Corporate Research Group’s Weblog

Forbes has a very good article on Germany’s universal healthcare system, which combines public and private insurance and could be a model for the U.S.  I’ve often wondered why the German system gets so little attention in the U.S.  Germany spends about 10% of its GDP on healthcare (vs. 16% in the U.S.) – despite having an older population — and costs adjusted for inflation are rising just 1.4% annually.  The German system has very high satisfaction levels and achieves superior results to the U.S. based on measures such as life expectancy, infant mortality and obesity rates.  Writes Forbes:

This is close to, but not fully, socialized medicine. The public insurance system is largely financed by a payroll tax amounting to 14.9% of a person’s salary, with employees picking up 7.9% and employers taking the rest. As for disability, employers pay six weeks’ salary; after that the sickness fund, or nonprofit insurer, pays 80%, subject to a cap, for 18 months. This year the government will kick in an additional $10.3 billion to help cover children, maternity benefits and home help. Unemployment insurance pays the fees for those out of a job. Premiums in the public system are based on income and not an individual’s risk (that is, age and current health). It’s a different story for those with private insurance, where high-risk people pay higher premiums. There are sometimes deductibles in the private system, but public patients have only copays.

How does Germany do it? By doing what Medicare does and more. It sets fixed reimbursement rates for hospitals and wields a stick Medicare lacks: extracting price concessions from drug companies.

If you want an indication of what Obama is likely to say in his healthcare reform speech reportedly set for next week, take a look at his weekly address from Aug. 21.  My guess is the tenor will be the same.

President Obama is reportedly going to make a major speech next week outlining a new strategy to counter opposition to health reform, including potential areas of compromise, according to Reuters.

As much as I like and support Obama, I don’t expect any major changes in his approach.  He’s a consensus builder by nature; although I wouldn’t mind seeing him come out swinging. 

The big question is whether he will say outright that the public plan is off the table — or simply doom it by omission.  Notes Wachovia analyst Matt Perry:

The speech is likely a response to the loss of momentum that has occurred over the Congressional recess….Momentum has shifted to such a degree that a public plan is now unlikely to be implemented, in our view. Obama needs more public support to pass health care reform. To turn the tide, we expect compromises in the coming weeks. Obama’s speech next week may be the first concrete sign of compromise.