If nothing else, the events of 2020 have shown us the importance of universal health coverage. The health of a population has direct effects on nearly every aspect of society—and the risk of economic fallout from poor health infrastructure cannot be overstated. When a crisis like the COVID-19 pandemic hits, the gap between strong health systems and weak ones becomes strikingly obvious.
As a digital insurance startup, we are happy to be working in a country like Germany, which has a robust public health system with universal access as its guiding principle. And today, on Universal Health Coverage (UHC) Day, we’re joining governments, organizations, and private enterprises around the world in thinking about how access to care can be ensured—and how investments in healthcare can be scaled for maximum benefit.
The myth of “free” healthcare
Universal health coverage is a system in which “all individuals and communities receive the health services they need without suffering financial hardship”, according to the World Health Organization. And in order to understand how UHC can be achieved, it’s also important to understand that universal coverage is never without costs.
A big part of our work is guiding newcomers to Germany through the health insurance registration process. Many of the people we help are surprised to learn that they have to pay for public health care in Germany. Most of our customers who sign up for public insurance pay several hundred a month to enter the health system. We would argue that this is in no way unreasonable. After all, providing high-quality care to more than 80 million people comes at a significant cost. To the tune of €390 billion, according to the most recent figures.
To understand why the government expects German residents to pay so much, let’s revisit the second part of the WHO’s UHC definition. People should have access to care without suffering financial hardship. In Germany, health insurance contributions are directly correlated with income—they are taken at a government-mandated rate of 14.6% of pretax income. (Please note that this doesn’t extend into astronomically high prices for high earners—the contribution amount maxes out at around €700/month.) For salaried employees, half of the maximum contribution comes out of their paycheck, while employers pay the other half. The system covers dependents at no extra cost; students pay reduced rates, and the government takes on the health insurance costs of those who register as unemployed. This income-based system ensures that healthcare costs are spread evenly across the population. It also ensures that people have access to the care they need without suffering financially.
Universal health coverage is a system in which all individuals and communities receive the health services they need without suffering financial hardship.
Getting past the sticker shock
Paying several hundred euros a month for healthcare can come as a shock to people coming from single-payer systems like those in the UK or Canada. And it can even be surprising to people coming from private-dominated systems like that in the US, where there seems to be a prevailing belief that health systems in Europe provide “free coverage”.
But no matter which flavor of universal health coverage you prefer (tax-financed or social health insurance? Single-payer or multi-payer?) one thing is certain: UHC is never free! The prices paid by governments and their populations reflect how good the healthcare coverage is.
Paving the way for growth
Though it’s not cheap, UHC has helped many countries make great strides in improving public health. Among other benefits, UHC reduces maternal and infant mortality. It also improves the early detection of chronic conditions and makes access to care more equitable across various demographic groups.
And improved population health has knock-on economic benefits. Healthy populations are generally more productive. When doctors detect health problems and treat them early, people’s life expectancy goes up. And, people are able to work more efficiently into their later years. The widespread access to healthcare also encourages entrepreneurship by reducing inefficient “job lock.” A state in which people feel bound to their current employer to keep their health insurance.
Countries with UHC also tend to spend less on healthcare overall. Within the OECD, for example, nearly all countries already have UHC or are transitioning to UHC. Spending on healthcare within the organization averages at around 8.8% of GDP. With healthcare spending standing at 17% of GDP, the U.S.—one of the only countries in the bloc without UHC, and the only country in the bloc with the majority of its population covered by private insurers—spends far more than any other member state and nearly twice the average for the group.
At Feather, it’s our mission to help people find the right insurance for their lifestyle and budget. We consider it our duty to make sure our customers feel empowered. Empowered to choose the best options for their needs but make use of the benefits the German system provides.
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