Restructuring the German Welfare State. Health Care Policy and Reform in Germany

As health care is among the most personal issues, this is one reason why it is also among the most politically discussed as cost containment has become a priority of health care policy. Health care has consumed a large and growing portion of social spending in all advanced industrialised societies, particularly in the last decade. This cost explosion coincided with the global economic slowdown and worries about the fiscal viability of the welfare state. Reasons for escalating health care costs are, although to varying degrees, common to Western countries.

The health care sector provides fertile ground for technological innovations that may prolong life but at considerable expense. Moreover, once these discoveries are made, it is extremely difficult for insurers or governments to limit their provision, as patients demand access to these treatments. Furthermore, the aging population of Western countries has direct consequences for health care because older persons are more likely to be in need of cost intensive treatment and/or care due to acute illness or chronic conditions.

At the same time, birth rates are no longer balanced with increasing longevity, so that there will be fewer working age persons in the future to bear the financial requirements for elderly care. Governments and employers claimed that health care costs posed immediate and longterm problems and began to search for ways to address them. The ‘new politics of the welfare state’ – Pierson’s (1996) famous concept, which deals with welfare state reform in the face of changing demographic and tougher economic conditions – has also modified the position of diverse welfare state stakeholders.

The actions and preferences of payers and the state are determined by the prevailing health care system as well as by the political system and whether it provides them an opportunity to influence health policies.