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THE HEALTH CARE SYSTEMS OF GERMANY AND SWITZERLAND
Merely slouching towards “Regulated Competition”
WWS 597 Reinhardt
SOCIAL INSURANCE WITH PRIVATE PURCHASING
SOCIAL INSURANCE
(Ability-to-Pay Financing)
NO HEALTHINSURANCE
Single Payer
Multiple Carriers
PRIVATE INSURANCE
(Actuarially fair premiums)
Non- Profit
For- Profit
THE FINANCING OF HEALTH CARE
OWNERSHIP OF PROVIDERS
Government
Private, but non-profit
Private, and commercial
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
Out-of- pocket
First, some comparative statistics
International Comparison of Spending on Health, 1980–2007
0
1000
2000
3000
4000
5000
6000
7000
8000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
U.S.
Switzerland
Netherlands
Germany
Average spending on health per capita ($US PPP)
Source: OECD Health Data 2009 (June 2009) cited in http://www.commonwealthfund.org/Content/Publications/Chartbooks/2009/Multinational-Comparisons-of-Health-Systems- Data-2009.aspx
International Comparison of Spending on Health, 1980–2007
5
6
7
8
9
10
11
12
13
14
15
1619
80
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
U.S.
Switzerland
Germany
Netherlands
Total expenditures on health as percent of GDP
Source: OECD Health Data 2009 (June 2009) cited in http://www.commonwealthfund.org/Content/Publications/Chartbooks/2009/Multinational-Comparisons-of-Health-Systems- Data-2009.aspx
Percentage of Population over Age 65 with Influenza Immunization, 2007
77.5 77.073.5
69.066.7 64.9 64.3 63.7
58.956.0 56.0
0
10
20
30
40
50
60
70
80
AUS* NETH UK FR US ITA CAN NZ OECDMedian
GER SWITZ
* 2006
a
Source: OECD Health Data 2009 (June 2009).
Percent
34.3
26.5
24.0
15.413.6
11.2 10.5 10.2 9.9 9.0 8.1
0
5
10
15
20
25
30
35
US* NZ UK CAN GER** NETH FR* SWE ITA NOR SWITZ
Obesity (BMI>30) Prevalence Among Adult Population, 2007
* 2006** 2005Note: BMI = body mass index. For most countries, BMI estimates are based on national health interview surveys (self-reported data). However, the estimates for the US, UK, and New Zealand are based on actual measurements of weight and height, and estimates based on actual measurements are usually significantly higher than those based on self-report.Source: OECD Health Data 2009 (June 2009).
Percent
Potential Years of Life Lost Because of Diabetes per 100,000 Population, 2007
1925
29313335363637
64
99
0
20
40
60
80
100
US** NZ** NOR* SWE* OECDMedian
GER* NETH ITA* FR* UK SWITZ*
* 2006** 2005Source: OECD Health Data 2009 (June 2009).
Health Care Expenditure per Capita by Source of Funding, 2008 In Purchasing‐Power Parity Dollars (PPP $s)
3,5074,213
2,736 2,863 2,875 2,8692,263 2,585
3,119
467616 648 382
494
912
756
1,424 600 273 487543 605
2,841
35
19788 347
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
US NOR SWITZ CAN FR GER SWE AUS* UK
Out-of-pocket spendingPrivate spending Public spending
* 2007
Dollars
$7,538
$5,003$4,627
$4,029$3,796 $3,737
$3,472 $3,362$3,319
SOURCE: OECD DATA BASE 2010, cited in Anderson and Markovich, “Multinational Comparisons of Health Systems Data, 2010, Commonwealth Fund International Symposium, 2010.
Out‐of‐Pocket Health Care Spending per Capita, 2008 In Purchasing‐Power Parity Dollars (PPP $s)
$232$273
$347$372
$487$492$543$605$600
$756
$912
$1,424
$0$100$200$300$400$500$600$700$800$900
$1,000$1,100$1,200$1,300$1,400$1,500$1,600
SWITZ US NOR CAN AUS SWE OECDMedian
GER NZ UK FR NETH
SOURCE: OECD DATA BASE 2010, cited in Anderson and Markovich, “Multinational Comparisons of Health Systems Data, 2010, Commonwealth Fund International Symposium, 2010.
Dollars
2006
Hospital Discharges per 1,000 Population, 2007
84
109126126135139
162163165166172
227
274
0
50
100
150
200
250
300
FR GER NOR SWITZ SWE OECDMedian
AUS* ITA* NZ US* UK NETH CAN*
* 2006Source: OECD Health Data 2009 (June 2009).
