GERMAN HEALTH CARE COST CONTROLS: A GLOBAL COMPETITIVE ADVANTAGE.

There is an interesting article in the February, 2010 issue of the McKinsey Quarterly, the on-line journal of McKinsey & Company.  The article entitled “How Germany is reining in health care costs: An Interview with Franz Knieps” provides an interesting comparison to our own struggle to control rising health care costs.  Mr.Knieps is the director general for public health care, health insurance and long term care in the German Federal Ministry of Health. 

Germany, one of our major international competitors,  spends 10.4 percent  of its Gross National Product on health care costs , while providing near universal coverage (10 percent of Germans are covered by private health insurance). Contrast that with the USA where we are paying 17.2 percent of our GNP without universal coverage.

Most of Germany’s health care coverage is provided by 180 statutorily created insurance funds which receive their money mostly from private citizens and employers. Tax subsidies support about 10 percent of the costs of the funds. There is a liberal use of co-pays and other incentives.  The insurance funds are designed to compete with each other to keep costs down and quality up.

New drugs and treatment modalities are added to the benefit package when approved, but they are also reviewed by the Institute for Quality and Efficiency in Healthcare to determine whether they bring significantly new value to the table. If not their pricing is restricted by a reference price system that aggregates therapeutic classes of modalities and limits the pricing. Truly innovative drugs and treatment modalities are rewarded with additional pricing opportunities. 

The Germans have borrowed a system of “polyclinics,” clusters of specialized primary care centers from the old German Democratic Republic  under the new name of “medical centers” that have been successful in providing cost efficient medical care to large numbers of people.  The German system, because of its centralized structure also operates on a a program of annual budgets to which there is rigid adherence.

Physicians are paid more to enroll their patients in disease management programs (borrowed conceptually from the USA) in which patients and their physicians are required to follow evidence based guidelines and protocols.  Both positive and negative incentives for physicians and their patients are widely in play.  Electronic data aggregation plays a major role in the identification of behavior driven opportunities to save costs and improve quality. One factor that Herr Knieps does not mention in his interview is the relentless pressure the German government places on controlling the compensation of health care providers, who while mostly private, are substantially less well paid than their counterparts here. The Germans don’t believe in public payment without public control and accountability. The cost of their cars and other competitive products start out of the gate with close to a 7 percent cost advantage.  That makes for a lot of hard running and heavy lifting for American industry to compete. What is wrong with this picture??

https://www.mckinseyquarterly.com/How_Germany_is_reining_in_health_care_costs_An_interview_with_Franz_Knieps_2534

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[Douglas Thompson]

Health Care Reform Act-intent for Change

For many years, America’s health brokers have been offering health insurance to individuals, small businesses and large businesses for decades, yet the enrollment statistics have revealed a steady decrease on an annual basis. The number of uninsured Americans is estimated to be as high as 30 million, and the Health Care Reform Act offers a solution. Not only will there be a higher enrollment number for America’s health brokers, but as of 2014, it will be required by law for every American to obtain health insurance. Every single American will be impacted by the New Health Reform Bill, making it one of the most important measures of the 21st Century.
Businesses
The main focus will be on businesses of 50 or more employees, in which they will be required to offer individual health plans, as well as family plans to all employees or face some stiff fines from the government. The amount comes to $2000 per uninsured employee, though there are exemptions to this fine. If you as an employer assist an individual with acquiring a personal health insurance plan through an open market called an exchange, then it would result in no fines. This only applies to an individual who makes a certain amount under the Federal Poverty Level, and the premiums are over 8% of his annual income.
America’s health brokers can rest easy in the fact that there will be expanded coverage, though there may be more competition. With the rise in individuals who will have health insurance, there may not be as large of a risk as one may assume. Though the new bill will require America’s health brokers to enroll individuals with pre-existing conditions, there will also be a new population of young individuals who will be insured with fewer health problems.
It is understood that larger companies already provide a group insurance plan (HMO, PPO) that covers all areas of needs for the population of employees. These policies will change very little, but there may be some changes in where the funding for the new health care plan will come. It is proposed that those making a certain amount of money, both individuals and couples, will be taxed at a higher percentage than others. This will provide money that can be used for the exchange and making sure that all individuals will be offered an affordable health plan.
There are still a few years before the plan goes into full effect, though some of the measures will be enforced immediately. There will be plenty of time to sort out the details and iron out the difficulties. As for the plan, anyone who does not have health insurance as of January 1, 2014, will be penalized a certain amount of money, and this amount could become worse if health insurance is continuously neglected. There has never been a better opportunity for America’s health brokers in terms of acquiring a new customer base-a broader customer base. Also, there has never been a better time in history for individuals being provided with the resources for the necessary medical treatment. This is a very unique time, with history in the making. Finally, there will be health care for all.

[Douglas Thompson]

A Government proposal for Change-Health Care Reform Act

March 2010 may stand out as a monumental month for change with the Obama Administration-Americans can look forward to changes in the current health care system through the passing of the Health Care Reform Act. Though there are many details that need to be ironed out, there are many changes that have been established.

There are two factors that will have the largest impact for Americans and America’s health brokers:
1) The fact that as of 2014, it is required by law for employers to offer affordable health insurance plans to all employees.
2) As of 2014, all Americans will be required to acquire health insurance.

Employers-For businesses over 100 employees, there may not be many changes. The difference may be that part-time employees will be offered aid with a percentage of hours in relation to full-time employment. This will offer benefits to those who do not have that same opportunity currently as a part-time employee. With businesses under 100 employees, there will be opportunities for credits from the government to offer aid with those employees. A percentage will be paid, based on payroll that will pool to help those who acquire insurance through an exchange, where many of America’s health brokers will provide different affordable insurance plans for all individuals.
What is the incentive for employers to offer insurance?
Employers will face a fine of up to $2000 per employee for not providing insurance coverage to an individual employee. These fines can be diverted if the employer offers an alternative means to acquire insurance (which would require assistance through the exchange).
Individuals-As of 2014, all Americans (with the exception of certain special case individuals) will be required to carry some form of insurance. Insurance will either be offered through employment or affordable insurance can be purchased through the exchange. America’s Health brokers will offer many new plans and opportunities to acquire cheap health insurance.
What is the incentive for individuals to acquire insurance?
According to the law, there will be a penalty assessed to all Americans who fail to acquire health insurance by the year 2014. The fine will be originally set at $695 per person, per year. This will hopefully be enough to encourage those who are not insured to carry some form of low cost health insurance.
America’s health brokers will be seeing some changes that could affect them. Pre-existing conditions will no longer be applicable in denying insurance to children. As of 2014, America’s health brokers cannot deny health insurance to anyone due to a pre-existing condition. There are other factors that will change certain policies and conditions.
The Health Care Reform Bill is an opportunity to reorganize the condition of care that is offered in the United States. There are many issues that riddle the care of many Americans, so hopefully this will provide solutions to some of the larger issues. One key aspect is the fact that all Americans will have the opportunity to have health care. This will be advantageous in many aspects: Prescription medications, preventative care, and treatment.

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Most of Germany's health care coverage is provided by 180 statutorily created insurance funds which receive their money mostly from private citizens and employers. Technological advances are generally associated with increased rather than reduced costs.