The looming crisis in healthcare delivery
Dennis Nowak reports on the rampant dissatisfaction with working conditions among German doctors in the Oct 12th issue of the (”Doctors on Strike — The Crisis in German Health Care Delivery). If you care about the future of healthcare delivery, and you’re not already familiar with the German healthcare system, read this brief and compelling account.
In it you’ll read how most of Germany’s physician’s have recently walked out of work to protest an increasing workload and relatively low wages (the purchasing power of a German physician’s wages is now about 20% that of a U.S. physician). It wasn’t always this way, when healthcare costs were lower as a percentage of GDP, German physicians worked relatively less and earned relatively more. But Germany has relied on sacrifices among its healthcare workers to help constrain growth in government healthcare costs.
As result of this policy, the loss of purchasing power for physicians in Germany has been paralleled by relatively small increases in Germany’s per capita public healthcare expenditures. According to a 2005 NBER report from Christian Hagist and Laurence Kotlikoff that compared healthcare costs in ten OECD countries, Germany’s per capita healthcare expenditures increased at an annualized rate of 3.6% between 1970 and 2002, the lowest annualized rate among major economies. Compare this rate with Norway’s, the highest, of 5.3%.
Despite the controlled growth in per capita healthcare expenditures, Germany’s per capita healthcare expenditures as a percentage of GDP have spiralled upwards, becoming the highest among the 10 leading economies (8.6%). This is because of Germany’s anemic GDP growth over this period, just 1.5% annualized, again the lowest among major economies. As a result, Germany’s per capita healthcare expenditures as a percent of per capita GDP has increased, to become the highest among the 10 major economies in 2002 (8.6%). Compare Germany’s level of spending with the U.S. 2002 level of 6.6%, which puts the U.S. in the middle of the pack [note that I’m speaking of per capita spending in 2002; aggregate spending on healthcare as % of GDP is higher in the U.S. than in Germany: ~16% vs. ~11%].
You can quickly see how a healthcare delivery crisis can arise when the general economy weakens and a dominant proportion (80% in Germany in 2000; compare with 45% of healthcare spending from public sources in the U.S. in 2004) of healthcare expenditures are made by the government: governments restrain healthcare costs by putting downward pressure on healthcare-worker wage growth, as GDP growth stalls, but real-wage growth lags healthcare delivery needs (owing to population aging) resulting in overworked, underpaid healthcare workers who then look to other countries for better conditions, leaving less highly qualified workers, who work more, so quality suffers, etc.
Is Germany’s crisis a foreshadowing of healthcare crises everywhere? Just wondering.