Number of Practicing Physicians per 1,000 Population, 2007
2.2
3.9 3.9 3.93.7 3.6 3.5 3.4
3.2
2.8
2.5 2.4 2.3
0
1
2
3
4
NETH NOR SWITZ ITA SWE* GER FR OECDMedian
AUS* UK US NZ CAN
* 2006Source: OECD Health Data 2009 (June 2009).
Pharmaceutical Spending per Capita, 2007 Adjusted for Differences in Cost of Living
$241
$381$422$431$446$446$454
$518$542$588
$691
$878
0
100
200
300
400
500
600
700
800
900
US CAN FR GER ITA SWITZ SWE OECDMedian
AUS* NETH NOR NZ
* 2006Source: OECD Health Data 2009 (June 2009).
Dollars
Drug Prices for 30 Most Commonly Prescribed Drugs, 2006–07
US is set at 1.0
0.34
0.440.450.490.51
0.63
0.760.77
1.00
0.0
0.2
0.4
0.6
0.8
1.0
US CAN GER SWITZ UK AUS NETH FR NZ
Source: IMS Health.
Drug Prices: Lipitor (atorvastatin), 2006–07 Price for one dose
$0.71
$1.01
$1.35$1.45$1.45$1.46$1.52
$1.83
$2.82
$0
$1
$2
$3
US CAN SWITZ AUS UK NETH GER FR NZ
Source: IMS Health.
Dollars
Drug Prices: Nexium (esomeprazole), 2006–07 Price for one dose
$0.88$1.02
$1.22$1.28$1.32
$1.97$2.15
$3.91
$0
$1
$2
$3
$4
US SWITZ CAN UK NETH FR AUS GER
Source: IMS Health.
Dollars
Magnetic Resonance Imaging (MRI) Machines per Million Population, 2007
25.9
18.6
14.4
8.8 8.5 8.2 8.26.7 6.6
5.7 5.1
0
10
20
30
US ITA SWITZ NZ OECDMedian
GER UK CAN NETH** FR AUS
** 2005Source: OECD Health Data 2009 (June 2009).
MRI Scan and Imaging Fees, 2009
1,200
839 824
567
436
179
0
200
400
600
800
1,000
1,200
1,400
US GER CAN NETH FR UK
Source: International Federation of Health Plans, 2009 Comparative Price Report.
Dollars
Coronary Bypass Procedures per 100,000 Population, 2007
3132
132
8581
77 76 73 73
59 58 56
45
0
25
50
75
100
125
150
GER US* NOR* NZ AUS* ITA* CAN* OECDMedian
NETH SWE UK FR SWITZ
* 2006Source: OECD Health Data 2009 (June 2009).
A closer look at German health care
THE HEALTH INSURANCE SYSTEM OF GERMANY
A health‐are system with the following features
1.
Mandated, universal health insurance (about 90% in the non‐
profit, private, Statutory Health Insurance (SHI) system (initiated
by Chancellor Otto von Bismarck in the late 1880s), and about 10%
with highly regulated for‐profit private insurers.
2.
A mixed public‐private delivery system with a heavy for‐profit
component, even among hospitals.
3.
Overall pervasive and tight government regulation at both the
state and federal levels.
4.
By American standards, relatively low cost.
THE STATUTORY HEALTH INSURANCE SYSTEM OF GERMANY
The system grew out of the self‐help “friendly societies”
established by workers during the industrialized revolution of
the 1880s.
Became a federal system in 1998 with Bismarck’s RVO – the
Reichs‐versicherungsverordnung
(Imperial Insurance Decree)
which survives, after a myriad amendments over time to this
day.
Originally composed of over 1,000 quasi‐private, non‐profit
sickness funds with what is called “self‐regulation”, but only
within the very narrow limits allowed by the RVO.
THE STATUTORY HEALTH INSURANCE SYSTEM OF GERMANY
Up to an income threshold that has changed over time
(currently $62,500), all employed Germans were mandated to
be insured under the SHI. Above the threshold people were
free to choose private insurance or remain in the SHI or go
without insurance.
Until very recently (starting in 1992 and fully since 2004)
people in the SHI did not have a choice of sickness plans, but
instead were assigned to it on the basis of either craft,
employer or location.
Until 2004, the payroll contributions to the SHI (shared 50:40
by employers and employees) varied enormously among
funds, which brought on the reforms of 2004.
THE STATUTORY HEALTH INSURANCE SYSTEM OF GERMANY
Since 2004, Germans can choose among any of the 200 or so
surviving sickness funds, at a uniform payroll tax, which
covers the employee and dependent non‐working spouse, but
not children, whose premiums are paid by the federal
government.
