. al. sold him a bunch of crock. While the radical right is chiseling out Reagan's image on Mt. Rushmore, check their pockets for your health care premiums. I'm not talking about Eisenhower Republicans. I'm talking about naked greed that has brought this country to its fiscal knees. And they call Obama "socialist." I only wish he were...at least then people would know what "socialist" means! Ask yourself this: why is the taxpayer paying for the health care for the seniors and disabled (the most expensive part of the population) and all the politicians, and that "socialized medicine" (it isn't, but that's what they call it) is fine and dandy...BUT. The premiums from the healthier parts of the population, carefully cherry-picked, just HAVE to go to private companies. Have to! Or the Commies will come! There's probably someone with a hammer and sickle under your bed, better go look! Well, I'll tell you what I was asked recently by someone in Europe, who has decent health care and is totally baffled over the living nightmare my life became without it: "why are Americans so stupid? We would be striking all over the country if they tried to do this to us! What do you think Americans will do?" My answer: "They will vote in politicians even further to the radical right, and even more in bed with the companies that are ripping us off, in 2012. That's what they are going to do. Because they'll be told to on Fox News, and they believe what they are told. You heard it here first."
Cali...that's a powerful, heartfelt and compelling critique--or condemnation of our present predicament. And you offer a gem for the soundbite wars:

"We are overpaying for the health care we are not getting."

All of this, of course, contributes to the present gridlock. As long as health care is a commodity, greed will be a driver.
Steve - I saw this recently by a gentlement in Belgium. Could you comment?

In the early 1990s the German government, in a move designed to cut health-care costs, limited – and in some cases completely blocked – access to new drugs and medical technology. Since 1993 the German government has set separate budgets for each segment of the health-care market, with provisions of heavy sanctions if these budgets are exceeded. The 1993 pharmaceutical budget was set at $15 billion – a 9.1% cut from 1992. The government ruled that money spent over the budget would be taken out of doctors’ incomes. This caused a 25% drop in spending on medicine. Similarly, the sale of the seven largest research-intensive drug manufacturers fell by 16.5%, while the sales of generics (copycat drugs which are cheap because they were developped at least 15 years ago and hence no longer protected by patents) rose by 36%.

While these measures were successful in the field of cost control, they had devastating consequences for the pharmaceutical industry. The German pharmaceutical companies, no longer keen on developing new drugs, saw their world-wide share of drug patents drop to 8% from 16%. Doctors, afraid that they would have to pay the pharmaceutical bills out of their own pockets, started to refer their patients to specialists and hospitals. Patients with minor illnesses, requiring common and cheaper medicines were helped, but the doctors would “dump” their more serious cases instead of treating them in more costly ways. As a result, in 1993 Germany saw an increase of 10% in hospital patients and 9% in referrals to specialists.

The next year a similar phenomenon occurred at the level of the hospitals. They, too, were assigned budgets that they were not allowed to exceed. Consequently German hospitals, faced with patients who might cost too much, referred them to university clinics, which by law are not allowed to refuse patients. “Patients are being turned away, acutely ill patients are wandering from clinic to clinic, and expensive drugs are being withheld from cancer sufferers,” the German weekly Der Spiegel wrote in 1994 (April 11). “Money is being saved – even if it costs lives to do so. Whenever possible many hospitals are turning away expensive patients covered by the sickness funds. The only good patient is a cheap patient.”

Unfortunately, the German system has become the European model. Politicians in neighbouring welfare states, noticing the drop in German health expenditure, started to follow the German example. The only thing that mattered in their eyes was cost control. Many adopted the policy of adding drug volume control to price control and finally to prescription control. France introduced so-called negative recommendations, telling doctors what they are allowed to prescribe and what not. These recommendations have been made compulsory and doctors risk heavy financial penalties if they go against them.

At the root of these decisions is the understandable desire of governments to control health-care costs. But rationing is clearly not the answer. What many governments in Western Europe have overlooked is that there is nothing wrong with a society devoting more of its resources to health care. This even appears to be an indication of prosperity. The higher and the more developed a society becomes, the more its citizens are willing to spend on keeping healthy. Modern technology makes everything cheaper except the highest quality of medical care, which is constantly improving. To try to limit access to this technology in the name of “cost-control” is irresponsible.

Meanwhile, the larger and more fundamental problem of how to finance the health-care systems is not addressed. Instead of funding the provisions of today’s sick with taxes from today’s healthy and young, people should be building up reserves for their own future liabilities. What Europe needs is to replace its pay-as-you-go systems by privatized and capitalized health-care systems. This, however, would imply that the governments relinquish control over the system, which is the very last thing they are willing to do.
You pose some challenging questions here and I’ll give it my best shot, although I am not an expert, merely an informed (I hope) lay person. I made the assertion that health care is not “significantly rationed” in Germany. Multiple sources attest that there is no real rationing in Germany. One source for the assertion that I used is from “Health Care in Germany,” by David G. Green, Ben Irvine and Ben Cackett, (Civitas, UK, 2005, here).

You present case studies that are 16 years old. That would be my first caveat. A foremost American expert, Uwe Reinhardt, writing at that time, makes no reference to the imbalances you site in some references she makes to German cost-containment efforts of the 90s. In recent years the Germans have reformed their drug classification practices to ameliorate certain imbalances in the system. At the same time, promoting generics is important in a market where physicians are bombarded with perks to promote pricey new drugs, the use of which may or may not be warranted in any given case.

A drop in German companies’ worldwide share of the pharmaceutical market is based on international considerations rather than the domestic market alone. And the argument about disincentives to pharmaceutical research is at least 20 years old, and is present worldwide.

Patient dumping (even in quotes) in Germany? More evidence please.

Cost containment is a nasty business. You have to squeeze somewhere. Everyone has horror stories. You write: “there is nothing wrong with a society devoting more of its resources to health care.” My point is that costs must be contained or we will go bankrupt. The Germans will not. So that pretty well sums up the difference in our points of view. What would you propose? My point is to cut costs by moving away from pay-per-procedure. That is radical. Radical reform is desperately needed.

You summarize: “The only thing that mattered in their eyes was cost control.” At this moment, critics of health care reform in this country are reminding anyone who will listen that unless we address cost, all the rest is useless. So, again, what would you cut?

Because once you do, someone will howl. And they will howl about rationing. And insensitivity to patient care.

Yet, I don’t deny that some rationing may occur now in Germany, and may well be documented. My primary point is that it is already rationed in the U.S. The overall intent in Germany is that it not be rationed.

As I said in the post, compromises abound. A recent paper on the German system from the Max Planck Institute states that in considering the course of treatment for some cases, and I presume this would include cancer, the age of the patient is taken into account. That can be construed as rationing. It is also done everywhere. Find out more on that here.

You write: “people should be building up reserves for their own future liabilities.” By this I presume you mean something like a medical savings account. I cannot see the logic in this. A single, intensive surgery could wipe out the life savings of even an upper middle class family. Which the whole point behind insurance.

If you want to research the German system as profiled by writer who has done far more research than me, I recommend, Health of Nations: An International Perspective on U.S. Health Care Reform, 3d edition, by Laurene A. Graig.

We absolutely should be kicking the tires of any proposed system, but I don’t think we can throw out the German model based on the (legitimate) concerns you raise here.