The Efficiency of the German Healthcare System: Some Puzzling Findings

This article examines the cost-effectiveness of the German healthcare system from the perspective of statutory health insurance (SHI). Using data for 2011-2014-the most recent period for which consistent national inputs are available-we compare a marginal, system-wide cost-effectiveness ratio with the cost-effectiveness of newly approved cancer drugs. The analysis indicates that the German healthcare system incurred costs per life-year gained that were broadly comparable to the incremental cost-effectiveness ratios reported for many new cancer drugs. Sensitivity analyses varying the attribution of mortality reduction to healthcare do not materially alter this comparison. Although evidence of overuse and inefficiency in the German healthcare system is documented across multiple sectors, the available evidence does not clearly identify a single domain sufficiently large to explain the aggregate pattern. This raises the hypothesis that inefficiency may be diffuse, or that structural features common to high-income health systems-such as diminishing marginal returns to health spending-play an important role. While the empirical estimates rely on data from roughly a decade ago, subsequent trends in treatment costs and life expectancy provide little indication that the underlying tension has dissipated. The findings highlight the need for more systematic cost-effectiveness analysis across sectors, alongside rigorous evaluation of reforms and consideration of institutional and political constraints affecting implementation.