NCPA - National Center for Policy Analysis

BISMARK'S BABY

December 5, 2006

Supporters of legislation to expand government health care coverage in the United States may want to take a closer look at Germany's long history with "free care" before jumping in, says the Wall Street Journal.

Consider:

  • For the average German, "free" health care comes with a big bill, around 14.2 percent of gross pay, about half of it covered by the employer.
  • Such punishing payroll taxes make companies less willing to hire and contribute to double-digit unemployment, currently at 10.2 percent.
  • Overall, since the 1970s, payroll taxes to pay for free health care for the average German have almost doubled.

A big part of the problem in health is the incentive structure.  As Germans have already forked out so much through their taxes for usually zero-deductible plans, patients have no incentive to keep costs down by going to the doctor selectively.  Britain's National Health Service (NHS) is plagued by long waiting lines and regular hospital visits for the common cold.

But there are other problems as well:

  • The health care insurers, quasi state-run bureaucracies, which cover nine in 10 Germans are free from competitive pressure, and are €4 billion (about U.S. $5.3 billion) in debt.
  • This set-up also hinders competition in the medical professions; a top doctor earns the same for his service as a mediocre practitioner through a central payments system.
  • German hospital doctors are doing worse, earning less than a fourth of the comparable figure in the United States and less than half of the average top income in France.

As a result, many German doctors end up in America.  But if the new Congress ends up importing Germany's system, that escape route will be closed.  But Americans will at least get the "free medicine" that Germans have lived with for well over a century, says the Journal.

Source: Editorial, "Bismarck's Baby," Wall Street Journal, December 5, 2006.

For text:

http://online.wsj.com/article/SB116527075305840382.html

 

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