Unlike in the US, where patients often are confined to
networks of providers, Germans have long enjiyed
completely
free choice of providers.
Premiums paid by the insured now flow through the system
as follows:
Central health Fund
(Risk Equalization Fund
~ 160 non-profit Sickness Funds
(Insurers)Adult Insured
Providers of Health Care
Federal Government
Uniform payroll contribution of about 15% (and growing) of gross wages shared by employer and employee
Risk adjusted capitation to sickness fund chosen by the insured
DGRs for hospitals; capital from state
FFS for ambulatory physicians
Refrence prices for pharmacies
Premiums for
Children
For unemployed people the Unemployment Insurance fund pays the premiums.
For retired people, their pension fund pays 50% of their premiums; they the rest.
Co-Pays
Federal Ministry of Health
Regulation & supervision
Patient
150,000 physicians and
psychotherapists
Federal Association of SHI Physicians (KBV)
All physiciansGerman Hospital
Federation (DKG)
2,100 hospitals
Federal Association of Sickness Funds
Federal Joint Commitee (G-BA)
Institute for Quality and Efficiency in Healthcare (IQWiG) - technologies
Institute for Quality (focused on providers)
Federal Physicians‘
Chamber (BÄK)
160 sickness funds
Self-Governance under Germany‘s Statutory Health Insurance
Source: Reinhard Busse.
For a more detailed chart on governance, see a separate handout.
THE PRIVATE HEALTH INSURANCE SYSTEM OF GERMANY
Provides full covers less than 10% of the German insurance, but
supplemental coverage to millions of SHI insured (mainly for
better amenities).
Premiums at time of enrollment are actuarially fair, but
thereafter can change by age, regardless of health status.
Pay higher fees to physicians, but also registers higher health
spending per capita.
Premiums are per individual, not per family.
People who opt for private insurance cannot ever return to SHI
unless they are poor.
The industry is heavily regulated by the federal government,
which sets the fee schedule (e.g., age reserves).
HEALTH‐CARE DELIVERY SYSTEM OF GERMANY
Until very recently, there had been a strict division between
ambulatory and inpatient care. Hospitals give only limited
outpatient care.Hospital‐based physicians are (rather poorly paid) salaried
employees of the hospital whose salary is included in the DRGs.
The insured may voluntarily enroll in GP gatekeeper models at
favorable premiums.
Ambulatory physicians are self‐employed business people who
practice in solo (75%) or group (25%) practices.
PAYMENT OF HOSPITALS IN GERMANY
Germany has what is called a “dual hospital financing system.”
The states (Länder) pay for the structures and equipment of
hospitals, within regional health planning), as role the states
have jealously preserved for themselves.
The hospital’s operating costs are covered by some 12,00 DRGs
paid by the sickness fund, traditionally within a global budget
per hospital, but not any more since 2009.
There exists in Germany a new Hospital Payment Institute
that
updates the DRGs
constantly in light of new medical
technology.
Ambulatory‐care physicians are paid on a FFS basis, on a
schedule of points per service which is then converted to
monetary units through a conversion factor (€/point).
Until recently, this system operated within global budgets so
that the €/point automatically fell if the budget was exceeded.
PAYMENT OF AMBULATORY PHYSICIANS IN GERMANY
The fee schedules now have fixed Euro prices instead of points, but physicians are still subjects to budget caps on an individual basis. Services rendered beyond the cap are reimbursed at a much lower rate.
State-based associations of sickness funds physicians negotiate annually with state-based associations of sickness funds over the overall aggregate payments to the physician sickness fund association (the Kassenärztliche Vereinigungen or KV).
Sickness Funds
Regional Sickness-Fund Physician Associations
(Kassenärztliche Vereinigungen or KV)
GLOBAL BUDGET FOR GPs GLOBAL SPECIALIST BUDGET
General Practitioners Specialists
FFS payment on point system subject to the global budgets.
Aggregate amount, based on risk- adjusted capitation per insured
FFS WITHIN GLOBAL BUDGETS
Since 2009 adjusted for morbidity
Drug manufacturers in Germany can set their own wholesale prices.
The federal government regulates wholesale and retail mark-ups.
PAYMENT FOR PRESCRIPTION DRUGS
Sickness funds pay for prescription drugs on a reference-price system, coupled with rebates for on-patent drugs, which replaced earlier budget caps per prescribing physicians.
From 2011 on, the system is subject to comparative effectiveness analysis.
A closer look at Swiss Health Care
Switzerland 7.5 million people live in 26 cantons, some of which are large cities, other small rural enclaves.
