The Plan’s Strengths: * Coverage is universal. * Benefits include dental care and drugs, as well as cash payments for eyeglasses, grants for young mothers, wages while ill, and convalescent therapy ("cures"). * Physician payments are fee-for-service, negotiated between the sickness funds and the medical associations within a global state budget. This guarantees cost containment and maximizes clinical freedom. There are no cost over-runs because fees are pro-rated downward when budget ceilings are approached. * Patients can freely choose among physicians. * Care is financed through a payroll tax based on income (averaging 12.6 percent in 1992), half paid by employers, half by employees. * Germany is the first nation to mandate that health care expenditures not rise faster than wages. * Health care costs within each fund are redistributed from the young and healthy to the elderly and ill. Because people stay with the same fund for life, these costs even out over a person’s lifetime. * Only the very rich are permitted to opt out of the statutory funds and buy private insurance. Once they do so, however, they can never again return to the state’s funds. * Government’s primary role is policy-making and assuring compliance. It also provides a stipend (usually 25 percent of the health care budget) to supplement private payroll tax contributions and cover the unemployed. * Individuals are free to purchase private insurance to cover what is not covered by the plan.
The Plan’s Weaknesses: * Contributions by employers and employees vary by fund. * Ambulatory care and hospital care are structured separately, and there is no coordination between them. This results in long hospital stays because hospital physicians do all the follow up before patients are released. There are also no incentives in the fee schedules to shorten lengths