3 April 2020

Decentralised, competitive and local: how Germany’s health system is tackling the virus

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Despite the near universal shock and concern over the virus, the responses of national governments to the crisis have been starkly different. Countries like Sweden and South Korea have largely left society intact in a more laissez-faire approach. Others, such as Italy, France, and Austria, have locked down their countries to a point where public life as such has been largely eliminated. The results have been equally dissimilar, with some countries seeing infection numbers flatten out while others have to live through national tragedies.

Germany’s approach is particularly interesting. Despite over 81,000 infections – one of the highest in the world, only around 900 have died so far. Contrast that to Italy with 14,000 deaths, Spain’s 10,000, and France’s 4,000. In fact, even though Germany has more than double the confirmed infections of the UK (34,000), almost three times as many Brits have died from coronavirus (2,900)

Indeed, the death rate of Germany has been hovering around 0.2% to 0.5% for the entirety of March, only rising to the current 1.1% in the last few days after deaths spiked in the first days of April. And yet, 1.1% is still light years away from Spain’s 8.7% Italy’s 11.7%, Britain’s 7.11%, and France’s 6.8%.

What’s more, infection rates have been slowly flattening out. The daily increase of infections was still 53.6% on March 17, but has decreased significantly to 5.1% a day in the last week, with the number of days until infections double slowing to 10.1 days in contrast to the UK’s 4.9.

Because of this, Germany’s lockdown has also been somewhat more lenient than in other European countries. Most public locations have been closed, gatherings of more than two people outside of essential activities banned, and people have been advised to stay at home. And yet, people continue to be able to pretty much go wherever they want as long as they are alone or engaged in an essential activity (such as work).

So why is Germany doing comparatively well?

For one thing, mass testing has taken place for weeks – indeed, a hospital in Berlin had already developed the first worldwide coronavirus test in January. Since then testing capacities have been ramped up immensely, with the Health Ministry saying Germany can perform around 300,000 tests a week. A government advisor put the number even higher at around 500,000 – much higher than Spain (up to 140,000) or Italy’s 200,000, which only increased once the chaos had already taken hold. Meanwhile the UK is on just 35,000-40,000 a week, which ranks in the bottom-quarter of countries when it comes to testing capacity.

By mass testing, Germany has been able to identify new cases and hotspots fast and prevent the virus from spreading too rapidly, particularly to those most at risk – indeed, the average age of someone infected in Germany is only 46, compared to 63 in Italy. In fact, testing has been so prevalent in Germany that some experts have suggested scaling it down the process a bit. As the vast majority of tests come back negative, the authorities risk using up resources that could be crucial further down the line.

The second key factor is the good condition of Germany’s health sector. The number of critical care beds in Germany previously stood at 29.2 per 100,000 inhabitants – the highest of the countries most affected by Covid-19 other than the US (34.7). Newer reports put the number even higher at 33.9, and even greater scaling is planned, with the government intending to double the bed count. The next major European country, by the way, is Italy with 12.5 beds per 100,000 – less than half the number Germany had when the crisis started.

Fundamentally, this means fewer Germans will die of the virus they are better cared for. That is born out in the statistics: the average age of those who have died is 80 and less than 30 of those who have died have been younger than 60.

All of this raises even more questions, however: why does Germany have these testing capacities? And why is the health sector so well-equipped? One of the main answers is that, at least relatively speaking, Germany’s health sector is more decentralised and leaves more room for competition than other systems.

When it comes to health care in general, Germany does not have an NHS-style one-size-fits-all approach, but an insurance-based system. Everyone has to have health care and the government bears the cost for poorer patients. Everyone else can choose – also depending on one’s income – on whether they want to sign up to a statutory health insurance or private insurance (which about a quarter of Germans have signed up to). But even in the statutory system, there is competition between different insurance plans and individuals can pick their preferred plan. The health sector’s revenue comes from the premiums paid by patients as well as their employer – not through state funding. It certainly has not hurt health insurances who have been “swimming in money”.

The testing system has also been very decentralised, with a mixture of government agencies, private enterprise, and research organisations working on expanding testing capabilities – indeed, the January test was made possible by a private biotech entrepreneur. The Robert Koch Institute is coordinating the effort, but it is not an omnipotent authority. It’s also worth noting that healthcare is the remit of Germany’s state governments, not the central administration in Berlin.

Importantly, when it comes to testing, Germany does not have a centralised diagnostic system, but a network of local authorities. As Christian Drosten explain, “Germany does not have a public health laboratory that would restrict other labs from doing the tests.”

That, however, is precisely what has happened in the UK, where testing was centred on the Public Health England laboratory – which has, according to a new report from the Adam Smith Institute, been “slow to approve additional tests, and has as-yet not approved private sector testing”. As the report’s author Matthew Lesh notes, “the UK’s COVID-19 testing has been dangerously slow, excessively bureaucratic and hostile to outsiders and innovation”.

This is not to say that Germany has done everything right or that its system is problem-free. But so far, in the chaos of Covid-19, it has held up remarkably well.

As a German, I can only hope that it stays that way and that we come out of the crisis relatively unscathed, perhaps even being one of the first countries to lift lockdown measures again soon. For the UK, meanwhile, it might be a good sign that the only alternative to the NHS isn’t American health care; that there is actually a more decentralized, private, and competitive system much closer to home.

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Kai Weiss is a Research and Outreach Officer at the Austrian Economics Center and a board member at the Hayek Institute.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.