Health insurance is mandated in Switzerland, on a cantonal basis, but within an overarching federal health insurance law passed in 1996. There are few uninsured (about 1.5% of the population).
As in Germany, there are no government-run health insurance programs in Switzerland. All insured purchase coverage from private insurers that cannot earn profits on the mandated benefit package but may earn profits on supplemental insurance.
OVERVIEW
The health-care delivery system is a mixed system, as in Germany.
Governance of the system is highly decentralized, involving federal, cantonal and communal governments.
Mandatory basic health insurance in Switzerland is regulated and supervised by the Federal Office of Public Health under the Federal Health Insurance Act of 1996. It covers about 43% of total national health spending. Long term care is not part of social insurance and is still paid largely privately out of pocket.
For the mandated basic package – which excludes dental care -- insurers can vary the deductible from a minimum of CH300 to a maximum of CH2,500. In addition, a coinsurance rate of 10% applies to all but a few exempt services. Out of pocket spending therefore is very high in Switzerland (30% of total national health spending), although very low-income people receive subsidies from the cantons.
SWITZERLAND’S HEALTH INSURANCE SYSTEM
Nationwide there are over 80 private insurers, although not all of them sell insurance in every canton, and the 10 largest carriers cover 80 percent of the population.
Every insurer is free to set the premium for the mandated basic benefit package, but an insurer’s premium applies to all customers regardless of age or health status.
As a result, individual insurers in Switzerland have an incentive to cherry pick – not to earn profits (which is prohibited on the mandated package), but to be able to compete with lower premiums.
SWITZERLAND’S HEALTH INSURANCE SYSTEM
Because of guaranteed issue and community rated premiums, there is cantonal a risk equalization fund, but it relies on few variables (only age and gender, while Germany’s as well as the Dutch risk adjusters have over 80 morbidity variables) for risk adjustment and is judged far from satisfactory.
Low-income people in Switzerland receive public subsidies toward the purchase of health insurance.
SWITZERLAND’S HEALTH INSURANCE SYSTEM
Because health insurance is decentralized on a cantonal basis, there are significant differences in health insurance premiums for identical benefit packages.
Remarkably, there remain large premium differences even within cantons – see the following slides from Rutten et al.. These variances are thought to reflect risk selection, rather than relative efficiency in purchasing health care and administering claims.
These intra-cantonal variances in premiums suggest that many Swiss citizens do not switch insurers in spite of these large differences. It reflects a bias for the status quo.
PAYMENT OF HOSPITALS IN SWITZERLAND
Hospitals, which can be public, private non-profit or private for profit receive about a third of their financing from the cantons, within a cantonal planning system.
Hospitals are paid by insurers either on a per diem or a DRG basis negotiated at the cantonal level.
As of 2012, hospitals are to be reimbursed on a nationwide DRG basis.
The cantonal governments absorb hospital deficits.
PAYMENT OF PHYSICIANS IN SWITZERLAND
Switzerland has one of the highest physician-population ratios in the OECD (380 per 100,000 population)
As in Germany, hospital-based physicians are usually salaried.
Ambulatory-care physicians are paid on a FFS basis at fees that are negotiated on the cantonal level between associations of insurers and of physicians.
Drug prices are regulated by the federal government in Switzerland. Comparative effectiveness is a factor in setting prices for drugs.
Generics must be sold at 50% of the corresponding brand-name drug; but only about 9% of drugs sold are generics (compared with close to 70% in the US)
PAYMENT FOR PRESCRIPTION DRUGS
Sickness funds pay for prescription drugs on a reference-price system, coupled with rebates for on-patent drugs, which replaced earlier budget caps per prescribing physicians.
From 2011 on, the system is subject to comparative effectiveness analysis.
CONSLUSION ON THE GERMAN AND SWISS HEALTH-CARE SYSTEMS
Both systems slouch in the direction of what we think of as “regulated or ‘managed’ competition” in the U.S.
Allowing citizens a choice among tightly regulated health insurers provides the illusion of competition, but it is just that, an illusion.
It is an illusion because the prices at which insurers buy health care for the insured are typically out of the insurer’s control.
Furthermore, there is virtually no ability to exclude providers with relatively low quality of services.
But perhaps there is value in the eyes of citizens in a system that provides the illusion that it is not a government-run health insurance system.
Of the two systems, Germany’s is by far the more egalitarian system.
Germany’s health system also registers significantly lower costs on a PPP per capita basis.
Overall, though, the Swiss health system is generally viewed as one of the highest-quality health systems in the world – certainly outranking the United States on many dimensions.
THE END
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