[Congressional Record Volume 140, Number 15 (Tuesday, February 22, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 22, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
             THE TRUTH ABOUT THE GERMAN HEALTH CARE SYSTEM

                                 ______


                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Tuesday, February 22, 1994

  Mr. STARK. Mr. Speaker, recently, the Wall Street Journal editorial 
page ran an extraordinarily fictional account of the German health care 
system. The article, by a Mr. Wilfried Prewo entitled ``Germany is not 
a Model,'' is part of the Journal's ongoing effort to confuse the 
American people about foreign health care systems that really do work 
and which offer important lessons as we reform our own system.
  Princeton's Woodrow Wilson School Professor Uwe Reinhardt, who was 
born in Germany and is a leading expert on the German system, 
demolishes Mr. Prewo's case in the following letter:
         Woodrow Wilson School of Public and International 
           Affairs, Robertson Hall,
                                  Princeton, NJ, February 5, 1994.
     Letters to the Editor,
     The Wall Street Journal, New York, NY.
       Dear Madam or Sir: Mr. Wilfried Prewo's op-ed piece 
     ``Germany is not a Model'' confronts astute American readers 
     with three intriguing riddles.
       First, can millions of German really be as stupid as Mr. 
     Prewo implies? He asserts that premiums (payroll taxes) for 
     statutory health insurance in Germany are 25 percent higher 
     that are premiums for private insurance which, according to 
     him, is both more efficient and offers better benefits. But 
     Mr. Prewo also allows that over 10 million Germans (14% of 
     the population) with incomes high enough to escape compulsory 
     statutory insurance nevertheless opt voluntarily to remain 
     within that statutory system. Why do these Germans not 
     recognize the good deal Mr. Prewo evidently sees in private 
     insurance?
       For those who wish to solve the riddle, here's a hint. 
     Private insurance in Germany is priced actuarially. Private 
     premiums reflect the insured's age, health status as well as 
     the number of his or her dependents. By contrast, premiums 
     for statutory health insurance are based strictly on the 
     insured's income, and not on health status, age or family 
     size. For a single, high-income German Yuppie private 
     insurance may well be the cheapest option. For a family it 
     may not be, especially if the family is large and some family 
     members are not perfectly healthy. For these reasons some 14% 
     of the German population voluntarily opts for statutory 
     coverage, while less than 10 percent opt for private 
     coverage.
       Further on in the piece, Mr. Prewo offers the second 
     riddle: How can President Clinton propose to finance health 
     spending at 14% to 17% of the GDP with a payroll tax below 
     10% (actually a maximum of 7.9%) when Germany requires a 
     payroll tax of 13.4% to finance health spending of only 10.6% 
     of the GDP? The answer: the 7.9% payroll tax pays for only a 
     part of American health care. It would not cover any of the 
     over 30 million elderly, who would remain in their separate 
     Medicare system. It would not cover some 30 million low-
     income Medicaid recipients, whose care would continue to be 
     financed largely out of general revenue. Finally, it would 
     not reflect the high American deductibles, co-pays and 
     exclusions (such as prescription drugs). By contrast, the 
     13.4% in Germany covers virtually all health care for insured 
     members. The latter include the poor the unemployed and the 
     elderly, whose own pension funds contribute premiums that 
     cover less than half of the true actuarial cost of treating 
     the elderly. The other half is covered with the premiums paid 
     by working Germans. Apparently, Mr. Prewo is unaware of these 
     details, which leads him to compare apples with oranges.
       Finally, Mr. Prewo alleges that German's graze themselves 
     to obesity'' on [free] medical services. Here is the third 
     riddle in Mr. Prewo's piece: How is it that, with all that 
     grazing to medical obesity, Germany spends a much smaller 
     percentage of the GDP on health care (10.6%) than does the 
     United States (14%), where cost sharing by patients is so 
     much higher, even among the elderly, and where over 30 
     million are uninsured? If insured Germans are medically 
     obese, what adjective is one to use for insured Americans?
           Sincerely yours,

                                             Uwe E. Reinhardt,

                                           James Madison Professor
     of Political Economy.

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