Unhealthy Times for German Health System

Germany's health insurance system, long the envy of other European states, is slowly but surely losing its appeal as it struggles with soaring costs, unhappy doctors and a powerful pharmaceutical lobby.

Not one to lament, Ulla Schmidt, the feisty Social Democratic health minister, has gone on the offensive and has made it her personal crusade to tackle the country's discontented doctors.

Last week, Schmidt was forced to concede that Germany's public health deficit for 2002 was higher than expected. Her ministry had insisted that it would not rise above €2 billion ($2 billion). But the latest estimates put the figure at €2.5 billion.

Cost cutting

As part of Schmidt's austerity plan, the government recently passed measures making it more difficult for individuals paying into the public health system to switch to private coverage. The majority of Germans belong to statutory health funds, now being hit by spiraling costs. Those on higher incomes generally tend to take out private insurance.

In a further attempt to get a grip on costs, Schmidt has now demanded a freeze in doctors' fees and looks likely to extend that to hospitals and related administrative areas.

Angry doctors

This move has raised the hackles of the association of statutory health physicians. Ahead of a meeting with Schmidt, its chairman, Manfred Richter-Reichhelm, called on doctors to provide the minimum requirement of care but not beyond that. This could entail long waiting lists, the closure of practices and cuts in certain medication.

Richter-Reichhelm said doctors should treat their patients according to the savings measures proposed by the government and let their patients know why they were doing so.

He said the treatment of sick people was guaranteed.

Jörg-Dietrich Hoppe, the president of the German Medical Association, was even more confrontational threatening to "paralyze the entire health system" if Schmidt was going to let doctors, assistants and nurses bear the brunt of the problems.

Reform package

Schmidt is currently not budging an inch and has announced her intention of preparing a draft reform package for parliament by Easter next year with the aim of passing it into law in 2004.

By law, Germany's doctors are obliged to guarantee a minimum level of treatment. Schmidt plans to delegate that guarantee to the country's statutory health funds, if physicians' associations refuse to guarantee that care.

Another cornerstone of her reform package is her idea to turn doctors' fees into case-by case flat rates. Specialist physicians are not spared by her reforms either. Schmidt intends to give clinics more opportunities of offering specialist treatment.

And in a sleight to the pharmaceutical industry, the health minister wants further independent vocational training for doctors applying for their panel license. Currently training courses are sponsored by pharmaceutical companies who in return expect doctors to give their products preferential treatment.

No to innovation

However, the reform-eager minister has pulled the plug on one project, seen by many observers as innovative. The TK health insurer was the first statutory fund to offer its members a bonus rate, which would grant its clients a yearly discount of €240. In return, members would have to pay €20 out of their own pocket for each visit to the doctor but only up to a €300 limit and with exceptions for screening tests. Members who see a doctor less than 12 times a year would profit from the discount.

Schmidt says the plan does not conform with current law and would only benefit the young and healthy putting the old and sick at a disadvantage. In response, Andreas Storm, an expert on social affairs with the opposition Christian Social Union, accused Schmidt of "nipping innovative ideas in the bud."