Some observations on greater competition in the West German health‐insurance system from a US perspective

Abstract
This article argues that greater competition could result in improved performance and greater efficiency in the West German health‐care system, much as more extensive competition has reduced the growth rate in the United States. Two special impediments to greater competition are discussed: (1) geographical limits in size of sickness funds which limit economies of scale, and (2) the tax‐like financing of individual sickness funds which may actually offer incentives to increase health‐care costs and which violates the most generally accepted principle of tax equity, that of horizontal equity.

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