1993 German Health Reforms:

New Cost Control Initiatives

HRD-93-103: Published: Jul 7, 1993. Publicly Released: Aug 10, 1993.

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Pursuant to a congressional request, GAO examined recent German health care reforms, focusing on: (1) the reasons for the German reforms; (2) the nature of the reforms; (3) the initial reaction to and expected effects of the reforms; and (4) implications for U.S. health care reforms.

GAO found that: (1) large increases in mandated health care premiums and variations in contribution rates between health care insurance funds have prompted the German health care reforms; (2) German legislation has strengthened global budgeting procedures for office-based physicians and hospitals and more closely linked them to revenue growth of the health insurance funds, and extended global budgets to pharmaceutical and dental care providers; (3) German government officials expect the global budgets to stabilize contribution rates over the next 3 years and save about $6.3 billion in fund expenditures in the first year; (4) the reforms are designed to reduce excess services and physician supply by limiting reimbursements and the physician-to-population ratio, unnecessary hospital care through a prospective budgeting system, and disparities among the insurance funds, and allow members greater choice; (5) it is too early to fully assess the reforms' effects, but early indicators show progress in curbing expenditure increases; (6) most German health care providers initially denounced the reforms, but have accepted the new requirements; and (7) the German experience with health care reforms shows that it is a continuous process, and the United States should incorporate flexibility in its system to respond to changing health market conditions.

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