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The development in social policy in Germany has followed a unique historical path. During a long process of growth and social experimentation, Germany combined a vigorous and highly competitive capitalist economy with a social welfare system that, with some exceptions, has provided its citizens cradle-to-grave security. The system's benefits are so extensive that by the 1990s annual total spending by the state, employers, and private households on health care, pensions, and other aspects of what Germans call the social safety net amounted to roughly DM1 trillion and accounted for about one-third of the country's gross national product (GNP). Unlike many of the world's advanced countries, however, Germany does not provide its citizens with health care, pensions, and other social welfare benefits through a centralized state-run system. Rather, it provides these benefits via a complex network of national agencies and a large number of independent regional and local entities--some public, some quasi-public, and many private and voluntary. Many of these structures date from the nineteenth century, and some were developed much earlier.
Three laws laid the foundations of the German social welfare system: the Health Insurance of Workers Law of 1883, which provided protection against the temporary loss of income as a result of illness; the Accident Insurance Law of 1884, which aided workers injured on the job; and the Old Age and Invalidity Insurance Law of 1889. Initially, these three laws covered only the top segments of the blue-collar working class.
In 1938 artisans came to be covered under compulsory social insurance, and in 1941 public health insurance coverage was extended to pensioners. In 1942 all wage-earners regardless of occupation were covered by accident insurance, health care became unlimited, and maternity leave was extended to twelve fully paid weeks with job protection.
Two separate German states evolved after World War II, each with its own social welfare programs. In the GDR, the state became even stronger than it had been under Hitler. The communist-directed Socialist Unity Party of Germany (SED) had a near monopoly of control over all social and political institutions, including those that administered social welfare programs.
Initially, the GDR retained separate social insurance plans, but by 1956 the plans had been unified into two compulsory, centrally controlled, and hierarchically organized systems that provided universal flat-rate benefits. Because the right to work was guaranteed, unemployment insurance did not exist. When West Germany moved away from Hitler's central state direction and returned to decentralized administration and control. Social insurance and social protection programs under labor and management control, which were characteristic of the Weimar period, were restored. The return to separate earnings-related and means-tested benefits for different groups meant that social insurance, social compensation, and public assistance (or social aid) were not integrated into one overall administration, as some Germans wished and as the Allied Control Council had intended in 1946 when it drafted a unified national insurance system.
In the mid-1970s, legislators attempted to consolidate the goals, the protection, and the entitlements as much as possible. But they failed to develop a coherently organized and uniform system that would have eliminated disparities in individual entitlements. Indeed, by the mid-1990s the disparities in welfare benefits entitlements in unified Germany had become more significant than ever before (A Country Study, 1988-2010).
Population and Health Status
At the end of 2004, Germany's population was 82.5 million, essentially unchanged from the prior year. However, the World Bank projects that Germany's population will decline to about 80.3 million by 2015. Germany's population includes 7.3 million foreigners, including 2 million Turks and many refugees from the developing world. Many Turks came to Germany as guest workers during the economic boom from the mid-1950s to the end of 1973. Since 1970, about 3.2 million foreigners have become German citizens. With the introduction of a new citizenship law in 2000, many children of foreign parents became eligible for German citizenship for the first time. Between 1988 and 1993, more than 1.4 million refugees, many from the former Soviet Union, sought asylum in Germany, but only 57,000 were granted their wish. Although the right to asylum remains intact for legitimate victims of political persecution, restrictions on the countries of origin and entry introduced in 1993 have steadily reduced the number of those seeking asylum to a 20-year low of 50,500 in 2003 (Gordeeva, 1989-2009).
The population of Germany manifests trends characteristic of most advanced industrial countries: lower marriage rates, delayed marriage and child-bearing, low fertility rates, small household size, high divorce rates, and extended life expectancy. The population of indigenous Germans has been in decline since 1972 in the west and since 1969 in the east because the number of births has not kept pace with the number of deaths. As in the United States, a greater proportion of the population is moving into advanced age. In 1871 only 4.6 percent of the population was sixty-five years of age or older. By 1939 that proportion had risen to 7.8 percent, and by 1992 it had risen to about 15 percent. By 2000 one-quarter of the population was sixty years or older.
Since the 1950s, the population of Germany has become more diverse. Millions of foreigners have migrated to Germany, seeking employment, citizenship, or asylum. In contrast to the native population, foreigners in Germany tend to have more children and larger households. In 1988 their average household size was 3.5 persons. Depending upon their origins and social status, foreigners in Germany have been integrated into society in widely varying degrees (NBER, 2010).
Immigration has been a primary force shaping demographic developments in the two Germanys in the postwar period. After the erection of the Berlin Wall in 1961, the immigration flow, first into West Germany and later into united Germany, consisted mainly of workers from southern Europe. In addition, the immigrants included several other groups: a small but steady stream of East German immigrants (Übersiedler) during the 1980s that exploded in size in 1990 (389,000) but by 1993 had fallen by more than half (172,000) and was somewhat offset by movement from west to east (119,000); several million ethnic Germans (Aussiedler) from East European countries, especially the former Soviet Union; and several million persons seeking asylum from political oppression, most of whom were from East European countries.
