1993 German Health Reforms: Initiatives Tighten Cost Controls

GAO discussed the German health care system, focusing on the approaches used to control health care costs. GAO noted that: (1) before 1993, Germany had budget caps on physician and hospital services that were negotiated by provider associations and sickness funds that provide health insurance to most Germans; (2) German health care reforms limit physician and hospital expenditures to increases in sickness fund revenues; (3) Germany has instituted global budgets for pharmaceutical and dental services; (4) additional cost-containment measures are in various stages of development and are expected to reduce continued reliance on mandated global budgets; (5) Germany is changing to a prospective budgeting approach for hospitals that specifies rates for some services, limits the number of physicians permitted to practice in sickness funds, and limits reimbursements for certain services and for all services in excess of the average volume for a practice; (6) Germany is attempting to increase competition between sickness funds by giving workers a greater choice of funds and narrowing the differences in the premium rates assessed by the funds; and (7) the United States should monitor Germany's past experiences and current reforms over the next 3 years to assess their feasibility and applicability to the U.S. health reform process.