Overview

The governance of the German health system is complex and decentralized, involving both the federal and state levels, as well as corporatist bodies of self-governance. Health insurance is compulsory and is provided either through statutory health insurance (SHI) or substitutive private health insurance (PHI). SHI covers around 89% of the population, while approximately 11% has purchased substitutive PHI. SHI offers a wide range of benefits beyond essential services, with the same coverage for all insured. Those with substitutive PHI typically receive benefits equal to or better than those covered by SHI.

In 2022, Germany spent 12.7% of its GDP on health, equivalent to US$ 8166 (adjusted for differences in purchasing power) per capita, which is the highest among EU countries and one of the highest within the WHO European Region.  Out-of-pocket (OOP) payments account for a modest share of health expenditure. The two main drivers are long-term care (nearly two fifths of total OOP spending) and pharmaceuticals (nearly a quarter).

Since 2022, with the establishment of a Government Commission for Modern and Needs-based Hospital Care, reforming the German hospital landscape has been high on the health reform agenda. Based on one of the Government Commission proposals, a flat-fee remuneration will supplement the current DRG-based hospital payment system. Another recommendation, implemented since January 2023, mandates hospitals to perform treatments that were previously inpatient procedures as day treatments when appropriate, easing staffing and capacity challenges.