Why healthcare reform is so difficult

Recently I had an emergency. My family doctor had reason to send me to the emergency room because of dramatically poor lab results. It was Friday afternoon. And it all came out pretty much the way you always read it. The first clinic I went to turned me away again: the capacity for emergencies had been exhausted. The second clinic took me in, then made me wait five hours until the first examination.

Completely clear what I conclude from this experience? We have too few clinics. And they don’t have enough staff. This is called “anecdotal evidence.” Obviously, medical care in Germany is inadequate. Anyone could have been like me. You have to know: I live in Frankfurt, a big city where there are many clinics. In Vogelsberg or Lower Lusatia everything would be much more difficult, I suspect.

Interim result: all-clear. I’m fine again. I received excellent care in the clinic.

A few days after my hospital episode, I was at a scientific conference. There was a lecture by health economist Boris Augurzky. It was entitled “Health as the greatest good? 100 percent approach and its consequences”. The talk refuted my personal experience with data. Augurzky conducts research at the RWI-Leibniz Institute in Essen and is considered one of the leading hospital experts in Germany. During the traffic light years he was a member of Minister Karl Lauterbach’s (SPD) hospital reform commission.

Economists are not interested in individual fate. They operate with so-called aggregate numbers. They care about statistics. And this is devastating when it comes to the health system in this country: our health is too expensive and extremely personnel-intensive. Germany spends more than almost any other European country, employs an above-average number of doctors and nursing staff and has an extremely high density of hospitals. Nevertheless, the results measured by life expectancy are at best mediocre in international comparison, and the financing problems – the difference between income and expenditure – are growing.

How can it be that a country with a particularly large number of doctors, hospitals and health expenditure gives its citizens the impression of a permanent economy of shortage?

Let’s make it concrete in a few points. Germany spends 12.2 percent of its economic power (gross domestic product) on health. In Austria and Switzerland it is 11.5 percent. Denmark gets by with 9.5 percent. All countries that are not known for poor medical care. Our expenses have continued to increase; In 1992 the share of GDP was still 9.3 percent. In an international comparison, Germany occupies a leading position in terms of clinic density with a corresponding excess of hospital beds. In relation to the population, we employ an above-average number of clinical staff. With 4.7 doctors per thousand inhabitants, we have more doctors than most other countries in the world. On the other hand, the number of patients is shrinking.

And the output? Life expectancy in this country is below average at 82.9 years for women and 78.2 years for men. In addition to the high costs, the OECD criticizes excessive bureaucracy (fire protection, hygiene, personnel requirements, accounting), uncoordinated treatment paths and far too many operations (the famous new hip joints). If nothing happens, the social security contribution rate will rise from the current 41.9 to 48.7 percent in 2035.

Enough of the numbers. How does the contradiction arise between individual perception of a shortage economy and the statistics of uneconomic oversupply? My experience can easily be generalized: citizens experience long waiting times in doctors’ offices and clinics, overloaded emergency rooms, stressed nursing staff – and a specialist who doesn’t have an appointment available. In other countries around the world, you can hope for a longer life through better medical care – and you have to spend less money to achieve it.

So where does the subjective impression come from? A first answer: Supply creates its demand. Not only do we have a lot of doctors, we also have a particularly large number of doctor visits. On average, every German goes to the doctor around ten times a year. For the Danes, fewer than four visits to the doctor are enough, and yet they are fitter than us. There, family doctors have less incentive to maximize contact with their patients.

But the real explanation is not demand, but expectation. What matters is people’s health preferences, says Boris Augurzky. Everyone would prefer to have maximum care on every corner. Health, it is often said, is not a commodity like any other, but rather a “priceless good” that should not be economized. Society treats health as something in which every conceivable benefit must be realized: every hospital must be maintained, every new service must be financed, every waiting time must be prevented.

When a hospital in the neighborhood is closed, there is great outcry from the population, which is amplified by mayors and district administrators who fear for their re-election. If five poorly functioning hospitals are replaced by one efficient center, no one sees the benefit. The costs of reform are visible; the benefit is diffuse and lies in the future.

Citizens demand one hundred percent security; The economist thinks in terms of so-called marginal utility and asks: What additional benefit does the next euro, the next nurse or the next hospital bring? The first country doctor in a village makes a huge difference. The fourth one, not so much. So the benefit does not increase proportionally. But prioritizing health services is considered the work of the devil; We remember the debates about “triage” during the corona pandemic.

It’s true: illness is not a normal good. But scarcity does not disappear simply by making it a moral taboo and hiding the costs of full coverage. A look at the statistics is good for this.

The health reform that Minister Nina Warken (CDU) is now planning basically leaves it with an austerity program. That may be realistic, because the need for structural reform cannot be politically communicated. Democracies are good at serving expectations; they are bad at correcting expectations. As long as health is considered an unlimited right, any reform is an imposition. Conclusion: Good health care reform is much more difficult than good pension reform.