Reforming Health Care Finance: What Can Germany Learn From Other Countries?1

1 Introduction After more than two decades of incremental tinkering with cost containment, German health care financing is now at the crossroads of fundamental reform. It is clear that the impetus for reform stems from a general effort to restore Germany's dismal economic growth, and that the two main proposals, claiming to reduce the health system's impact on non-wage labour costs, are primarily motivated by macroeconomic considerations. We shall argue that a comprehensive assessment of any proposal must be consistent with all of society's objectives for health policy and seek to combine efficiency with equity. In light of these more general considerations, the two main proposals could hardly be more polarized. The proposal favoured by the left, Bürgerversicherung, introduces a new system of proportional taxation, not only based on wages, but also on other sources of personal income, whereas the proposal favoured by the right, Kopfpauschale, equalizes per-capita contributions by introducing a poll tax or flat-rate health premium (also advocated as Gesundheitsprämie). To make a contribution to the debate and draw attention to its empirical dimension, we will discuss the two main reform proposals in light of other countries' experiences with comparable reform initiatives, particularly those motivated by similar policy objectives or based on similar designs. The essential features that characterize Bürgerversicherung and Kopfpauschale have long been present in other OECD countries' health care financing systems, although details do of course differ. Clearly, the introduction of Bürgerversicherung would move the German system towards general tax financing of the kind that characterizes Beveridge systems, with a single payer funded from general tax revenue, typically structured as a national health service. German policy makers can therefore learn from Spain's recent shift from a Bismarckian system of social health insurance to a Beveridge system and from the introduction of a scheme similar to Bürgerversicherung by France in the 1990s. The introduction of Kopfpauschale would make the German system more similar to the financing of health insurance in Switzerland and the Netherlands, where flat-rate premiums are paid by all or parts of the population, respectively. While such case studies alone cannot replace a general equilibrium analysis of the impact of health care finance reforms on the macro-economy, they can still give us an idea what effect is likely in relation to specific policy objectives. For example, the experiences of other European countries may help us to identify the proposal likely to be successful in …