In the postwar period, the former GDR developed a comprehensive health care system that made steady advances in reducing infant mortality and extending life expectancy for both men and women. Early in the postwar period, life expectancy in some categories was actually longer for East Germans than for West Germans, and infant mortality was lower until 1980. However, starting in the mid-1970s, West Germany began to register longer life expectancies in every age-group, and after 1980 the infant mortality rate dropped below that of East Germany. In 1988 infant mortality in West Germany was 7.6 per 1,000 live births and 8.1 per 1,000 in East Germany.
The better health and longevity of West Germans probably stemmed from an increased interest in quality of life issues, personal health, and the environment. East Germans, in contrast, suffered the ill effects of the Soviet model of a traditional rust-belt industrial economy, with minimal concern for workers' safety and health and wanton disregard of the need to protect the environment. Improving environmental conditions and a more health-conscious way of living should gradually reduce remaining health differences among Germans. In mid-1995 unified Germany had an estimated mortality rate of about eleven per 1,000, and life expectancy was estimated at 76.6 years (73.5 years for males and 79.9 years for females). The major causes of death were the same as those of other advanced countries.Â
The German health service is highly decentralized. Each of the 16 states share responsibility with the central government for the building and upkeep of hospitals, while the state-regulated health insurance providers exert some control over running costs. Of Germany's 2,030 hospitals, 790 are publicly owned, 820 are private non-profit, and 420 are private for-profit. The Catholic and Protestant churches run many of the hospitals with federal or state subsidies. The hospitals, in general, are packed with technological sophistication and a high level of accommodation comfort. According to World Health Organization (WHO) statistics, Germany has an average of 358.40 physicians per 100,000 inhabitants (the USA has 279).
Until they reach the retirement age of 65, people must, by law, pay into health insurance plans (and, since 1994, an additional long-term care plan). The health insurance plans are either state-regulated or private. After retirement, contribution payments for the state-regulated plans stop (although private patients continue payments), but coverage is continued until death.
Only certain groups are allowed to take out private health insurance. The vast majority of people are obliged to use state-regulated plans and, depending on their individual circumstances, choose from one of about 400 options. The government regulates the fees of state-regulated plans. Although some doctors take only private patients, normally every doctor has a sign that says s/he is accredited by all insurance providers.
There are several types of state-regulated plans. Some large companies and guilds offer their employees in-house plans. Other groups - notably people working in technical and scientific environments, employees in medium-sized and small firms, or blue-collar workers - often prefer the so-called self-governing substitute plan (Ersatzkassen). The state covers health insurance contributions for the unemployed and those with low income.
Contributions to the state-regulated health plans (currently around 14% of the employee's gross income and shouldered equally by the employee and the employer) cover up to 68% of overall healthcare costs. Income taxes, funds derived from those with private health insurance, and out-of-pocket payments (e.g., for prescriptions where the insurance covers only 90% of the charges) attempt to cover the remainder.
The government regulates the use of private insurance. There are three main types of people who use private insurance plans. Persons with a monthly income exceeding US $3,825 may legally opt out of state-regulated plans and switch to private insurance. The self-employed are excluded from the state-regulated plans and so must take private insurance. Public sector employees (e.g., police, teachers) are reimbursed for part of their health costs by the state but have to be privately insured to cover the rest. (The government is now trying to make it difficult to opt for private insurance because the state-regulated insurance loses the 14% contribution from these high-income earners.)
Currently, the seven million patients insured by the 52 private health insurance providers are billed directly by physicians, dentists, and hospitals, and are reimbursed by the insurance companies. Doctors may charge higher fees for private patients and it is at the insurer's discretion to refuse to cover unreasonable amounts.
Both types of insurance cover physician fees, hospital fees, chronic care, and part of dental care. Patients within the state-regulated insurance plans may consult any general practitioner or specialist officially contracted and recognized by their insurance provider. The doctor then settles the fees directly through the insurance provider. Hospital bills for diagnostic tests, treatment, and drugs are settled directly between the insurance providers and the hospitals. In order to keep costs down, the government is forcing the powerful pharmaceutical firms to give insurance providers a higher discount on medicines.
In the WHO's year 2000 report for global healthcare, Germany ranked 25th out of 191 countries based on a cost/effectiveness ratio (the USA came 37th and Canada 30th). Although some hospitals have certain wards designated solely for the use of private patients, people in state-regulated insurance plans and those with private insurance use the same hospitals. On the whole, patients who are not privately insured are at no medical disadvantage and receive the same standard of care as the private patients. http://www.medhunters.com/articles/healthcareInGermany.html
Availability of Services
Germany's health care system provides its residents with nearly universal access to comprehensive high-quality medical care and a choice of physicians. Over 90 percent of the population receives health care through the country's statutory health care insurance program. Membership in this program is compulsory for all those earning less than a periodically revised income ceiling. Nearly all of the remainder of the population receives health care via private for-profit insurance companies. Everyone uses the same health care facilities.
