Europe’s demography juggernaut: how to save affordable health care


Picture of Ulla Schmidt
Ulla Schmidt

Former Vice-President of the German Bundestag

Surging healthcare expenditures are far from a new debate; forty years ago, a pioneering study highlighted spending on statutory health insurances and predicted that they would increase dramatically. Since then, even modest increases in premiums, drug costs, or hospital budgets have been labelled “cost explosions”, even though it’s a myth. EU countries’ healthcare spending in relation to GDP has been stable at 11% for more than a decade.

It’s true that in developed countries healthcare costs tend to grow faster than GDP. Technological innovations keep pushing up health spending. Germany has been proactive in seeking new ways to curb these expenditures through various minor measures at all levels of the health system. For instance, a budget serving as a guide to all parties is established each year on the national level. Also introduced were reference prices on a therapeutic class, making it possible for all drugs in one therapeutic class to be reimbursed at the same price. Further reforms like benefit assessments and price negotiations are implemented to that end, helping health care remain affordable.

What Europe can’t afford in the long run is poor quality: money that is being wasted on the interface of outpatient and inpatient care; on treatments that do not help or even harm the patient; or between cure, rehabilitation, and nursing care – to name just a few.

Besides financial reforms of health care, we need effective measures to open decrepit structures

All cost-control efforts reflect the commitment to two goals: First, to ensure that all citizens have access to and receive the same level of high-quality care and, second, to keep health care spending in line with the health system’s revenues. My suggestions will therefore draw upon both, quality and expenditures.

To grasp the challenges and political approaches to solutions, a few words need to be said about the German health care system. One of the particularities of our system is the divide between outpatient and inpatient care, the latter comprising specialised as well as general hospitals and the former representing a large number of GPs and specialists in their private medical offices. Health coverage is mandatory in general and the German system combines public and private health insurance. The statutory public health insurance funds cover about 90% of Germans, whose income-based contributions are paid by employers and employees. Ten per cent of the German population have private health insurance, with premiums based on each patient’s risk factors.

Demographic change is very real in Germany and is becoming more and more visible. With a decreasing birth rate (fertility rate of just 1.36 in 2011) and an increasing life expectancy (80.74 years on average in 2011), the ratio of elderly to younger people is increasing. The group of above eighty-year-olds is the fastest growing segment of our population. Despite the common belief that a society’s aging goes hand in hand with a rise in multi-morbidity, a different picture is emerging in Germany. So far, no studies have proved that the German population is becoming sicker as they grow older. But formerly rare age-related diseases now prevail, such as chronic diseases, which have become the leading cause for disability, care dependency and death worldwide.

But the primary challenge of demographic change is not how to finance health care. In Germany, every grown-up pays his or her insurance contribution for health care and nursing care. Not only two or three young people must account for a certain number of elderly; all elderly people also account for themselves. Even, say, en elderly woman receiving a widow’s pension pays a fair and equal share on her income. This is why in Germany we do not have a re-distribution from young to old as well as but from rich to poor.

With a strong economy and employment figures, we can generate enough money for health care. By contrast, we currently have between six and seven million people that we do not even involve in our employment market. Sound finances for our health care system thus depend on the increase of wealth and average incomes.

In such a system, the crucial question for health care financing is how high the wages and the level of employment are in our country

This said, the demographic trend also affects the health system in another way: work force. The health sector is Germany’s primary economic sector and a growing employment market. Larger developments now underway will have a big impact on health professions, in Germany and across Europe. In many countries, there is both a strong urbanisation trend and a specialisation trend within medical profession. The future of health care is also feminine, as nearly 70% of medical students are women. If the medical sector is to attract the numbers of qualified professionals we will need in the future, more flexible employment structures will be needed to help young female and male doctors reconcile their career and a family wishes.

To effectively manage these developments it will be important to develop more inter-professional co-operation between medical and non-medical personnel. Non-medical healthcare professions must be integrated into teams. Many tasks that doctors have performed so far can be delegated and, where applicable, substituted to non-medical professions, freeing up doctors to carry out their core duties. The objective is not only to limit expenditures – such reforms can professionalise and streamline the procedures crucial in health care provision. Equally important is the collaboration between specialists of the various disciplines.

Good diagnoses and courses of treatments can only be guaranteed if doctors know what is happening in other segments of the clinical pathway. The German system has historically been strictly divided into ambulatory care and hospital care, resulting in a system that was complicated for patients as well as very wasteful. In 2003, I introduced disease management programmes (DMPs) in Germany to address this. The DMPs were developed for heart disease, diabetes, and other chronic conditions, but severe diseases such as the mamma carcinoma were also integrated. These structured pathways ensure high quality care for chronic diseases that previously was lost in the different health sectors. Most importantly, all specialists and assistants involved started working together on a case, providing a high quality of medical care on the level of the medical progress. After five years, more than 4.7m patients had signed into one of the DMPs.

Given the decrease of available funds, a more critical assessment of costs and benefits should be the standard rule. In Germany, it has been common practice up to now to integrate a new service if it has any additional benefit – even if it had 10% additional benefit and 100% additional costs. We have established evidence-based medicine – so why not use it further? It’s a tricky discussion to have, but we will not get around the question of weighing up the costs and the benefit of a new treatment or drug. Various new ideas have been floated on the health market, but the question will be whether any of these is a true improvement, or just more of the same.

Finally, a healthy lifestyle is key when we ask ourselves how to promote public health. Germany, like most other health systems, only just started investing in prevention and fixes that are achievable through lifestyle changes. Prevention, rehabilitation, and care must be upgraded. There are many people whose daily routine involves too little movement and exercise. In 2005, I launched a campaign with many popular TV stars and athletes, motivating citizens to walk just 3000 extra steps each day – less than 30 minutes of walking. This was just the start of a long journey and prevention and healthy lifestyle promotion should become a separate pillar in our health system.

Demographic change and today’s level of medical-technological research and innovations are causing health expenditures to rise. I have outlined a variety of incentives to keep the health system affordable. On the whole, it is crucial to improve the quality of the system while making structural reforms. Transparency, a fair level of competition and an efficient collaboration and co-operation are, in my mind, among the most important aspects to improve medical care while keeping the system running.

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