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The Fraser Institute: German Health Care System Embraces Private Sector, Costs Less with Shorter Wait Times

CALGARY, ALBERTA -- (Marketwired) -- 05/08/14 -- Despite costing less, the German health care system provides universal access to high-quality care with shorter wait times than the Canadian health care system, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The study, part of a series of Fraser Institute studies examining health care policies in other countries that share Canada's noble goal of access to care regardless of ability to pay, spotlights the German health care system and offers valuable insights for the health care debate in Canada.

"Canadian policy makers could learn a lot from the German health care system and its reliance on the private sector, because despite spending substantially less on health care, Germans enjoy shorter wait times for emergency care, primary care, specialist appointments and elective surgery than Canadians," said Nadeem Esmail, Fraser Institute senior fellow and author of Health Care Lessons from Germany.

In 2009, as an age-adjusted percentage of GDP, Germany's total health care expenditures (9.8 per cent) were 22 per cent lower than Canada's (12.5 per cent).

Among developed countries with universal health care, Germany's total health care expenditures were one per cent below the all-country average. By comparison, Canada's health care expenditures, the highest among developed countries with universal health care, were 26 per cent higher than the all-country average.

The study finds that the Canadian health care system would greatly improve if provinces allowed more private competition in the financing and delivery of health care, like in Germany and other countries with high-performing universal systems.

Unlike Canada's tax-funded government monopoly, the German health insurance system provides universal coverage through two insurance premium-funded systems: a statutory social health insurance system for all Germans and a second optional system for higher-income and self-employed Germans (as well as civil servants). In both systems, private insurers compete for subscribers while private providers (i.e. hospitals) compete for patients. And governments in Germany, while involved in funding, regulation and oversight, play little role in the direct delivery of health care.

"The optional private health insurance system in Germany, which shares providers with the social insurance system, has not compromised quality or access in the social health care system," Esmail said.

The private sector also plays a large role in the delivery of health care services in Germany. The study notes that in 2010, 37 per cent of German hospitals were private not-for-profit and another 33 per cent were private for-profit. Since 1991, the number of private for-profit hospitals in Germany increased by roughly 90 per cent following the privatization of public hospitals. Studies have found that private for-profit hospitals are more efficient, deliver higher-quality care (including greater investment per case), and have shorter wait times than public hospitals.

"If Canada wants to mirror the successes of the German health care system, it could start by enhancing the role of the private sector in the delivery of services as part of a larger transition to a system of independent competitive insurers. Competition breeds efficiency and innovation, and in Germany, has contributed to shorter health care wait times and a lighter burden on taxpayers," Esmail said.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

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