Summary

Expensive new technologies, an aging population, administrative waste, structural inefficiencies, and unnecessary medical procedures have all fueled soaring health care costs in most industrialized nations. In 1993, Germany, concerned about sharp rises in health insurance premiums, began tightening its existing cost-control measures. The United States may find the German experience instructive because that nation provides coverage for nearly all its residents, guarantees a generous benefit package, and, like the U.S. system, relies mainly on employment-based financing. This testimony, which draws on a July 1993 GAO report (GAO/HRD-93-103), provides an overview of the German health care system, discusses problems leading up to the 1993 reforms, and presents some early results of these changes.