Relevance of Social Market Conditions in the German Health Care System to the United States

By Powell, Francis D. | Review of Social Economy, Fall 1992 | Go to article overview

Relevance of Social Market Conditions in the German Health Care System to the United States


Powell, Francis D., Review of Social Economy


Experiment: Explaining and Evaluating Cost Containment in Canada and the United States." Annual Review of Public Health, 1991, 12, 481-518.

Freidson, Eliot. Professional Dominance: The Social Structure of Medical Care, New York, 1970.

Glaser, William A. Paying the Doctor: Systems of Remuneration and Their Effects. New York, 1970.

-----. Health Insurance Bargaining. New York, 1978.

The introduction of a national health insurance program in the United States, owing to initial expansion of services to the uninsured, has been estimated to produce substantial short-term increases in health care costs (Thorpe, et al, 1989; Thorpe and Siegel, 1989; and Monheit, et al, 1985). Longer-term costs of a system of national health insurance for this country, however, may be more appropriately assessed through examination of expenses sustained by other Western nations operating under established conditions of guaranteed universal health care coverage.

Over several recent decades Western industrial societies experienced rises in health care costs attendant to advances in medical technology and due to increases in portions of their populations obtaining access to newly effective health services. On the other hand, during approximately the last ten years or so, many of these countries have initiated determined policies to bring health expenditures under control. The United States, however, while consistently showing higher rates of health care expenditure than other Western nations, has also tended to lag behind in regard to control of costs in recent years. Thus, although approximately 13% of the population is lacking in health insurance (Holahan, et al, 1991), the United States devotes 11.2% of gross domestic product to health service expenditures. This figure is substantially higher than the rate for six major industrial Western nations with virtually universal health care coverage, which average only 7.6% in total expenditures allocated to health care (Cf. Schieber and Poulier, 1989).

Moreover, other Western systems have been quite successful in curbing costs since a period in the early seventies when all of these countries experienced sharp rises in expenditures. Thus, Britain, Canada, France, Germany, Italy and Japan each possess systems with nearly universal health care coverage. In these countries, during the years from 1970 through 1976, real per capita health care costs rose annually at an average rate of 10.3%. From 1977 through 1987, this rate declined to an average of 6.0%. In the United States the real per capita annual rate during the prior period amounted to 13.1%, while in the subsequent eleven years the rate fell to 8.6% annually (based on a seven country average cost for the year 1970, as derived from the data analysis of Schieber, 1990). This tendency for health service costs to remain higher in the American system, while lagging behind other Western countries in control of expenditures in recent years, is substantiated by a number of investigators (Simanis and Coleman, 1980; Abel-Smith, 1985; Altenstetter, 1987; Kirkman-Liff, 1990). This failure to control costs, while significant portions of the population are lacking in insurance coverage, constitutes a vexing and serious obstacle, complicating plans to expand health services in this country to include the uninsured (Cf. Holahan, et al, 1991, for sensitive treatment of the issue of coverage of the uninsured population; cf. Swartz, 1989 for data on the uninsured nationwide).

The experience of the Federal Republic of Germany in controlling rises in health service expenses since the middle of the 1970's has been seen as particularly relevant to proposed revisions in the health care system of the United States. Thus, a number of investigators in the field of international health care analysis have recommended the German system for consideration due to its fundamental similarities to health care arrangements in this country (Cf.

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Relevance of Social Market Conditions in the German Health Care System to the United States
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