Health Care Spending Control:

The Experience of France, Germany, and Japan

HRD-92-9: Published: Nov 15, 1991. Publicly Released: Nov 15, 1991.

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Pursuant to a congressional request, GAO reviewed aspects of the health care systems of France, Germany, and Japan, focusing on: (1) their methods of providing universal coverage through their health insurance and financing systems; (2) their policies for controlling increases in health care spending; and (3) the effectiveness of those policies.

GAO found that: (1) in France, Germany, Japan, and the United States, medical care is provided by private physicians and by both private and public hospitals, patients have free choice of a physician, most people receive health insurance coverage through their work place, and health insurance is provided by multiple third-party insurers; (2) France, Germany, and Japan require insurers to provide minimum coverage that includes a wide range of health care benefits; (3) in the three countries reviewed, insurance enrollment is compulsory for all residents and work-place-based insurance is financed not by premiums that reflect each individual group's expected costs of care, but by employer and employee payroll contributions that reflect the average cost of a larger cross section of the population; (4) all three countries standardize reimbursement rates for almost all physicians and hospitals and set price controls on those rates; (5) although budget controls that augment price controls by setting limits on overall spending for hospital care or for physician services can moderate spending growth, those controls do not ensure high quality care or efficient delivery of services; (6) each of the three countries sets limits on overall health spending, but only France and Germany enforced policies to ensure compliance with the limits; (7) between 1984 and 1987, French budget controls reduced real hospital spending by as much as 9 percent, compared with what would have been spent if it had only used price controls; and (8) there was no evidence in the three countries of a decline in broad measures of health status during the relatively brief period that budget controls were in effect.

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