• Spending overview
• Policy overview
• Diseases overview

Spending overview

Germany spent an estimated 10.6% of GDP on healthcare in 2009, a proportion exceeded only by the US, Switzerland and France. More than three-quarters of German health spending is public, slightly more than the proportion spent by Italy, but less than in France, and considerably less than in the UK. The majority of the German population is covered by the public health insurance system. Pressure on public finances will lead to continued privatisation of publicly owned hospitals, leading to further growth of the major private hospital operators. The public system is largely financed by contributions deducted from wages, with the remainder—some 5.1% of total revenue of the public health insurance system in 2007, according to the Statistical Yearbook—coming from government subsidies and from patient co-payments. Incentives to strive for cost-effectiveness have traditionally been weak and have only recently been given greater weight.

Specifically, the long duration of hospital visits is a key factor explaining the high expenditure in Germany, although this may gradually change following the introduction of the new diagnosis-related reimbursement system. In 2007 patients stayed on average 7.5 days in the hospital, the second-highest figure in the OECD and substantially above the average of 6.8 days. Even after the most recent reforms, incentives for patients to keep costs at a minimum remain weak. Renewed fiscal tightening is expected from 2011 owing to the sharp increase in public indebtedness caused—directly and indirectly—by the 2009 recession, the deepest since the second world war.

Policy overview

In 2007 the former left-right grand coalition of the Christian Democratic Union/Christian Social Union (CDU/CSU) and the Social Democratic Party (SPD) pushed the most recent major health reform through parliament. The reforms introduced a health insurance fund in which all public health insurance revenue—both from individual contributions and from the federal government—is pooled. If a public health insurance organisation runs a deficit, it can raise additional fees from its members, whereas a public insurance provider running a surplus can reimburse its members. In theory, the reforms will inject more competition into the healthcare system by allowing individuals to choose a health insurance fund based on these additional membership fees. In practice, however, the impact of the change has been limited.

The CDU/CSU and Free Democratic Party (FDP) government, which has been in power since September 2009, is considering a radical reform of health care financing, including a system of per head premiums and a tax-financed subsidy for low-income households. In the medium term, the share of healthcare expenditure financed by federal tax will increase further, especially as the government is committed to increase federal subsidies to bear the costs for the insurance of children. Smaller-scale initiatives to dampen the increase in healthcare spending are also likely to continue. In an attempt to make patients more cost-conscious, some of the restrictions on incentive programmes by health insurance funds have been lifted (although such restrictions remain substantial). Although the overwhelming majority of people participate in the public system, it is possible for people with higher incomes and the self-employed to take out private insurance.

Although tight public finances in the 2000-05 period meant that necessary renovations in public hospitals were delayed, the quality of hospital infrastructure remains high, and patients do not normally have to wait for treatment. The number of private hospital operators is growing, as a more market-driven dimension is being introduced to the public hospital system.

Diseases overview

Germans had a life expectancy at birth of an estimated 79.1 years in 2008. This is lower than most peer countries, largely owing to the formerly socialist eastern German states, where life expectancy, although rising, remains substantially lower than in the western German states. Infant mortality rates are among the lowest in Europe. The proportion of the population aged 65 or older is likely to exceed one in five by the end of 2014. This will push up demand for treatments for conditions related to old age and for old-age care. At the same time, demand is likely to continue to increase for so-called lifestyle drugs and treatments, which are becoming more widely accepted.

Germany’s relatively high spending on healthcare is partly the result of lifestyle factors. For example, alcohol and cigarette consumption is relatively high, leading to a greater incidence of liver problems and lung cancer.