Although the federal government has an important role in specifying national health care policies and although the Länder control the hospital sector, the country's health care system is not government run. Instead, it is administered by national and regional self-governing associations of payers and providers. These associations play key roles in specifying the details of national health policy and negotiate with one another about financing and providing health care. In addition, instead of being paid for by taxes, the system is financed mostly by health care insurance premiums, both compulsory and voluntary.
The health care system in Germany is not funded by government taxes, but it is compulsory. All German workers pay about 8 percent of their gross income to a nonprofit insurance company called a sickness fund. Their employers pay about the same amount. Workers can choose among 240 sickness funds. Basing premiums on a percentage-of-salary means that the less people make, the less they have to pay. The more money they make, the more they pay. This principle is at the heart of the system. Germans call it "solidarity." The idea is that everybody's in it together, and nobody should be without health insurance. The U.S media makes out European health care systems to be socialistic systems, and socialism is definitely used as a derogatory term.
Generally, doctors work either in hospitals or in private practice. Those working in hospitals are employed by the hospitals. Those working outside the hospitals have their own offices and are self-employed (these include general practitioners and specialists, e.g., gynecologists, internists, homeopaths), but they all refer patients to a hospital if necessary. Some of the specialists - notably gynecologists and ENT surgeons - have "reserved" beds in a hospital, where they perform operations and visit their patients, leaving the rest of the care to the hospital staff.
Apart from relatively minor delays for non-emergency surgery (e.g., three to four months for hip replacements), waiting times are virtually non-existent.
To keep costs down, the government has frozen hospital workers' salaries for the year 2003. Also, government legislation imposing strict limits on hospital expenditure and the number and type of medication practitioners are allowed to prescribe, has fuelled fears that healthcare workers will leave the country, resulting in generally lower standards at home. Recently, there have been scandals involving doctors who bill insurance companies for treatments that they never performed, and there has been an increase in malpractice (especially in the ORs). In eastern Germany, many new practices have high debts and face insolvency, which undermines provision of healthcare.
A lack of screening facilities for the early detection of breast cancer makes Germany fall well behind European standards. Also, Germany's underdeveloped palliative care system provides only 12 beds per one million inhabitants. Other weak points of the system include a lack of co-ordination between inpatient and ambulatory care and, at best, fragmented support from the social services departments.
Patients currently perceive healthcare in Germany - despite its generally excellent results - as being in a crisis and fear that it is turning into a "two-class system" whereby the rich would be able to buy private, comprehensive, quality healthcare but those legally bound to the state-regulated schemes would receive only basic healthcare.
Germany's system: Germany's public insurance is largely financed by a 14.9% payroll tax, 7.9% of which is paid by the employees. Germany sets reimbursement rates for hospitals and drug companies; patients pay the difference between drug prices and reimbursement rates.Â General PractitionersÂ earn about half their counterparts in the U.S. Not all German doctors accept the low public reimbursement.
Percentage of GDP spent on health care
Health care spending per capita
Average annual growth rate of real health care spending per capita 1997 - 2007
Out-of-pocket health care spending per capita
Per capita spending on health insurance
Per capita spending on drugs
Number of practicing doctors per 1,000
Average annual number of doctor visits
Average length of stay for acute care
Germany has an elaborate network of social security systems (pension, health, healthcare and unemployment insurance), financed in equal measure by employees and employers alike. Almost all Germany's inhabitants have health insurance (88% on statutory and just under 12 % in private insurance schemes). Given total outlays on health of 10.7% of GDP, Germany is well above the OECD average of 9.0%
Insurance policies can be divided between compulsory and voluntary insurance. Compulsory insurance falls under the German social security system. It covers all employees, students, trainees, pensioners and their respective families. It is likely you will be obliged to join the system when living in Germany, although there are some exceptions.
The term 'social security' covers five main categories - the '5 pillars' of the social security system:
Long-term care insurance
Work accident insurance
Work accident insurance is fully paid by employers. Contributions for the rest are equally shared between employer and employee. These are calculated as a percentage of your gross income, and in some cases capped to a certain income level. Total contributions are around 40 percent of gross salary, so you should expect to pay about 20% of your salary into the system. Contributions are deducted directly from your salary. If you are self-employed you pay the contributions yourself.
If you are a restricted employee, i.e. you work less than 50 days or 2 months a year, or if you have a â‚¬ 400-Job (income less than â‚¬400/month) you do not pay German social security or tax. However, you must still be registered for health insurance.