NCPA - National Center for Policy Analysis


January 16, 2006

In 1993, when the Clintons where in the White House, Germany's health-care system was hailed as a model for how to remake the American way of providing insurance coverage. It consisted then, and still consists of everyone paying into a publicly funded health system through payroll taxes, says the Washington Times.

Health care is delivered through what are known as Krankenkassens or "regional health plans" that are non-profit and heavily regulated in terms of what they charge and the care they deliver. If someone changes his job or is fired -- or more often the case in Germany, if they remain unemployed -- they have health insurance that is portable, says the Times.

Since then, the German health system has careened toward bankruptcy and worse as a result of three factors:

  • An aging and eroding population base cannot support a generous package of benefits that includes a six-week spa vacation.
  • The government's efforts to control costs have initiated a death spiral of more serious financial problems triggered by penny-wise and pound-foolish measures; by limiting access to new drugs German regulators drove up the use and total cost of hospital stays and nursing-home use.
  • Finally, government regulation of the health plans hinders innovation; efforts to improve outcomes, reduce hospital stays, increase efficiency or consumer choice with electronic patient records and health savings accounts are almost non-existent.

German Chancellor Angela Merkel has seized the health-reform portfolio from Social Democrat health minister Ulla Schmidt, whose policies have deepened the crisis. That's a good first step, says the Times. The next step would be to import some health-care innovations from America and let Germans, if they want, to pay for them with tax free dollars.

Source: Editorial, "Germany's HillaryCare," Washington Times, January 16, 2006.


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