Summary

Despite an enviable record in health care cost containment and universal coverage, the German government decided in 1993 to impose emergency budget caps and begin structural reforms of its health care system. Germany's universal coverage and well-organized administrative framework, which make it easier to monitor provider fees and monitor service utilization, bolster that country's ability to respond to changing health market conditions. But Germany still faces many cost pressures from an aging population, expanding demands for high-technology care, and consumer demands for high-quality care and choice. Germany's past experience and current reforms using global budgets, physician fee schedules, and constraints on resource growth could provide valuable insights for the United States as it grapples with health care reform. The German experience in refining, changing, and adapting some of the same tools being considered in U.S. reform proposals underscores the dynamic nature of the health care market. One of the most important lessons from Germany is that health care reform is a continuous process. As the United States moves toward comprehensive health care reform, the flexibility to respond to a constantly changing health market will be crucial.

GAO found that: (1) large increases in mandated health care premiums and variations in contribution rates between health care insurance funds have prompted the German health care reforms; (2) German legislation has strengthened global budgeting procedures for office-based physicians and hospitals and more closely linked them to revenue growth of the health insurance funds, and extended global budgets to pharmaceutical and dental care providers; (3) German government officials expect the global budgets to stabilize contribution rates over the next 3 years and save about $6.3 billion in fund expenditures in the first year; (4) the reforms are designed to reduce excess services and physician supply by limiting reimbursements and the physician-to-population ratio, unnecessary hospital care through a prospective budgeting system, and disparities among the insurance funds, and allow members greater choice; (5) it is too early to fully assess the reforms' effects, but early indicators show progress in curbing expenditure increases; (6) most German health care providers initially denounced the reforms, but have accepted the new requirements; and (7) the German experience with health care reforms shows that it is a continuous process, and the United States should incorporate flexibility in its system to respond to changing health market conditions.