A German Import That Could Help U.S. Health Reform

After a three-hour meeting at the White House on Tuesday, fiscally conservative Democrats in the House of Representatives — the so-called Blue Dog Democrats — got a tentative agreement on an addition to the health reform bill. The new provision would give an outside panel of health policy experts and stakeholders the power to make cuts to government-financed health care programs.

Although brushed off by some as a “pint-sized breakthrough in an ocean of concern,” Peter Orszag, the White House budget director, called it “probably the most important piece that can be added” to the health care bill in the House.

I could not agree more. Such a provision, if part of the final bill, would be the proverbial camel’s nose under the tent for a more rational approach to America’s health policy.

It would be a very big deal.

More often than not, Congress has been ineffective when it comes to health policy, paying far more attention to the income needs of the supply side than to the health of the American people. It can explain why for over two decades Congress has never shown any interest in the question of why Medicare spending per beneficiary in some parts of the country is more than twice the level in other parts (see the graph below), and why millions of low-income of Americans — children included — have been left without the benefit of health insurance for decades.

Source: Elliott Fisher et. al., New England Journal of Medicine, February 26, 2009.

An outside body of health policy specialists and stakeholders would be able to inform America’s health policy. It could provide insights from detached research and a consensus among experts and stakeholders, in place of the campaign contributions of powerful interest groups that now drive policy.

The Medicare Payment Advisory Commission, for example, could serve as such a body.

To understand how such a body might function, Americans could learn from Germany’s experience with precisely such a body — Der Gemeinsame Bundesausschuss or, in English, the Joint Federal Committee.

Germany’s joint committee was established in 2004 and authorized to make binding regulations growing out of health reform bills passed by lawmakers, along with routine coverage decisions. The ministry of health reserves the right to review the regulations for final approval or modification. The joint committee has a permanent staff and an independent chairman.

Fees paid to providers in Germany are negotiated among regional associations of providers and corresponding associations of sickness funds (self-governing, non-profit insurance plans), so the joint committee does not have to set payment rates. Its main tasks include making evidence-based coverage decisions for ambulatory and inpatient services and medical products and furthering disease-management programs.

To arrive at its coverage decisions, the committee seeks scientific input from its nonprofit subsidiary, the Institute of Quality and Efficiency in Health Care. It conducts cost-effectiveness analyses for particular procedures or medical products, mainly on the basis of research done by academic or other outside research institutes.

In a lengthy interview on Germany’s health system, the country’s minister of health, Ulla Schmidt, explained the role of the committee:

“This is the approach we prefer in Germany — consensus building under a form of self-regulation, but under general government oversight. The federal government provides a general legislative framework for our universal health insurance system. But precisely how to implement it is left to the experts and representatives of the various stakeholders in health care. No political committee can decide whether a new medical procedure should become part of universal coverage or not. We feel that this should be left to the experts who, in our case, are hospitals, physicians, dentists and sickness funds. The Joint Federal Committee also has patient representatives as well, so that patients can be heard, too. … It is our experience that the decisions rendered by the J.F.C. are widely accepted, including by patients. Generally, we then have no additional problems.”

Americans have traditionally been too proud to learn anything from the health systems of other nations. All told, however, this country’s legislatures have not served Americans well in health care. They have permitted and actively facilitated the uncontrolled growth of an unwieldy system that costs far too much for what it delivers.

The genesis, modus operandi and practical experience of Germany’s committee could serve as a role model for the more rational approach to health policy sought by the Blue Dog Democrats.