Let's move to consider the finance building block and how it supports the tight network of relationships. As we noted in relation to the United States healthcare system, the finance building block includes three elements: the collection of revenue, the pooling of prepaid revenues, and the process by which services are paid for. I want you to note here the overall size of the German healthcare system. It consumes 11.3 percent of GDP, which is high but well below that of the United States. Germany compares itself primarily with other European Union countries, and in this graph, you'll say that Germany is one of the largest health systems in Europe. The health system in Germany consumes the largest proportion of GDP, and amongst the EU countries, per capita spending on health is second only to Luxembourg. This is significant because when we come to review the challenges to the German healthcare system, we'll note that many Germans do not experience the healthcare system is producing outcomes consistent with the cost of that system. The German health system is a large healthcare system, but it does include significant contribution to long-term care as you'll see on this graph. The contribution to long-term care is above the OECD median, well above the levels of expenditure on long-term care in the United States. This is significant because the low-levels expenditure on long-term care in the United States is one of the sources for increased health expenditure in that country. When considering the proportion of GDP expenditure on health in Germany is useful to note this relatively high level of expenditure on long-term care services. The system of financing in Germany is this system of social health insurance. The way this works is that those on incomes below €54,900, which is approximately $70,000, are automatically enrolled in a system of social health insurance. For those who earn above that level, they may opt out of the social health insurance model and purchase private health insurance. They must, however, purchase health insurance. There is no way of opting out of the obligation to purchase health insurance. Social health insurance includes roughly 88 percent of the population. Private health insurance, 10 percent of the population. The interaction between the systems of private health insurance and social health insurance do provide some friction in the German health system. One of the primary ways in which the German government controls the German health system is by defining the level of contributions to that system. So the mandated social insurance payment for every employee in Germany is amount of 14.6 percent of gross wages. The federal government makes contributions on behalf of unemployed persons. The contributions for employees are shared with employers. There is an additional average payment of 0.833 percent of gross income paid by contributors to sickness funds. The amount of these payment is determined by each sickness fund. The supplemental contribution provides sickness funds with the source of revenue to cover the cost of offering health insurance and in maintaining payment systems. There is a separate system of long-term care insurance, and this includes an additional 2.55 percent contribution to the social health insurance system. Long-term care insurance covers approximately 50 percent of the cost of long-term care. There are supplementary insurance policies to cover that part of the cost of long-term care not covered by compulsory long-term insurance. Out of pocket expenditure in Germany is relatively high in comparison with other high income countries. This graph shows that in 2015, out of pocket payments made up approximately 12.5 percent of national health spending. As a proportion of national health spending, this figure is above both the United Kingdom and the United States, but the actual per capita spending tells a different story. The following graph shows that in 2018 in Germany, per capita out of pocket spending was approximately $738. This figure is well below US per capita out of pocket expenditure of $1,122, but is above the UK figure of $629. Spending on out of pocket payments is for over-the-counter medicines, long-term care, and dental care. We now move to the information building block. As we noted in Module 2, the WHO identifies and suggests that a well functioning health information system is one that ensures the production, analysis, dissemination, and use of reliable and timely health information by decision-makers at different levels of the health system, both on a regular basis and in emergencies. In the German health system, one of the most complex flows of information is concerned with the pooling and distribution of social health insurance payments. Social health insurance contributions are pulled across Germany, they are then distributed to particular sickness funds and adjusted according to the risk of the population with the members of those sickness funds. Remember that people are entitled to choose their sickness fund. This is designed to ensure that particular sickness funds are able to compete on an equal basis, and that the cost of social health insurance offered by specific sickness funds is not dependent upon the state of the health of the population that makes up a funds membership. There are though many challenges concerning the development of a well functioning health system in Germany. These include providing sickness funds with the capacity to enter into selective contracts with specific healthcare providers to improve the quality of care, reduce the cost of care, and improve the health of specific populations. These selective contacts are predominately relevant for those with specific chronic diseases. There are also challenges to providing timely and relevant information flows to support pay-for-performance mechanisms and to support initiatives designed to improve the quality of health services. One important outcome of the emerging system of universal health coverage is that Germany is moving towards a system of electronic health records. Currently, every citizen has a chip or a card with a chip that includes information about health insurance. There is an effort to move towards the inclusion of personal health information on that card. In the following segment, we will review the workforce, service delivery, and medical devices and pharmaceutical building blocks in Germany. This is significant because there's some very interesting and surprising features of the German health system.
