HEALTH CAREANALYSIS VOL. 5:3 244-251 (1997) ................................................... Reviews ®~44~-N~-4~-i~ Edited by lan Buchanan A Social Market in Health Care Faces Reform: The Seehofer Plan for The German Health System Rod Sheaff Occurring in one of the most influential member states of the European Union, and in a health system which has been a model for health policy in many countries (including, a century ago, the UK), reform in the German health system is a matter of relevance to health policy analysts and policy-makers in many countries. This paper reviews the motives for these reforms, how far they have been implemented at the time of writing (June 1997), and some aspects of them that, it is reasonable to expect, will continue to exercise both German and other European health policy-makers over the next few years. Motives for Reform Current German health system reform originates partly (and as one would expect) in the peculiar characteristics of this national health system, and partly in recent challenges to Germany's position as a first-rank economic power. Until the 1990s the strength of the German economy largely insulated the German health Rod Sheaff, National Primary Care Research and Develop- ment Centre, Manchester University, WiUiamson Building, Oxford Road, Manchester M13 9PL, UK. E-mail: <rod.sheaff@man.ac.uk> system from the economic effects of interna- tional competition, political instabilities and trade cycles outside that sector. Since 1945, and especially since the 1960s, the German health system has developed by providing a wide range and high standard of high-technology services, with a slightly more hospital-oriented approach than that found in the UK and USA, on an ever-increasing scale and at a correspond- ingly high cost (see below). The post-1945 German health system has been distinctive in that the national (Federal) level plays a relatively small role by European standards whilst pro- vincial (Land) governments and the autonomous sickfunds play a rather more significant role. Still more distinctively, health care financing is both rather fragmented and highly regulated. Most health care is financed by bodies which are (at least nominally) private the sickfunds (Krankenkassen)--and the social insurance me- chanism ensures that the poorest 90% or so of Germans nevertheless do have practically uni- versal access to a wide basic profile of health services, largely free at the point of use. Because many sickfunds originated as workplace-based organisations, compensation for loss of earnings due to sickness is a significant part, and a major cost, of the sickfund system. German health policy formation rests on the 'social market' approach adopted in many sectors of the West German economy after 1945. Trades union, professional, pressure-group and inter-organisa- tional interests are structured into the bodies which oversee the health system and periodi- cally review health policy. So are the large number of interest groups and intermediaries, through whom the financial side of the system functions. This wide range of interests is represented (sometimes directly, sometimes CCC1065-3058/97/030244-08517.50 @1997 by JohnWiley & Sons, Ltd.