‘Manacled Competition’: Market Reforms In German Health Care

Abstract

PROLOGUE: Among industrialized nations, the former West Germany came closest during the 1980s to limiting health spending increases to a rate that equaled the growth of its national income, an achievement that the United States came nowhere close to matching. But concerns over the impact of the reunification of East and West Germany on health costs prompted Germany's Parliament to enact, with lightning speed, a far-reaching reform package. The reforms, which were implemented in 1993, were notable in that they introduced the concept of competition into German health care for the first time. Six years later many international observers want to know how Germany stands with its experiment with competition. The answer, apparently, is a matter of interpretation. In this paper Larry Brown and Volker Amelung take a “half-empty” view, arguing that Germany's experiment has been beset by political conflicts that threaten the future of the reform program. In an accompanying Perspective Uwe Reinhardt offers a more optimistic assessment. Brown is a political scientist and long-time commentator on American and international health policy. He is a professor in the Division of Health Policy and Management at Columbia University's School of Public Health. Amelung is a visiting assistant professor at Columbia and a scientific assistant at the University of Economics and Political Sciences in Hamburg, Germany. ABSTRACT: In 1993 Germany joined the small but swelling ranks of societies determined to explore managed competition as a means of slowing the growth of health spending by giving stakeholders new incentives for efficiency. Realizing the benefits of competition, however, demands changes in institutional norms and regulatory practices that now largely handcuff those who would follow competitive logic into

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