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Current Social Welfare Issues and Outlook for the Future

As of mid-1995, the policy and institutional features that characterized the development of German social policy over the last century continued to provide the overall umbrella of social policy in Germany. This has meant the continuation of separate programs for different groups in the labor force; decentralized and mostly nongovernment, self-administering bodies and private grassroots voluntary social welfare agencies; an emphasis on earnings-related individualized cash benefits determined by past contributions rather than by need; and a continued reliance on social insurance programs. For most people living in Germany, these programs have worked well and in the postwar period have provided a continuous expansion of coverage and improved benefits.

Behind these achievements, however, are hidden inequities and inequalities. During the last forty years, the system favored the improvement of benefits for those with a continuous work record. For the most part, these were male workers and women who had never left the workforce. They received earnings-related insurance benefits while other population groups tended to receive means-tested benefits or a combination of the two.

The number of individuals receiving means-tested social assistance, however, was increasing in the former FRG even prior to unification. And in 1995, in a united Germany, the recipients of social assistance included a growing number of impoverished elderly women, female-headed single households, and families with several children. For example, a 1992 study found that households with a sick or disabled person needing constant home care, households with a newborn child, and non-German households had an increased likelihood of receiving social assistance benefits.

Women are more heavily represented among the disadvantaged than men. Their lower wages on average mean smaller benefits because of smaller contributions into insurance programs. In addition, the time women spend caring for children and other relatives generally means that women have shorter work histories, which affects their pension levels. German welfare regulations also place divorced and separated women at a disadvantage.

The new Lšnder present a challenge to Germany's social welfare system. From the perspective of individuals, unification brought a number of social and institutional innovations and improvements in living conditions, along with a few new entitlements--for example, disability pay, retirement for men under the age of sixty-five, and pensions for widows and widowers. However, the abolition of familiar social service centers, child-care facilities, and nursing homes, coupled with inexperienced staff in administrative agencies, has increased social and psychological stress for many in the east. Women of child-bearing age living in the new Lšnder have been particularly affected because before unification they had better prenatal and postnatal care, the right to abortion, and a fairly widespread network of day-care centers at work or in their communities.

The lack of private voluntary organizations in the new Lšnder has made the administration of social programs there difficult. Western German voluntary and church-related agencies have provided and still do provide much assistance. They have also assisted in setting up local and district government offices and have trained new manpower to decide on entitlements, calculate benefits, and interpret new laws. But a serious shortage of social workers and facilities to train or retrain them remains.

The difference between the two Germanys in terms of benefits received and resources available for different social strata will continue for some time. The resulting dissatisfaction and social decline can be considered time bombs that might bring future political, social, and psychological instability.

National Health Insurance and Medical Care

Germany's health care system provides its residents with nearly universal access to comprehensive high-quality medical care and a choice of physicians. Over 90 percent of the population receives health care through the country's statutory health care insurance program. Membership in this program is compulsory for all those earning less than a periodically revised income ceiling. Nearly all of the remainder of the population receives health care via private for-profit insurance companies. Everyone uses the same health care facilities.

Although the federal government has an important role in specifying national health care policies and although the Lšnder control the hospital sector, the country's health care system is not government run. Instead, it is administered by national and regional self-governing associations of payers and providers. These associations play key roles in specifying the details of national health policy and negotiate with one another about financing and providing health care. In addition, instead of being paid for by taxes, the system is financed mostly by health care insurance premiums, both compulsory and voluntary.

In early 1993, the Health Care Structural Reform Act (Gesundheitsstrukturgesetz--GSG) came into effect, marking the end of a more than a century-long period in which benefits and services under statutory public health insurance had been extended to ever larger segments of the population. Rising health expenditures may prompt policy makers to impose further restrictions on providers and consumers of health care. These high expenditures have been caused by a rapidly aging population (retirees' costs rose by 962 percent between 1972 and 1992), the intensive and costly use of advanced-technology medical procedures, and other economic and budgetary pressures. As of mid-1995, the drafting of new reform proposals was under way.

For residents of the former GDR, the era of free care ended in 1991. The political decision to adopt the FRG's health care system required the reorganization of nearly all components of health care in the new Lšnder . As of mid-1995, the reorganization of the health care system in the former GDR still was far from completion.

Data as of August 1995

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Germany Table of Contents